If SA is to prosper and its people are to benefit from economic growth, then the patterns of ownership and control need to be fundamentally changed. This is a critical part of radical economic transformation (RET) and building a more equal society through sustained inclusive growth.
We must fundamentally alter the racial and gender composition of the ownership, control and management of our economy. It needs to truly reflect the composition, diversity and interests of SA’s people. It cannot be owned by white people and dominated by men.
This means we must address the concentration of ownership in the economy. Many significant economic sectors are dominated by just a few companies. This not only makes transformation more difficult by limiting scope for new entrants, it also stifles competition, keeps prices high and encourages inefficiency. To truly unleash our country’s potential we need to tackle this concentration of ownership, control and market dominance.
We also need to diversify our economy – specifically through development of SA’s industrial capacity. SA has abundant mineral and agricultural resources, but is not extracting the true economic value of these before exporting them, which means they are creating millions of jobs in other countries. By beneficiating our minerals and processing our agricultural produce we will be able to realise their full potential value.
We cannot change the structure of our economy without a massive increase in the number of South Africans who are employed. Job creation remains the most effective driver of inclusive growth, the most direct route out of poverty, and the best way to address inequality. Everything we do must be aimed towards job creation – but jobs will not be created in any significant quantity unless the economy grows at a much faster rate, which won’t happen unless there is significant investment in productive activity.
For RET to be successful the process of black economic empowerment (BEE) needs to be integral to our efforts to grow the economy. Empowerment and growth should be mutually reinforcing. By bringing more black South Africans into the economy – as owners, managers, financiers, industrialists and employees – we expand the capacity of our economy and improve potential for growth and development.
We need to use the levers of state procurement more effectively to affirm black-owned companies. We have been successful to some extent, but need to do more to ensure that government’s substantial procurement budget opens up opportunities for emerging black businesses.
Government’s black industrialist programme is part of a broader development in the evolution of BEE. Until now much empowerment activity has been around acquisition of black partners with minority stakes in established businesses. This has enabled many to build up a capital base and acquire skills and capabilities, but has not brought about the broad-based empowerment that SA needs.
There is now a growing determination for black businesspeople to establish their own companies or become majority shareholders in existing businesses. There is a greater push, using mechanisms like the black industrialists’ programme and revised BEE codes, for black people to establish, own, finance and control businesses in their own right.
Central to the success of RET, growth of our economy and the prosperity of our people is development of skills. We need to undo the damage done by apartheid education. If we can provide all our children with quality basic education, make higher education accessible to all, and equip our young people with skills appropriate to the workplace of tomorrow, then we will have laid the firmest foundation for economic growth and inclusion.
Above all, for RET to succeed we need to build a new national consensus on a programme for inclusive growth, and ensure that all social partners are involved in implementing it.