Growth and inclusive development must be prioritised to move SA forward
- Adam Habib
South Africa’s young democracy has emerged intact, albeit severely battered, from Jacob Zuma's tempestuous era.
Cyril Ramaphosa is the new leader at the helm, and has to chart a strategic course that is beneficial to all South Africans. We have survived a multifaceted political and socioeconomic crisis in which trust has eroded between much of the citizenry, the political elite and the now departed President.
Our society is ravaged by extreme levels of inequality, with the gap having increased exponentially in the post-apartheid era, resulting in a fractured, polarised populace.
Ramaphosa has to develop an innovative strategic agenda that addresses both this trust deficit and the inequality challenge. This has to involve a focus on growth, attracting investment, and rebuilding the economy, while simultaneously addressing the fundamental challenge of inequality, coupled with poverty and unemployment. We need a pioneering plan that both creates an environment conducive to growth and enables inclusive development, thereby strengthening the foundations of democracy.
South Africa achieved some economic growth in the last two decades, even if it is at a level far lower than we would have preferred. However, growth is a necessary, but not sufficient condition for inclusive development. While it is true that much has been delivered – electricity, water, sanitation and social support grants – and that poverty rates have declined in certain years of the post-apartheid era, our society simultaneously has been ravaged by the scourge of inequality in the last two decades. We overtook Brazil to become the most unequal society in the world. Since 1994, inclusive of the period of the Zuma presidency, inequality has grown every single year.
A new agenda requires a recognition that regulation is also essential in order to channel resources to education, healthcare, infrastructure and small business development. None of this is going to happen without a reconsideration of tax rates, remuneration caps, more measured profitability and longer term investment horizons – measures that mainstream business has opposed for so long.
It is also incumbent upon all social actors – the private and public sectors, civil society, active citizens and the fourth estate, among others – to confront power and transform society towards the inclusive vision that we collectively share. It is my view that two powerful sets of stakeholders – corporate leaders and the political elite – are not sufficiently appreciative of the extent of the challenge of inequality.
Some executives in the corporate sector, and in particular the private sector economists who serve them, assume that with economic growth, inequality will automatically stabilise and subsequently erode. Thomas Piketty, in Capital in the Twenty-First Century, explicitly demonstrates that inequality will continue to grow across the world unless there is a clear political attempt to counter the structural dynamics that facilitate it.
The political elite, on the other hand, recognise the threat that inequality poses, but cannot muster the political will to do anything about it. Some erroneously assume that by addressing poverty, we will automatically reduce inequality, a view that is expressed in the economic chapter of the National Development Plan (NDP). The NDP therefore proposes to expand livelihood op