/ 2 July 2017

‘Let’s embrace radical economic transformation’

Seeking solutions: Minister Rob Davies says it is essential to bring about fundamental changes in South Africa’s economy.
Trade and Industry Minister Rob Davies. (David Harrison/M&G)

Trade and Industry Minister Rob Davies has called on South Africans to embrace a radical approach to the economy if the country hopes to move up the international value chain and prepare itself for the shifting global economic landscape.

This was his advice during the ANC policy conference Progressive Business Forum’s business breakfast at Nasrec on Saturday. He said South Africa’s current approach to the economy was unsustainable and not aiding the fight against poverty, inequality and unemployment.

“We’ve got to have a radical approach to economics. We can’t carry on as we have been because the changes that we are going to face are disruptive,” Davies said. “We’ve got to bring about a radical change in production structures and inclusion. We’ve got to bring this about to place us on a higher growth path.”

Davies said the fourth industrial revolution, together with globalisation, had been tipped as the causes of widening inequality, where those that master technology “reap huge rewards” while others get left behind.

He said South Africa’s only solution for keeping up would have to involve radical economic transformation. “We cannot any longer afford to be an economy whose position is determined by the fact that we are producers and exporters of primary mineral resources. That is what colonialism defined our role as. We need to move away from that.”

Although radical economic transformation has been a long-standing policy of the ANC, the methods towards achieving it have been a source of debate within the party.

The term came to prominence after President Jacob Zuma delivered the ANC’s January 8 anniversary statement at the Orlando Stadium this year, and has since been widely used in public discourse.

At the same time, its use within the context of defending the Gupta family and their business dealings in South Africa has raised concerns, both within and outside the ANC, that the term has been hijacked by those who want to deflect attention from alleged acts of state capture.

But for Davies, who is also a member of the South African Communist Party politburo, the definition of radical economic transformation is clear: “To bring about fundamental changes in the productive structure of our economy and also in the patterns of ownership, participation and management in favour of the majority of the population”.

Attempts to transform the productive structure of the economy have already begun with government implementing its black industrialists programme. So far 46 black industrialists have received government support, which has seen them invest R3.7-billion in the industrial economy and create 8000 direct jobs.

“We have quite lot of black people active in the industrial economy of our country but all at a very low level of activity,” Davies said. “And what we do through our programme, we are trying to take the best of them and lift them to the next level.”

He said the ANC would use its policy tools to favour the procurement of locally produced products and would deploy incentive programmes to support the emergence of value chains that allow more industrial participation from black people.

In anticipation of less favourable trade relations with developed countries, which Davies said were also planning their own reindustrialisation programmes, South Africa would require regional integration to sustain its plans for deep industrialisation.

This month the Southern African Customs Union hopes to finalise a tariff schedule agreement with the east African region that will see more trade between south and east Africa.

“We think that industrialisation has to happen on a continental scale,” he said. “Because if you look at the world as it is now, the India’s and the Chinas of this world, they are now turning to their domestic market as a source of growth. We need to have a large regional market to sustain deep industrialisation”.