Date:03/07/2007
Source: Department of Public Enterprise
Title: SA: Erwin: Driving for growth and sharing it with all

Address by Minister of Public Enterprises, Alec Erwin,
to the Star Safmarine Breakfast Club

Welcome and thank you for the invitation to speak at this breakfast hosted by the Star and Safmarine. These Breakfasts are becoming a well established institution and offer a platform for providing and exchanging information. Those capable of these early risings certainly deserve a good meal and some useful of information. I hope I do justice to my injunction.

This morning I would like to focus on the need for all of us public and private sector to develop a growth mentality. But more than this we must develop a determination to ensure that all of our citizens benefit from the growth that we generate. This growth mentality is not some reckless activity but a carefully planned process that will develop our economy, expand all the necessary capacities for the growth process and take our economy into the ranks of the world's leading economies. It requires both careful planning and a boldness of vision. Both of these in turn require a confidence in our ability to achieve. Such confidence comes from maturity and a resolve not to be distracted by idle chatter and political sophistry.

We have just come out of an important ANC Policy Conference and since the press is redolent with the views of nameless 'NEC members' and experts who were not in the meetings I feel entitled to give you a viewpoint and you are welcome to attribute it to me. For those of us who have attended many previous ANC conferences discussing policy there was one overriding impression and that was the quality of the debate and the detailed knowledge the delegates had on what is actually happening in all parts of our economy and society. This is an inspiring development as it point to the improving quality of policy making we can look forward to in the future. It also confirmed that the ANC is indeed still a liberation movement allowing for a broad church of ideas and beliefs. This bodes well for our tolerance and diversity essentials for a stable and prosperous democracy in the future.

I would urge all of you to access the actual documentation prior to and after the Conference. It is indeed a festival of ideas and trenchant critique of our progress so far a democracy. Some of the ideas floated for further discussion may indeed not be firmly located in the wise or possible. However, it is regrettable that the press has chosen to elevate the so called succession issue above all else. In this misplaced elevation they have missed the two very important themes that do flow through the documents, and thereby are materially misinforming their readers. The first is the preoccupation with ensuring that we address the needs of the poor and that growth is shared by all not as some ancillary trickle down but as an integral component of the growth. How do we ensure a growth process, indeed a growth mentality, whilst at the same time ensuring that we build an integrated economy that is both competitive and inclusive? This requires a clear, persistent and determined strategic programme and for this reason the role of the state is critical. A state that can carry out such a transformatory and strategic process will have to be predicated on the realities of capacity, global economic forces and the political will that underpins that state. The Conference debated these requirements and agreed that our formulations were not precise enough and that more work has to be done an exciting opportunity for all thinkers and opinion makers to contribute too.

The second crucial theme relates to that precise issue of the political will that underpins a postulated developmental state. There is no question that the ANC is located at the very centre of such political will. Now it is true that there are elements within the ANC and Alliance that are preoccupied with a narrow question of office. They are a minority, but like any single issue lobby they are noisy, mainly through the favour they find among many journalists and purported experts, but they are not a very reflective group. There is no question in my mind that the majority of the delegates and the purported protagonists themselves are preoccupied with a much more fundamental issue. This is the retention of the unity, political cohesion and enhanced inclusivity of the ANC and how the ANC fulfils its leadership role of the historically crucial Alliance. There is a general concern that the ANC and the Alliance are not as strong as they should be in this period. From an electoral perspective the ANC is unassailable but in its prime role, that of a liberation movement of all our peoples leading its vital partners COSATU and the SACP it has to be strengthened. This is why the Conference stated clearly that there is a strong view that the current situation where the President of the ANC is the President of the country should not be seen as a principle it is the product of specific circumstances since 1999. Any tendency toward or actual occurrence of a collapse of the ANC into the structures of governance must be resisted and reversed. Accordingly, the Conference also made it clear that there is no automatic link between Provincial Chairs or Regional Chairs and Premiers or Mayors respectively. This again asserts the unity of the ANC as a national liberation movement and only centre of political power. It is not a federation of electoral fiefdoms. As a liberation movement our task is not reducible to being a governing party as we still have much work to do to cross racial, ethnic, gender and cultural divides. We have a great deal of work to do to repay Africa for their support and immense patience in defeating Apartheid. It is these profound political issues that were debated in depth and which the Conference agreed will have to be refined and clarified as we move to the National Conference. So I urge you not to take too much heed of the pop politics that many think is at the centre of making a new nation. The ANC and the Alliance are what they are and where they are because they do not trivialise what is too important to trivialise.

