Radical Economic Transformation: A Misnomer of Inclusive Growth

2017-05-02 15:23

The “nation’s money anxiety”, the “wasted years” of transformation, and the fuss over which kind of capital holds monopoly all point to how radical economic transformation fits into the development trajectory govt. wishes to take us on. Or does it? Malusi Gigaba’s brief yet testing time in the finance portfolio suggests otherwise. He’s now instructed his advisors and underlings to use the term “inclusive growth” instead. This only further hints at his submission to the business and investor communities’ influence on our economic climate. This comes in addition to his promise in appointing a new director general in the mould of previous incumbents like Maria Ramos and Langisa Fuzile.

As stated previously, the word radical has only now sprung up in government language following the rise of ‘fallist movements’ underpinned by black conscious thought. It has been introduced to ride on the currency of items that have taken precedence in our living room and media spaces.

Wealth redistribution in the vein of nationalization of strategic sectors (like banking and mining), land redistribution and actual greater taxation have all riled up wealthy (mainly white) South Africans to the point that fear has smudged reasoning. The treasury’s recent activities beat no indication of going down such a path, nor will they intend on doing so. Inclusive growth can still mean transformation, but in the radical sense, I cannot be led to believe so. This comes as strategic sectors of the economy still have a large sway over our economic structure and outlook. As said by other contributors, sectors like mining and agriculture are ones which have little added value if the products from these areas have little processed or added value. This however need not be the case should we be strategic in our longterm outlook and planning.

South Africa is abundant in resources beyond raw minerals. Local South Africans in township and rural areas have a range of skills, girded by their tenacity to survive and in some cases, thrive. Informal markets take place despite the impediments faced by small traders. Allowing these informal markets access to liquidity has always been a hamstring for banks and loan agencies simply because these markets tend to be unreliable in their turnover. The price range at which larger consortiums offer smaller operators at the informal level is perhaps a contributor to their unstable capital flows which deter most loan agencies when they such unreliable collateral. Should loans be granted to informal traders/operators it’s usually at very high interest rates. This is even more compounded with the long dreaded junk status now finally slapped on us by ratings agencies. So how would banks be lobbied into granting concessions for businesses that show promise but are stifled by accessing or raising capital for increasing their base?

Provision of training for operational competency is an obvious example but one is to be weary of such attempts as before. SETA programs have become a honeycomb for providers looking to make a quick buck while other short course programs under local [municipal] governments may well be in the purview of tenderpreneurs looking to do the same. Answers in alternate forms of training may well lie with internet based courses with accredited developers. Massive Open Online Courses (MOOCs) may well hold the key to unlocking potential among unemployed youths and prospective businessmen (and women) seeking to establish their futures and that of the country. Attrition (drop out) rates in these courses could be addressed by introducing group learning environments (lans) under the auspice of an instructor or mentor like figure. Such a model could be replicated across the diverse landscape of our country. Corporates like Samsung, Huawei, Microsoft and other tech giants have already led the way in this manner. Incorporating business training through this model is a no brainer really.

Fitting local areas like this with tech infrastructure allows locals in peripheral/satellite areas participate in the knowledge economy while broadening their world-view horizons. Getting larger corporates on board to donate beyond the veil of corporate social responsibility but to vest in the inclusion of small traders from the informal sector – through flexible loan agreements based on candidate viability – all depends on developing our human capital. This comes as World Bank projections predict a lessened amount for education in South Africa's budget over the coming years. This already adds to the struggling capacity for our country to harness a youth bulge - where unemployment for 15-24 year olds sits at roughly 50%

Source: World Bank Economic Update: Jobs and South Africa's Changing Demographics. pp. 33. http://documents.worldbank.org/curated/en/479161467998767997/pdf/98880-WP-P131437-PUBLIC-8-17-15-Box393184B.pdf

A large responsibility of this task lies with the government, whose credibility is (and has been for some time now) wearing precariously thin. People’s tolerance of the Zupta mob has come to breaking point, as evidenced by the recent jeers elicited by some of the COSATU crowd at a Bloemfontein rally. Like the Davis Tax Commission’s strongly worded warning relating to increased tax levies on the rich – the only way such can be achieved, as with inclusive growth – is where conviction is achieved through a change in government culture and subsequently, its modus-operandi. Markets rally at notions of Jacob Zuma’s possible removal (like the morning of the constitutional court’s ruling on the Nkandla matter brought before it by the DA). The possibility of lifting a (majority black) population out of poverty is surely possible, but only with a government that grows empathy and a strong sense of duty to its own collective people. The evidence since Jacob Zuma’s installation as president however inspires little confidence in this possibility. Business and finance can only throw so much of its weight behind a leader and his government evidenced by what they [as can we all] see clear as day.

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