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Land reform key for SA’s economic transformation - ANC

Jan 31 2017 05:31
Lameez Omarjee

Johannesburg – Land reform is one of the key parts to the ANC’s strategy to ensure economic transformation, and an economist says it can have a positive impact on economic growth.

In a statement issued by the ANC, detailing the matters discussed in its recent lekgotla held on January 25, the party’s National Executive Committee (NEC) highlighted points to be addressed to ensure economic transformation, land reform being one of them.

Speaking to Fin24 by phone, chief economist at Investment Solutions, Lesiba Mothata explained that land reform would have positive multiplier effects for the economy.

“The productive land must be shared equally. The majority of this country must own the productive aspects of the economy,” he said.

He explained it was different to investments on the stock market where only the shareholders can maximise their wealth. Land reform ensures that land is in the hands of those who live in the country, and will even impact the social aspects of life.

The statement also indicated the ANC’s intention to ensure more infrastructure investment which prioritises black industrialists and entrepreneurs in townships and rural areas.

Mothata said that this is an important policy that could “remove inequality”. This way the growth potential of the economy can be unlocked and be more inclusive. “Inequality is creating problems because it is not allowing as many people in the middle class,” he said.

The ANC also wants to pursue industrialisation strategies, so that the country is not dependent on exporting raw materials.

Mothata explained that the manufacturing industry’s contribution to GDP has declined and that it is the second most taxed industry, relative to mining and tourism, according to the World Bank.

“Manufacturing needs to be a focal point in that it attracts private investments,” said Mothata. He added that the sector has the potential to become an export hub of high-end products, for consumption within South Africa, sub-Saharan Africa and beyond.

Although the ANC wants agriculture to play a bigger role in GDP growth, Mothata highlighted that the manufacturing industry has potential to create more jobs, and ensure the longevity and sustainability of the labour force through the skills and training provided in the industry. “Agriculture is a weather-related industry so it creates cyclicality in job creation,” he explained.

Among the other points raised by the NEC meeting was that the South African economy should shift from a capitalist to a “state developmentalist” one.

Globally the construct of capitalism is being challenged said Mothata. “Pure capitalism as understood can prove unfruitful in an economy with stark differences historically in terms of growth, employment, income and standard of living,” he said. “Correction is needed in the structure of the economy.”

There is a trend of the state contributing to the constructs of the economy, but Mothata cautioned that this should not be in a way that crowds out private investment. “When that happens it can create an unintended consequences of not being able to achieve the desired goal.”

There should be a balance between privatisation and state-owned enterprises. To achieve this balance requires pragmatism or practically, explained Mothata. The statement by the NEC implies that there will be more of a municipal focus and provincial focus to “revive” the economy, he said.

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