Jonas speaks out: Discard populism and focus on fixing broken SA economy

Why do the insights and opinions of ministers always seem more credible when they’ve just been turfed out of their portfolios for political and/or more nefarious reasons? Perhaps it’s because they’re speaking their minds openly for the first time. Former deputy finance minister Mcebisi Jonas revealed the level head that’s just been lopped off by Jacob Zuma and his Zuptoids. While not deviating from the ANC policy of radical economic transformation, he nevertheless hit out at the dangerous and growing populism race we’re witnessed between the EFF and the ANC’s power elite. He defined populism as partisan, rule-breaking and law-evading, without credibility, a formula for crippling inclusive growth. Jonas outlined what’s needed to restore trust and credibility in government. His call to white-owned businesses to champion transformation will be ignored at their peril. Liberally interpreted, he means, sit down, define what the term means to you, engage with government and then implement. Or they’ll do it for you. The appeal was echoed by Treasury’s acting director general, Dondo Mogajane at the same University of Johannesburg forum with an encouraging shot across the bows of corrupt and dysfunctional State-owned enterprises. Hope springs eternal. – Chris Bateman

By Lameez Omarjee, Fin24

Johannesburg – Radical economic transformation has lost its credibility as a policy for inclusive growth, said former deputy finance minister Mcebisi Jonas.

Jonas was speaking at the Mapungubwe Institute for Strategic Reflection (MISTRA) lecture at the University of Johannesburg on Tuesday night. He shared insights on the role of fiscal and monetary authorities in helping or hindering radical economic transformation.

Pravin Gordhan, former South African finance minister, right, speaks to Mcebisi Jonas, his former deputy, during a news conference in Pretoria, South Africa, on March 31, 2017. Photographer: Waldo Swiegers/Bloomberg

“South Africa’s economy is in need of an overhaul … There is no denial the economy must be radically transformed,” he said. However, with the approaching ANC elective conference in December combined with increasing populism, Jonas said it is difficult to subject the policy of transformation to democratic public reasoning.

Populism has resulted in distrust in the governing party, which has impacted on investing stakeholders. “Populism works best in low trust societies,” said Jonas.

“Populism defines friends and enemies and demands the state to behave in a partisan manner, break rules and bypass institutions established to hold the law.”

Read also: Can an annual wealth tax save SA economy? Here’s how the rich can help – finance ministry

As a result, radical economic transformation has lost its credibility as a policy. “We must recast radical economic transformation as a genuine programme for inclusive growth around which society can be mobilised.”

Finance Minister Malusi Gigaba this week called on white-owned or established businesses to champion transformation by providing support networks for emerging black businesses.

“The economy of today still reflects our colonial and apartheid past,” said Gigaba. “We need white businesses to champion transformation and view it within the commercial interest of business.”

Treasury’s acting director general Dondo Mogajane clarified his views on radical economic transformation in Parliament. He said that inclusive growth is no different to radical economic transformation, Fin24 reported.

Among the measures to be taken to transform the economy include improving education and skills development, strengthening competition laws, improving governance at state-owned enterprises and overcoming the fragmentation that was caused by apartheid spatial planning, among other things, said Mogajane.

Source: http://www.fin24.com/Economy/jonas-radical-economic-transformation-has-lost-credibility-20170517-2

8 things in the SA economy that must change

By Lameez Omarjee, Fin24

Johannesburg – The South African economy needs an overhaul to address persistent inequality, said former deputy finance minister Mcebisi Jonas.

Jonas was speaking at the Mapungubwe Institute for Strategic Reflection (MISTRA) lecture at the University of Johannesburg on Tuesday night. He unpacked eight features of the South African economy which needs to be addressed.

Jonas defined radical economic transformation as a “progressive, structural” change in the “fundamental features” of South Africa’s political economy.

South African president’s radical economic transformation. More magic available at www.zapiro.com

The fundamental feature or areas which need to change are:

  1. South Africa’s underperforming mixed economy.
  2. Inequality, especially along racial lines, as a result of the apartheid legacy. If the wealth of the country was equally distributed then it would be possible to feed all families. Jonas pointed out that 8% of black households have a monthly expenditure of R10 000, compared to 63% of white households.
  3. South Africa is only partially industrialised, with a high unemployment rate and low labour market participation.
  4. The private sector is dominated by large scale capital and capital intensive industry. This indicates that capital is highly centralised, with limited distribution among small businesses and entrepreneurs.
  5. The South African economy’s integration into the global economy relies on trade of minerals and foreign capital flows. The country is too reliant on minerals as exports, which shows that industries need to be developed. Secondly, the country is highly dependent on foreign assets: guards should be placed against capital flight or disinvestment.
  6. The economy is dominated by the financial, insurance, business and real estate sectors, which have grown rapidly in the past 20 years. These sectors must be more responsive to increase fixed investment.
  7. Although there are large fiscal allocations to education and training, the outcomes still remain poor. This is a binding constraint to all facets of social development.
  8. The public sector is weak. It must become more effective, capable, less wasteful and less corrupt. We need political leadership.

These issues are mutually reinforcing, said Jonas. “We can’t address some and neglect others… It is possible to make progress with all eight at same time.”

Source: http://www.fin24.com/Economy/8-things-in-the-sa-economy-that-must-change-20170517