These comments only touch the tip of three days of debate in a Conference of some 1500 delegates. However, I hope they point to the essential stability of policy making in the ANC and it Alliance partners.

I want to now focus on a more concrete illustration of what I am driving at when I talk about a growth mentality, driving growth and ensuring that it is shared. It is a process dependent on strategic intent and a strong political will to achieve success.

As the Department of Public Enterprises we are responsible on the behalf of Government for critical strategic investment decisions. Our mandate is to provide strategic direction and economic coherence to approximately R170 billion in state owned assets and some 120 000 people who are employed in our SOE. In addition these SOE are planning to invest nearly R250 billion in new infrastructure construction and industrial capacity over the next five years. By any account this is a massive and unprecedented programme for the public sector bear in mind it is not the totality of public sector investment which over the next three years totals closer to R420 billion. There is no doubt that such investment will drive growth but how do we ensure that it transforms the South African economy into a leading economy and how do we share the fruits of such growth.

We are focussing on three main areas: building and rebuilding South African industrial capacity in a manner that opens opportunities for all and not just a few; fast tracking our human resource development and enhancing research and development.

In regard to the first area we are developing the competitive Supplier Development Programme. Its aim is to create an environment which is conducive to investment in manufacturing, based on the demand created by our sustained infrastructure investment programme. The essence of the programme is to improve the competitiveness of the SOE supply base, and to increase local supply capacity and capability in areas of supply where South Africa has comparative advantages. The programme will therefore focus on those areas of supply where there is a coincidence or overlap between national economic development interests and the commercial interests of the SOE to lower total costs and secure supply. In other words, the programme will focus on areas of supply where there is potential for both lowering the total cost of ownership and increasing national value add.

The programme is based on the notion that procurement planning and execution is the key transmission mechanism that translates SOE expenditure into an attractive and sustainable investment climate.

Under the programme, Transnet and Eskom have started a process of developing Supplier Development Plans which will provide a strategic long term vision for improving the competitiveness of their supply bases. There will be a focus on areas of supply which are important to the SOE and for which there is potential for local industries to be more competitive. The plans will include an analysis of projected expenditure and supply markets and supply industries, which will result in the identification of the areas of supply where competitiveness is lacking, and where there is potential for increasing local supply capacity or capability. There are already indications that a lack of competition, rather than a shortage of manufacturing Inputs, is resulting in rising prices in certain supply sectors as demand increases.

The plans will also identify interventions to be undertaken by the SOE, and will include targets and key performance indicators for measuring the impact of these interventions on supplier industry competitiveness and national value add. My Department will also be working together with other government departments, including the Departments of Trade and Industry and Science and Technology, and industry associations to put in place supply side support measures at the firm and cluster level, such as supplier benchmarking initiatives and programmes aimed at improving technology and productivity. Industry associations will be consulted regarding the content of the plans, which are due to be finalised by February 2008.

In regard to fast tracking skills development each of the SOE has a major programme in this regard. However, we are adding to this as key players in the JIPSA programme by coordinating our efforts not only between the SOE but with private sector partners within the JIPSA.

Lastly we are now developing major collaborative research and development programmes with the Department of Science and Technology. The PBMR is clearly one of those advanced technology programmes but there is massive potential in the work of all the SOE. I am sure that the 'big space programmes' will revolutionise digital signal processes and high speed computing. The defence related industries around Denel will make major contributions to avionics, material science and command and control technology and we are slowly but surely developing significant aerospace capacity.

They message I am trying to convey is that we have to develop a growth mentality. This requires the requisite confidence, boldness and determination to achieve growth and the ingenuity to ensure that it is shared. We must not allow ourselves to be distracted by those who can only see the trite, trivial and mean in the course of our development. We must inform ourselves accurately and the media must rediscover a sense of purpose and cause and shy away from the trite, trivial and mean.

We are a great people, a great country and we are capable of taking our nation to its deserved place amongst the prosperous and free in the world. What we can think we can do!