There is a case for radical economic transformation, says economics professor
Cape Town - While those who are benefiting from the current structure of the country’s economy are opposed to the implementation of radical economic transformation (RET) policies, an economics professor says there is a need for the policy to be implemented.
Ghanaian-born Professor Matthew Ocran, who teaches economics at the University of Western Cape, says the country’s economy has been stagnating in the past decade and, in order to reform it, there must be structural reforms like those proposed by RET proponents.
He described RET as a policy that can ensure that not only a few are brought into the mainstream economy but a large majority of the country.
Ocran was speaking during a webinar on radical economic transformation and post Covid-19 hosted by the Cape Argus.
He said these reforms can enable more people to take part in the economy and businesses to mushroom, thus ensuring everybody has money to spend to circulate in the economy.
“In order to prepare the ground, you know to look at the need for radical economic transformation, or as an economist, I would call it a structural reform, it is important to look at how the economy has performed in the past 10 years, others have called it the lost decade…
"There has been a decline, consistently of growth; growth has been very weak to the extent that in the last two years we have had recessions now and again.
"So the growth has been terrible, very weak to be charitable, even before Covid and that is what we are sitting with.
“Having set the scene, I think it is difficult at this point to argue that there is no need for radical economic transformation. I think the idea of economic transformation is being pushed because something radical needs to be done about the economy.
"We cannot continue on the same path that we have been running over the past decade. For me, that is a motivation for radical economic transformation and if one looks at the economy, it becomes very clear that indeed this is the time to do something about the economy."
According to Ocran, the reforms need the participation of the Reserve Bank, state-owned companies (SOEs) and the government. He said the Reserve Bank can help in opening up the financial market so that it could easily take part in the financial sector.
Making a case for SoEs, he said, while some of the SOEs have experienced financial difficulties in the recent past, they have and will still play a role in transforming the economy. That is because they play in critical sectors like energy and transport.
Without condoning the alleged capturing of the state, which is currently being probed by the State Capture Commission chaired by Deputy Chief Justice Raymond Zondo, Ocran said the state is always at risk of being captured by some powerful elements in the society.