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Radical economic transformation requires more than repealing percentages of state procurement


The President’s pledge to repeal the Preferential Procurement Policy Framework Act (PPPFA), although commendable, doesn’t go far enough to bring about radical economic transformation, argues Mxolisi ka Nkomonde

State Owned Enterprises (SOEs) have since 1948 until 1989, been the engines of Afrikaner nationalism but most were deliberately weakened ahead of the takeover by majority rule so as to prepare them for sale to British and verligte Afrikaner elite and a small Black buffer class under the banner of Black Economic Empowerment (BEE).

However the large SOEs such as Eskom, Transnet and SAA remain as public entities but they have not been able to facilitate the economic upliftment of the Black majority due to weak policies adopted by the ANC.

President Jacob Zuma made a pledge to repeal the Preferential Procurement Policy Framework Act (PPPFA) because it is one of the obstacles in changing the ownership and control of South Africa’s economy which largely remains colonial. The President’s call is commendable but it’s only the beginning; the 30% of contracts above R30million  that will be set aside for small to medium-sized businesses owned by women, youth, Blacks and people with disabilities can only work in the short run.

The problem in South Africa stems from the cartels in mining, banking, agriculture and manufacturing which are currently controlled by large Johannesburg Stock Exchange listed firms which are 99.4% controlled by white minority.

These cartels control value chains in the South African economy. The proposition to merely change the percentage of contracts targeting Black business at state procurement level is not sufficient to bring about the required “radical economic transformation”. The state will have to take greater steps in restructuring the economy using other instruments since 25% of Gross Domestic Product is in the hands of the state while 75% is controlled by the cartels which feed into the state procurement system.

State entities such as Industrial Development Corporation (IDC), Land Bank, Public Investment Corporation (PIC) and National Empowerment Fund (NEF) are currently entrenching the colonialstructure of the economy largely controlled by the cartels as the requirements to access finance, technological advancements and other economic tools favour established businesses which are owned and controlled by the white minority. The community and economic development clusters of the government need cohesive and cogent policy to arrest this problem such as strengthening Local Economic Development Agencies at municipal level instead of the “trickle down” neoliberal strategy which has dismally failed over the last 20yrs.

The problem with the “trickle down” neoliberal strategy is that white controlled cartels are replaced with Black controlled cartels but solely at state procurement level which doesn’t help with dismantling the colonial structure of the economy. The President is willing to change the economic structure but society needs to interrogate the different structures of government to make it a sustainable and prosperous reality for Black majority.

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