Radical economic transformation, if not implemented carefully, especially when it comes to skills development, could drag the country’s economy backwards and result in more poverty, inequality and high unemployment rates.
That’s the warning from economist Azar Jammine, who said transformation policies have prevented transferring skills properly, as more young people fail to reach the minimum skill levels required to compete in the international economy.
“The way black economic empowerment policies have been implemented have favoured a handful of connected individuals who have enriched themselves,” he said.
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“And the majority of black people have been left way behind and there have been fewer resources available, or rather left in the economy to uplift the masses.”
Jammine said the best way to transform the economy was to improve the educational outcomes of the majority of South Africans, as education was currently “generating very weak outcomes”.
“A lot of the people leave schools or leave before matric and are then unable to add value to the economy with the kind of education they’ve received,” he said.
“They are just far too unequipped to actually contribute towards the jobs they try to get into.
“And this is especially the case with mathematics, science, technical skills and the like – and that’s where the educational system needs to focus more.
“If people ended up getting a decent education, they would be able to start adding formal value and become less dependent on someone offering them a job.
“They would be able to start doing jobs themselves and uplifting themselves that way.”
According to Afrika Tikkun, a nongovernmental organisation involved in transformative development, the skills deficit in SA was to blame for the lack of economic growth and job opportunities, due to a mismatch between the skills needed to create jobs and the unemployment rate.
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On Sunday, at the ANC’s KwaZulu-Natal elective conference, President Cyril Ramaphosa said although there was “some progress in improving the economic position of blacks and women through redistributive and affirmative action policies, the country is still defined by widespread poverty, unemployment and inequality”.
“That is why we must continue to implement the available legal instruments to tackle this concentration of ownership, control and market dominance,”
Speaking at the Black Industrialists and Exporters Conference in Sandton last week, Ramaphosa admitted black business owners were still facing hurdles, including unfavourable policies and lack of capital.
He also noted that while black-owned businesses have received support amounting to R55 billion over the past 11 years, black businesspeople remained sidelined.
Ramaphosa said while government had made gains in transforming a racialised economy, the country had not yet overcome the structural defects, which ran deep and were reflected in the high levels of unemployment.
“With the country’s majority having been deliberately and systemically excluded from the economic mainstream for centuries, it is no wonder self-employment and entrepreneurship in SA are at lower levels than most peer economies,” he said.
Business Leadership SA chief executive Busi Mavuso said while the plight of the poor needed urgent measures, “undermining the economy was not the answer and the right answer is to do the opposite – focus on growing the economy”.
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“We have done it before – in the years leading up to 2008, the economy grew strongly, enabling a dramatic expansion of social spending, including creating one of the largest social grant systems in the world,” she said.
“Growth allowed it to happen then, while simultaneously improving government’s financial position and reducing some taxes.
“We sit now with fragile growth; with economic growth trailing population growth,” she noted.
“All our energy should be focused on reforms which drive the economy into a higher gear.”