Ac­cept our chal­lenges

Rad­i­cal eco­nomic trans­for­ma­tion is al­ready un­der way, but gov­ern­ment must work to in­crease the of our in­ter­ven­tions

CityPress - - Voices - Cyril Ramaphosa voices@city­press.co.za

This is a crit­i­cal mo­ment in the de­vel­op­ment of our young democ­racy. Our econ­omy is cur­rently un­der great strain, af­fected by both global and do­mes­tic pres­sures, and by the last­ing struc­tural con­straints of the apartheid econ­omy.

Our po­lit­i­cal life is frac­tious, with pub­lic sen­ti­ment ap­pear­ing to be more po­larised and pub­lic dis­course more charged – and more shrill – than at any other time since 1994. There is dis­cord within the demo­cratic move­ment it­self, with dif­fer­ent for­ma­tions adopt­ing op­pos­ing po­si­tions on key is­sues of the day.

We must be hon­est enough to ad­mit the depth of the po­lit­i­cal, eco­nomic and so­cial chal­lenges our coun­try faces. And we must be coura­geous enough to recog­nise the do­mes­tic and global con­di­tions that give rise to th­ese chal­lenges. But courage also re­sides in ac­knowl­edg­ing the sub­jec­tive fac­tors – is­sues that are a con­se­quence of our own ac­tion or in­ac­tion – that ag­gra­vate the sit­u­a­tion.

Yet, even amid the great dif­fi­cul­ties we now con­front, there is progress; there is de­vel­op­ment; and there is hope. Even as we strug­gle with a low growth rate and come to terms with the im­pact of re­cent rat­ings down­grades, work is be­ing un­der­taken across the econ­omy to boost in­vest­ment, ex­pand our pro­duc­tive ca­pac­ity, im­prove our skills lev­els and develop our eco­nomic infrastructure.

At the same time, we are wit­ness­ing greater col­lab­o­ra­tion and co­op­er­a­tion be­tween so­cial part­ners on crit­i­cal eco­nomic is­sues. There is a grow­ing ac­cep­tance among all so­cial part­ners that it is only through col­lab­o­ra­tion that we will achieve sus­tain­able growth that in­creases em­ploy­ment and im­proves liveli­hoods.

This has been ev­i­dent over the course of the past year in the Pres­i­den­tial CEO Ini­tia­tive. This part­ner­ship be­tween gov­ern­ment, labour and the coun­try’s lead­ing chief ex­ec­u­tive of­fi­cers arises from a recog­ni­tion that we need to mo­bilise the skills, ca­pa­bil­i­ties, en­ergy and, im­por­tantly, re­sources of all sec­tors of so­ci­ety.

The agree­ment that was re­cently reached be­tween so­cial part­ners on a na­tional min­i­mum wage and labour sta­bil­ity sig­nalled the de­ter­mi­na­tion of the so­cial part­ners to work to­gether to ad­dress even the most dif­fi­cult chal­lenges in our so­ci­ety. From th­ese ini­tia­tives, and from several others, we see the seeds of a so­cial com­pact for in­clu­sive growth emerging.

For more than two decades, South Africans from all walks of life have been work­ing to build a united, equal and car­ing so­ci­ety from the ru­ins of racial op­pres­sion. But our long walk to free­dom is far from over. More than two decades into democ­racy, the face of poverty re­mains black, in par­tic­u­lar, African woman. Many of our peo­ple still ex­pe­ri­ence so­cial marginal­i­sa­tion and eco­nomic ex­clu­sion.

They de­sire train­ing op­por­tu­ni­ties and want to work. They want ac­cess to land and the means to pro­duc­tively farm it. They want to own fac­to­ries and start en­ter­prises to employ others.

To fail them would be a be­trayal of their con­fi­dence and a dere­lic­tion of our re­spon­si­bil­ity to­wards the Con­sti­tu­tion.

The call for rad­i­cal eco­nomic trans­for­ma­tion seeks to ad­dress th­ese fun­da­men­tal is­sues. Even as some peo­ple may want to de­ploy the con­cept to pur­sue self­ish personal ob­jec­tives – or sim­ply to cast as­per­sions on the rev­o­lu­tion­ary cre­den­tials of others – rad­i­cal eco­nomic trans­for­ma­tion has sub­stance, mean­ing and rel­e­vance. It is a re­sponse to the needs of the peo­ple.

