Tiisetso Makhele
In most developing countries, the concept of economic growth is used less widely to assess economic progress. Instead, the much broader concepts of economic development and transformation have assumed centre stages of much deliberations.
Economic growth simply refers to the quantitative change in the nation’s economy, while development, on the other hand, denotes the qualitative change in the economy.
Over the years, most scholars and policy makers have preferred to focus on the concept of economic transformation, which refers to the structural transformation of the economy through increasing investment from lower – to higher-productivity sectors.
It entails more investment of labour and resources in productive sectors like manufacturing, adoption of new technologies, innovation and improvement in management practices.
In order to address the triple challenges of poverty, inequality and unemployment, economic transformation in our province, our country and the region, must be inclusive, and not be narrowly focussed on economic growth. Taking lessons from the Asian Tigers (South Korea, Taiwan, Singapore and Hong Kong), the People’s Republic of China, Rwanda, etc. the Free State has an opportunity to embark on a radical path towards economic transformation, growth and development. Below are some of the proposals I intend to table on this piece, for further deliberations by all and sundry.
What is to be done?
Whilst we appreciate the efforts to interact with the people through dialogues and imbizo’s, I am of the view that such must not be the primary focus of the state, but a sideshow of the broader policy and legislative process to transform the economy. Such a process must be centrally led, by the state, through the Premier as the Political Head of the state, and involve all government departments, government entities, municipalities, civil society and the private sector.
As an example the Four Asian Tigers, whose have experienced rapid economic growth since the 1960’s, were clear. Their economic transformation and development strategies were driven by rapid industrialization and export-driven growth. This therefore necessitated massive investment in local manufacturing capacity.
Currently, Hong Kong and Singapore are among the most globally prominent financial centres, while South Korea and Taiwan are global hubs for manufacturing of automobile and electronic components, as well as information technology. The Free State must therefore sit, look at its capacity, and agree on one plan to develop the transform the economy, and place targets for the next 10 years.
The above plan must involve massive investment in industrial development, manufacturing, mineral beneficiation and agro-processing. The plan must not be a plan that sits and gathers dust, it must be accompanied by brave and courageous decisions to invest massive resources, human and capital, in the sectors to revive the Free State economy.
Agricultural transformation seeks to reduce the ratio of subsistence farming to commercial farming. It is characterized by the increase in the ratio of agribusiness value added to farm value added, as more economic activity takes place in upstream input manufacturing and supply and downstream trading, processing, and retailing. The Free State, once recognized as the bread basket of the nation, must begin creating new jobs through processing of farming produce locally.
In order to create easy access to markets for emerging enterprises, especially those in manufacturing, it is my strong belief that the Free State Provincial Government is on the right direction to formalize the leveraging of state procurement to propel life into SMMEs. The provincial government must be fully supported, and must be bold as this step will rescue many SMMEs from the challenge of high mortality rate.
The Free State has long adopted a Value Chains Economic Transformation Model and through leveraging of state procurement, we shall see many enterprises really gain strength to even participate fully in the value chain of all sectors of the Free Stat economy.
The envisaged Free State Local Economic Development and Transformation Bill, which is currently in the corridors of the Free State Legislature, will surely ensurethat local people dominate selected economic activities and the economy. The Bill, once promulgated, will attract local investment through creating stability in the townships, restore the township economy to locals, and ensure employment and income for local people.
Our economic plan must ensure that the tourism industry is strengthened so that the Free State becomes a destination of choice. The Free State, given its central location, low levels of violent crime, magnificent sceneries and heritage sites, has an advantage to become a destination of choice. We can leverage on various echelons of tourism, including but not limited to, sport tourism, health and wellness medical tourism, leisure tourism, religious tourism, ecotourism, cultural tourism, adventure tourism, business tourism, etc.
Makhele is an African Marxist, public sector economist and communications practitioner. He writes in his personal capacity
TIISETSO MAKHELE