Achieving “inclusive growth” and overcoming inequality in South Africa would be positive for investment, economic growth and stability, Deputy Finance Minister Sfiso Buthelezi said on Friday.
Buthelezi said South Africa was the most unequal country in the world with a Gini coefficient score of 0.66. The Gini coefficient is a measure of income or wealth distribution – a score of zero is absolute equality and a score of one is absolute inequality.
“Unequal societies are the most unstable. There is an inverse relationship between instability and investments. If you are unstable, you can’t hope to get investments and capital formation in the economy.
“It is in the interests of all of us to give economic citizenship to all of our people. It will augur well for investments going forward,” he said at the launch of the World Economic Forum (WEF) on Africa in Johannesburg.
The “inclusive growth” that will be discussed at the WEF on Africa in Durban this week was the same as government’s “radical economic transformation” idea, Buthelezi said.
“There is no difference between inclusive growth and radical economic transformation ... [both] ensure that the majority of the citizens get involved in economic activity, and it talks to all the citizens of the country being part of the ownership of means of production. It talks about beneficiating the primary products that we produce so that we add value to our exports,” he added. “The National Treasury is sticking with more inclusive growth ... Once we mention the word ‘radical’, a lot of people get a little bit tense,” Buthelezi said. Elsie Kanza, head of Africa at the WEF, said that the “status quo was not tenable”. “We are concerned about the lack of urgency. We need a sense of urgency ... maybe that speaks to the radical part that this situation cannot be sustained and will lead to instability,” Kanza said. Buthelezi said the way to achieve inclusive growth was to “grow the cake”, or grow the economy. Procurement was another means to achieve inclusive growth, he added. South Africa’s reliance on primary products was a “big, big problem”. “We need to be focusing on beneficiation. When you do that, you know that you are exporting goods of higher quality ... That makes it easier to share the cake,” he added. “It is evident that global capitalism needs to be better managed to address the increasing alienation and discontent experienced by citizens – not only in Africa, but globally. The global economy is not growing fast enough or is not deep enough to affect rising global inequality, unemployment and financial exclusion,” Buthelezi said.
“Africa must lead in seeking solutions to its challenges ... Despite the drop in commodity prices in 2016, Africa remains an attractive investment destination ... Africa is the second-fastest-growing area in the world after emerging Asia. This presents significant growth opportunities for trade and investment,” he said.
This is the 27th meeting of WEF on Africa. The last time it was held in Durban was in 2003. The theme for the meeting is “achieving inclusive growth”.
Kanza said: “There is a concern that the pursuit of growth has not translated into the benefits citizens are expecting ... [There are] not enough jobs, and [there is a] deterioration of living standards as well as pressure on leaders to become more responsive to their citizens.”
More than 1 000 leaders in business, government and civil society from more than 100 countries will be attending the meeting. More than 600 organisations will be represented.
President Jacob Zuma, Deputy President Cyril Ramaphosa, Finance Minister Malusi Gigaba, Buthelezi and 15 other Cabinet ministers, as well as a number of other heads of state and politicians from the rest of Africa and the world, will be at the meeting.