While the recent chaos-ridden State of the Nation address was long on rhetoric and short on detail (as well as new ideas), President Jacob Zuma nevertheless arguably succeeded in placing the concept of ‘radical socioeconomic transformation’ at the centre of the current economic and business discourse.
Organised business immediately reacted, with Business Unity South Africa (Busa) describing “comprehensive transformation” as a critical component for achieving inclusive growth. Busa president Jabu Mabuza also stressed the desirability of involving all stakeholders in an evidence- led process to “achieve radical economic transformation”. Then speaking in his capacity of chairperson of Business Leadership South Africa (BLSA), Mabuza added that “transformation of the ownership and control of the economy is a moral, political and economic imperative”.
However, both Busa and BLSA also attempted to shift the emphasis to what they viewed as the main economic priority: ensuring an enabling environment for investment. To achieve this, the organisations placed significant emphasis on building on the 2016 partnership between government, business and labour, which was instrumental in avoiding a downgrade of South Africa’s credit rating and which also yielded labour reforms and joint initiatives to support small business development and youth work experience.
Organised business is not alone, though, in attempts at shaping the interpretation of radical socioeconomic transformation. To be sure, the concept is contested terrain, with robust campaigns under way – both inside the African National Congress (ANC) and on its fringes – to control its ultimate definition.
The debate is also the key differentiator of the two dominant factions in the ANC and has become a proxy for the leadership contest, owing to the constraints placed on open campaigning. Besides this high-profile economic debate, this succession battle will likely envelop just about everything that happens in this country up until the ANC’s fifty-forth national conference, scheduled for Gauteng from December 16 to 20.
Two broad philosophical stands appear to dominate internal ANC debates on the concept. One faction is rallying strongly behind calls for accelerated changes in ownership and control of business, which is viewed as still being dominated by white South Africans. For them, the concept is strongly allied to calls for the dismantling of “white monopoly capital” and to ensuring that public procurement is more assertive in its support of black business. The other faction, meanwhile, is attempting to offer a more nuanced set of proposals, whereby transformation is packaged into a larger plan to bolster investor confidence and reignite employment-rich growth.
Outside the formal ANC structures, the contest is also raging, with the South African Communist Party seeking to define it as the main lever for supporting “structural transformation of the political economy”. Then there are those calling for the “opening” of the National Treasury in support of a more transformative procurement policy.
The upshot is a ratcheting up in rhetoric that is both difficult for domestic and foreign business to interpret and to align with. As a result, the uncertainties will linger and investments will be either deferred or abandoned.