Economic transformation should not be about replacing white faces with black ones,
Raising the standard of living of the majority of South Africans requires us to dump the dogma about ‘white monopoly capital’ and get people into jobs
Gwen Ngwenya writes
● The majority of South Africans would agree that the pursuit of economic transformation has been an unambiguous failure. However, what we understand economic transformation to mean differs, and this is evident in how it is assessed.
To measure progress, there is a self-defeating habit of looking at the demographic profile of the owners of JSE-listed companies and those who occupy executive positions. The theory is that in an economically just society these outcomes would reflect the racial demographics of the population. This is of course not true.
Economic opportunity for the majority is not linked to the economic opportunities available to elites. At his party’s 100th anniversary celebration, former president Kgalema Motlanthe joked at the end of his toast: “The leaders will now enjoy the champagne, and of course they do so on your behalf through their lips.”
It is entirely possible for there to be “black” majority ownership of the JSE and for most executives to be “black” while economic injustice persists. Indeed, many South Africans reject the idea that replacing a “white” economic elite with a “black” economic elite equates to economic justice. And yet, we obsess with indicators that can only inform us about the racial demography of the “1%”.
We must focus the measurement of transformation away from elite gains, irrespective of race, towards measuring the ability of all in society to earn an income and build wealth. It is for this reason that the DA’s draft economic justice policy is a key discussion point at its policy conference at the end of the week.
Whatever economic approach we choose as a country will be influenced by ideology. But what is critical is a politics free of dogma. In other words, whatever our initial impulse, it must not be immune to evidence. This is crucial because the stark realities we are confronted with require concessions from a variety of stakeholders:
● Established businesses cannot continue to take part in setting up a regulatory edifice within which new companies cannot compete and that kills innovation and aids cronyism. It has not worked out for South Africans for big businesses to spend eyewatering amounts to sit in close proximity to some or other minister who whispers sweet nothings in their ear.
Critically, the official policy of trickle-down redress — in other words, co-opting the politically connected onto boards and the ownership of companies — will not work as a plan to include the majority of South Africans in the economy. And thus, ultimately it will fail as a way for businesses to buy a social licence to operate. There will continue to be mass resentment from the majority excluded from the economy.
● Some labour groups will need to confront the fact that there is no decent work if there is no work at all. And so, we must balance labour demands with the need to get as many people as possible into work. There is surely a point at which elites irresponsibly raising reservation wages becomes no better than worker exploitation.
It is imperative that we reduce the transactional costs related to doing business in SA, to grow the economy, and to increase the jobs available to the labour force we possess. There is nothing decent about mass unemployment.
● Those who chant “Pull yourself up by your bootstraps” will need to acknowledge that if we are not deliberate about improving the opportunities available to all, meritocracy can reinforce inequalities and place a cap on economic mobility.
Meritocracy is a fine principle — the idea that success in life is to be determined by our performance, a combination of hard work and our innate abilities. This is in stark contrast to a society based on nepotism, aristocracy or inherited status, or even cadre deployment.
However, how merit is assessed at various stages (for example, extracurricular activity, university attended, referees for job referrals) can be elitist.
And we must be concerned about how we ensure that everyone has a reasonable opportunity to nurture innate talents and develop strengths. There needs to be recognition that some may never possess, through no fault of their own, any monetisable ability. And thus, we need to provide a floor below which no human being, no matter how vulnerable their situation, can fall.
● We must recognise that the drivers of economic exclusion are multifaceted and work in reinforcing ways. Focusing on ownership, executive management of companies and the awarding of contracts reduces economic exclusion to one predominant assumption: that were it not for “white monopoly capital”, the majority of South Africans would be better off. This could not be further from the truth.
Economic exclusion is a combination of illness and disease caused by poor socio-environmental conditions, the high cost of transport, low levels of savings and savings in low-return investment vehicles, no affordable housing close to areas of economic activity, unreliable and costly energy, digital disconnect, poor educational outcomes, and so on.
All these factors contribute to a cycle of deprivation that is difficult to escape.
The majority of South Africans are not excluded from the economy predominantly because of racism. The majority of South Africans are malnourished, fall prey to preventable and treatable sickness, live in overcrowded conditions, are out of work (some for so long that they’re no longer employable), cannot overcome the barriers to starting a business and cannot afford transport to look for work.
These deprivations find their roots in a monarchical, colonial and more recently apartheid past.
The horror is that they persist powerfully into a democratic SA.
The future of SA depends on successfully challenging the hegemonic approach to economic transformation. Absent any policy change, SA will continue to be characterised as an economy of outsiders and insiders.