Zuma: What do we mean by radical socio-economic transformation?

Today we are starting a new chapter of radical socio-economic transformation. We are saying that we should move beyond words, to practical programmes.

In his 2017 state of the nation address, President Jacob Zuma, dedicated ample time to the theme of radical socio-economic transformation. Here are key extracts from the speech.

“What do we mean by radical socio-economic transformation?

We mean fundamental change in the structure, systems, institutions and patterns of ownership, management and control of the economy in favour of all South Africans, especially the poor, the majority of whom are African and female, as defined by the governing party which makes policy for the democratic government.

Twenty two years into our freedom and democracy, the majority of black people are still economically disempowered. They are dissatisfied with the economic gains from liberation.

The gap between the annual average household incomes of African-headed households and their white counterparts remains shockingly huge. White households earn at least five times more than black households, according to Statistics SA.

The situation with regards to the ownership of the economy also mirrors that of household incomes. Only ten percent of the top one hundred companies on the Johannesburg Stock Exchange are owned by black South Africans, directly-achieved principally, through the black empowerment codes, according to the National Empowerment Fund.

The pace of transformation in the workplace, the implementation of affirmative action policies as required by the Employment Equity Act, also remains very slow.

In terms of the 2015/16 information submitted to the Employment Equity Commission, the representation of whites at top management level amounted to 72 percent whilst African representation was at 10 percent.

The representation of Coloureds stood at 4.5% and Indians 8.7%.

The report further provides that white South Africans, in particular males, are afforded higher levels of recruitment, promotion and training opportunities as compared, to the designated groups.

At the level of gender at senior management level, males remain dominant at 67.6% and females at 32.4% percent.

The skewed nature of ownership and leadership patterns needs to be corrected. There can be no sustainability in any economy if the majority is excluded in this manner. In my discussions with the business community, they accepted these transformation imperatives.

Today we are starting a new chapter of radical socio-economic transformation. We are saying that we should move beyond words, to practical programmes.

The state will play a role in the economy to drive that transformation. In this regard, Government will utilise to the maximum, the strategic levers that are available to the state.

This includes legislation, regulations, licensing, budget and procurement as well as Broad-based Black Economic Empowerment Charters to influence the behaviour of the private sector and drive transformation.

The State spends five hundred billion rand a year buying goods and services. Added to this is the nine hundred billion rand infrastructure budget. Those budgets must be used to achieve economic transformation.

As a start, the new regulations making it compulsory for big contractors to subcontract 30 percent of business to black owned enterprises have been finalised and were gazetted on the 20th of January.

Through such regulations and programmes, government will be able to use the state buying power to empower small enterprises, rural and township enterprises, designated groups and to promote local industrial development.

Two key challenges we face is the high levels of concentration in the economy as well as the collusion and cartels, which squeeze out small players and hamper the entry of young entrepreneurs and black industrialists.

The competition authorities have done excellent work to uncover the cartels and punish them for breaking the law.

Last year I signed into law a provision to criminalize the cartels and collusion and it came into effect on 1 May. It carries jail sentences of up to 10 years.

We are now stepping up our actions to deal with the other challenge, namely economic concentration, where a small grouping controls most of a market.

During this year, the Department of Economic Development will bring legislation to Cabinet that will seek to amend the Competition Act. It will among others address the need to have a more inclusive economy and to de-concentrate the high levels of ownership and control we see in many sectors. We will then table the legislation for consideration by parliament.

In this way, 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.

Compatriots,

Government is actively involved in the property sector, having provided more than four million houses since 1994.

This sector in our country is valued at approximately seven trillion rand, with the subsidised sector being valued at one point five trillion rand.

However, less than five percent of the sector is owned or managed by Black people and Africans in particular. A draft Property Practitioners Bill will be published by the Department of Human Settlements for public comment with the purpose of establishing a more inclusive, representative sector, towards radical economic transformation.

Among key priorities this year, Government will also address the increasing delays and backlogs in registration and issuing of title deeds to beneficiaries of housing projects funded by the capital subsidy.

Compatriots,

We reiterate that radical economic transformation should mean moving beyond share ownership schemes only. We would like to see black people involved directly in business, owning factories. The development of the Black Industrialists programme is thus critical.

The programme has from inception supported more than 22 entrepreneurs. Government has further opportunities in the property maintenance projects of the Department of Public Works.

