Just three words but many views on how to achieve it in SA
Radical economic transformation, a popular turn of phrase on the tip of many South African tongues, has been lambasted for being nothing more than a few platitudes on inclusion.
It is a term the ANC adopted four years ago and President Jacob Zuma reiterated in 2017’s state of the nation address. While there is general consensus that the term calls for more inclusion in the economy, the details on how this is to be achieved are hazy.
In the state of the nation address, Zuma called for SA to move beyond words and to create practical programmes.
“What do we mean when we say radical economic transformation?” he asked.
“We mean 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, as defined by the governing party, which makes policy for the democratic government.”
The president was hailed by business and labour alike for adopting a more inclusive and transformative stance, which was reiterated by Finance Minister Pravin Gordhan in the budget speech a few weeks later.
But as Absa investment economist Chris Gilmour puts it: “There were a number of times the minister said radical economic transformation. It’s politically important to inject that rhetoric into his speech, but if you dissect what he was saying, there’s nothing radical, so where’s the transformation?”
Following the budget, the Black Business Council (BBC) expressed concern that there was not enough spending on policies that would champion radical economic transformation — a distinct disconnect between Zuma’s speech and reality. The council was very clear on what is required to achieve this programme.
The secretary-general of the BBC, George Sebulela, says: “Quite simply, we always wanted 50% of spending for government and parastatals to be set aside for black business.”
Sebulela urges the government to be more transparent on its stance on state-owned enterprises and to understand how many licences will be given to black-owned businesses.
“In the process of doing that, we need radical economic transformation to take place,” Sebulela says.
BBC president Danisa Baloyi adds: “If we put energy into small business, our economy will grow.”
The BBC calls on the government to consider new methods of financing economic transformation, such as capital expenditure and an increase of financing by the Public Investment Corporation, the government-owned investment manager that invests funds on behalf of public sector entities. It also wants a change in policy that supports “white monopoly capital”, such as the principle of “once-empowered, always empowered”, which sets lower targets for direct ownership and the Preferential Procurement Policy Framework Act.
The Progressive Professionals Forum also questions Gordhan’s commitment to radical economic transformation. “We’re not seeing the implementation of radical economic transformation and how it translates in the budget,” says the forum’s Mzwanele Manyi, adding that the BBC had a fundamental disagreement with Business Unity SA (Busa) because of this.
Busa welcomes Gordhan’s stance, calling the budget “transformative and inclusive”. Its CEO, Tanya Cohen, says economic transformation requires investor certainty; easing the regulatory burden of small businesses; accelerating private investment in the energy sector; and improving education and skills development systems.
“We need to get the over 6million unemployed into the economy in businesses across different sectors and of all sizes and forms,” she adds.
The ANC has a 12-step plan for radical economic transformation. It wants the return of the land to the people; investment in townships; allocating 30% of all government spending to black business; a mass roll-out of broadband infrastructure; spending 10% of GDP on developing agriculture; better service delivery; diversifying ownership in the financial services sector; increasing the requirement for black ownership of mines; free higher education for the poor; reviewing trade policies; promoting local business; and fighting corruption.
The ANC’s concerns align with the BBC — but as Cosatu warns, it is the same rhetoric and promises the ANC has been pushing for years.
Cosatu spokesman Sizwe Pamla says radical economic transformation includes transforming the financial sector with a state bank; and transforming the health sector through National Health Insurance and a state pharmaceutical company. This will begin to tackle ownership patterns.
The South African Communist Party (SACP) has been clear and consistent for years on what is required. Its second deputy general secretary, Solly Mapaila, says: “Firstly, by radical economic transformation it is meant not private corporate, not personal, not state-captured, family interests propagated in the name of all black people.”
The SACP emphasises social grants and redistributive programmes while expanding national production to create more employment. Mapaila argues this will be achieved by expanding the export market through more investment in innovation, research and development and the radical transformation of the education sector.
For the EFF, radical economic transformation can be achieved only with decolonisation, which begins with the redistribution of land.
EFF national spokesman Mbuyiseni Ndlozi says: “We are the only political party that is prepared to restore the humanity of black people by giving them land so that they too can call this country their own.”
Ndlozi accuses the ANC of refusing to champion radical economic transformation by not amending the Constitution to allow the expropriation of land without compensation.
“It is of no use for Jacob Zuma to accede to land expropriation without compensation on public platforms and for ANC MPs to vote against the same motion,” Ndlozi says.
The Food and Allied Workers Union echoes the EFF’s stance on land expropriation.
It proposes that fiscal expansionism be achieved through higher tax rates on both corporate and personal income, as well as monetary policy specifically targeting employment.
“This call on the part of the ANC will remain rhetoric that [will] not translate into concrete programmes,” the union says in a statement.