Is the ANC Serious about 'Radical Economic Transformation'?

By Ebrahim-Khalil Hassen · 29 Sep 2014

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Picture: Citizen Alert ZA Blog
Picture: Citizen Alert ZA Blog

Presidents’ relish shorthand descriptions of the agenda they are implementing. In Jacob Zuma’s first term of office, the term “faster change” played that role. Bureaucrats and politicians quickly took up this term not merely to demonstrate loyalty to a newly installed President, but also because many in public service valued a commitment to accelerating change. The term however faded from usage, buried in inaccessible policies and procedures, and the absence of a communication strategy that would have rallied troops and resources behind the President’s big idea. Will the term “radical economic transformation”, which is today’s agenda setting term, suffer the same fate?

Understanding what the ANC means by “radical economic transformation” requires slogging through inaccessible policy documents and operational plans. This is remarkable, because rather than define the meaning of the term, the ANC has permitted conceptual confusion on the term to reign. Even Gwede Mantashe is quoted as saying that it is a “South African sickness to spend time on conceptual clarity”. To add to the confusion, the General Secretary offers this remarkable circular logic, “You can only talk of radical transformation if you implement radical programmes”.

This begs the question, what are the radical programmes?

The current administration has thus far failed to set an agenda that is immediately understandable and clearly linked to programmes and budgets. Consequently, it is failing to play a key role envisaged for a developmental state -- that of embedding its agenda across society.

The State of the Nation debate attempted to offer clarity on the meaning of the term at conceptual and practical level. However, President Zuma left the heavy lifting to veteran ANC politicians, Rob Davies and Yunus Carrim. The speeches by Davies and Carrim focused on industrialisation and an inclusive economy with the state playing an important role in achieving this. Both Davies and Carrim are comfortable dealing with complex issues, and exploring the meaning of “left” strategy in a democratic but unequal society. Over the first 100 days, several Ministers have chimed in to explain the term, but also the operationalization of the “radical economic transformation”.

An understanding of the term is thus emerging, which from the reading of various government statements on the issue have three crucial features.

First, the ANC-led government recognises that there are structural constraints to ramping up economic growth to the 5-7% levels. The constraints include factors such as infrastructure, electricity supply, credit market imperfections, and low levels of beneficiation. However, there is nothing new in this list of constraints, which have been the same in successive government economic strategies since 1996.

Second, government argues that they have created a foundation during President Zuma’s first term to deal with these constraints. Minister Davies in his speech during the State of the Nation address lists these activities, especially efforts focussed on linking infrastructure delivery to the industrialisation process, and industrialisation to black economic empowerment.

Third, the major policy instruments include industrial policies, government infrastructure spending and catalysing public policy on small business. The intent is for government to play a role in supporting more equal markets and to achieve racial redress and economic prosperity.

Taken together, the term “radical economic transformation” could be read as a continuity of economic policy since Thabo Mbeki, but with greater focus on industrial policy and the implementation of an ambitious infrastructure-spending programme. The clarion call of the “radical second phase” – which is the parlance that the ANC uses – thus inadvertently reads as “lets implement our policies more quickly and effectively” rather than a conceptual shift to a more aggressive strategy to tackle economic inequality.

It is a reading that many in the ANC would question arguing that “the links between industrial and fiscal policy are now stronger” or that “import parity pricing is likely to be a thing of the past”. These and other areas do reflect a stronger shift towards operationalizing strategies, but do not reflect new strategies.

The range of policies and instruments suggested, in fact can be traced to the Accelerated and Shared Growth Initiative (ASGISA) crafted in the Mbeki administration. The difference though is that Minister Davies and Minister Patel have provided, during the first term under President Zuma, measurable progress on a core set of ideas loosely called “binding constraints”.

Real and tangible progress in the economic department is important as it offers Zuma a unique opportunity to deliver during his second term, but deeper questions around racial equity are emerging.

