Are top firms hindering SA's economic transformation?

South Africa's economic transformation is under scrutiny as the country's big firms continue to dominate key sectors, hindering competition and consolidation. The U.J. Centre for Competition, Regulation and Economic Development recently released findings on ownership and control of South Africa's top firms, revealing significant concerns. Tando Villagasi, a senior economist at U.J.'s Centre for Competition, Regulation and Economic Development, discussed the research and its implications in a recent CNBC Africa interview. The research focused on measuring competition, ownership, and investment levels among the largest firms in the South African economy, using firms listed on the JSE as a proxy. Villagasi highlighted issues such as greenfield investments being made outside the country by food producers like Tiger Brands, calling for a reevaluation of industrial development strategies to encourage domestic investments. The assessment of cash reserves held by firms also raised questions about redirecting investments back into South Africa. A key concern highlighted in the research is South Africa's stagnant investment relative to GDP ratio, which has hovered around 10 percent for the past decade. Villagasi emphasized the need to stimulate investment by engaging not only large firms but also black industrialists and dynamic emerging companies to enhance competitiveness and combat concentration in the economy. Despite existing policies and initiatives like the black industrialist program, challenges persist in fostering a more inclusive economy. Villagasi stressed the importance of policy reforms to open up opportunities for emerging black firms in sectors like agro-processing, leading to a more dynamic and diverse business landscape. The interview also touched on policy uncertainty, low growth, and the role of the National Development Plan (NDP) in steering economic transformation. Villagasi highlighted the need for greater coordination among economic policy organizations to effectively implement the NDP's objectives and drive sector-specific policy changes. Looking ahead to Moody's announcement and its potential impact on South Africa's economic outlook, Villagasi emphasized the importance of government commitments to stimulate investment and boost confidence in the economy. With pockets of funds available for domestic investment, there is untapped potential to drive economic growth and development in the country. In conclusion, the interview underscored the urgency for policy intervention and coordinated efforts to unlock South Africa's economic transformation. Addressing issues of concentration, investment stagnation, and policy uncertainty will be crucial in fostering a more competitive and inclusive economy for the benefit of all stakeholders.