South Africa’s President Jacob Zuma presented his 2017 state of the nation address on the back of mounting socio-economic challenges for a country that’s squandered its development opportunities. Many would have been hoping that Zuma would deliver a speech that showed some sense of urgency to save the situation.
Those hopes were dashed. South Africans will now be looking for some saving grace in the national budget due to be presented by finance minister Pravin Gordhan. But then there is also a dark cloud hanging over him. The president seems to be preoccupied with moving the one person who has helped the country from tipping over into calamity.
Zuma wasted lots of time in his speech on cheap politicking wrapped in what he termed “radical socio-economic transformation”. His characterisation of this played into the narrative that the South African economy is being held hostage by “white monopoly capital”. This is a bogeyman invented by Zuma’s allies.
Zuma could have used the occasion to embark on an honest assessment of challenges facing the country and calling for innovative solutions. But he blew another chance to galvanise the desperately needed collaboration with business to arrest the country’s economic decline.
Zuma prefaced his radical socioeconomic transformation talk with finger pointing rhetoric:
To allow the existing economic forces to retain their interests intact is to feed the roots of racial supremacy and exploitation, and does not represent even the shadow of liberation. It is therefore a fundamental feature of our strategy that victory must embrace more than formal political democracy; and our drive towards national emancipation must include economic emancipation.
To be sure, there is no question that South Africa needs some radical effort to transform its economy. But Zuma’s cheap politicking, like blaming so-called white monopoly capital, won’t address the problem.
According to Zuma radical economic transformation:
means a 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, as defined by the governing party, which makes policy for the democratic government.
The term radical economic transformation emanates from the African National Congress’s 2012 policy conference. It also made it into the country’s National Development Plan, a document meant to guide South Africa’s economic ambitions, and was a central feature of the party’s 2014 election manifesto.
The term has also been the subject of discussions by interested stakeholders and ANC allies such as the Black Business Council, a lobby group representing emerging black business, and the country’s largest trade union federation, the Congress of Trade Unions of South Africa.
In his 2017 state of the nation address, Zuma sought to put the 2012 Policy Conference call for radical economic transformation into practice.
All of this suggests that the ANC’s current election mandate is premised on fundamental changes to the economy. But Zuma’s call for radical economic transformation appears more like populist cheap politicking than effective economic policy. It is cheap because the ANC has ruled for 23 years. In that period it has changed economic policies three times.
These were the Growth Employment and Redistribution, the Accelerated and Shared Growth Initiative for South Africa and the New Growth Path. Yet the economy continues to underperform, unemployment continues to rise, poverty and inequality have become worse.
At macro level the policy instruments such as the broad based black economic empowerment policy have not yielded the required results. The state is struggling to meet basic needs such as transport, electricity, water and sanitation.
The levers to addressing these issues lie with the state. It boggles the mind as to why Zuma and his allies continue to blame “white monopoly capital” for their own failings.
Zuma’s politicking is further exposed by his failure to acknowledge some progress on the empowerment front. That is not to say that efforts to promote economic participation by black people have been an economic success. But there has been some progress.
The president made specific reference to the fact that only 10% of the top 100 companies on the Johannesburg Stock Exchange are directly owned by black South Africans. He neglected to mention that the figure of black ownership on the Johannesburg Stock Exchange is much higher when considering both direct (10%) and indirect ownership (13%). White South Africans hold about 22% of the Top 100 companies while foreign investors hold about 39%.
I had expected the president to mention all these numbers and not to selectively quote figures that suit his narrow political agendas.
Since 1994 there have been some changes in the country’s economy, largely driven by emergence of new industries and facilitated by information and telecommunication technology advancements. This has created considerable black capital in a number of sectors like telecommunications in a movement that fulfils Joseph Schumpeter’s creative destruction theory. Not only has the economic participation by black business people increased in these new sectors, so has ownership, as represented by individuals like the Deputy President Cyril Ramaphosa, Phuthuma Nhleko, Robert Gumede and others.
Despite this progress it’s clear that some of the policy instruments designed to effect broad based black economic empowerment are blunt. And in some instances redistributive policies have been captured by powerful individuals.
What must be done
In the current period of global turmoil, growing nationalism and protectionism, South Africa should focus on building a united front to develop its economy and eradicate unemployment, poverty and inequality.
Growth is key. It’s now commonly accepted that success depends on its economy averaging at least 6% growth per year. The country needs all the support it can get from captains of industry to achieve this.
But instead of galvanising collaboration, Zuma chose to adopt a tone that is likely to polarise South Africans.
South Africa may not be there yet, but the president’s gearshift are symptomatic of a failing regime.