State capture, lack of political will stalled progress on transformation: Godongwana

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Finance Minister Enoch Godongwana.
Finance Minister Enoch Godongwana.
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  • State capture and lack of political will has stalled progress in transforming the SA economy, says Finance Minister Enoch Godongwana
  • The minister says black professionals need to play their part in managing resources efficiently.
  • Black professionals also need to consider why black management is associated with "failure and incompetence", says Godongwana.

Since 2009, progress in the country's transformation agenda has stalled, mainly due to state capture and lack of political will, according to Finance Minister Enoch Godongwana.

The minister spoke this week at the Black Management Forum's gala dinner. He addressed issues relating to the country's fiscal strategy and the transformation of the South African economy.

Godongwana noted that transformation was not only an economic and political imperative, but a moral one too. There had been efforts to address economic marginalisation and promote black economic empowerment and employment equity, he said. 

"Regrettably, however, since 2009, our progress has stalled particularly as a result of state capture and a lack of political will."

Citing the Commission for Employment Equity's 2020/21 report, Godongwana said the pace of transformation has been slow.

The progress of Black Africans into top management positions averaged around 15% in the three years between 2018 and 2020. The representation of the Coloured and Indian populations remained at 5.7% and 10.6%, respectively, in 2020. The White population continues to dominate top management roles, accounting for nearly 65%.
- Enoch Godongwana

The skewed representation in the economy fed into income and wealth inequality and contributed to social instability, he said.

But Godongwana stressed that government was addressing the challenges to transformation through policies and legislation related to localisation, and the Preferential Procurement Policy Framework Act (PPPFA). The PPPFA incentivises government and businesses to work with BEE certified suppliers.

Godongwana described a Constitutional Court ruling that indicated certain aspects of the PPPFA are unlawful, as a setback. Treasury had since issued new regulations to the PPPFA for public comment, he said.

The bill is with the National Economic Development and Labour Council and Treasury intends to table it before Parliament in June.

"We are committed to using all levers at our disposal, including legislation, to advance economic transformation," said Godongwana.

Apart from driving transformation through legislation, Godongwana said that black professionals also had a role. "We see black professionals as our partners in the ongoing struggle to transform our economy and society."

Black professionals needed to be among the primary custodians of the transformation agenda. They also needed to play their part in ensuring resources were managed efficiently to the benefit of the people, Godongwana said.

He added that black professionals also had to consider why black managers tended to be associated with "failure and incompetence".

"If you look at the state of local government, six out of every 10 municipalities in the country are in financial distress – their governance is weak and they lack professional and judicious management. These are largely municipalities led by black managers under a black political leadership.

"We must ask these difficult questions and not shy away from them." 

Godongwana said that the Ready to Govern Document of the ANC, indicated the importance of meritocracy in approaches to achieve transformation.

Staying the course

He also shared on the country's high debt levels which risk rising from R4.3 trillion to R5.4 trillion over the medium term.

Debt servicing costs, of around R330 billion annually are among the country's biggest expenses.

Apart from crowding out other priority spending areas, high government debt increased the cost of debt for the overall economy. It made it more expensive for the private sector to borrow and limited investment in the economy, said Godongwana.

"Government is determined to stay the course of fiscal sustainability in order to restore the health of our fiscus and to support growth."

This meant that public officials should spend public money in a "responsible and prudent" manner, he added.

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