Prospects and challenges of radical economic transformation

Abstract

In 2014, the then president of South Africa, Mr Jacob Zuma, delivered his State of the Nation Address in Parliament and promised that economic transformation would take centre stage. This promise was made against the backdrop of transformation having stalled and difficulties being experienced in reducing social inequality and poverty. He called on social partners to debate the issue of wage inequality and the possibility of instituting a national minimum wage to reduce income inequalities. He promised that the structure of the economy would be transformed through industrialisation and broad-based black economic empowerment and through strengthening and expanding the role of the state in the economy. However, these commitments have not been kept and remain under threat given the extent of corruption in national government departments and state-owned enterprises (SOEs). The revelations in the financial reports of the Public Protector and the Auditor-General on SOEs raise key questions relating to the role of the national government departments and SOEs in driving radical economic transformation. A fundamental and radical change is required if the economy is to be run to the benefit of all poor South Africans, the majority of whom are black people. One possibility is to institute ethical leadership and an executive that is accountable. Twenty-three years into freedom and democracy, and the majority of South Africans, black people in particular, are still economically disempowered. This is a concern given the developmental objectives of government as espoused in its National Development Plan (NDP) 2030. As long as the country continues to battle with the persistent triple challenge of poverty, unemployment and inequality, radical economic transformation remains a pipe dream. Considering the current state of affairs, the objective of radical economic transformation (i.e. to place the economy on a qualitatively different path that ensures more rapid and sustainable growth, higher investment, increased employment, reduced inequality and the deracialisation of the economy) is far-fetched. Any political posture not aimed at giving effect to the NDP, the New Growth Path and the Industrial Policy Action Plan to stimulate growth, employment and the re-industrialisation of the South African economy will not lead to radical economic transformation.