Date: 09/02/2004
Source: Ministry of Trade and Industry
Title: L Hendricks: Debate on State of the Nation Address, NA
DEPUTY MINISTER HENDRICKS ADDRESSES PARLIAMENT IN THE DEBATE ON THE PRESIDENT'S STATE OF THE NATION ADDRESS, 9 February 2004
Mr President
Madam Speaker
Honourable members.
The one message that I would like to leave with you during this debate is one that says, "the economy has never been better managed". The evidence is there for all to see, books have been written and rewritten about the successes of this economy since this African National Congress (ANC) led government took over. Commentators and analysts are fully occupied trying to demystify this miracle that is South Africa because of the policies of the ANC, which we have implemented since 1994.
We talk to big business, we talk to black business, we talk to the trade unions, the farmers, the youth, we talk to businesswomen's associations and all testify to an economy that is well managed. They give evidence that inflation has gone down, of increased income levels, of increased profits and a GDP that has improved.
But we also speak to the masses of our people through the door-to-door campaigns and imbizo among others and though they do not talk of GDP, inflation and other economic terms they speak of having a decent roof over their heads, of having clean water to drink, cook and wash, of electricity in the house, of a telephone not far from the house. They speak of new roads, schools, clinics and houses. They talk of how their lives have improved and how they have hope for the future. These people whose aspirations were zero in 1994 now aspire to greater things. They say you know we are happy with the house, school, and the clinic but there are no parks for our children to play, community halls, no sports amenities, cannot the government do something about that? And that Honourable members, is a sign of a better life, as we all know that aspirations grow as one's standards of living improves. All this is evidence of an economy that is well managed that has freed resources for us to start addressing our social needs. Of course there are those who only see economic growth in terms of the number of jobs created.
Madam speaker, honourable members, to appreciate how well we have done with the economy it is important to understand what we inherited. By 1994 South African's economy was in an advanced state of decline due to political isolation, inward looking economic policies and the legacy of racial exclusion. The GDP was stagnant resulting in decline in the per capita GDP, declining savings and investment rates and falling employment rates. The ANC led government had to respond decisively and boldly to this state of affairs. It was not an easy task to take over and correct in ten years what was destroyed in more that 300 years of colonial and apartheid oppression.
Honourable Members, the South African economy in 2004 is stronger, more dynamic and more robust than in 1994. This strength comes after ten years of successful interventions by the ANC led government and it provides a solid basis for the continued growth and expansion of the economy over the next ten years. Interventions made during the first ten years of democracy start firstly from the Reconstruction and Development Programme (RDP) and later from the Growth, Employment and Redistribution (GEAR) policy and then the Micro Economic Reform strategy.
Our overarching approach has firstly, been to provide an enabling environment for business through macro economic stability, as such stability provides a predictable environment in which business can operate and flourish; and secondly, by making decisive interventions in an economy that required structural transformation in order to move away from the protectionist, uncompetitive, and primary sector bias that was in existence prior to 1994.
Madam Speaker, over the past few years we have seen the positive impact that macro economic stability and structural transformation of the economy have contributed to our economic growth and the role these measures have played in facilitating our successful entry into the global economy. These measures provide the framework for us to continue on a positive and sustained growth path over the next ten years, a growth path that will contribute to our stated objectives of job creation, poverty reduction, a more egalitarian society and black economic empowerment. By addressing these objectives and including more people, in particular black people, into the economic mainstream we will in turn further stimulate economic growth and tackle the challenges posed by the second economy.