The rubric of the “black industrialist” is an important development. The Deputy Minister of Trade and Industry, Mzwandile Masina, has, for instance, made this a staple aspects of speeches he has given identifying the racial composition of ownership as a core outcome of government activity, but within the context of existing policies, such as the Industrial Policy Action Plan. The relationship between economic ownership and race still reflects wide disparities and, as such, should form part of any economic development agenda. A question however remains about the number of black owned companies that are able to participate in an industrialisation programme. Linking the industrialisation programme to black economic empowerment may thus require greater focus on start-ups in the industrial space and linking these initiatives to the incredible opportunities offered by innovative technological developments such as 3D printing.

The term “radical economic transformation” is about in the same place as “faster change” was during the first 100 days of the first term of Jacob Zuma. The term has been enthusiastically embraced within the ANC and in government. It has been operationalized in documents such as the Medium Term Strategic Framework (according to government), but the rest of us remain confused as to what it all means. President Zuma failed to solidify an agenda early in his first term and looks less likely to do so during his second term.

Operationally speaking, the Zuma administration still has an opportunity to find ways to connect entrepreneurs with “radical economic transformation”. On the ground such leadership would allow entrepreneurs to find ways to connect with government programmes. This is economic leadership in the sense of supporting the proverbial “little guy” in the economy. This is the nuts and bolts stuff, which has been so vital to success stories in other developing countries.

Moreover, building wide social support for an economic programme requires greater levels of social dialogue. The calls for an “economic CODESA” or a “social covenant for South Africa” are essentially calls for discussing economic strategy. One may not agree with the messengers – usually big business leaders – but the message is important and foundational. In a society as unequal as ours, government has to build a working coalition that agrees on major tenets of economic policy and commits resources to its implementation. The role of the state is not akin to a “referee”, but rather as a “playmaker” that explicitly represents the little guy in the economy. Clarifying what government means by “radical economic transformation” at a conceptual and operational level is important. Government may argue that it has done this, but both trade unions and business organisations are still asking for clarity. 

The deeper question that faces us is whether the current strategy of tweaking our focus towards more inclusive growth will result in greater equality. As it stands, the policies once implemented have a fighting chance of raising economic growth, but it remains doubtful whether they will lead to a more equal society. If this is the case we will have to conclude that there is nothing “radical” about the ANC’s “radical economic transformation” agenda.

Hassen is the founder of Zapreneur and Proposal Desk, both websites aimed at answering the question, "Can the Internet help South African small business?"

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Barry Saayman
29 Sep

Investor and Business Confidence vs the NDR. Part 1

>>"Understanding what the ANC means by "radical economic transformation" requires slogging through inaccessible policy documents and operational plans."

Unavoidable 'slogging' through among others the ANC Strategy and Tactics and the other SACP documents such as 'Has Socialism Failed?' (Jan 1990) and The South African Working Class and the National Democratic Revolution (1988) Joe Slovo is required, if one is interested in the detail of the NDR.

It is however untrue that these documents are 'inaccessible' meaning unable to be reached. Comprehension is something else.

This is basically what is meant with 'economic transformation' as articulated by the late Joe Slkovo-

"The basic objectives of liberation cannot be achieved without undermining the accumulated political, social, cultural and economic white privileges. The moulding of our nation will be advanced in direct proportion to the elimination of these accumulated privileges."

In my opinion these 'privileges' are in fact basic human rights such as the right to work and to be protected against unemployment as well as the right to own property and not to be arbitrarily deprived of property as per respectively Articles 23 and 17 of the UN Universal Declaration of Human Rights.

The ANC Strategy and Tactics geared towards 'Building A National Democratic Society' goes further -

"28. Colonialism of a Special Type contained within itself contradictions that could not be resolved through reform. It had to be destroyed. As such, the system we seek to create will stand or fall on the basis of whether it is able to eliminate the main antagonisms of this system.

29. A national democratic society constitutes the ideal state we aspire to as the ANC and the broad democratic movement. It should thus not be confused with tactical positions that the liberation movement may adopt from time to time, taking into account the balance of forces within our country and abroad...

96. The liberation movement defined the enemy, on the other hand, as the system of white minority domination with the white community being the beneficiaries and defenders of this system. These in turn were made up of workers, middle strata and capitalists. Monopoly capital was identified as the chief enemy of the NDR..."

'Economic transformation' in other words means the dispossession of whites on the one hand and 'black economic empowerment' on the other.

