ANC transformation plan vague on strategies to boost economy - Soko

Mills Soko.
Mills Soko.

In the context of stagnant growth, the ANC’s economic transformation document is rather vague on strategies for revitalising the economy, argues Professor Mills Soko.

The ANC’s economic transformation document, which will be discussed at the national policy conference in June, provides insights into the governing party’s thinking on economic policy and direction. But it is also characterised by vagueness, omissions, generalities and silences on some of South Africa’s prevailing economic realities.

The document starts by reaffirming the ANC’s resolutions at the Mangaung conference in 2012. These revolve around, among other things, tackling unemployment, poverty and inequality; increasing state-led infrastructure investment; implementing the National Development Plan (NDP), New Growth Path (NGP) and the Industrial Policy Action Plan; transforming the mining sector; and building a developmental state.

Stating that South Africa is into its “second phase of transition from apartheid colonialism to a national democratic society,” it declares that the “ANC remains unwavering in its objective to fundamentally change the racialised and unequal structure of the South African economy and of society.”

The document calls for “radical economic transformation” to deal with historical economic inequities and cleavages. It reiterates the definition of “radical economic transformation”, outlined in President Jacob Zuma’s state of the nation address early this year, as “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.”

To realise the goals of “radical economic transformation,” several necessary policy interventions are emphasised. These include: reducing unemployment and inequality; accelerating land reform; increasing black ownership and control in the economy; supporting small businesses and cooperatives; improving the employment impact of infrastructure projects; raising the level of investment; ending monopoly practices; deepening South Africa’s integration into the African economy; and asserting South Africa’s interests in the world economy.

The pursuit of these policy objectives, the document avers, will be undergirded by a developmental state, whose “most important task is to grow the South African economy as rapidly and as inclusively as possible.” Building a developmental state, therefore, is “required to lift the South African economy onto a new inclusive and employment-creating growth path.”

It is easy to agree with the broad thrust of the ANC’s document. The urgent necessity for economic transformation in South Africa cannot be denied, brushed away or downplayed. It is a matter of historical record that the roots of social and economic inequality in South Africa can be traced to the roles that colonialism and apartheid played in the development of the country’s economy.

When the ANC government came to power in 1994, it was faced with the twin challenge of implementing policies geared at redistributing income, wealth and economic power while simultaneously creating a climate favourable to the pursuit of rapid economic growth.

To this end, successive ANC governments carried out an assortment of policies – notably the Reconstruction and Development Programme, the much-maligned Growth, Employment and Redistribution strategy, the Accelerated and Shared Growth Initiative for South Africa, and the NGP – to stabilise South Africa’s macroeconomic policies and improve its economic performance.

Despite the huge strides that have been made to reverse the apartheid legacy over the past two decades, South Africa continues to be faced with formidable challenges, including chronic skills shortage, widespread poverty, high unemployment and growing social inequality.

There is, thus, a compelling need for a more equitable distribution of economic power and for implementation of social and economic policies that will upend the racially skewed legacy. Unless South Africans are unable to effectively deal with the country’s gaping economic disparities, the political and social stability of the country will remain at risk.

It bears pointing out, however, that although the arguments set out in the ANC discussion document are broadly valid and defensible, they also raise questions that need answers. The first question relates to how “radical economic transformation” is defined: it is not clear how the proposed policies differ from previous ANC policies and whether they warrant such a definition. Is this a completely new policy or is it an adjustment of old policy? If it is the former, is the policy underpinned by a clear implementation plan with goals and objectives, a budget, targets and timelines?

Also, the policy context that necessitated “radical economic transformation” is not explained. What, for example, were the successes and failures of the NGP, and which shortcomings in previous policies is “radical economic transformation” seeking to address?

Unsurprisingly, the document – released before the recent Cabinet reshuffle – is silent on the considerable damage to the economy caused by, among other things, the controversial axing by President Jacob Zuma of former Minister of Finance Nhlanhla Nene. And it does not say anything about the measures that need to be carried out to restore investor confidence in the struggling economy. Likewise, in the context of stagnant growth the document is rather vague on strategies for revitalising the economy.

And although it is hard to disagree with the document’s assertion on the need for a capable state and professional public service, this will remain empty rhetoric in the absence of clear and decisive actions to deal with corruption, dysfunctional state-owned entities and the general hollowing out of public institutions.

* Professor Mills Soko is the director of the Graduate School of Business at the University of Cape Town.

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