Nuts and bolts

Zuma has put his seal on an agenda that will create jobs and change the face of the economy

At President Jacob Zuma’s second inauguration, he vowed that economic transformation would “take centre stage” during his last term of office. He promised that “the structure of the economy will be transformed through industrialisation, broadbased black economic empowerment and through strengthening and expanding the role of the state in the economy”.

That the economy would assume centre stage should not come as a surprise. It is part of the normal course of the evolution of statehood. All indications point to the fact that the first phase of transition — the consolidation of formal democracy — is complete. The country has entrenched all the necessary checks and balances, such as a free press, an independent judiciary, independent chapter nine institutions, and regular free and fair elections.

But this achievement is under threat owing to the unfinished business of economic transformation. In his State of the Nation address last week, Zuma was clear and unambiguous in his description of the challenge. He observed: “Twenty-two years into our freedom and democracy, the majority of black people are still economically disempowered … the gap between the annual average household incomes of Africanheaded households and their white counterparts remains shockingly huge. White households earn at least five times more than black households, according to Statistics South Africa. The situation with regards to the ownership of the economy also mirrors that of household incomes. Only 10% of the top 100 companies on the JSE are owned by black South Africans.”

The situation is not any different in top management, in which whites continue to rule the roost, with 72% demographic representation and Africans grossly underrepresented with a measly 10%.

The second challenge facing the country is the persistence of the triple challenge of poverty, unemployment and inequality. Underscoring the centrality of the economy in its resolution, Zuma is spot on with his observation that “the most effective weapon in the campaign against poverty is the creation of decent work, and that creating work requires faster economic growth”.

Indeed, since assuming office, economic transformation has become the hallmark of Zuma’s administration, featuring minor refinements in each of his State of the Nation addresses. Its latest incarnation is the formulation of “radical economic transformation”.

The objective is twofold. First is to place “the economy on a qualitatively different path that ensures more rapid, sustainable growth, higher investment, increased employment [and] reduced inequality”, and second is to deracialise the economy.

The ANC and the president could not have been more bold and direct in defining radical economic transformation — “a fundamental change in the structure, systems, institutions and patterns of ownership, management and control of the economy in favour of all South Africans, especially the poor, the majority of whom are African and female”.

Described this way, transformation of the productive structures and relations would be at the core of placing the economy on a qualitative path. This would require moving away from a situation where the country