What's the deal with 'radical economic transformation'?

Every time President Jacob Zuma is under severe pressure or up for re-election and has to show he still has political fire in his belly, he comes up, interchangeably, with the phrases "second phase of the national democratic revolution" and "radical economic transformation".

Until this week, he was vague on the content of these rather glib phrases, but for those with the focus to listen to his speech after the blood-dimmed tide had been loosed upon the EFF on Thursday night, his meaning is somewhat clearer.

Basically, he defines radical economic transformation as racialised regulation by the government in lucrative areas of the economy where the belief is that black people are underrepresented.

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If his state of the nation promises are to be implemented (past experience shows this to be a big "if"), then the estate agents' profession (long targeted as being too white by black business) and contractors benefiting from work done for the state are in the government's crosshairs to be transformed this year.

As justification for the racialised prism through which he views radical transformation, he listed the ways in which apartheid and, before that, colonialism and segregation, had allowed race and class to overlap, to the extent that they had almost become interchangeable, with this largely persisting to this day.

Zuma noted that white households earned at least five times more than black ones, according to StatsSA.

"Only 10% of the top 100 companies on the Johannesburg Stock Exchange are owned by black South Africans - directly achieved, principally, through the black empowerment codes," Zuma said.

According to Commission for Employment Equity statistics, the representation of whites in top management is 72%, with Africans at 10%, coloureds at 4.5% and Indians at 8.7%.

Zuma held that the "skewed nature of ownership and leadership patterns" needed to be corrected. He cut to the chase: "There can be no sustainability in any economy if the majority is excluded in this manner. In my discussions with the business community, they accepted these transformation imperatives."

Then he stated the dictum of his version of radical economic transformation: the state will play a role in the economy to drive transformation. The government will utilise to the maximum the available strategic levers, including legislation, regulations, licensing, budgeting, procurement and broad-based BEE charters, to influence the behaviour of the private sector and drive transformation.

block_quotes_start Zuma held that the 'skewed nature of ownership and leadership patterns' needed to be corrected

"The state spends R500-billion a year buying goods and services, and R900-billion on infrastructure building and maintenance. Those budgets must be used to achieve economic transformation," Zuma instructed.

Then he got to the nitty-gritty: new regulations making it compulsory for big contractors with state contracts to subcontract 30% of business to black-owned enterprises were gazetted on January 20.

The president made no mention of how the government would combat the twin evils of fronting and fly-by-nights lacking the proper skills, capacity and economy of scale to finalise projects. On these rocks, many well-intentioned business partnerships have run aground, with the public the ultimate loser.

Zuma also pointed out that, since his last state of the nation address, the law had been changed to criminalise cartels and collusion, with jail sentences of up to 10 years.

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Furthermore, the government will table an amendment to the Competition Act this year. It will, among other issues, address what Zuma terms the need to have a more inclusive economy and to de-concentrate the high levels of ownership and control in many sectors.

In this way, Zuma said, the government sought to give black people economic opportunities and make the economy more dynamic, as part of its vision of radical economic transformation.

Regarding estate agents, a draft Property Practitioners Bill will be published by the Department of Human Settlements for public comment with the purpose of establishing a more inclusive, representative sector, as a further step towards radical economic transformation.

The purpose is to have more black agents handling lucrative sales at the top end of the market. How this will be managed, given the competitive and highly personalised nature of estate agents' work, is unclear, but the message is unmistakable - become racially representative or the state will regulate you into doing so.

It was a slow start to giving meaning to the concept of "radical economic transformation", but it was a clear indication that it means racially defined access will be used to counter perceived racial bias in the economy, and that Zuma will not be deterred from using blunt objects to structurally advance economic access for a constituency the ANC does not want to lose to the opposition.

This president is a fighter with much to lose if the ANC loses power. The run-up to the 2019 elections may descend into grim racial power politics, with not an inch given to the opposition in the race to the Union Buildings.