Some of the interventions that have arisen from our policy of macro economic stability and structural transformation measures include:
* A reduction of the budget deficit, repayment of foreign debt, setting an inflation target, and put in place a medium term expenditure framework
* Overhauling the bureaucracy in key economic organisations such as the Department of Trade and Industry, National Treasury, South African Revenue Services, Department of Public Works, Department of Minerals and Energy, etc. This has led to better policies, incentives, improved spending on infrastructure projects and a more efficient tax collection system, amongst other things
* Developing an industrial strategy that promotes the diversification of our economy, growth of the manufacturing sector and competitiveness in a global economy
* Opening up the South African economy, promoting trade and growing the export market through reduction of import tariffs, concluding trade agreements, participation in international trade bodies, and implementation of (World Trade Organisation compliant) export incentives
* Developing closer links with other countries in Africa. These links are not only at a political level and we have seen economic ties being improved and economic agreements being concluded with our neighbours
* Introducing numerous policies and pieces of legislation that seek to positively transform our economy and empower our people. Such legislation includes the Broad Based Black Economic Empowerment Bill, the National Small Business Act, National Procurement Bill, Minerals Rights Bill, and the Land Restitution Act. It is important to mention that in the development of such policies and in the introduction or amendment of legislation, the ANC led government has consistently been open to negotiation and prepared to listen to the economic citizens of our country, and where necessary we have adjusted our policies and amended legislation. This openness has played an important stabilising effect on our economy
* Attracting inward investors into the country. Investors have started to recognise South Africa as an important investment destination. This recognition has come through our macro economic stability, sound economic policies, and marketing of South Africa; as well as through hosting and participating in international forums, leading and receiving numerous trade missions and having foreign economic representation. We have also been able to attract investment by focusing on the development, clustering and support of key sectors such as automotive, information and communication technology, tourism, agro-processing, clothing and textiles, and minerals beneficiation.
Madam speaker, honourable members I have mentioned only a few of the key economic interventions that we have embarked on since the start of our democracy. These interventions have been implemented alongside a broad range of social support measures, which firstly, ensure that the most impoverished people in our country have a social safety net; secondly that current and future employees are provided with skills that are relevant to a modern industrial economy; thirdly that the problems of crime are tackled; and fourthly that the prevalence of HIV/AIDS is reduced and that those infected with this disease are given support.
Ten years is a very short period to address our colonial and apartheid past yet we have made remarkable progress; achievements that in 1994 many would not have believed possible from an ANC led government.
Some of the achievements of the past decade include:
Firstly, an average growth rate of approximately 2.8% over the past ten years; and to reiterate what our President said on this issue in his State of the Nation Address, "the country is currently experiencing the longest period of consistent positive GDP growth". This growth rate compares favourably to the negative growth rate that this country experienced from 1990 to the end of 1993, which was on average minus 0,5%; it also compares favourably to other developing countries with South Africa having the least volatile GDP growth of all developing economies since 1994; it should be noted that our growth took place during the Asian currency crises in 1998 and the global downturn from 2001 to 2003. The performance of our economy, as measured by the growth rate, has been a good since democracy and with the global economy starting to pick up we should see a positive impact on South Africa's economic growth from this year.
Secondly, South Africa has become a competitive economy that has jumped several places in the World Competitiveness Index to rank at 42 in 2003. The countries that rank ahead of us on this list are mainly the developed and industrialised countries of Europe and North America. Evidence of our growing competitiveness is that our volume of trade, which includes imports and exports, has more than tripled since 1994. This growth has been stimulated by the growth in volume of South African exports, which on average grew by 8,8% per annum since 1994. This is an impressive performance, which has not abated as a result of the strengthening of the Rand. We have also had a steady inflow of capital into the country, a significant proportion of which is for productive investments, for example, last year alone R5 billion was invested in South Africa.
Thirdly, a manufacturing sector that far outperforms the primary sector when it comes to productive capacity and exports. Manufactured exports are now our biggest export sector and constitute 32% of total exports, which is a reversal of the situation that we found ourselves in 1994 when primary products were our biggest export sector. A good indicator of the positive shift and growth of our economy is that the export value of motor vehicles and components is double that of gold.
Fourthly, a more efficient bureaucracy, which makes it easier to do business in South Africa. South Africa was recently recognised as being in the top five of developing countries when it comes to ease of starting and operating a business, and ranks in the top 30 countries in the Business Competitive index. An example of one of these improvements in the public service is the Company Registrations Office, which has reduced the registration time for a new business from six weeks in 1994 to three days in 2004.
