The Steinhoff Saga Management review - University of Stellenbosch Business School

January – June 2020

New wine into new wine skins:
An alternative economic strategy for
South Africa’s economic reconstruction

  • Prof Mark Swilling and Dr Nthabiseng Moleko
  • October 2020

SHARE

What is this report about?

Despite 26 years of democratic rule, South Africa remains one of the most unequal countries in the world. Here are some statistics:

  • In 2017, only 50.7% of learners completed secondary school.
  • 30% of the working-age population is unemployed.
  • Women earn about 30% less than men for the same work.
  • 90% of asset wealth owned is by 10% of the population.
  • About 30 million people live below the poverty line.
  • More than 17 million people rely on social grants.

How can South Africa solve the triple crisis of poverty, inequality and unemployment? Up until now, reliance on mainstream economic thinking and micro-economic solutions have not yielded the outcomes we need to support development in this country, particularly in the Covid-19 context. As a result, there is an urgent need for an alternative economic framework.

This report is the outcome of a multi-stakeholder project aimed at providing alternative solutions packaged into seven strategic interventions. According to the authors of the report, South Africa needs a new model of the state – a model underpinned by enhanced coordination, domestic capital mobilisation, and less reliance on external capital markets. This model needs to generate demand for labour while stimulating productivity, facilitating structural transformation, and producing more sophisticated goods within a diversified economy. The fundamentals of this policy should include:

  • Restructuring the economy to enhance productivity and support inclusive growth
  • Reforming value chain and distribution channels to absorb new entrants
  • Transferring the factors of production (land, capital, skills) to black South Africans
  • Optimising public goods and ownership
  • Adopting technology to advance growth
  • Targeting full employment of South Africans.

The authors believe that the seven strategic interventions proposed in this report have the potential to bring about an inclusive, equitable and sustainable economy for South Africa. Each of these interventions come with a number of alternative strategies:

  • Using a coherent industrial planning framework to drive economic growth
  • Adopting labour-absorbing strategies to reduce unemployment
  • Boosting domestic food production and rural development
  • Mobilising domestic capital and obtaining private sector participation
  • Using fiscal policy to stimulate growth, redistribute income and eliminate poverty
  • Building the capacity of the state, especially after being weakened by state capture
  • Growing the economy through redistribution to help open up the economy to previously disadvantaged people and smaller businesses.

Who produced this report?

This report was commissioned by the Law Faculty of Stellenbosch University, and was supported by various institutions and role players. This report originated from two workshops held in Stellenbosch in August and November 2019, convened by Prof Thuli Madonsela, Chair of Social Justice at Stellenbosch University. The aim of the workshops was to gather future policy makers, established as well as upcoming young economists, thought leaders and academics, and particularly those whose voices are largely unheard in the current discourse on economic growth.

The report was finalised by the convenors of the workshops, namely Prof Mark Swilling and Dr Nthabiseng Moleko. Dr Moleko is a senior lecturer in Managerial Economics and Statistics at the University of Stellenbosch Business School.

Download full report
Download Executive Summary

Related articles

May 26

6 minutes to read

The gender pay gap: a guide fo...
Mar 02

8 minutes to read

Women on South African boards ...

Join the USB Management Review community

Subscribe to receive an email alert for new content on USB Management Review.

SUBSCRIBE NOW