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7 Things You Need To Know About Radical Economic Transformation

Here's what the ANC's policy discussion document says about how it will make economic transformation a reality.

29/06/2017 11:37 SAST | Updated 29/06/2017 11:38 SAST

Radical economic transformation is "the gospel truth", according to President Jacob Zuma. Both of the two main candidates touted to take over as ANC president -- Nkosazana Dlamini-Zuma and Cyril Ramaphosa -- have also embraced the phrase.

What it means for policy and politics, however, is still up for grabs. Does it mean unprecedented overhaul of the economy or is it old policy cloaked in a new catchy slogan? Is it an empty "ideological smokescreen" for state capture, as suggested by authors of the Betrayal of the Promise report, or a visionary call-to-action?

Here are (simplified) key strategies from the ANC's policy discussion document on how they plan to realise economic transformation:

1. Re-industrialising South Africa's economy

The country must sever its old growth path, largely dependent on exporting raw materials. Instead, government must create the conditions for the economy to industrialise through manufacturing and beneficiation, or processing, of raw materials. It must use industrial policy - such as providing incentives for manufacturers - to promote a more diverse economy and generate mass employment.

2. Emphasis on black ownership (of land and the economy)

Priority must be given to generating black ownership in emerging new, and old, sectors of the economy including mining and manufacturing. Revised BEE codes also need to be enforced across a range of sectors.

Targeted financial support - such as tax breaks and improved market access - for black enterpreneurs and small businesses is listed as crucial for equitable growth.

Supporting land reform and "returning the land to our people", along with investment in farming equipment and technical skills transfer to beneficiaries, is a priority policy intervention.


3. Dismantling monopoly structures and practices

Strict enforcement of competition legislation aimed at eliminating monopolistic behaviour in the economy is required, including bringing legislation to Cabinet to strengthen the Competition Act. Deconcentration of ownership of the economy will demand eliminating price-fixing and anticompetitive behaviour of both private and public companies.

The ANC says it should mandate a "detailed investigation into the underlying structure of the economy to recommend ways to... dismantle monopolistic and oligopolistic structures in the economy". The creation of a state-owned bank is listed as one way to change the structure of the country's banking sector.

4. An end to cadre deployment?

The emphasis on 'political deployment' of individuals to government needs to be replaced by a focus on building a professional public service that "serves government correctly but which is insulated from problems associated with political patronage".

Attracting "talented young people" into the public service is also reiterated in the National Development Plan and stresses the need for nurturing of "technical, specialist and professional skills among public servants".

The ANC's current cadre deployment strategy, according to HSRC researcher Modimowabarwa Kanyane, puts "loyalty [to the party] ahead of merit and even of competence, and is therefore a serious obstacle to efficient public service", News24 reported.


5. State in the driving seat of development

The ANC must defend its vision of a 'democratic developmental state' in which government guides the economy and harnesses the strengths of the private sector. This includes a strong role for state-owned companies and maintaining a budget for at least 2 million public sector employment opportunities every year.

The document lambasts both 'right-wing opponents' of the ANC's state-led developmental vision, as well as 'populist forces' on the left that criticise the ANC for not being radical enough.


6. Policy continuity over policy change

While economic policy remains up for debate, the ANC says its economic transformation strategy was defined at Mangaung in 2012 and must give effect to the National Development Plan as a societal blueprint, along with the New Growth Path (NGP) and Industrial Policy Action Plan (IPAP) as guiding policy.

In this way, the document signals fewer major changes (at least in policy) than may be assumed. Issues around policy implementation or procedure, rather than policy design, emerge as more contentious or challenging for the governing party.

7. There's policy... then there's politics.

Factional battles at the upcoming ANC conference may nevertheless overshadow policy debates, analysts told HuffPostSA this week. The ANC will also have to confront allegations by civil society groups and academics, and even Deputy President Cyril Ramaphosa, that radical economic transformation is being 'co-opted' by some as an 'ideological smokescreen' for state capture.

A week ahead of the policy conference, Ramaphosa said business should not be distracted by those who use the term to justify state capture, according to EWN.

The ANC's 5th policy conference begins on Friday at the Nasrec Expo Centre in Johannesburg.