The South African Communist Party (SACP) and Black Business Council (BBC) held a bilateral session on Monday, 4 April 2020. The meeting was attended by the office bearers of both the BBC and the SACP. The purpose of the bilateral was to share perspectives on South Africa’s response to the novel coronavirus (Covid-19) pandemic and the national imperative to turn our economy around.
The Covid-19, technical recession and economic stagnation
The Covid-19 pandemic found the South African economy in a technical recession, against the background of long-term stagnation characterised by low levels of growth since the Great Recession of 2008. The global economic crisis interrupted the fastest growth rates experienced in South Africa since the 1960s between the years 2004 and 2007.
Real gross domestic product rates averaged 5.2 per cent per annum over the pre-Great Recession period of 2004 to 2007. This growth performance was significantly underpinned by the global minerals commodity super cycle, among other factors. Starting in 2002 in particular, minerals commodity prices generally began rising.
Despite the pre-2008 Great Recession growth performance, unemployment in South Africa remained at crisis levels and workers in various sectors were retrenched, casualised and outsourced into precarious employment conditions, contributing to a fall in labour’s overall share of income. Ironically, this occurred within the ambit of a policy framework for shared growth, called the Accelerated and Shared Growth Initiative for South Africa.
Persisting colonial features and the end of the global minerals commodity super cycle
The Great Recession of 2008 marked the beginning of the end of the global mineral commodity super cycle, starkly exposing the legacy of colonial features still persistent in the South African economy. Despite the radical democratic breakthrough of April 1994, South Africa continued with significant reliance on exports of mineral resources as raw materials beneficiated overseas and dependency on imports of a wide range of finished products and capital goods from overseas. The BBC and the SACP share a common concern about this lack of radical structural transformation of our country’s economy, as well as its impact on our people.
Inequality, poverty, unemployment and lack of structural economic transformation
In the last quarter of 2019, approximately 10.4 million active and discouraged work seekers were unemployed, a direct result of the pre-Covid-19 economic crisis and lack of radical structural transformation of our country’s economy. There is a correlation between the high rate of unemployment and levels of poverty and inequality. These triple challenges, as well as lack of radical structural transformation of the economy, and the social reproduction crisis severely impact the formerly oppressed, defined in historical terms as black people in general and Africans in particular, and of whom the majority is the working class and poor, women and youth.
The great threat of the Covid-19 pandemic
The SACP and the BBC are deeply concerned that the Covid-19 pandemic poses the real threat of worsening our national situation of high levels of unemployment, poverty and inequality, with far reaching implications. Various projections indicate that unemployment could rise to as high as 50 per cent depending on the overall direction articulated by the impact of Covid-19.
The parties thus welcomed the measures announced by President Cyril Ramaphosa in March and April 2020 in response to the pandemic and its economic impact. We share a common belief that more could be done to both mitigate the impact of the crisis and turn our economy around.
Common stance against monopoly
The SACP placed emphasis on the crucial importance of the pro-worker and pro-poor interventions announced by the President. The BBC underlined the dangerous possibility of the war against Covid-19 being exploited to undermine broader social transformation. The parties agreed to approach the two observations through a mutually reinforcing way forward. This includes adopting a common stance against monopoly capital domination of our economy and capture of the economic value of government’s Covid-19 interventions. Monopoly capital tends to marginalise the participation of black business, co-operatives, small, medium and micro enterprises in economic ownership and management control.
The meeting attached great importance on fostering co-operation on the basis of a patriotic front in pursuit of transformation to end monopoly capital domination and drive the democratisation of our country’s economy. This common premise is rooted in our history. It is a key pillar of our national imperative to systematically reduce inequality and advance towards our constitutional vision of a completely non-racial and non-sexist society characterised by prosperity for all. The meeting agreed that it is critical to pioneer progressive legislative and policy advances and ensure implementation to redress imbalances created in the past as well as end their legacy.
The bilateral session identified fighting corruption, including within the framework of the war against Covid-19, as one of the common objectives of fostering and deepening co-operation in a patriotic front. This will include efforts to ensure that Covid-19 government interventions serve the intended recipients. Implementation of the interventions should advance non-racial and non-sexist transformation, empowerment of the formerly oppressed masses and de-monopolisation of our economy as part of the national imperative to systematically end inequality.
Financial sector transformation
The financial sector in South Africa is dominated by a handful of oligopolies constituting a monopoly with the effect of excluding the participation of black business, co-operatives, small, medium and micro enterprises.
The meeting recognised transformation of the financial sector as a key priority, without which transformation progress in other areas will continue to move at a snail’s pace or stall. This includes working together to push availability and access to affordable finance for productive purposes and reducing the high cost of other financial services.
Transformation of the financial sector requires de-monopolisation and diversification as part of its objectives. The SACP and the BBC will forge co-operation towards realising the success of this objective as part of the wider transformation effort to foster the participation of black business in the economy and develop a thriving co-operatives sector, small, medium and micro enterprises.
There was a discussion pertaining to the pension funds industry and the need to regulate the asset consultants who influence allocation of capital to industry. The meeting also affirmed the need for a state-owned bank and introduction of more banks in the economy that are owned and run by black people and workers through co-operatives.
