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Gigaba has dropped ‘radical’ from his economic transformation. Here’s why

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Malusi Gigaba. Picture: Leon Sadiki/City Press
Malusi Gigaba. Picture: Leon Sadiki/City Press

The term “radical economic transformation” has become a catchphrase. It is ubiquitous in the discourse surrounding South Africa’s political economy.

In President Jacob Zuma’s 2017 state of the nation address, the president used the phrase six times, declaring that “radical economic transformation” would be necessary to tackle the economic inequalities ingrained in society.

Earlier this month, Zuma reiterated his belief in the importance of radical economic transformation in his formal welcoming address at the World Economic Forum on Africa.

“In our country, we speak about radical economic transformation, which in our view will take us on the path to inclusive growth and a better life for all,” the president said.

But in the National Treasury budget vote speech, which outlines the department’s plans for the next financial year, Finance Minister Malusi Gigaba notably did not mention the word “radical” at all – just “economic transformation”.

“As the executive leadership of finance, we are absolutely clear about our priorities: inclusive growth and economic transformation as spelled out by the National Development Plan,” Gigaba said on Tuesday.

“Economic transformation should prioritise – among other objectives – changing the structure, ownership and institutions of our economy to include all South Africans in opportunity and wealth creation, particularly marginalised groups such as black people, women and youth.”

At the time of writing, neither the National Treasury department’s communications office nor Gigaba’s spokesperson, Mayihlome Tshwete, had responded to requests for comment on whether the omission was deliberate.

But Dr Azar Jammine, the director and chief economist at economic consultancy firm Econometrix, said that Gigaba has generally avoided using the term “radical economic transformation” since the country’s investment rating downgrade.

South Africa was downgraded to junk status following Zuma’s firing of former finance minister Pravin Gordhan.

The downgrade was seen as evidence of foreign investors’ lack of confidence in the country’s political and economic climate.

Gigaba has since adjusted his rhetoric to help ease the fears that the president’s Cabinet reshuffle unleashed, Jammine said.

“Because no one knows what [radical economic transformation] actually means, it has created a sensation of fear of what it might mean, which is excessive government spending that might result in a substantial increase in the public debt, which would lead to more credit downgrades.”

Earlier this month, Gigaba similarly told Parliament’s standing committee on finance that the debates around radical economic transformation were ongoing and the ANC had not defined what that transformation would specifically entail.

Yet regardless of its ambiguity, the phrase does encapsulate a unanimous sentiment.

“It can mean many different things, but clearly what people are trying to get at is that with the economy having performed poorly for very long, there is need for major changes in how the economy is run,” Jammine said.

But the discourse needs to be about how to create tangible economic change, not about what to call that change, Gigaba said at the World Economic Forum on Africa earlier this month.

“What we are aiming for is a growing economy that is transforming and a transforming economy that is growing.”

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