S&P downgrade offers opportunity to explore options without blackmail from rating agencies

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In the first of a series of conversations on what it is that defines radical economic transformation and how it can be achieved, Khotso Molekane leads the way on what can be done….

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The decision by S&P to downgrade the foreign currency debt status of the South African economy is not a blessing in disguise, it is a direct blessing. It allows us to have a deep national conversation and explore all the options without us being blackmailed by the threat of a downgrade.

We now have an opportunity of a truly open and robust discussion about the future of this country. In this discourse, there should be no holy cows. We have rid ourselves of the Minister who considered his job the protection of the fake financial economy. He paid no attention to the real economy. He said nothing about lack of competition and competitiveness.

The President of the Republic has introduced new vocabulary into our economic discourse-Radical Economic Transformation. This represents a breath of fresh air into our economic landscape. While we welcome this new willingness to explore new frontiers in economic thinking, we have to remain vigilant. Radical Economic Transformation cannot remain a slogan. It must be defined properly and given legs to stand on. How should our economy look like after it has been radically transformed?

My answer is a simple one. The distribution of the wealth of this country should reflect the demographics our country. Radical Economic Transformation should dismantle existing economic apartheid in terms of the ownership of wealth and land.

I propose the following as a starting point to radically transforming our economy.

  1. Transformation of township and rural economies. The townships and rural communities have always existed under junk status. Real economic transformation will come from ownership, not through rented blacks as is the case on the JSE. JSE must have a target for the number of black owned and listed companies. I will give an example, if Pick and Pay, Shoprite or KFC want to establish a presence in the township, they should only be allowed to do so through a competitive franchising to the black local entrepreneurs. Lastly all franchises must be distributed according to national demographics. Do not worry about finance. Money follows opportunity.
  2. Relentless prosecution of monopolistic and anticompetitive tendencies wherever they rear their heads. All monopolies and cartels should be broken down into smaller entities and dismantled. Innovation and agility has never come out of fat and uncompetitive monopolies.
  3. We currently have pseudo constitutionalists who campaign for the selective implementation of the constitutional principles that protect apartheid ownership patterns and remain very quiet when transformation, which is a constitutional imperative is undermined. Let us march to the Union Buildings to demand that the Companies Act be amended to compel all listed companies to break down their BEE procurement into the following categories;
    1. 100% black owned and managed companies.
    2. 51% black owned and managed companies, and lastly,
    3. White majority owned companies.

Let us march to the offices of listed companies that do not transform and demand that their CEO’s and Chairpersons resign.  Let us put pressure on the National Treasury to force the PIC to adopt a transformation charter for all the corporations they invest in.

No company that does business with the state or requires state licences to operate should do business with the state or get a licence from the state if less than 50% of their procurement spend does not go towards at least 51% black owned and managed companies. This is not new thinking. The current Minister of Finance while the Minister of Public Enterprises forced all suppliers of coal to Eskom to be at least 51% black owned. Secondly, he applied pressure on small black accounting and audit firms to merge and gave them the majority of the Audit accounts at the major public enterprises like Eskom and Transnet. This clearly demonstrates that where there is political will, the Constitution is not an impediment.

If white capital wants to give a share of their companies to Sipho Pityana or African Rainbow Minerals that is their prerogative and it’s nothing for us to complain about, but such transactions do not represent radical economic transformation.

  1. The state can be the biggest catalyst for Radical Economic Transformation. It has to be supported by all Chapter 9 institutions. How come the Auditor general never reports on public institutions that fail to transform their spending or the Public Protector makes findings against public institutions that do not meet their transformation goals? This indicates how rigged the current economic game is. The state cannot continue to award emerging enterprises three year contracts and hope that they will grow and produce necessary skills. Three years is too short to invest and create operational depth necessary for sustainability.
  2. The biggest impediment to the attainment of all of the above is the perpetuation of black subjugation through racialized patterns of what constitutes knowledge and who possesses useful knowledge and ultimately who becomes meritorious and proficient. The South African education sector will take decades to overcome its racist legacy. If we want to control the economy of our land, we cannot rely on those who see our advancement as a threat to their privileged existence. We need to train more young South Africans outside our country. Training is not just about university education. It is also about those that graduate and are being told that, because they are black, their UCT degree is inferior told that of their white colleagues. If the Financial Services Board sends their interns to Investec to learn about financial regulation, how can such a person hold Investec to account in the future? Why not place them with one of the regulators in Sweden, Germany or even Canada? This is how you build black excellence. Botswana, Lesotho and Swaziland send more students to study overseas than a big economy like South Africa.

