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Cape Town - South Africa needs to ignite its growth engine and restructure the economy to avoid being stuck in a low growth trap, according to Deputy Minister of Finance Mcebisi Jonas.
In an address to the Gordon Institute of Business Science's Think Tank Event on Monday evening, Jonas clarified that this growth "must be inequality reducing. This is at the heart of the notion of inclusive growth". And playing the blame game won't help anybody: "Rather than blame each other, we should accept that things need to change – change radically as we are saying in the ruling party."
FULL SPEECH: Mcebisi Jonas warns of low growth trap
This change should happen without delay, hence the call for a new consensus to bring policy certainty to give business the stability it needs to make long-term investment decisions.
The matter is given even greater urgency by the context of rising social discontent and impatience - as in the #feesmustfall protests - as well as the rise of populism both worldwide and at home. Jonas cautioned against harmful policies: "Unfortunately there are no quick-fix solutions to the complex problems we face as a country, and we need to collectively fight against short-term posturing that may do us untold damage in the long term."
One of the tasks the country's leadership needs to address is the business government relationship, said Jonas. He singled out "a very narrow interpretation of what constitutes redistribution" as a problem point.
"Simply changing the colour of the asset owners without restructuring will simply mean replacing a white elite with a black elite. Fundamental inequality will not change," cautioned Jonas.
"What we should rather be focusing on is creating new wealth and new assets, and making sure that the previously dispossessed get an increasing share in this new wealth." This can be achieved through training, partnerships, access to capital and markets, access to technology and the like, explained Jonas.
"What we would like to see in collaboration with universities and industry is the blossoming of techno-parks and incubators. The established private sector must play a key role in enabling this to happen. This must be unpacked industry by industry, in partnership with government and other stakeholders."
Corruption has been a constraining factor in achieving the country's targets, said Jonas. "Currently it is driving the asset grabbing mind-set that we need to allay." But business must play its part and the fight against corruption cannot be left to government alone: "Business has a core role in keeping its members ethical through peer-reviewing mechanisms, monitoring and reporting."
An important lesson taught by history is that "where rent-seeking is a primary source of wealth creation, institutions will always be under threat." But if innovation and growing productivity underlie the creation of wealth, societies are more likely to have stable institutions.
The surest way of defeating corruption is economic restructuring and the development of real innovation and productive capability, said Jonas. "In the meantime, we must stay strong and unite against any assaults on our democratic institutions."
These issues are "being hotly discussed" by the African National Congress in the build-up to its national conference in December, said Jonas.
