Gordhan Says South African Economy Needs Bigger Black Role

South African Finance Minister Pravin Gordhan said the government must focus on boosting the participation of black people in the economy, while pledging to stick to its policies after next week’s election.

“We’ve had a few generations of black economic empowerment policies; some have worked, some have not quite helped us to achieve the goals” that were set out, Gordhan said yesterday in an interview with Bloomberg TV Africa’s Eleni Giokos.

Gordhan, 65, reiterated comments from President Jacob Zuma, who said in an interview on March 7 the government must push for increased black ownership, signaling his policy focus as he prepares for a second term in office. While the ruling African National Congress has won every election since the end of white minority rule in 1994 with more than 60 percent of the vote, discontent over a 24 percent jobless rate and a lack of housing, water and other services has fueled violent unrest.

Black citizens earn on average a sixth of what their white counterparts do, a 2011 census showed, and 1.9 million households had no income at all. More than 10 million people lack proper shelter.

“In 20 years we have done phenomenal things as South Africans, probably in many instances in the quickest time ever in history, but there are still legacies of apartheid which we all wanted to deny,” Gordhan said. “The spacial legacies of apartheid are still with us, townships are still townships.”

Market Concentration

The next administration needs to focus on reducing market concentration in some industries and boosting small businesses, Gordhan said.

A majority win for the ANC means policy certainty and transparency, he said.

The ruling party has “a record of translating election manifestos and the commitment to the National Development Plan into business plans for government departments,” Gordhan said. “The one thing you will get is continuity.”

While the government and the ANC recognize that corruption is a problem and are working to combat it, the bulk of taxpayers’ money is spent well, he said.

“Corruption and inequality are two big issues for our society,” Gordhan said. It “feeds into a culture of greed, it feeds into a culture where values of integrity and honesty don’t seem to matter.”

Zuma’s Home

South Africa’s graft ombudsman released a report in March saying that money used to pay for work at Zuma’s private property in Nkandla in KwaZulu-Natal province was taken from projects such as the regeneration of inner-city areas. Zuma improperly benefited from the state-funded 215 million rand ($20 million) home upgrade, it alleged. He denies wrongdoing.

The election comes at a time when thousands of workers on a three-month strike have idled the world’s biggest platinum mines.

While the platinum strike will have some impact on economic growth, the severity will depend on how soon mining companies can resume production, Gordhan said.

The government is forecasting expansion of 2.7 percent this year, up from 1.9 percent in 2013.

Before it's here, it's on the Bloomberg Terminal.