Re-industrialisation and beneficiation of mineral resources
The SACP and the BBC agree that the productive sector, especially re-industrialisation and beneficiation of our mineral resources, should be a key priority for radical structural transformation of our economy and employment creation. The bilateral session identified section 26 of the Minerals and Petroleum Resources Development Act as a progressive policy instrument to build and deepen co-operation around.
The section states that the Minister responsible for mineral resources may initiate or prescribe initiatives to promote beneficiation of minerals in our country and, in consultation with the Minister responsible for trade and industry, set the terms and conditions for the economic beneficiation of our minerals. The section concludes by stating that “Any person who intends to beneficiate any mineral mined in the Republic outside the Republic may only do so after written notice and in consultation with the Minister” responsible for mineral resources. The parties will promote manufacturing localisation, diversification and growth in a manner that is responsive to environmental protection.
Localisation of medical supplies, health-care equipment and personal protective equipment
South Africa has adopted an importation strategy that has unfortunately promoted job creation abroad, rather than employment creation in South Africa, in the midst of our high rates of unemployment. Now the importation preference strategy has backfired as we scramble to source basic medicines and medical consumables such as paracetamol, masks, gloves and swabs for conducting tests, personal protective equipment and other basic health-care supplies and equipment that are not complicated to manufacture locally. Covid-19 has revealed that we do not have a secure supply of the medicines that are essential to the nation’s wellbeing, which is premised on strong, sustainable local manufacturing. As such, there is an urgent need for South Africa to implement a localisation strategy that will ensure security of supply and local job creation.
Innovation and Industrialisation
The BBC and the SACP recognise the need to collaborate and to actively promote an inclusive innovation ecosystem and High-Technology industry in South Africa, thereby ensuring that black business, co-operatives, small, medium and micro enterprises are active participants in the creation of new industries of tomorrow and to meet the needs of the Digital Industrial Revolution also known as the Fourth Industrial Revolution. The BBC and the SACP should be at the centre of policy discussions on the development of new technologies, making sure that black people are not left behind in the new economy era.
Infrastructure development is crucial to economic and broader social transformation. Government’s greatest challenges in the war against Covid-19 come from the same problems that it seeks to address. Uneven spatial development, over and above the challenges of other forms of inequality, as well as unemployment and poverty, is a serious challenge standing in the way of a more effective response to the pandemic.
The SACP-BBC bilateral session thus agreed that a massive infrastructure expansion programme, with greater attention on developing historically disadvantaged areas, should be a key policy priority for an economic turnaround and a new, post-Covid-19 reality. Infrastructure development should be linked to manufacturing localisation and therefore re-industrialisation as well as transformation in the patterns of economic ownership.
National Health Insurance
The much needed implementation of the National Health Insurance aimed at providing access to quality health-care for all, thus covering the historically disadvantaged, should also be supported by social infrastructure expansion, inclusive of health-care facilities, sanitation and clean drinking water in their respective areas.
Co-operatives, small, medium and micro enterprises
The meeting agreed that the parties should work together to promote and ensure the development of a thriving co-operatives sector as well as small, medium and micro enterprises. This will form part of the efforts to transform the patterns of ownership in our economy and promote an inclusive growth trajectory. As with other common areas, this effort will be pioneered as an integral part of the national imperative to redress imbalances created in the past. Moreover, the bilateral session attached great importance on this front as on others on driving women and youth empowerment. A number of practical steps were agreed upon in regard to immediate co-operation.
Joint review of legislative framework and policy instruments
The parties agreed to conduct legislative review in order to identify more common grounds for co-operation. The scope of this review will cover various sectoral charters and a thorough appraisal of their transformation and employment creation impact. The work will involve more consultation and bilateral sessions. The general outcome the parties seek to firmly establish is that of more progressive policy advances in pursuit of our constitutional vision of redress towards a non-racial, non-sexist and prosperous society. The outcome of the work will be articulated into short-term, medium-term and long-term transformation and development interventions towards equality and a higher level of democracy in which poverty is eradicated.
Dr Blade Nzimande, SACP General Secretary said: “The BBC and the SACP have very strong synergies. Our national response to the Covid-19 pandemic should be used as a platform to build an inclusive and transformed economy that serves the socio-economic and other material needs of all the people.”
Our joint efforts should include ensuring that the stimulus package and interventions amounting to the billions of rand announced by the President and the National Treasury are not used to reinforce monopoly capital domination but instead vigorously promote transformation and the participation in the economy of black business, co-operatives, small, medium and micro enterprises. Sets-asides to foster this inclusion in economic ownership and management control are crucial and should rigorously be pioneered both in the here and now within the framework of the fight against Covid-19 and in overall societal transformation.
The SACP and BBC will co-operate in developing their inputs into the process on the type of economic dispensation that the country should follow as a result of this economic reset.
“The measures needed should advance an inclusive growth trajectory that promotes socio-economic transformation of ownership patterns, protects workers’ rights and advances increasing participation of black business, co-operatives, small, medium and micro enterprises”, said Sandile Zungu, the BBC President.
The bilateral session established a joint committee to be led by BBC’s Head of Policy, Tilson Manyoni and SACP First Deputy General Secretary, Solly Mapaila. The joint committee will take forward the work on common objectives and co-ordinate the socio-economic transformation and development efforts of the parties. This will include facilitating regular consultation to seek shared perspectives.