The ongoing NDR towards a 'national democratic society', most probably without private property, has everything to do with the redistribution of existing wealth and opportunities and very little to do with new wealth creation.

The Freedom Charter of 1955 articulates this as follows -

"The national wealth of our country, the heritage of South Africans, shall be restored to the people;

The mineral wealth beneath the soil, the Banks and monopoly industry shall be transferred to the ownership of the people as a whole;"

To be continued-

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Barry Saayman
29 Sep

Investor and Business Confidence vs the NDR. Part 2

The term "radical economic transformation" is about in the same place as "faster change" was during the first 100 days of the first term of Jacob Zuma...but the rest of us remain confused as to what it all means..."

NDR code speak -

- "faster change" means faster transfer of excising wealth and opportunities from white to black.

- "radical economic transformation" means faster and more radical transfer of excising wealth and opportunities from white to black.

>>"The relationship between economic ownership and race still reflects wide disparities and, as such, should form part of any economic development agenda."

This is you perception of the basic motivation for NDR induced dispossession of private property and blocking minority access to scares opportunities.

The achievement of equality, human dignity and the advancement of human rights and freedoms are also constitutional imperatives as per subsection 1 (a) of the Constitution, 1996.

>>"This is remarkable, because rather than define the meaning of the term, the ANC has permitted conceptual confusion on the term to reign. Even Gwede Mantashe is quoted as saying that it is a "South African sickness to spend time on conceptual clarity."

What will the effect on investor and business confidence be if the SACP?ANC don't employ 'business friendly' propaganda to counter negative albeit accurate perceptions about their 'radical' wealth redistribution program (read 2nd phase of the NDR) and stop playing very effective mind games with minorities, international investors and the business community in general?

These are examples of legislation and government policies that support and execute the radical phase of the NDR-

1. Employment Equity Amendment Act of 2013
2. Draft regulations to be promulgated in terms of section 55 of the Employment Equity Act, 1998
3. Women Empowerment and Gender Equality Bill of 2014
4. Broad-Based Black Economic Empowerment Amendment Act of 2013
5. Codes of Good Practice (generic codes) under subsection 9 (1) of the Broad-Based Black Economic Empowerment Amendment Act, 2003
6. Mineral and Petroleum Resources Development Amendment Bill of 2013
7. The cancellation of bilateral investment treaties
8. The Promotion and Protection of Investment Bill of 2013
9. The Restitution of Land Rights Amendment Bill of 2013
10. The Property Valuation Bill of 2013
11. The Private Security Regulation Amendment Bill of 2013
12. The power now vested in the State to expropriate land or rights in it in accordance with the Infrastructure Development Bill of 2013.
13. Immigration Regulations

Government departments are playing an important part in the execution of the racist NDR. The DCS discrimination against minorities as well as the SAPS/Jennila Naidoo and Renate Barnard cases spring to mind..

SA must expect further pedestrian growth whilst government and those that dis-invest as fast as they can (Lonmin Plc and Anglo American are good examples) try to fool one another whilst the 'economic CODESA' in NEDLAC is without direction and rampant violent industrial action in service of the seditious NDR towards communism are ruining everything for everybody.

>>"Is the ANC Serious about 'Radical Economic Transformation'?"

Yes the SACP/ANC is very serious about the NDR and about creating a national democratic society (undefined as far as inter alia private property is concerned) and their obfuscation is effective enough to fool most opinion leaders and other casual observers. The SACP/ANC moves as fast with the NDR as the balance of forces allow them.

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Miles Teg
30 Sep

Mampara Economics

Is the ANC serious? Let's see, Brazil is ramping up Heterodox Economics at Uni Brasilia and the Workers Party is intimately involved. We wanted the BRICS bank, but what did people say, why come to that intellectual backwater (we have a handful of good economists - the rest are paid or free traders)...And Gwede is great, Don't think, just do!

And what about interest rates? The whole world is going down, meanwhile Marcus at the SARB is taking us up...which means we can still get foreign capital "investment" (which is mostly hot money) to fund imports and foreign dividends (which is unstable).

The sequence of countries in these kinds of problems is 1) they ramp up debt, 2) elites make off with the loot while the donors and World Bank looks away, 3) the country goes into free fall...and voila, the mamparas would have primitivised the economy...