Fifthly, our inflation rate is under control at between 3% and 6% per annum and we have almost cleared our short-term foreign currency debt, putting us in a very strong position to build our currency reserves. Both of which will have a stabilising effect on the economy and on the value of the Rand.
Sixthly, there has been a significant change in our relationship with other countries in Africa. Investment and trade with other countries in Africa has grown substantially, with South Africa becoming one of the largest foreign direct investors in Africa and since 1994 increasing the volume of trade with African countries by an average of 17% per annum.
Finally, the release of the black economic empowerment (BEE) strategy, which has resulted in several sectors negotiating their own BEE charters. These sectors include financial service, wine, sugar, information and communication technology, the auto industry and the construction sector. We have also seen sector charters being developed in the mining sector and the oil and energy sectors.
Madam speaker, honourable members, too often we hear people arguing that the ANC led government is not doing enough in the area of economic growth, they say that it is not creating jobs and that we have not achieved broad-based BEE. Madam Chair, they are misguided if they believe that South Africa would have achieved any measure of long term economic stability and success that I have mentioned today if we had pursued any other economic strategy. There may have been individual policies or once off economic development projects that could have been better implemented over the past ten years, yet when we consider the bigger picture and the progress that we have made, we should give ourselves a round of applause because we have achieved remarkable success and have received international accolades for our well-managed economy. These are positive indications that we have pursued the correct policy framework and as the President said in his address we will continue on this path, only with better implementation.
There is no doubt that during this period we have set the stage for future growth, for creation of many more new jobs and for sustainable broad based black economic empowerment ventures, so that in the future more people will have access to and be part of our successful economy. Yes there are challenges and we do have a plan to confront these challenges in a sprit of partnership with all South Africans.
I thank you.
Issued by: Ministry of Trade and Industry
9 February 2004
Source: Department of Trade and Industry (http://www.dti.gov.za)
Source: Ministry of Trade and Industry
Title: L Hendricks: Debate on State of the Nation Address, NA
DEPUTY MINISTER HENDRICKS ADDRESSES PARLIAMENT IN THE DEBATE ON THE PRESIDENT'S STATE OF THE NATION ADDRESS, 9 February 2004
Mr President
Madam Speaker
Honourable members.
The one message that I would like to leave with you during this debate is one that says, "the economy has never been better managed". The evidence is there for all to see, books have been written and rewritten about the successes of this economy since this African National Congress (ANC) led government took over. Commentators and analysts are fully occupied trying to demystify this miracle that is South Africa because of the policies of the ANC, which we have implemented since 1994.
We talk to big business, we talk to black business, we talk to the trade unions, the farmers, the youth, we talk to businesswomen's associations and all testify to an economy that is well managed. They give evidence that inflation has gone down, of increased income levels, of increased profits and a GDP that has improved.
But we also speak to the masses of our people through the door-to-door campaigns and imbizo among others and though they do not talk of GDP, inflation and other economic terms they speak of having a decent roof over their heads, of having clean water to drink, cook and wash, of electricity in the house, of a telephone not far from the house. They speak of new roads, schools, clinics and houses. They talk of how their lives have improved and how they have hope for the future. These people whose aspirations were zero in 1994 now aspire to greater things. They say you know we are happy with the house, school, and the clinic but there are no parks for our children to play, community halls, no sports amenities, cannot the government do something about that? And that Honourable members, is a sign of a better life, as we all know that aspirations grow as one's standards of living improves. All this is evidence of an economy that is well managed that has freed resources for us to start addressing our social needs. Of course there are those who only see economic growth in terms of the number of jobs created.
Madam speaker, honourable members, to appreciate how well we have done with the economy it is important to understand what we inherited. By 1994 South African's economy was in an advanced state of decline due to political isolation, inward looking economic policies and the legacy of racial exclusion. The GDP was stagnant resulting in decline in the per capita GDP, declining savings and investment rates and falling employment rates. The ANC led government had to respond decisively and boldly to this state of affairs. It was not an easy task to take over and correct in ten years what was destroyed in more that 300 years of colonial and apartheid oppression.
