At the beginning of the year, President Jacob Zuma coined a new term in his state of the nation address (Sona): radical economic transformation. One could easily believe that Zuma has just awoken from a 10-year deep sleep.
He glaringly forgot that he had been presiding over an economy that had been decimated during his tenure.
He could be forgiven for not knowing that the government’s own official statistics showed that while South Africa’s economy grew by 0.3%, the world economy grew by 3.1%.
To rub salt into the wound, developing nations like ourselves grew at a rate of 4.3% last year. Ethiopia is growing at around 7%. Surely one has to be extremely gullible to believe that Zuma’s talk of radical economic transformation could turn into anything positive economically.
He sometimes glibly spoke about economic growth, despite not being committed to that concept.
Radically distributing a shrinking economic cake is no solution to the woes of the country.
He has to look back at his political management of the country and radically change the culture he has instilled in governance.
If Zuma wanted radically to transform the South African economy, he should not have done away with the Growth, Employment and Redistribution policy (Gear) adopted in 1996.
This programme was adopted to generate national revenues and thus fund the socioeconomic backlogs.
Gear was a self-imposed stabilisation policy.
It sought to restore macro-economic balance in the short to medium term, and adjustment policies, which sought to alter the basic economic institutions of the country to foster higher growth on a medium- to long term-basis.
The Reconstruction and Development Programme (RDP) was radical enough.
However, there were no finances at the time to fund it, hence the change to Gear.
The ANC leadership, of which I know Zuma was part, rejected out of hand the protestations by over-zealous ideological left-wing fanatics. Gear’s aim was growth first. Realistic, plausible and sustainable redistribution can only happen in a growing economy, not in a contracting one.
Years later, Zuma sought the counsel of those ultra-leftists to help him get to the Union Buildings.
In return, he would do away with Gear.
Lo and behold, his wish was granted.
Since then, a few economic policies have been crafted with the aim of “radically transforming” the economy.
The outcome of all those polices is the development of hair salons, loan sharks, spaza shops and small pubs in the high streets of our economy.
Today the radical economic transformation is punishing us with a R146-billion interest payment, because the president and his friends thought that they could borrow money, thereby bringing the country to economic prosperity.
Mr President, it does not work like that.
You have to talk about economic growth with conviction as well as believe in it with all your heart.
You may believe that it is an economic success to have millions of citizens unemployed and doling out R180-billion every year towards social protection. It’s a sign of failure. It is not surprising that South Africa’s potential trading partners, Brazil and Russia, “grew” -3% last year.
India’s growth has always been from a very low base.
The government has been warned that if it hopes to borrow its way into growth, the country will lose both its political and economic independence.
The Thabo Mbeki administration worked hard not to invite the IMF and World Bank into our country.
South Africa may soon be going to them with cap in hand and a big begging bowl.
Is it this that radical economic transformation is all about?
It has not occurred to the president that economic growth of 0.3% in a country whose population grows by 1.5% a year is a catastrophe.
One needn’t even think about the 34% unemployed South Africans who need to be absorbed into the active labour market.
To mop up the current unemployment levels, our economy would have to grow at 5 to 6% annually for an unbroken 30 years.
That reality is beyond the president’s thinking.
He is just hell-bent on radically dividing the diminishing economic cake.
It is wishful thinking to assume that the government, especially a corrupt and captured one, could radically transform the country’s economy.
The private sector operating in an environment of clear policies and fair regulatory framework is the way to go.
The government’s only responsibility is to create an enabling environment for entrepreneurs to thrive.
The president could be guided well if he were to familiarise himself with the thoughts of Moeletsi Mbeki on the effect of the private sector.
In an article from 2004 titled The Iron Law of African Underdevelopment, he wrote: “For private individuals to produce more and better, they must generate savings that they plough back into the production process as new and improved techniques, processes and products.”
Mbeki then said, “This is the inexorable logic of capital accumulation.
“The more you produce, the more you must produce; the more you must produce, the cheaper you must produce; the better the products you must produce because if you do not, others who are seeking greater security and comfort will displace you in the market place and you will therefore suffer reduced security and comfort.”
Surely Mr President, you need to apply your fancy catchphrase to dealing radically with the 42.6% of our GDP.
That would surely radically transform every citizen in the country.