JACOB ZUMA: My radical plan for South Africa's economy
'Twenty two years into our freedom and democracy‚ the majority of black people are still economically disempowered. They are dissatisfied with the economic gains from liberation'
This is an extract from President Jacob Zuma's State of the Nation Address on February 9 2017 in which he outlined his plan for 'radical economic transformation'
Political freedom alone is incomplete without economic emancipation.
Oliver Tambo spoke clearly about this mission at an SACP anniversary meeting in London in 1981.
“The objective of our struggle in South Africa‚ as set out in the Freedom Charter‚ encompasses economic emancipation. It is inconceivable for liberation to have meaning without a return of the wealth of the country to the people as a whole.
“To allow the existing economic forces to retain their interests intact is to feed the roots of racial supremacy and exploitation‚ and does not represent even the shadow of liberation.
“It is therefore a fundamental feature of our strategy that victory must embrace more than formal political democracy; and our drive towards national emancipation must include economic emancipation.”
What do we mean by radical socio-economic transformation?
We mean fundamental change in the structure‚ systems‚ institutions and patterns of ownership‚ management and control of the economy in favour of all South Africans‚ especially the poor‚ the majority of whom are African and female‚ as defined by the governing party which makes policy for the democratic government.
Twenty two years into our freedom and democracy‚ the majority of black people are still economically disempowered. They are dissatisfied with the economic gains from liberation.
The gap between the annual average household incomes of African-headed households and their white counterparts remains shockingly huge.
White households earn at least five times more than black households‚ according to Statistics SA.
The situation with regards to the ownership of the economy also mirrors that of household incomes.
Only ten percent of the top one hundred companies on the Johannesburg Stock Exchange are owned by black South Africans‚ directly-achieved principally‚ through the black empowerment codes‚ according to the National Empowerment Fund.
The pace of transformation in the workplace‚ the implementation of affirmative action policies as required by the Employment Equity Act‚ also remains very slow.
In terms of the 2015/16 information submitted to the Employment Equity Commission‚ the representation of whites at top management level amounted to 72 percent whilst African representation was at 10 percent.
The representation of Coloureds stood at 4.5% and Indians 8.7%.
The report further provides that white South Africans‚ in particular males‚ are afforded higher levels of recruitment‚ promotion and training opportunities as compared‚ to the designated groups.
At the level of gender at senior management level‚ males remain dominant at 67.6% and females at 32.4% percent.
The skewed nature of ownership and leadership patterns needs to be corrected. There can be no sustainability in any economy if the majority is excluded in this manner. In my discussions with the business community‚ they accepted these transformation imperatives.
Today we are starting a new chapter of radical socio-economic transformation. We are saying that we should move beyond words‚ to practical programmes.
The state will play a role in the economy to drive that transformation. In this regard‚ Government will utilise to the maximum‚ the strategic levers that are available to the state.
This includes legislation‚ regulations‚ licensing‚ budget and procurement as well as Broad-based Black Economic Empowerment Charters to influence the behaviour of the private sector and drive transformation.
The State spends five hundred billion rand a year buying goods and services. Added to this is the nine hundred billion rand infrastructure budget. Those budgets must be used to achieve economic transformation.
As a start‚ the new regulations making it compulsory for big contractors to subcontract 30 percent of business to black owned enterprises have been finalised and were gazetted on the 20th of January.
Through such regulations and programmes‚ government will be able to use the state buying power to empower small enterprises‚ rural and township enterprises‚ designated groups and to promote local industrial development.
Two key challenges we face is the high levels of concentration in the economy as well as the collusion and cartels‚ which squeeze out small players and hamper the entry of young entrepreneurs and black industrialists.
The competition authorities have done excellent work to uncover the cartels and punish them for breaking the law.
Last year I signed into law a provision to criminalize the cartels and collusion and it came into effect on 1 May. It carries jail sentences of up to 10 years.
We are now stepping up our actions to deal with the other challenge‚ namely economic concentration‚ where a small grouping controls most of a market.
During this year‚ the Department of Economic Development will bring legislation to Cabinet that will seek to amend the Competition Act. It will among others address the need to have a more inclusive economy and to de-concentrate the high levels of ownership and control we see in many sectors. We will then table the legislation for consideration by parliament.
In this way‚ we seek to open up the economy to new players‚ give black South Africans opportunities in the economy and indeed help to make the economy more dynamic‚ competitive and inclusive. This is our vision of radical economic transformation.
Government is actively involved in the property sector‚ having provided more than four million houses since 1994.
This sector in our country is valued at approximately seven trillion rand‚ with the subsidised sector being valued at one point five trillion rand.
However‚ less than five percent of the sector is owned or managed by Black people and Africans in particular. A draft Property Practitioners Bill will be published by the Department of Human Settlements for public comment with the purpose of establishing a more inclusive‚ representative sector‚ towards radical economic transformation.
Among key priorities this year‚ Government will also address the increasing delays and backlogs in registration and issuing of title deeds to beneficiaries of housing projects funded by the capital subsidy.
We reiterate that radical economic transformation should mean moving beyond share ownership schemes only.
We would like to see black people involved directly in business‚ owning factories. The development of the Black Industrialists programme is thus critical.
The programme has from inception supported more than 22 entrepreneurs.
Government has further opportunities in the property maintenance projects of the Department of Public Works.
The Department will invest approximately one hundred million rand this year on critical capital and maintenance programmes to modernise harbours. They will also continue generating revenue from letting state owned harbours and coastline properties‚ which will benefit black owned SMMEs.
Government will also continue to pursue policies that seek to broaden the participation of black people and SMMEs‚ including those owned by women and the youth‚ in the Information and Communication Technologies (ICT) sector.
We assure the youth that the lowering of the cost of data is uppermost in our policies and plans.
Mining has always been the backbone of our economy and an important foreign exchange earner.
We welcome the recovery in commodity prices which has resulted in an upswing in mining output. This augurs well for the industry.
The Mining Charter is currently being reviewed. The Charter seeks to recognise the internationally accepted right of the state to exercise sovereignty over all the mineral and petroleum resources within the Republic.
It is also aimed at helping the country to de-racialise the ownership of the mining industry. This will help ensure the sustainability of this industry.
We trust that discussions between government and business on the Charter will yield results so that the process can be finalised.
We will continue to pursue direct state involvement in mining. The Mining Company of South Africa Bill will be presented to Cabinet and Parliament during the year.