Honourable Members, the South African economy in 2004 is stronger, more dynamic and more robust than in 1994. This strength comes after ten years of successful interventions by the ANC led government and it provides a solid basis for the continued growth and expansion of the economy over the next ten years. Interventions made during the first ten years of democracy start firstly from the Reconstruction and Development Programme (RDP) and later from the Growth, Employment and Redistribution (GEAR) policy and then the Micro Economic Reform strategy.
Our overarching approach has firstly, been to provide an enabling environment for business through macro economic stability, as such stability provides a predictable environment in which business can operate and flourish; and secondly, by making decisive interventions in an economy that required structural transformation in order to move away from the protectionist, uncompetitive, and primary sector bias that was in existence prior to 1994.
Madam Speaker, over the past few years we have seen the positive impact that macro economic stability and structural transformation of the economy have contributed to our economic growth and the role these measures have played in facilitating our successful entry into the global economy. These measures provide the framework for us to continue on a positive and sustained growth path over the next ten years, a growth path that will contribute to our stated objectives of job creation, poverty reduction, a more egalitarian society and black economic empowerment. By addressing these objectives and including more people, in particular black people, into the economic mainstream we will in turn further stimulate economic growth and tackle the challenges posed by the second economy.
Some of the interventions that have arisen from our policy of macro economic stability and structural transformation measures include:
* A reduction of the budget deficit, repayment of foreign debt, setting an inflation target, and put in place a medium term expenditure framework
* Overhauling the bureaucracy in key economic organisations such as the Department of Trade and Industry, National Treasury, South African Revenue Services, Department of Public Works, Department of Minerals and Energy, etc. This has led to better policies, incentives, improved spending on infrastructure projects and a more efficient tax collection system, amongst other things
* Developing an industrial strategy that promotes the diversification of our economy, growth of the manufacturing sector and competitiveness in a global economy
* Opening up the South African economy, promoting trade and growing the export market through reduction of import tariffs, concluding trade agreements, participation in international trade bodies, and implementation of (World Trade Organisation compliant) export incentives
* Developing closer links with other countries in Africa. These links are not only at a political level and we have seen economic ties being improved and economic agreements being concluded with our neighbours
* Introducing numerous policies and pieces of legislation that seek to positively transform our economy and empower our people. Such legislation includes the Broad Based Black Economic Empowerment Bill, the National Small Business Act, National Procurement Bill, Minerals Rights Bill, and the Land Restitution Act. It is important to mention that in the development of such policies and in the introduction or amendment of legislation, the ANC led government has consistently been open to negotiation and prepared to listen to the economic citizens of our country, and where necessary we have adjusted our policies and amended legislation. This openness has played an important stabilising effect on our economy
* Attracting inward investors into the country. Investors have started to recognise South Africa as an important investment destination. This recognition has come through our macro economic stability, sound economic policies, and marketing of South Africa; as well as through hosting and participating in international forums, leading and receiving numerous trade missions and having foreign economic representation. We have also been able to attract investment by focusing on the development, clustering and support of key sectors such as automotive, information and communication technology, tourism, agro-processing, clothing and textiles, and minerals beneficiation.
Madam speaker, honourable members I have mentioned only a few of the key economic interventions that we have embarked on since the start of our democracy. These interventions have been implemented alongside a broad range of social support measures, which firstly, ensure that the most impoverished people in our country have a social safety net; secondly that current and future employees are provided with skills that are relevant to a modern industrial economy; thirdly that the problems of crime are tackled; and fourthly that the prevalence of HIV/AIDS is reduced and that those infected with this disease are given support.
Ten years is a very short period to address our colonial and apartheid past yet we have made remarkable progress; achievements that in 1994 many would not have believed possible from an ANC led government.
