Cape Town - Finance Minister Pravin Gordhan on Wednesday weighed in on the need for economic transformation, saying there was a need for fundamental and radical transformation measures.
In his Budget Speech yesterday Gordhan said relationships between labour and capital, rich and poor, black and white, men and women, town and township, urban and rural still reflected the entrenched legacy of colonialism.
“Wealth is produced and allocated along lines that remain fundamentally unjust,” he said. “The ownership of assets and the distribution of income is captured by a minority of the population - a situation that is morally wrong and economically unsustainable.”
Gordhan said government programmes should create jobs, eliminate poverty and narrow inequality.
Speaking at a press conference ahead of the delivery of the national Budget speech, Gordhan emphasised the need for inclusive growth. “We can continue to manage the fiscal framework but unless we have a dynamic approach to economic growth, the numbers will not change.
He said the state of the South African society - with many still trapped in poverty - created the urgency for transformation. “We must go beyond slogans. The big issue is who benefits from transformation,” he said.
Radical transformation has taken a centre stage in the government and the ANC, with President Jacob Zuma and his ministers appearing to champion the move to tackle the economic legacy of segregation.
Gordhan said it was unsustainable to have a small elite pocketing the bulk of the wealth. He said the structure of the South African economy was unacceptable, immoral and inconsistent with the values of the constitution.
He said South Africa was still structurally linked to the past. “Sooner rather than later, we need to have a conversation We must start focusing on inclusive growth,” he said at the press conference.
In his speech, Gordhan said transformation should be mass-based and should benefit the most disadvantaged South Africans through the creation of new assets, capabilities and opportunities.
“We have to mobilise both private and public investments in social and economic infrastructure, new technologies and new activities that help build a modern and diversified economy.
“Transformation must reshape our cities and build linkages across the rural and urban landscapes, where fragmentation and separation characterised past patterns.
"Transformation must must unleash growth, establish a new economic direction, mobilise investment, empower the masses and create the new resources for social change,” he said.
Gordhan said that while economic growth made transformation visible, the fiscal system was the most direct vehicle for redistribution and inclusivity. He said about two thirds of this year’s Budget was dedicated to the so-called social rights such as housing and education.
“The budget is highly redistributive to poor and working families. It also redistributes substantial resources from the urban economy to fund services in rural areas,” he said.
He said radical transformation and inclusive growth affected many areas of economic activity. There was growing impatience about the pace of transformation. "Can we channel this energy into constructive activism and productive collaboration?” asked Gordhan. Inclusive growth should be an obsession, he said.