Radical economic transformation is a long-term process
IF YOU ASK anyone what “Radical Economic Transformation” (RET) is and how we should go about making it happen you are sure to get different answers and priorities. The answers will encompass everything from the complete overhaul of the structure of our country’s economic system to usher-in job creation and entrepreneurship to poverty reduction, wealth creation, reallocation of resources (from less productive to more productive sectors), raising agricultural productivity and education and skills development.
Maybe it is because every one of us – individuals, private sector, the government and non-government organisations – have a view and a role to play in economic transformation.
What is most important is that all of the answers must be addressed in ways that favour long-term, sustainable development, not simply short-term growth.
This is the essence of RET, now sure to become the leading acronym and paradigm in South Africa’s political lexicon for years to come.
Our 24 years of democracy have seen slow economic growth and a struggle to leverage that growth into sustainable development policies and plans to reduce poverty – hence the government is beating the “radical economic transformation” drum that would seek to change the ownership and control of the economy through legislation and empowerment regulations.
President Cyril Ramaphosa, Finance Minister Nhlanhla Nene, Trade and Industry Minister Rob Davies, DA leader Mmusi Maimane and chief executives of top companies hardly make a speech without touching on some or other aspect of RET.
For me, the starting point for RET is best captured by the policy institute African Centre for Economic Transformation’s “Growth with Depth.”
“Depth” is an acronym: the “D” stands for diversification of production and exports; the “E” for export competitiveness; the “P” for productivity gains; the “T” for technological advances; and the “H”’ for human well-being brought about by expanding formal employment and raising incomes.
The truth is, we can’t just assume that transformation will happen because we have the National Development Plan and other plans which came before it, such as RDP (Reconstruction and Development Programme) and Gear (Growth, Employment and Redistribution) strategy.
It’s up to all of us – policymakers, the business community, and civil society – to make it happen.
While the government seeks to change the ownership and control of the economy through legislation, empowerment regulations and the private sector, the next question is how we can all – the private sector, non-governmental organisations, small and big business – help drive radical economic transformation.
I wish to make seven suggestions linked our economic value chain which could enhance RET.
They are: improving education and skills development; enhancing the labour market; improving workforce productivity, improving the business environment; stronger emphasis on trade; facilitating access to finance to start small businesses; and raising agricultural productivity.
Let me discuss them one by one.
Trade For centuries trade has been a significant part of our economy and will continue to be important to the growth of our country’s products, technology and innovation. Trade continues to play a large role in our present and future economic well-being.
As we expand to new markets worldwide, trade will bring new opportunities, create jobs, and provide economic security for our country and citizens.
Trade agreements are the best way to ensure that South African products have the opportunity to compete for new and expanding foreign markets.
Trade agreements help reduce barriers and increase access to open markets, concurrently helping the economies of these nations and our country.
Business environment Regulations are not drawn up in order to stifle business. Rather, they are designed to accomplish a legitimate purpose.
Those proposing regulatory reforms must be mindful of that purpose.
Complex and burdensome regulations hold back job creation and growth.
Starting a business must become much easier.
Reforming government regulations is an appealing concept, especially when businesses are struggling in a weak economy. Improving productivity In his book Managing in Turbulent Times, Peter E Drucker said: “One has to assume, first, that the individual human being at work knows better than anyone else what makes him or her more productive… Even in routine work the only true expert is the person who does the job.”
For example, the most obvious sign of our country’s construction boom is in the expansion of the country’s cement production capacity. We are the glue of economic development.
As the leading supplier of cement and related products in southern Africa, PPC has nine manufacturing facilities and three milling depots in South Africa, Botswana and Zimbabwe that can produce around eight million tons of cement products each year.
Our growth plans drive economic growth and getting employees’ ideas and getting their involvement is not an option anymore.
If we are going to be competitive, it’s mandatory we involve the workforce from the bottom-up in the process.
Education and skills Our education system must be improved to stay ahead of the curve on research and development and to provide a well-trained, available workforce for investors.
Also, improvement in maths and science education should be a priority. Science, technology, engineering and maths training is not only of growing importance to our technology-dependent society, but these disciplines also represent compelling advances in human knowledge that all students should have the opportunity to appreciate.
Labour market Trade unions have secured improvements in working conditions.
Now they must help increase South Africa’s productivity and global competitiveness to generate enough wealth to address developmental backlogs.
Access to finance We need more new businesses to create employment, because currently we are putting too much pressure on the existing organisations to grow so they can increase the amount of people they employ.
Unfortunately, potential entrepreneurs have to deal with poor access to finance, sub-standard infrastructure and regulations that create administrative burdens and costs.
Therefore, greater confidence in an improving economic environment alongside better access to financing will facilitate start-ups which will create jobs.
Agricultural productivity Historians and researchers say countries that have managed to pull out of poverty are those that have been successful in increasing agricultural surplus and using that as a basis for diversifying their economies away from agriculture-based activities.
A thriving agricultural sector can provide cheap food. This in turn will ensure adequate nutrition for the population, including its workforce, and also increase the amount of disposable income left to individuals and families after the food bills have been paid.
This generates demand for other goods and services, creating direct and indirect jobs.
Surplus production is also used to provide raw materials for industry, setting off a positive chain reaction including production, marketing, distribution and all the other value additions involved.
We need strategies and projects which we must all implement without any disruptions and policy changes which may end up impeding progress.
While collaboration between the government and the private sector is at the core of economic transformation, radical economic transformation must transcend politics.
From my above arguments, there is no doubt that RET will succeed when the entire economic value chain of infrastructure and finance, enabling environment and education and skills development, are on track and are serving to create resources, inputs, processes and policies that are combined with the government and non-government organisations.
Trade and professional associations generate improvements in the lives of individuals or society as a whole.
Radical economic transformation is a multifaceted, consistent and long-term process.
It needs everybody’s involvement.
A multifaceted, consistent, long-term process, the transformative ideal sorely needs everybody’s involvement and must transcend politics.
Tryphosa Ramano is the chief financial officer of PPC Limited, a leading supplier of cement in southern Africa.