President Announces Radical Economic Transformation
Radical economic transformation will be at the centre of Government’s priorities for 2017, President Jacob Zuma declared on Thursday night, during his televised annual address to the nation.
“Today we are beginning a new chapter of radical transformation, the state will play a role in the economy to drive that transformation,” the President said in the State of the Nation Address given to a joint seating of parliament.
Thursday’s State of the Nation Address comes at a time when the economy is not growing fast enough to create much needed jobs in the country.
President Zuma said the government anticipates an economic growth rate of 1.3% in 2017. But, unemployment remains a huge challenge, hence Government’s nine-point plan to reignite growth so the economy can create jobs, he said. He said the time had come for the state to move a step further to ensure an overhaul of the economic structure of the country for the benefit of all citizens – not just a few.
“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,” President Zuma said.
Economic inequalities persist
He spoke at length about a cluster of issues that still faced the South African economy and these need to be addressed if the country is to address the socio economic challenges it faces. These include, among others, the issue of inequality in the workplace and an uneven redistribution of wealth.
“The pace of transformation in the workplace, the implementation of affirmative action policies as required by the Employment Equity Act, also remains very slow. At the level of gender at senior management level, males remain dominant at 67.6% and females at 32.4% percent.”
The President expressed discomfort over the fact that the representation of whites at top management level amounted to 72 percent whilst African representation was at 10 percent, according to the 2015/16 information submitted to the Employment Equity Commission. The representation of Coloureds stood at 4.5% and Indians 8.7%.
President Zuma told the house, bluntly, that the skewed nature of economic ownership and leadership patterns needed to be corrected. There could be no sustainability in any economy if the majority is excluded, he said.
“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,” said President said.
One of the most notable aspects of Thursday’s speech was probably the President’s statement the state will increase its power to use the Expropriation Act to pursue land reform and land redistribution, in line with the Constitution.
“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 2,9 million in 2011 to 2,3 million households in 2016.”
Since 1994, government has transferred millions of hectares of land back to the black majority who were removed from their ancestral land. But some feel that the pace of redistribution has not been fast enough.
President Zuma said 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.
President Zuma renewed the call for 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,” he said.
Plans to boost Employment
President Jacob Zuma has outlined a number of proposals aimed at boosting employment.
Speaking during the State of the Nation Address on Thursday night, President Zuma said that while indications were that South Africa had entered a period of recovery, the economy is still not growing fast enough to create the jobs needed.
The plans include:
– The establishment of a Invest SA One-Stop Shop
– Taking advantage of tourism as a job driver
– Scaling up the Expanded Public Works Programme
– Using public infrastructure as a way to create work opportunities
Government would use the nine-point plan announced in the 2015 State of the Nation Address to help speed up growth and employment.
The Key Pillars of the plan include, among others, resolving the energy challenge, promoting agriculture and agro-processing, advancing beneficiation, and encouraging private sector investment.
On Thursday, President Zuma said government had also identified tourism as a key job driver.
“We are thus pleased that our tourist arrival numbers for the period January to November 2016 increased to nine million, an increase of just over one million arrivals from 2015. This represents a thirteen percent growth in tourist arrivals,” he said.
In addition, government runs effective poverty alleviation programmes such as the Expanded Public Works Programme (EPWP).
“The EPWP has since 2014, created more than two million work opportunities towards the attainment of the target of six million work opportunities by the end of March 2019. Of the work opportunities created, more than one million have been taken up by the youth.”
President Zuma noted that during 2015/2016, more than sixty one thousand work opportunities were created through the Environmental Programmes such as Working for Water, Working for Wetlands, Working on Fire and Working for Ecosystems. More than 60% of the beneficiaries were young people.
This has led to job creation in the Northern Cape and diversification of the economy through the creation of artisan and maintenance jobs, and the promotion of science as a career of choice.
On road infrastructure, Sanral has started with the planning phase of the 4.5 billion rand project to upgrade the current Moloto road.
In 2014, government launched the operation Phakisa Big Fast results methodology in the ocean economy, health, education and mining sectors. The purpose was to find a few key projects where it could unlock growth in implementing the NDP.
Call to unite
President Zuma used his speech to call on South Africans to “unite in driving radical economic transformation for the good of our country.”
He earlier announced that in honour of one of the country’s most prolific struggle heroes, Oliver Reginald Tambo, who would have turned 100 years old this year – the year 2017 has been declared the Year of Oliver Reginald Tambo.
It is the year of unity in action by all South Africans as we move South Africa forward together, the President said.
He quoted the ANC struggle stalwart, who once said: “Working together as fellow South Africans, we have it within our power to transform this country into the land of plenty for all, where the nightmare of apartheid will just be a faint memory of the past.”