Rad­i­cal eco­nomic trans­for­ma­tion is fun­da­men­tally about in­clu­sive growth and build­ing a more equal so­ci­ety. It is about draw­ing into mean­ing­ful eco­nomic ac­tiv­ity the one-third of work­ing-age South Africans who cur­rently lan­guish on the out­side of the eco­nomic main­stream. It is about a mas­sive skills de­vel­op­ment drive that pre­pares young South Africans for the work­place of the fu­ture. In­clu­sive growth requires fun­da­men­tally chang­ing the own­er­ship patterns of the econ­omy, at a faster rate and in a more mean­ing­ful man­ner than at present. It requires that we re­dis­tribute agri­cul­tural land on a far larger scale and at a far quicker pace, and that we prop­erly equip the new own­ers of that land to farm it pro­duc­tively and sus­tain­ably. The Na­tional De­vel­op­ment Plan iden­ti­fied agri­cul­ture and agro­pro­cess­ing as sig­nif­i­cant po­ten­tial driv­ers of growth and jobs. With a few key in­ter­ven­tions – such as the ex­pan­sion of ir­ri­gated land, higher lev­els of com­mer­cial pro­duc­tion and im­proved sup­port for small-scale agri­cul­ture – it es­ti­mated that this sec­tor could cre­ate up to 1 mil­lion new jobs by 2030. Rad­i­cal eco­nomic trans­for­ma­tion also requires that we lever­age our mas­sive infrastructure in­vest­ment more strate­gi­cally and more de­lib­er­ately to build lo­cal man­u­fac­tur­ing ca­pac­ity. This should be part of a broader ef­fort to ben­e­fit from the mas­sive infrastructure pro­grammes that will take place across Africa for several decades to come. It also requires that we cre­ate a new gen­er­a­tion of black in­dus­tri­al­ists. Gov­ern­ment, through its de­vel­op­ment finance in­sti­tu­tions and other agen­cies, is putting sig­nif­i­cant re­sources into this ef­fort. To date, the de­part­ment of trade and in­dus­try has ap­proved more than R1 bil­lion in grant finance to 36 projects un­der­taken by black-owned and man­aged busi­nesses. This pro­gramme, once it reaches scale, will contribute to the rein­dus­tri­al­i­sa­tion of our econ­omy and help re­de­fine our ap­proach to black eco­nomic empowerment. Black busi­ness­peo­ple will no longer be mere mi­nor­ity share­hold­ers in es­tab­lished busi­ness, they will be pro­duc­ers and fi­nanciers who start their own busi­nesses

TALK TO US How do you un­der­stand the term ‘rad­i­cal eco­nomic trans­for­ma­tion’?

and run them.

If we are to change own­er­ship patterns, we need to cre­ate op­por­tu­ni­ties for black en­trants into sec­tors of the econ­omy cur­rently dom­i­nated by a few play­ers. We need to use our com­pe­ti­tion law more di­rectly to lower bar­ri­ers to en­try and pre­vent an­ti­com­pet­i­tive be­hav­iour. As we pur­sue a more in­clu­sive econ­omy, we also need to en­sure that com­mu­ni­ties and em­ploy­ees have a stake in the busi­ness through mech­a­nisms such as em­ployee share own­er­ship schemes and profit shar­ing.

We are also work­ing to ad­dress the sig­nif­i­cant chal­lenge of youth unem­ploy­ment, one of the great­est ob­sta­cles to in­clu­sive growth. This in­cludes mas­sively in­creas­ing ac­cess by young peo­ple to vo­ca­tional train­ing and ap­pren­tice­ship pro­grammes.

Dera­cial­is­ing the econ­omy means lever­ag­ing the pro­cure­ment spend of the state – and of the pri­vate sec­tor – in a fair and trans­par­ent man­ner to pro­mote black- and fe­male-owned busi­nesses. Pri­or­ity must be given to en­sur­ing black own­er­ship in emerging sec­tors of the econ­omy, such as in nat­u­ral gas and the oceans econ­omy.

Un­der­pin­ning all th­ese mea­sures is a con­certed ef­fort to sig­nif­i­cantly in­crease the level of in­vest­ment in the econ­omy. We need to im­prove in­vestor con­fi­dence by con­tin­u­ing to con­tain our na­tional debt, pre­vent­ing fur­ther in­vest­ment down­grades, im­prov­ing the gov­er­nance and fi­nan­cial po­si­tion of state-owned en­ter­prises, and main­tain­ing in­ter­na­tional norms and stan­dards in the reg­u­la­tion of the fi­nan­cial sec­tor.

In truth, the work of rad­i­cal eco­nomic trans­for­ma­tion is al­ready un­der way. What is ur­gently needed is sys­tem­atic ac­tion by gov­ern­ment, in part­ner­ship with other so­cial part­ners, to in­crease the scale and pace of our in­ter­ven­tions. In those ar­eas where we have en­coun­tered prob­lems, we must move with speed to find innovative ways of re­solv­ing them. We need more fo­cus and col­lab­o­ra­tion. We need to mo­bilise more re­sources, use the re­sources we do have more ef­fec­tively, and eliminate all forms of wastage and rent-seek­ing.

We in­vite all South Africans, in­clud­ing civil so­ci­ety and busi­ness, to work with all po­lit­i­cal lead­ers to ad­dress fun­da­men­tal dif­fer­ences in a man­ner that is con­struc­tive and that builds a united na­tion. This is a time to pri­ori­tise the cries of the marginalised and the poor through poli­cies and ac­tions that pro­mote sus­tain­able and in­clu­sive eco­nomic growth, ef­fec­tive re­dis­tribu­tive mea­sures and eth­i­cal man­age­ment of pub­lic re­sources. This is an edited ver­sion of a speech Ramaphosa de­liv­ered

at a Black Busi­ness Coun­cil din­ner this week

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