Radical economic transformation - Government prioritising state resources for small business development (SBD)

• Published in: Journal of Management & Administration Vol. 2017; no. 1; pp. 105 - 128
• Main Author: Balkaran, Sanjay
• Format: Journal Article
• Language: English
• Published: Management College of Southern Africa (MANCOSA) 01.08.2017
• Subjects: Preferential procurement; Radical economic transformation; Small business development; State-owned enterprise; White monopoly capital
• ISSN: 1728-9157

This paper serves to approximate the timing of radical economic transformation, espoused by the Economic Freedom Fighters (EFF) as a perceptible target, pronounced by the ANC as a yet to be adopted policy, but operationalised by the State through resources available only to a ruling party. The above convergence is seen through the lens of credit downgrades, preferential procurement legislation and the leveraging of state resources to deliver small business development by appealing to the voting youth1 bulge to wrestle the economy away from the stranglehold of “the emerging arrogance of white monopoly capital”. The four distinct postures of the Helmke-Levitsky Framework will be used to argue how the informal institution of racism can interact with formal empowerment laws. With the public sector (excluding local government) playing a huge role in the nation’s overall economy, Government argues that small business developmental should benefit from the 131 stateowned enterprises’ government contracts. Theoretically, the role of government in a typical market economy is that of regulator, and providing a social safety net for unintended casualties of market dynamics. In the absence of any unifying theory within the current body of literature, small business development is attainable through integrating multiple theoretical foundations. It is argued that if South Africa intends to keep the social welfare net, Government must grow the economy, create jobs, and generate more wealth. In the long run small business development has the potential to address the economic stratified inequality (class gap). This can only be achieved through a tangible plan for strengthening governance and regulation of its state-owned enterprises, through a well-designed regulatory framework that needs to be articulated by government, implemented by its officials, and embraced by those entities to which the framework applies. Economists argue that countries saddled with junk status have managed to recover, but had to implement austere economic and fiscal reforms to reduce external vulnerability and restructure or privatise state-owned entities. The fundamental question is this: Can South Africa do the same and achieve its objective of radical economic transformation by prioritising state resources as a seed pipeline to small business development?