The Department will invest approximately one hundred million rand this year on critical capital and maintenance programmes to modernise harbours. They will also continue generating revenue from letting state owned harbours and coastline properties, which will benefit black owned SMMEs.

Government will also continue to pursue policies that seek to broaden the participation of black people and SMMEs, including those owned by women and the youth, in the Information and Communication Technologies (ICT) sector.

We assure the youth that the lowering of the cost of data is uppermost in our policies and plans.

Compatriots,

Mining has always been the backbone of our economy and an important foreign exchange earner. We welcome the recovery in commodity prices which has resulted in an upswing in mining output. This augurs well for the industry.

The Mining Charter is currently being reviewed. The Charter seeks to recognise the internationally accepted right of the state to exercise sovereignty over all the mineral and petroleum resources within the Republic.

It is also aimed at helping the country to de-racialise the ownership of the mining industry. This will help ensure the sustainability of this industry. We trust that discussions between government and business on the Charter will yield results so that the process can be finalised.

We will continue to pursue direct state involvement in mining. The Mining Company of South Africa Bill will be presented to Cabinet and Parliament during the year.

The Minerals and Petroleum Resources Development Amendment Bill was sent back to Parliament so that issues relating to the public consultation process undertaken by Provincial legislatures can be addressed.

We trust that it shall be processed and returned for finalization without much delay so that the concerns relating to uncertainty raised by business can be resolved.

Government continues to work with other stakeholders to combat illegal mining to save lives and to prevent the trafficking of precious metals and diamonds.

We also continue to place great emphasis on the health and safety of mineworkers which is so crucial to the sustainability of the mining sector. Working with the mining companies we can ensure that lives are protected at all times.

The tragic accident that occurred at Lily Mine outside in Mpumalanga earlier in 2015 is the first of its kind that we have experienced since the dawn of democracy. The families are going through immense pain and frustration.

Compatriots,

It will be difficult if not impossible, to achieve true reconciliation until the land question is resolved. Only eight million hectares of arable land have been transferred to black people, which is only 9.8 percent of the 82 million hectares of arable land in South Africa.

There has also been a 19 percent decline in households involved in agriculture from 2,9million in 2011 to 2,3 million households in 2016.

We had stated our intention of using the Expropriation Act to pursue land reform and land redistribution, in line with the Constitution.  I have now decided to refer the Bill back to Parliament for reconsideration on the basis that the Bill might not pass constitutional master. This is due to inadequate public participation during its processing.

We trust that Parliament will be able to move with speed in meeting the requirements so that the law can be finalised to effect transformation.

The reopening of land claims is also still on hold because the Restitution of Land Rights Amendment Act, 2014 was declared invalid by the Constitutional Court.

The Constitutional Court found that the public consultation process facilitated by the National Council of Provinces and some Provincial Legislatures, did not meet the standard set in the Constitution.

Going forward, government will continue to implement other programmes such as the Strengthening of Relatives Rights programme, also known as the 50-50 programme.

In this programme, the farm workers join together into a legal entity and together with the farm owner a new company is established and the workers and the owner become joint owners.

To date 13 proposals have already been approved benefiting 921 farm dweller households at a value of R631 million. We applaud farmers and farm workers for this innovation.

Most importantly, we appeal to land claimants to accept land instead of financial compensation. Over 90% of claims are currently settled through financial compensation which does not help the process at all. It perpetuates dispossession. It also undermines economic empowerment.

Government has committed itself to support black smallholder farmers. I received a memorandum from the African Farmers Association of South Africa who say the year 2017 must be the year of the commercialisation of the black small holder farmers.

Indeed, Government will implement a commercialisation support programme for 450 black smallholder farmers.

We encourage more women to consider farming. I have as a special guest today, the 2016 Female Farmer of the Year, Ms Vanecia Janse from Koukamma municipality in the Eastern Cape.

Compatriots,

Our farmers went through a difficult period last year because of the drought. To date, an estimated amount of 2.5 billion rand was made available for the provision of livestock feed, water infrastructure, drilling, equipping and refurbishment of boreholes, auction sales and other interventions.

Furthermore, the Industrial Development Corporation and the Land Bank availed funding of about five hundred million rand to distressed farmers to manage their credit facilities and support with soft loans.”

news@ujuh.co.za

Leave a Reply

Your email address will not be published. Required fields are marked *