Never mind the 1%, it’s the 3% that worries us

2015-03-10 06:00

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This administration is more determined to use policy, legislative and incentive instruments to ensure radical economic transformation, writes Buti Manamela

When President Jacob Zuma addressed the inaugural meeting of the Broad-Based Black Economic Empowerment (B-BBEE) Advisory Council this week, he emphasised the urgency of implementing policies to effectively transform the economy’s structure and reflect the country’s demographics.

He urged new council members to put themselves in the shoes of a “Mr Mofokeng”, who is still locked in KwaMashu and has yet to experience economic transformation 21 years into our democratic dispensation.

The truth is the economy of our country remains predominantly in white hands according to the patterns designed by the apartheid system.

When replying to the debate about his state of the nation address last month, the president reiterated the troubling fact that black ownership of the top-listed companies in the JSE remained at a meagre 3%.

Despite the unsubstantiated uproar from proponents of the status quo, who claimed the state of economic transformation had significantly changed, no evidence was presented to refute the statement by the president.

“But the situation is not that bad,” proclaimed some.

But is it that good?

It is important to emphasise that those who own the other 97%, along with their political stooges, are the same people who hasten to blame government for the persistent socioeconomic challenges that plague South Africa.

But let’s look at some of the issues at hand.

Firstly, it is not in the interest of the ANC-led government that the status quo remains unchanged in terms of the ownership and control of the economy decades after Nelson Mandela took office as the first democratic president of South Africa.

Most former colonies moved with speed to transform the structure of their economies and ensure the historically excluded, exploited and marginalised took ownership and control.

South Africa was a colony of a special type with a unique and “peaceful” transition from apartheid barbarism to inclusive rainbow democracy.

Secondly, there is a huge difference between direct ownership of stock in the market and stock held indirectly by black people through, for instance, pension funds.

The latter has no authority to determine the developmental role their investment should play and therefore no control of their shareholding.

In fact, many of the decisions taken by the boards of companies that hold pension funds of black workers have had grave consequences for these workers.

Take, for instance, the issue that the president raised at the B-BBEE council meeting, about how financial monopolies invested in the building of shopping malls in townships housing retail giants contributed to the destruction of small black businesses.

Many of these decisions worked in favour of white-owned conglomerates, especially those selling food (such as Pick n Pay, Shoprite, Woolworths and Spar), clothing (such as Markham, Truworths and Edgars) and the big four banks.

All of these combined were responsible for the destruction of tuck shops and stokvels, which offered a means of survival to those who were part of the economy in our townships.

The sprouting of these malls was without the option of black cooperative ownership – and even though anyone can take ownership of franchises through these retail giants, the absence of venture capital makes it almost impossible for any form of black ownership to be considered.

One may argue these shopping malls reduced consumer costs of shopping in the township and also created a large number of much-needed jobs.

We should not take this argument lightly and for granted.

But we should also ask: what is the opportunity cost of destroying black small business? And thereafter creating an army of casualised labour?

And then mopping up the little income that is earned in the townships from social grants and low-paying jobs and investing it in Sandton and other plush areas instead of reinvesting it in communities?

The president also issued a direct challenge to black business that the idea of transformation of the economy lay in investing in spaces that were historically regarded as slums for cheap labour in the apartheid economy.

In this way, investments must stay in townships and rural areas. And, yes, the face of Sandton City – the “wealthiest square mile” on the continent – should be changed.

It is important that black business should build factories and industry near to where our people stay.

The consumer basket shows that most workers spend the majority of their wages on transport.

Beyond this, they also spend valuable time, which they could be spending with their families or to further their studies, on the road travelling to and from work.

Part of radical economic transformation therefore includes changing apartheid’s spatial development patterns to reduce the time and distance between townships and the world of work.

This administration is more determined to use policy, legislative and incentive instruments to ensure that the historical structure of our economy is radically transformed.

But radical economic transformation means we should move beyond mere inclusion and speak of the direct and majority participation of all of our people.

This also includes using fiscal policy, as was evident in Finance Minister Nhlanhla Nene’s budget speech, to get the state to take the lead in using its expenditure in the economy to support small business and invest in the health and education of the nation.

Such unashamed pursuance of radical economic transformation means we have to turn the figures at the stock exchange on their head – and to do this with urgency.

Radical economic transformation also includes a targeted programme of supporting black industrialists, using government’s procurement approach to support women and youth with businesses, buying locally produced goods and ensuring that the beneficiation of minerals creates much-needed jobs.

There are those who claim we are stuck in the past and refuse to move on.

However, in as much as we would wish away apartheid, its scars and open wounds remain.

They can only be healed if the economy is in the hands of the majority of the population.

Manamela is deputy minister in the presidency responsible for planning, monitoring and evaluation, youth development as well as administration publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

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