Zuma Targets ‘White Minority Capital’ For Radical Economic Transformation Following SONA Brawl
They’re coming for the financial sector. They’re also gunning for retail, the media and construction sector. Mines are in their sights, as well as telecommunications.
These are all sectors with big money and few players — prime targets for “deconcentration,” South African President Jacob Zuma said Thursday in his State of the Nation Address (SONA).
Zuma and the African National Congress (ANC) government lifted the veil from the amoeba-like and amorphous phrase, “radical economic transformation.” He’s made it clear: the government will deal with dominance in certain sectors of the economy by a handful of players.
Zuma’s State of the Nation Address followed a brawl that broke out in Parliament involving members of the Economic Freedom Fighters party and security staff. You can watch the video here.
EFF leader Julius Malema and his group were asked to leave for causing a disruption. When they refused, they were removed by force. Riot police were stationed outside parliament, News24 reported.
From Huffington Post. Analysis by Pieter du Toit.
“We are now stepping up our actions to deal with … economic concentration, where a small grouping controls the market,” Zuma said in his State of the Nation Address on Thursday.
Zuma explained the lack of transformation in the economy means black South Africans have not benefited from political liberation attained in 1994. As a result there still is a massive difference in wealth between black households and white households.
A mere 10 percent of listed companies on the Johannesburg Stock Exchange is directly black-owned, he explained to the approximately 300 MPs who remained in the National Assembly after most of the opposition parties left. “We need fundamental change in the structure, systems, institutions and patterns of ownership, management and control of the economy in favor of all South Africans,” Zuma said.
Talk about radical economic transformation — or #RET as it’s been hashtagged on Twitter — has been ratcheted up over the last six weeks, with a flood of criticism levelled at the monopoly certain companies hold in some of the economy’s sectors.
It reached a crescendo after the leaking of the Public Protector’s provisional report about the office’s investigation into the so-called Absa/Bankorp lifeboat, culminating in a social debate about “white monopoly capital.”
Zuma is under extreme pressure within the ANC, while the ANC is under extreme pressure from the electorate. Events of last year and 2015, which spawned Nenegate, the Constitutional Court’s Nkandla judgment and state capture are not only weighing the ANC down, they are sinking it. And the governing party and its leader need something to take back the initiative.
The ANC signalled its intentions, releasing a statement to serve as a rallying call for radical economic transformation. This statement was almost completely woven into Zuma’s address.
Zuma told MPs the state will now take on a leading role to drive transformation by pulling on every strategic lever it has at its disposal, with government spend and legislation as the two most important.
“The state spends 500 rand billion a year buying goods and services. Added to this is the 900 billion rand infrastructure budget. Those budgets must be used to achieve economic transformation,” he said.
The problem the ANC has, besides the reality of economics and access to capital, is the haphazard and very poorly drafted legislation it will table in Parliament to achieve its goals.
Given that the state sector comprises about 50 percent of the South African economy, that’s a rather big stick to carry around. Money will be redirected from certain suppliers to other suppliers — and with government’s drive to empower and to diversify, there is sure to be conflict with Treasury, that is focused on cost effectiveness and forcing down the price of procurement.
But it will be through regulation and legislation that it will seek to break up the dominance of some big players in the local market — in the media and financial sectors, for example.
Government will introduce new competition legislation to create “a more inclusive economy” and to “deconcentrate the high levels of ownership and control.” This means it will now force those sectors that politicians ostensibly believe are controlled by cliques like the so-called “Stellenbosch mafia” to give up their empires.
Which will prove to be difficult.
Besides the “deconcentration of the economy,” redistribution of land has been a large part of the ANC’s populist and symbolic politicking in the recent past. Given the political urgency of the return of land to black South Africans and the scope afforded to government by the Constitution, one would have thought the ANC would have been good to go ages ago.
But Zuma admitted in his speech two crucial pieces of enabling legislation — the Expropriation Bill (in the works since 2011) and the Restitution of Land Rights Amendment Act from 2014 — has been sent back to Parliament because of constitutional shortcomings.
“In this way,” Zuma said, “we seek to open up the economy to new players, give black South Africans opportunities in the economy and indeed help to make the economy more dynamic, competitive and inclusive. This is our vision of radical economic transformation.”
Read more at Huffington Post.
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