Some of the achievements of the past decade include:
Firstly, an average growth rate of approximately 2.8% over the past ten years; and to reiterate what our President said on this issue in his State of the Nation Address, "the country is currently experiencing the longest period of consistent positive GDP growth". This growth rate compares favourably to the negative growth rate that this country experienced from 1990 to the end of 1993, which was on average minus 0,5%; it also compares favourably to other developing countries with South Africa having the least volatile GDP growth of all developing economies since 1994; it should be noted that our growth took place during the Asian currency crises in 1998 and the global downturn from 2001 to 2003. The performance of our economy, as measured by the growth rate, has been a good since democracy and with the global economy starting to pick up we should see a positive impact on South Africa's economic growth from this year.
Secondly, South Africa has become a competitive economy that has jumped several places in the World Competitiveness Index to rank at 42 in 2003. The countries that rank ahead of us on this list are mainly the developed and industrialised countries of Europe and North America. Evidence of our growing competitiveness is that our volume of trade, which includes imports and exports, has more than tripled since 1994. This growth has been stimulated by the growth in volume of South African exports, which on average grew by 8,8% per annum since 1994. This is an impressive performance, which has not abated as a result of the strengthening of the Rand. We have also had a steady inflow of capital into the country, a significant proportion of which is for productive investments, for example, last year alone R5 billion was invested in South Africa.
Thirdly, a manufacturing sector that far outperforms the primary sector when it comes to productive capacity and exports. Manufactured exports are now our biggest export sector and constitute 32% of total exports, which is a reversal of the situation that we found ourselves in 1994 when primary products were our biggest export sector. A good indicator of the positive shift and growth of our economy is that the export value of motor vehicles and components is double that of gold.
Fourthly, a more efficient bureaucracy, which makes it easier to do business in South Africa. South Africa was recently recognised as being in the top five of developing countries when it comes to ease of starting and operating a business, and ranks in the top 30 countries in the Business Competitive index. An example of one of these improvements in the public service is the Company Registrations Office, which has reduced the registration time for a new business from six weeks in 1994 to three days in 2004.
Fifthly, our inflation rate is under control at between 3% and 6% per annum and we have almost cleared our short-term foreign currency debt, putting us in a very strong position to build our currency reserves. Both of which will have a stabilising effect on the economy and on the value of the Rand.
Sixthly, there has been a significant change in our relationship with other countries in Africa. Investment and trade with other countries in Africa has grown substantially, with South Africa becoming one of the largest foreign direct investors in Africa and since 1994 increasing the volume of trade with African countries by an average of 17% per annum.
Finally, the release of the black economic empowerment (BEE) strategy, which has resulted in several sectors negotiating their own BEE charters. These sectors include financial service, wine, sugar, information and communication technology, the auto industry and the construction sector. We have also seen sector charters being developed in the mining sector and the oil and energy sectors.
Madam speaker, honourable members, too often we hear people arguing that the ANC led government is not doing enough in the area of economic growth, they say that it is not creating jobs and that we have not achieved broad-based BEE. Madam Chair, they are misguided if they believe that South Africa would have achieved any measure of long term economic stability and success that I have mentioned today if we had pursued any other economic strategy. There may have been individual policies or once off economic development projects that could have been better implemented over the past ten years, yet when we consider the bigger picture and the progress that we have made, we should give ourselves a round of applause because we have achieved remarkable success and have received international accolades for our well-managed economy. These are positive indications that we have pursued the correct policy framework and as the President said in his address we will continue on this path, only with better implementation.
There is no doubt that during this period we have set the stage for future growth, for creation of many more new jobs and for sustainable broad based black economic empowerment ventures, so that in the future more people will have access to and be part of our successful economy. Yes there are challenges and we do have a plan to confront these challenges in a sprit of partnership with all South Africans.
I thank you.
Issued by: Ministry of Trade and Industry
9 February 2004
Source: Department of Trade and Industry (http://www.dti.gov.za)
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