Poor must benefit from ANC economic policies

Finance Minister Malusi Gigaba said he does not believe the public protector has the power to order Parliament to change the Reserve Bank’s mandate, but he said no one should fear a debate around the issue.

Speaking at a business breakfast at the ANC policy conference, which kicked off in Johannesburg on Friday morning, Gigaba told delegates that he was engaging with the office of the public protector to understand the situation better, but he said he was of the view she did not have the power to direct Parliament.

“Where changes [to monetary policy] are necessary, these should be directed to the finance minister.”

Busisiwe Mkhwebane’s recommendation that Parliament seek to broaden the South African Reserve Bank’s mandate is the subject of a legal challenge from the bank itself.

The outcome of a legal challenge to the public protector’s recommendation is important, as her recommendations have been found in a recent case brought before the courts to be binding.

“I don’t think anyone should panic,” said Gigaba, noting South Africa’s strong legal framework, “but no one should fear a debate.” 

Setting the tone for the policy conference ahead, which will draw to a close on Wednesday, Gigaba reiterated much of what is stipulated in the ANC policy conference discussion documents on economic transformation.

Radical economic transformation policies, he said, would automatically result in an inclusive economy with a new structure working in favour of the poor. A call for radical economic transformation was a call to return to the basics, he said. 

Gigaba said failure to act could cause South Africa to fall into a low-growth trap where the nation would “have to seek assistance from quarters we have so far avoided”.
This likely refers to financial assistance from developmental financiers such as the International Monetary Fund.

He said South Africa needed to overcome the triple challenges of unemployment, inequality and poverty and that the state, the private sector and social partners must work 

together in order to achieve success. He noted the need to develop the country’s industrial base and its rural economies, and to deepen regional integration.Gigaba said the state must play a role in growing the share of assets under the control of black fund man- agers. Expanding on this, he said this would involve a “review of the Public Investment Corporations’ role in driving transformation, instead of it being seen narrowly as an instru- ment for the empowerment of a few elites.”

Black auditing firms, he said, are low-hanging fruit that should be given the majority of work at state-owned enterprises — a decision the state has the power to make.

The test of government’s economic policies is whether they affect growth and enhance the lives of country’s poorest, he said.

The state should do these things without fear of losing investor confidence and being further downgraded by ratings agencies “because they are the right things to do” said Gigaba.

The negative features of the South African economy, he said, include its high levels of inequality, its high carbon intensity, and it oligopolistic and monopolistic characteristics, which make it difficult for new — mainly black — businesses to enter the market, with negative consequences for consumers. 

“These are among the main features of the economy we must change,” said Gigaba. “At the same time we must grow the economy.”

As envisioned in the National Development Plan, Gigaba said the economy needed to grow at 5% a year on a sustainable basis as opposed to the 2% it has grown on average in recent years.

“Clearly this is insufficient; we are underperforming and barely scratching the surface of our economy’s potential.”

Gigaba stressed the need for the private sector to work with government in its transformation aims. “We need business people who understand [that] transforming South Africa is in everyone’s interest. A more inclusive economy will mean a bigger economy.”

Gigaba said a government plan to enhance growth and to respond to the structural-reform challenges would be released in the next few days.

ANC treasurer-general Zweli Mkhize told delegates meaningful growth cannot be anticipated on the back of concentrated ownership in the economy with “no mechanism to open up the economy 23 years later”. The ANC couldn’t escape the discussion anymore he said, adding that people in poor communities needed to feel that democracy has delivered. 

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