Driving Radical Economic Transformation

Over the past five years, the Black Business Council has successfully lobbied for significant changes to empowerment legislation and regulations as part of its agenda to transform the economy.

- Andile Ntingi

In the past few weeks, a three-word catchphrase has spooked investors. “Radical economic transformation” has become the catchphrase for supporters of the recent Cabinet reshuffle, which sent financial markets into a tailspin and led Standard & Poor’s and Fitch to downgrade South Africa’s debt to junk.

President Jacob Zuma said his restructured Cabinet, which affected 10 ministers and 10 deputy ministers in all, will drive radical economic transformation (RET). The rating agencies read this as a signal of a significant shift in South Africa’s economic policies, a prospect that has made investors nervous and raised fears of capital flight, rising interest rates, and the spectre of a recession.

Since the Cabinet reshuffle, RET has been hotly debated. The sceptics say RET is a populist slogan designed to enrich a tiny ruling elite and its cronies through the looting of the state. In contrast, supporters see it as a credible attempt to decisively address the skewed ownership of the economy in favour of black people.

Radical economic transformation is not new as an ideology, but it has been on the periphery of public discourse over the last seven years, until after last month’s Cabinet reshuffle, where it was mentioned in Zuma’s statement that spelled out the axing of finance minister Pravin Gordhan. Zuma has referred to RET several times this year, but it has really been Gordhan’s dismissal that has given it prominence.