Economic transformation more than just a slogan - Gordhan
22 February 2017
Cape Town – Radical economic transformation shouldn’t just be a slogan, but it needs to get to the root of poverty and inequality in South Africa, Finance Minister Pravin Gordhan said on Wednesday.
Briefing the media ahead of his 2017 Budget Speech, Gordhan said whether one calls it radical economic transformation, or transformation, or inclusive growth, South Africa needs to consider something like a Charter of Economic rights in addition to the existing Constitutional Bill of Rights.
Such a charter should address unemployment, facilitate training and retraining of citizens in the face of technological change and create an enabling environment for micro, small and medium businesses.
Gordhan elaborated extensively on government’s radical economic transformation objectives, emphasising its commitment to mass-based transformation that generates more meaningful black participation in the economy.
South Africa needs to build a new national consensus and a new commitment to eradicate poverty, unemployment and inequality.
“President Zuma articulated this intent in the state of the nation address, rightly emphasising the radical nature of the socio-economic transformation we need,” Gordhan said.
Radical economic transformation does not mean a “narrow change that merely transfers ownership, benefits an elite and perpetuates inequality”, Gordhan said.
Although government has made progress in transforming the economy since 1994, which has led to a significant growth in the black middle class and provision of housing and services to millions of South Africans, the structure of the economy has remained largely unchanged.
Government intends on addressing this challenge by implementing a programme that will focus on creating more jobs, eliminating poverty and narrowing inequality.
Efforts to transform patterns of asset ownership and production, promoting competition and deconcentrating product markets will also be implemented.
Growth should underpin transformation
Gordhan pointed out though that South Africa’s growth challenge is intertwined with its transformation imperative. “We need to transform in order to grow, we need to grow in order to transform. Without transformation, growth will reinforce inequality; without growth, transformation will be distorted by patronage. A growing economy makes more rapid transformation possible, but it is the fiscal system that is the most direct vehicle for redistribution and inclusivity,” Gordhan said in his speech.
However, budgets alone cannot achieve our transformation goals and South Africa needs a combination of effective service delivery, collaboration between government, business, labour and the civil society and consensus about the sacrifices needed to realise radical economic transformation.
“Government can be an important catalyst,” Gordhan said, “but it cannot carry all of the responsibility for ensuring every citizen experiences a palpable change in wealth, dignity and well-being. It has to be our collective choice.”
Gordhan agreed with Zuma that South Africa requires a new perspective on economic transformation.
The principles that should guide the transformation agenda should include programmes that create jobs, eliminate poverty and narrow the inequality gap, mass-based transformation that benefit the most disadvantaged South Africans, private and public partnerships for infrastructure and technological advances and the establishment of a new economy where the legacy of race domination is no longer visible.
Gordhan says transformation is important
Pretoria – Government will spend over R200bn in 2016/17 to drive economic growth, according to the National Budget.
Finance Minister Pravin Gordhan delivered the National Budget in Parliament on Wednesday. He highlighted that economic growth is slow, unemployment is “far too high” and that many businesses and families are under stress.
Treasury’s projection for economic growth is to increase from 0.5% last year to 1.3% in 2017.
Gordhan further explained the importance of transformation to ensure inclusive economic growth, and that the National Development Plan (NDP) is part of ensuring the “sustainability and integrity” of the country’s transformation path.
Spend in economic affairs supports the NDP objectives of growing the economy and employment, according to the budget. Spend is expected to increase to R244bn by 2019/20; it will focus on developing infrastructure and industry, and creating jobs.
Government will continue to provide incentives for special economic zones, critical infrastructure and manufacturing, read the budget. Over the medium term R4.2bn will be allocated for industrial infrastructure projects. Of these projects, 32 are to be approved for special economic zones and industrial parks.
The Manufacturing Incentive Programme, which is allocated R9.6bn over the medium term, is expected to benefit 1 450 companies. A further R1.3bn is allocated to boost competitiveness.
The Industrial Development Corporation is allocated R95m to establish the Steel Development Fund.
As for road infrastructure, expenditure is expected to increase from R40.8bn in 2016/17 to R47bn in 2019/20.
Small, medium and micro enterprises will also benefit from R3.9bn provided. Further, schemes such as the national informal business upliftment scheme and the Black Business Supplier Development Programme will provide support to small businesses.
This article first appeared on Fin24, see here.
