Challenges to transformation initiatives detrimental to society’s interests

Thursday, June 29, 2023

Minister in the Presidency Khumbudzo Ntshavheni has warned against the resurgence of a blatant push back against transformation as detrimental to the country’s development.

According to a 2022 report by the World Bank, South Africa remains the most unequal country in the world with race playing a key role in society where 10% of the population owns more than 80% of the country’s wealth.

A recently published survey has reported that top management in the private sector still shows a disproportionate representation with white people occupying 62.9% of all positions.

Addressing the Black Business Council Summit on Thursday, the Minister noted the challenge against transformation policies in courts by business that sought to implement transformative programmes.

“An unequal society is detrimental to the interest of all, be it government, private sector, non-governmental sector, and citizens (both black and white) as demonstrated by the events of July 2021,” Ntshavheni said in Johannesburg.

South Africa experienced violent civil unrest, mainly in parts of the provinces of KwaZulu-Natal and Gauteng from 8 July 2021, until it was brought under control around 17 July 2021. At the end of the violence thousands of people were injured, an estimated 354 dead and over R50 billion lost to the economy.

The Minister said Broad-Based Black Economic Empowerment (B-BBEE) initiatives were introduced to redress the imbalances of the past, ensuring increased participation of historically disadvantaged individuals in the economy.

“While these policies aim to create a more representative and inclusive business landscape, their effectiveness and impact continue to be subjects of debate. I must be upfront that from a government perspective, calls for the scrapping of B-BBEE without an alternative economic transformation and empowerment policy, are completely pre-mature and have no basis in economic data,” the Minister said.

She said South Africa will continue its pursuit of inclusive growth, addressing income inequality, and empowering marginalized communities.

This may involve implementing and refining policies that promote job creation, skills development, and entrepreneurship, with a particular focus on youth, women, people with disabilities and historically disadvantaged individuals in general.

“Education or access thereof also contributes to the deepening inequality in South Africa – with a 30% influence on inequality gap. However, education also holds a key to addressing disparities in society by providing equal opportunities for all.

“Investing in quality education, particularly for historically disadvantaged communities, equips individuals with the knowledge and skills needed to participate meaningfully in the economy, reducing income inequality and promoting social mobility,” Ntshavheni said.

She said investing in infrastructure, such as transportation, energy, and telecommunications, is vital for economic growth and development.

“South Africa will focus on enhancing infrastructure networks to support industrialization, trade facilitation, and regional integration, while also addressing historical disparities in access to services.

“South Africa’s rich natural resources, including minerals, play a pivotal role in its economic landscape. The mining sector, in particular, has historically been a cornerstone of the nation’s economy.

“However, the reliance on finite resources poses challenges such as environmental degradation, resource depletion, and vulnerability to global commodity price fluctuations. Diversification and sustainable resource management are key considerations for South Africa’s future economic resilience,” the Minister said.

The country’s ability to diversify the economy is also affected by its ability to facilitate domestic investments as well as attract foreign direct investments.

“Therefore, South Africa’s political stability, sound governance, and commitment to the rule of law are crucial in attracting foreign investment and fostering economic growth. The pursuit of balanced international trade agreements and collaborations ensured South Africa’s integration into the global economy while protecting its domestic industries.

“As the nation seeks to reduce its reliance on finite resources and adapt to changing global trends, economic diversification will gain importance. Encouraging sectors such as renewable energy, technology, tourism, services and green economy to increase their contribution to long-term sustainability and resilience. However, mining and agriculture will remain significant players in South Africa’s economy given our endowment in natural resources and the climate,” the Minister said.

Government will focus on enhancing infrastructure networks to support industrialization, trade facilitation, and regional integration, while also addressing historical disparities in access to services.

“Continued efforts to combat corruption, enhance transparency, and improve accountability are essential for attracting domestic and foreign investment, fostering trust, and ensuring efficient resource allocation,” the Minister said.

She said South Africa's future political economy will be shaped by a multitude of internal and external factors.

“The country’s ability to effectively navigate challenges, implement reforms, and leverage its strengths will play a vital role in shaping its economic trajectory in the coming years.

“Central to these, is the imperative of innovative policies that will promote redistribution, empower marginalised communities, and foster sustainable economic development,” the Minister said. –