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The ANC has come to the conclusion that the only way to prevent social unrest is to place much more of the economy in black hands. That was the message from ANC economic policy head Enoch Godongwana, who spoke to Bloomberg news agency about the financial sector’s new charter. “We are dealing with an environment where unless you change the economy and the ownership patterns, you are sitting over time on something which is going to confront you in a violent way because South Africans, the majority of them, will not feel that they have a claim in the state and therefore have nothing to defend,” he cautioned. It doesn’t take an economic expert to see that high unemployment and a shrinking economy are ingredients for turmoil. But, focusing on addressing the challenge largely on the basis of race cannot be the right answer. The ANC should instead look at how empowerment legislation and high taxes have made it difficult for entrepreneurs across the racial divides from doing their bit to create jobs and generally boost the economy. They should also acknowledge the massive policy failures that have prevented many citizens from receiving quality school education, putting them at a distinct disadvantage in a world that favours the skilled. So far, the only significant beneficiaries of preferential rules for black investors have been a politically connected clique – which includes white and Indian friends. Instead of driving white investors away, the ANC should be thinking about how to make South Africa more friendly to all investors. – Jackie Cameron
By Sam Mkokeli, Amogelang Mbatha and Renee Bonorchis
(Bloomberg) – South Africa’s ruling African National Congress supports the financial services industry’s plan to set up a fund to boost financing for black investors in a bid to increase their participation in the economy.
The drive to create a bigger black business class following the end of white-minority rule in 1994 has been thwarted because emerging entrepreneurs struggled to obtain the capital required to finance big deals, the ANC’s economic policy head, Enoch Godongwana, 59, said in an interview in Johannesburg on Wednesday.
“We’re talking about black people who have got to get access to the economy, but for them to get access they need to have money. These are the very people who were deprived of assets in the first place,” Godongwana said. “In the financial sector’s new charter, there’s an interesting proposal of some funding that’s going to come from the financial sector, which is going to be an impressive figure,” he said, declining to give the amount.
South Africa’s biggest banks and financial services institutions, including Standard Bank Group Ltd. and Barclays Africa Group Ltd., are calling for the establishment of a Black Business Growth Fund that could be worth as much as 100 billion rand ($7.6 billion), according to Asief Mohamed, chief investment officer at Aeon Investment Management.
“We are dealing with an environment where unless you change the economy and the ownership patterns, you are sitting over time on something which is going to confront you in a violent way because South Africans, the majority of them, will not feel that they have a claim in the state and therefore have nothing to defend,” Godongwana said.
Difficulty in financing black investors’ involvement in industries such as mining and banking has hindered efforts to reduce economic inequality, he said.
“How are they going to fund this unless society makes a concerted effort to make sure there’s available funding,” Godongwana said. “It can’t be government alone.”
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