Land Reform in 2017
Government will take an aggressive approach towards land reform and redistribution this year.
This was announced by President Jacob Zuma who delivered the 2017 State of the Nation Address during a Joint Sitting of the two houses of Parliament on Thursday.
Government is of the view that it will be “difficult if not impossible, to achieve true reconciliation until the land question is resolved”.
While government’s land reform and redistribution programmes had yielded some successes since 1994, said President Zuma, large tracts of land still remain in the hands of very few people.
Data shows that only eight million hectares of arable land have been transferred to black people, which is only 9.8 % 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 2.9 million 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 muster. This is due to inadequate public participation during its processing,” President Zuma said.
The bill was voted for adoption in the National Assembly in May last year, however, President Zuma received objections against the signing of the bill into law from individuals and various organisations.
The petitions raised a number of procedural issues which include that procedures followed by the National Council of Provinces (NCOP) and some provincial legislatures in passing the bill were inconsistent with the Constitution.
Others include the failure by the NCOP to facilitate sufficient consultation with the public prior to the adoption of the bill, as well as the objection that the bill was not referred to the National House of Traditional Leaders as required.
Government introduced the bill in order to make progressive land purchases to address inequalities caused by the apartheid regime without being prevented by the willing buyer, willing seller principle.
It was introduced to make provision for a more coherent process of handling the expropriation of land and speeding up land reform.
It seeks to align the Expropriation Act of 1975 with the Constitution and to provide a common framework to guide the processes and procedures for the expropriation of land by organs of State.
The bill, once signed into law, would enable government to purchase land at a value determined by the State adjudicator and then expropriate – provided that the Minister of Public Works is satisfied that the land purchase is in the “public interest”.
President Zuma hoped Parliament will be able to move with speed in meeting the requirements so that the law can be finalised to effect transformation.
He told Members of Parliament on Thursday that 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,” said President Zuma.
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,” he said.
He 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 is committed to support black smallholder farmers. “Indeed, government will implement a commercialisation support programme for 450 black smallholder farmers,” said the President.
He encouraged more women to consider farming.
Property Practitioners Bill to be more Inclusive
A draft Property Practitioners Bill will be published by the Department of Human Settlements for public comment with a purpose of establishing a more inclusive, representative sector, towards radical economic transformation.
President Jacob Zuma made the announcement when he was delivering the State of the Nation Address (SONA) to a Joint Sitting of Parliament on Thursday evening.
President Zuma said that 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,” he said.
However, the President noted that less than 5% of the sector is owned or managed by Black people, and Africans in particular.
Issuing of title deeds
Among key priorities this year, the President said, 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.
He reiterated that radical economic transformation should mean moving beyond share ownership schemes only, adding that government 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 President also announced that the Department of Public Works will invest approximately R100 million 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 (Small, Medium and Micro-sized Enterprises).
“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,” said President Zuma.
He further assured the youth that the lowering of the cost of data is uppermost in government policies and plans.
The theme for this year’s address is: “The Year of Oliver Reginald Tambo: Unity in Action Together Moving South Africa Forward”.
Government’s Budgets must Empower Small Businesses
President Jacob Zuma says government budgets must be used to achieve the objective of economic transformation, which ultimately seeks to benefit the majority of South Africans.
Delivering the State of the Nation Address (SONA) to a Joint Sitting of Parliament on Thursday night, President Zuma said the State spends R500 billion a year buying goods and services. Added to this, government also has a R900 billion infrastructure budget.
He said interventions to accelerate economic transformation in the year ahead will include using 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.
“As a start, the new regulations that make it compulsory for big contractors to subcontract 30% of business to black-owned enterprises have been finalised and were gazetted on the 20th of January,” he said.
President Zuma said through these 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 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,” he said.
Last year, the President signed into law a provision to criminalise cartels and collusion. The law came into effect on 1 May. The provision carries jail sentences of up to 10 years.
“We are now stepping up our actions to deal with the other challenges, 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.
“We reiterate that radical economic transformation should mean moving beyond share ownership schemes only,” he said.
The President said government would like to see black people involved directly in business, owning factories.
He said in this regard, the development of the Black Industrialists Programme is thus critical.
“The programme has from inception supported more than 22 entrepreneurs. 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.”
Getting the ownership balance right
He said government will use all levers of the State to implement radical economic transformation.
“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,” he said.
Majority of black South Africans excluded from economic participation
According to the National Empowerment Fund (NEF), only 10% of the top 100 companies on the Johannesburg Stock Exchange are owned by black South Africans through the black empowerment codes.
President Zuma said in terms of the 2015/16 information submitted to the Employment Equity Commission, the representation of whites at top management level amounted to 72%, while African representation was at 10%.
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, compared to the designated groups, the President said.
Courtesy of SAnews.gov.za