Again, these are not new ideas. They have already found expression in isolated pockets within our state departments. When SANDF were confronted with high failure rates amongst especially black pilot cadets and other specialized areas in the military like avionics engineers, air traffic controllers and mechanics, they looked outside our borders for training; in China, Russia, Cuba, US and many other countries. These are very capable, bright and confident students who did not encounter the constant reminders of how intellectually inferior they are by those who have never had an opportunity to compare themselves with the best in the world, but only their victims. Their merit is based on being better than those they have denied resources and opportunity.

A government that seeks to do the above and more will be a government of the people, captured by the people for the people. The ANC was instrumental in organising and leading the black people of South Africa to political freedom. It is now up to the black South Africans to capture the ANC from the paid agents of white capital and use it and any other formation that seeks Radical Economic Transformation as tools to bring about the second face of liberation.

8 Comments on "S&P downgrade offers opportunity to explore options without blackmail from rating agencies"

  1. Jannie vd Merwe | April 6, 2017 at 8:44 am | Reply

    Very well said brother.

  2. Khotso Molekane, are you sure you don’t want to be our next president?

  3. Well spoken my brother. Let all state organs conduct a national ‘spending audit’ to determine the Rand value of their budgets spent on black enterprises, and that spent on white businesses. Those that still refuse to procure from black enterprises must bear the full brunt of the law. The boards of all state entities which refuse to increase the percentage spend (R value) on black enterprises must be vehemently removed and be replaced by patriotic ones. This goes with CEOs and leadership of such entities. When these leaders and boards enter into contracts with state entities their scorecards must make provision for serious economic transformation by way of increasing the percentage of Rand spent in procuring from black enterprises. This goes for all state organs, from national to municipal level. This is how Afrikaners got empowered economically; so why do we entrust such an effective empowerment tool to incapable and incorrigible hands?

    • Pinky Khoabane | April 6, 2017 at 10:22 am | Reply

      Dear Stalin

      Which government department would give us this information. Surely somewhere we can get the audit and we monitor and put pressure.

      Kindest

      PK

  4. Sis PK, before knocking on departments’ doors let’s go to state owned enterprises (SOEs) first, starting with Eskom and SAA. These are among the most contested organs. A 5 year audit of their procurement spend will provide us with a clear ‘picture’ of where they stand i.r.o. economic transformation (radical for that matter). I believe this is public info which the Boards’ chairpersons will be eager to share with us. Such info will also tell us who actually has ‘captured’ the state. I strongly believe that if we make this one of our main radical economic transformation campaigns we will surely get the sympathy of patriotic forces and we will ‘crack it’. This is doable.

    • Pinky Khoabane | April 6, 2017 at 3:41 pm | Reply

      I agree Stalin.

      I will draft some action plan which I will share with you and we can take it step-by-step and get going. I actually thought I saw a different response from you…Maybe Im getting too excited in my old-age.

      Kindest

      PK

  5. A good article.

    It is refreshing to have someone put more than just slogans on the table. Let’s see some positive selfless action on these issues.

  6. Jeff Koorbanally | April 7, 2017 at 10:17 am | Reply

    This is no slogan, but true Radical Transformation in its correct context.
    Well put Khotso!

    Dear Furious White People

    “If I march with you today, you won’t march with me tomorrow. When I march against WMC in protest of their collusion to manipulate our currency, an act of terrorism in a warfare style
    That’s a sad fact.”

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