By: Aviwe Mtila
Achieving inclusive growth and transforming South Africa’s economy remains at the core of the country’s government.Achieving inclusive growth and transforming South Africa’s economy remains at the core of the country’s government.
This was the message from South Africa’s Finance Minister, Malusi Gigaba, as he tabled his first Medium Term Budget Policy Statement in parliament this afternoon.
“Millions of South Africans are living in poverty. Unemployment is 27.7 per cent, the highest level since September 2003, and is mostly felt by our youth, and the wealth remains highly concentrated. 95 per cent of our wealth is in the hands of 10 per cent of the population,” says Gigaba.
In his speech, Gigaba noted a number of challenges that led to the exclusion of South Africa’s majority:
- Direct black ownership and management of the economy remains low.
- Employment equity remains a challenge with progress for black people and women participating at top and senior management levels have apparent stalled
- A high degree of market concentration, with low competition and high barriers to entry. In several sectors, a handful of companies dominate, controlling more than 80-90% of the market. Prospective market entrants find it extremely difficult to break in, as dominant companies enjoy seemingly insurmountable advantages.
- Historically segregated and entrenched spatial planning affect travel costs as well as job search and effectively disadvantage many individuals from equal participation in the economy.
The minister once again called for radical economic transformation, quoting President Jacob Zuma.
“Our next phase of growth must be characterized by radical economic transformation roadly defined by President Zuma in this year’s state of the Nation address as ‘fundamental changes to the structures, 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,” says Gigaba.
Concerns have been raised by the public and some politicians on the legitimacy of this call for radical economic transformation. This policy was adopted by the ruling African National Congress (ANC) in its elective conference, which took place in Mangaung, in 2012.
Many are questioning the timing of President Zuma’s heightened call for transformation when he has just over a year at the helm of South Africa, and a few months as the ANC leader.
The Finance Minister went on to call for the engineering of a new growth and transformation model.
- We desperately need government to effectively play its role as an enabler for and an active participant in growth and transformation.
- We desperately need business that invests, thereby creating growth and employment.
- We need labour that is productive, and ever growing its capabilities.
- We need a society that aids progress through constructive dialogue, active citizenship and social tolerance.
The COE’s Initiative was highly commended by Finance Minister Gigaba for advancing efforts on the Youth Employment Services (YES) initiative that aims to bring over a million young South Africans to internships over the next three years.
Gigaba also commended YES for setting up a R1.5 billion Small and Medium-sized Enterprise (SME) fund which he says will soon be operational.