Businesses told to be proactive about radical economic transformation

Cape Town – South African businesses need to start thinking proactively about radical economic transformation, said Standard Bank Group chief economist Iraj Abedian.

In a statement issued ahead of his engagements with business leaders in Port Elizabeth this week, Abedian said although radical economic transformation is thrown into the melting pot of the ANC succession planning, it has both opportunistic and substantive elements to it.

The opportunistic side, he said, injects "ill-defined and open-ended risks into the business milieu”, while the substantive element requires “systemic attention by the business sector insofar as business is the central player in any economic transformation”.

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Radical economic transformation has risen to prominence since President Jacob Zuma elaborated on the notion in his State of the Nation Address (SONA) in February this year. It has since become a catchphrase among ministers and members of the ruling party.

It was also a subject of discussion in a number of sessions at the recent World Economic Forum (WEF) on Africa held in Durban last week.

Touching on the topic at the WEF, Finance Minister Malusi Gigaba said radical economic transformation means structural changes to the economy, including a much stronger manufacturing sector including beneficiation that will add value to exports.

Small Business Development Minister Lindiwe Zulu responded at a different discussion session that radical economic transformation means South Africa must change its Constitution to allow the seizure of land for redistribution to black people without compensation, because the country’s laws are in the way of transforming the economy more than two decades after the end of apartheid.

READ: Lindiwe Zulu seeks land seizure without payment

Abedian said notwithstanding global and domestic challenges, there are opportunities for forward-thinking African business leaders.

He also pointed out that the current global instability is unprecedented - not only in the pace of change, but also the rate at which institutions of governance are decaying.

Brexit, a surprise US election in which business tycoon Donald Trump became president, and other global socio-economic and political upheavals are having a direct effect on local and national businesses, which companies simply cannot afford to take lightly. 

READ: Business confidence to take huge knock - economist 

According to Abedian, there is currently a “systemic problem” characterised by the twin traits of unsustainability and volatility, which business leaders ignore at their peril.

“No country, no business sector and no firm will be immune to any system disruption. As such, wherever we are, local businesses need to take a keen interest in such matters."