South Africa: The ANC will not say ‘radical economic transformation’ – Mmamoloko Kubayi

These debates are usually the most heated and often become the battlefield for proxy leadership contests between the party’s two factions, and can upset the markets. Radical economic transformation, but not in name.

Markets have also been skittish about talk of “radical economic transformation”, a popular slogan pushed by the lobby opposing President Cyril Ramaphosa – who was a business mogul – to push against big multinationals and established business.

Kubayi says this year’s discussion documents don’t mention the phrase. “The slogans remove you from dealing with the real issues. One of my objectives was to get to the issue,” she tells The Africa Report in an interview.

Making it easier for those in informal sectors to conduct their business is one such an issue. “There is a need for removing the burden on the informal traders, because policy treats them as criminals,” she says.

When people are unemployed the risk is more because they have got nothing to lose

It should be easier for them to get permits, for example, and they shouldn’t constantly fear persecution by metro police officers. “Someone can call it a radical shift, but the issue is we are fighting for small business,” she says.

South Africa’s economy has finally returned to what it was before the start of the Covid-19 pandemic, with recently-released figures by Statistics SA showing the economy expanded by 1.9% in the first three months of the year.

Economic risks

Even though Kubayi says the ANC has completed more than 60% of tasks it had committed to in its post-Covid-19 economic reconstruction and recovery plan that was introduced in September 2020, there’s a number of economic risks that party members should be taking into account during their discussions.

Kubayi says the biggest of these is the high unemployment rate – 34.5% in the first quarter – because it creates social instability. “When people are unemployed the risk is more because they have got nothing to lose, so your risk for social unrest is higher, so the creation of jobs is important,” she says.

Damage to infrastructure, such as railways and electricity, through sabotage and theft is another hindrance to economic development as it disrupts business and subsequent repairs eat into the government’s budget. “It kills business confidence […], kills investor confidence and cripples the economy in terms of movement of goods and people,” she says.

For example, if rail infrastructure is damaged, goods have to be transported from the ports by road, where in turn trucks are often burned and looted. This, together with the damage caused by recent floods, has led to many businesses opting to export through Mozambique’s ports instead, she says.

A lack of proper infrastructure and electricity increases the cost of doing business in South Africa, hitting the small businesses particularly hard. Kubayi says because of this, the target of increasing the ease of doing business in the country has not been met.

For example, if there are power cuts, informal traders who sell food to students will see their food rot in fridges that aren’t working. They also might not have alternative ways of cooking food to sell.

If the ANC doesn’t solve these issues, it risks losing credibility and people will resort to populism, she says.

Controversial resolutions

The resolution at its 2017 conference that the SA Reserve Bank should be 100% owned by the state and that the government should develop a proposal to ensure full public ownership, “had some repercussions that [were] negative to the party and the fiscus”.

We have not corrected the historical anomaly that the SA Reserve Bank has private shareholders

In its economic policy discussion document ahead of the party’s policy conference, the party admits that it hasn’t implemented its own resolutions around that. “We have not corrected the historical anomaly that the SA Reserve Bank has private shareholders,” the document says.

“This is partly due to concerns of possible negative unintended consequences of a move to public ownership. These include the undue enrichment of private speculators who have been lobbying for such an intervention as they hope to make massive financial gains from the process at the expense of South Africa and cost to the fiscus,” it says.

Kubayi says the resolution will be discussed again at conference, because “nationalising at all costs” was not an option.

This was a position that was pushed by the radical economic transformation (RET) faction of the party. It is likely that they will, again, push for the inclusion of this phrase in the party’s policy positions.

The good news

Government has done some things right, she says, such as:

• making good on its commitment to release and auction broadband spectrum;
• ensuring cheaper internet access;
• introducing e-visas for visitors from some countries;
• signing power purchase agreements with independent power producers for renewable energy earlier this month;
• reviewing the public private partnerships regulatory framework;
• and implementing reforms that improved South Africa’s credit ratings.

Bigger role for business

In its economic policy discussion document, which will only become official once passed as a resolution at the party’s elective conference in December, the party proposes greater private sector involvement in the economy.

If this goes through, it would represent a shift for the ANC, which has up to now favoured state-led growth.

Ramaphosa signalled this shift in February when he said in his annual state of the nation address that the “government does not create jobs. Business creates jobs”.

The era of bailouts for SOCs [state-owned corporations] is over. It is not sustainable.

In the document, the ANC proposes that private sector companies should be able to buy stakes in state-owned enterprises, and that theigovernment should no longer afford to keep propping up failing entities.

According to the document the “era of bailouts for SOCs [state-owned corporations] is over. It is not sustainable. Workers whose jobs are at risk must be reskilled and redeployed to where vacancies exist”.

It also states that private businesses should play a bigger role in infrastructure funding to help solve the country’s energy crisis and they could help land reform by donating land. Government’s land reform process is behind schedule due to a number of issues ranging from corruption to resistance by land owners.

Last year, the party failed to get enough support in Parliament to amend the constitution to allow for expropriation without compensation. At its 2017 conference, ANC resolved that the constitution should be changed to allow for such.

Kubayi also serves as human settlements minister in Ramaphosa’s cabinet and was appointed head of the party’s economic transformation committee after its former head, Enoch Godongwana, became finance minister last year. The party has traditionally preferred to separate the tasks of the party’s subcommittee heads from their cabinet portfolios to create a semblance of separation between party and state.