Budget 2021

Economic transformation more than just a slogan - Gordhan

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. 

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