Radical Economic Transformation (RET) has to be an investment imperative if South Africa is to grow its GDP, slash unemployment and lift many more people out of a life of poverty and squalor.
The economy needs and must be democratised and decentralised if we are to bring millions of citizens on the margins into the mainstream. South Africa is one of the most unequal countries on earth.
Siphokazi Mthathi‚ Oxfam SA’s executive director was quoted earlier this year as saying that the organisation believed that “for a radical economic transformation to be a plausible proposition and not just a talk-shop slogan by the government‚ we need clear and credible proposals on how the government aims to‚ among other things‚ eradicate absolute poverty from 39 percent of people living below the poverty datum line of R419 (2009 prices) to zero; reduce the unemployment rate to 6% by creating 11-million more jobs by 2030‚ and significantly reduce inequality … through a range of policy interventions”.
In a discussion document on economic transformation, the African National Congress is unequivocal in its vision for a future South African economy. The documents points out that ‘radical economic transformation is about fundamentally changing the structure of South Africa’s economy from an exploitative exporter of raw materials, to one which is based on beneficiation and manufacturing, in which our people’s full potential can be realised. In addition to ensuring increased economic participation by black people in the commanding heights of the economy, radical economic transformation must have a mass character. A clear objective of radical economic transformation must be to reduce racial, gender and class inequalities in South Africa through ensuring more equity with regards to incomes, ownership of assets and access to economic opportunities. An effective democratic developmental state and efficiently run public services and public companies are necessary instruments for widening the reach of radical economic transformation enabling the process to touch the lives of ordinary people.’
For this vision to be successful will require the government and business to work together to satisfy both parties’ ideals and goals – for the former to realise its ambition of a healthier socio-economic state and for the latter to be able to work in an environment conducive to investment and business. But we also have to be mindful that the private sector – big and small business – hold in their hands around 70 percent of the economy and the government 30 percent.
Central to the country’s long-term economic and social development is the government’s National Development Plan (NDP) which continues to be the blueprint for progress and which underpins a social compact that it believes will be a transformative agent that will benefit generations to come.
The NDP points out that ‘when considering the aims of the initiatives undertaken by South Africa, the key issues facing the country become evident.’
‘These include restructuring the economy to facilitate inclusion and for increased investment and employment to be addressed so that poverty and inequality can be substantially reduced. These interventions focus attention on the importance of continuity in policy and its implementation beyond the five year period of an electoral cycle.’
Until black South Africans become meaningful contributors and participants in the business value chains, the government is convinced that the economy will never be able to reach its full potential.
Transformative economic policies are therefore a necessary remedy to stimulate broader participation in the growth and development of South Africa.
Radical Economic Transformation or just simply transformation of the economy has to be a non-negotiable.
As pointed out by the World Bank in its South Africa Economic Update: Innovation for Productivity and Inclusiveness, ‘insufficient economic growth is pushing South Africa into a vicious circle: insufficient tax revenue raises the risk of public debt distress, which plays an important role in the downgrade of South Africa’s sovereign credit rating in early 2017. The credit rating downgrade in turn reduces investors’ appetite for South Africa, where their investments would support much-needed growth. Insufficient revenue and more complicated borrowing terms also limit the government’s capacity to support the economy and its citizens’.
It cannot continue to be business as usual. Inclusivity in the economy will grow the economy. Investing in people, growing people’s skills sets, breaking down barriers for people to realise their potential and encouraging/funding centres of innovation is what is needed to start turning this economic ship around.
Radical Economic Transformation is crucial in bringing millions of people who have so far been excluded from the formal economy. We pride ourselves as being an open and inclusive society and if we are to realise our true freedom, we cannot and must not allow the levels of poverty and inequality to continue to define much of our socio-political landscape. A radical system has played such a large part in this country’s history and its effects are still being felt every day. A radical approach is needed to usher in a new path, one that has the potential to take us where we know we can and should be.
Bathabile Dlamini is President of the ANC Women’s League