President Jacob Zuma has inadvertently started a great debate about radical economic transformation. This is a debate that is way overdue. Unfortunately there is nothing new in what he himself is proposing or any of the choir behind his noise. The question of transforming the economy has been saddled with the governing party since the days of the Reconstruction and Development Programme (RDP).
The RDP in itself should probably be considered to have far more substance in its articulation of what needs to be done than any of the latter day noises being made by Zuma and his choir. The problem of the ANC has never been policy. Most of the policies it has adopted, including the constitution, are excellent and well thought out. The problem of the ANC is translating that policy into action. Concrete things that can make the policy not sound so hollow.
A closer look at one such cross-cutting economic policy is black economic empowerment (BEE), which reveals that the problem with it was never its radical proposal about black ownership employment equity or even preferential procurement, for example.
On ownership there was a lot of manoeuvring with companies grabbing groups of uncoordinated shareholders making them pseudo owners through fake schemes. This effectively meant that the white owners of the business carried on business as usual as there couldn’t possibly be any ownership inputs of people owing crumbs put together to comply with an ownership target. So indeed there was ownership but a meaningless type.
Where meaningful ownership is required – on the JSE only 3% of companies listed are owned by blacks (see footnote). There is no second guessing the fact that indeed there is a need for drastic change if this ownership were to be at the 25% level envisaged by the BEE legislation.
On employment equity, despite the affirmative action legislation, many companies defied or ignored its requirements resulting in some 60% of new appointment and promotions going to white people. Where companies made an effort, often there was a token appointments or reluctant appointments evidenced by the so called joint CEO syndrome as we saw in the case of Standard Bank and Sasol. Instead of sending a strong message of confidence on black talent these corporate giants couldn’t risk being led by these professionals. Surely with this kind of attitude in the private sector there is a need for something a lot more radical to be done.
The government has to clamp down on corruption
Preferential procurement is the lever that government can use to empower new players. Through this lever the question of black industrialists can be advanced without the need for a new policy. But instead a parallel legislation on procurement remains a hindrance. The government has failed to repeal this law despite persistence calls by black business.
Alongside this inertia, government has dismally failed to use its built programme such as the one for building World Cup stadia, or roads, to empower new entrants. It is trite now that construction companies colluded the small players out of the market, a scandal whose implications are yet to be fully understood.
Clearly with this kind of complacency there is a need for something more radical than the RDP, but there still does not seem to be a new policy or political will. The government has to clamp down on corruption — R45bn in wasteful expenditure surely can make a difference. If directed to job stimulating interventions such as supporting black industrialists?
The private sector has to demonstrate a lot more faith in the economy by lifting a lid of the investment boycotts. Surely there is enough cash in the country for reinvestment? It is my sense, speaking to big business in this country, that there is a sense of despair especially after Zuma’s Russian roulette type cabinet reshuffle – with all puns intended. But remember Zuma will be gone in two years and we cannot model the future of South Africa based on his clueless recklessness. A bigger picture has to be borne in mind while developing solutions.
The new finance minister — who while wet behind the ears on matters of national and global financial management — has a job to do, but may also be gone in two years for all intents and purposes. Business will lose nothing to work with him even if it is to delay him making any wrecking ball decisions between now and then.
With a third downgrade staring us in the face we should be looking at examples around the world of resilience where this situation is concerned and acting fast and collectively to find radical levers within the current policy framework. Issues of nationalisation of mines and land, etc, will always remain far fetched and will not help us in getting out of the current rut but can only serve to further scare off investors who are already looking away given what seems to be a reckless management of the economy.
* Tabane cites the share ownership statistic provided by the National Empowerment Fund and cited by President Jacob Zuma, which the NEF says is based on direct holdings. JSE-commissioned research put the broader figure, including indirect holdings such as through pension funds, at 23% and direct ownership, including through empowerment schemes, at 10% at end-2013. Read more about different approaches to calculating share ownership here.
• Tabane is Author of Lets Talk Frankly and Anchor of Power Perspective on Power 98.7
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