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Date : 09/04/2005
Source: The Presidency
Title: Zuma: SACP Fundraising Dinner


Address by the Deputy President, Jacob Zuma, at the South African Communist Party Fundraising Dinner, Durban International Convention Centre

Secretary General of the SACP, Dr Blade Nzimande,
Minister of Provincial and Local Government, Sydney Mufamadi,
Minister of Intelligence, Ronnie Kasrils,
Members of the Central Committee,
Captains of Business,
Ladies and Gentlemen,

We are delighted to be part of this occasion, especially to have the opportunity to interact with members of the business community, our partners in building a better country.

Let me also greet the membership and leadership of the SACP at this special congress, which seeks to define the future role of the South African Communist Party.

I would like to share with you this evening some thoughts on the challenges the country faces and the role that we see business playing in meeting these challenges.

I trust that you share the view that our country scored successes in various areas in the last decade of freedom. Despite the achievements scored on the economic front, we are concerned about the scores of people who remain unemployed in our country, and the impact thereof on the living conditions of many families.

We are therefore doing all we can to reverse this situation, and need the support of our social partners, labour and the business community. The signs are indicating that our efforts to increase the rate of investment are continuing to bear fruit with investment rising from a low point of 14 percent of the Gross Domestic Product (GDP) to close to 17 percent by the end of last year.

South Africa is viewed as a destination of choice for international investment in manufacturing by global car makers and aerospace companies.

This was revealed in a survey of Annual Foreign Direct Investment Confidence Index conducted by a global management consulting firm AT Kearney.

This report ranks South Africa as seventh-most attractive destination globally for investment in the transportation equipment sector. Government has played a critical role in achieving this through its Motor Industry Development Programme which has ensured that global car makers operating in South Africa grow car exports nine-fold over the past decade.

Because of the improved economic conditions and our stronger government management systems, we have made really significant social gains. Our social grants - the pensions, the child support grant, the disability grant and the foster care grant - now reach about 90% of intended recipients - a huge improvement.

With regards to providing basic services to the people like water, electricity and housing, in December last year the 10th million South African since 1994 got access to potable water. 2 million housing subsidies have been issued and we have built close to 2 million new houses since 1994.

Primary school enrolment has risen to over 95 percent, and secondary education enrolment is now at 85 percent.

A survey of municipalities by Statistics SA has also revealed that we have expanded our municipal services around water, electricity, sewerage and sanitation and solid waste.

Our economic objectives for the Second Decade are simple, yet urgent. We need to halve poverty and unemployment. In order to achieve this we need to raise the rate of economic growth to 6 percent, and we have to include the excluded - those living in the Second Economy.

These are two sides of the same coin. If we don't increase economic growth, we won't be able to address the challenge of the Second Economy; and if we don't address the challenge of the Second Economy we will risk discontent and falling confidence.

Alongside these goals is the overall goal of transforming the economy so that all our citizens are able to contribute to their fullest ability.

The main question is how do we grow the First Economy, so that it can raise our growth rate to 6 percent? In the government's Programme of Action which is published on the government's website we set out in great detail our current objectives, strategies and planned actions. We can do this by ensuring that we implement some key strategies.

Chief among those is the issue of investment. The Government is escalating its own rate of investment from extremely low levels. The main vehicles for investment are the public corporations like Eskom and Transnet, and the municipal and provincial infrastructure grant programmes.

Projects include upgrading Spoornet, building a new pipeline between Durban and Johannesburg, building new power stations, and refurbishing others, and improving the infrastructure in the poorer parts of the country, especially roads, communications, electricity and water. Because we have reduced government debt and the cost of borrowing, we are in a much better position today to make the investments we want to make.

We have also set up the Public Investment Corporation that will invest government funds such as the government pension fund, in a more constrictive way, while remaining prudent, of course.

But most new investment in the future will come, as it always has in South Africa, from the private sector. Three quarters of investment currently come from the private sector. To increase private investment so that we get to six percent growth, we as government have to work closely with business, and with labour, to identify and develop the best investment projects we can. These partnerships are important in realising our goals.

We have discussed the matter with the private sector and the unions, and we are agreed that we have to develop more effective industrial policies-in other words strategies aimed at developing a potentially strong sector of the economy. In the past the government and its social partners have worked well together in developing and implementing strategies for the motor industry and for the tourism industry. We can do it in other industries too, and we plan to do so.

One sector that we are looking into quite carefully, for example, is the business process of outsourcing industry. This is a general name for the industry whereby some of the work of businesses in countries where labour is expensive is moved to developing countries.

For instance India has managed to create many jobs in the software engineering sector, and also in call centres. In South Africa we already have some investments in call centres, and we also do quite a lot of administration of insurance policies for companies in other countries, especially the United Kingdom.

These are very labour intensive activities. If government, labour and business work together effectively in developing a business process (of) outsourcing industry in South Africa, we could create over 150 000 new jobs within the next five years, and many more afterwards - these are figures from a study of South Africa done by the international consulting company McKinsey.

Other key growth challenges are improving the quality of regulation. Small businesses have an excessive regulatory burden at present, and we are working on strategies to make the regulatory environment more attractive for small businesses.

We have already announced that we have reduced the tax administration workload, and several other unnecessary burdens, but we think we can improve the environment still further.

Another key challenge is in human resource development. We have an economy that is short of key skills. We are short not only the high level skills that need university degrees, but also the bread and butter artisan skills such as welders and electricians. Here the main challenge is to get our industrial training systems and our formal education systems working together effectively.

We believe that we are making progress in this respect – for example, the Departments of Labour and Education are working together to fix the technical colleges (the Further Education and Training system). But business has a role to play as well. It is very important that business communicates effectively with the providers of education and training what its needs are. Business has to play an interactive role with the universities and technology institutions, and participate in the Boards of the Sector Education and Training Authorities (SETAs).

Empowerment remains a key element of our strategy to build the economy and to build democracy. Without effective empowerment programmes, our economy will have feet of clay that can crumble under stress. With effective empowerment, our capacity to build businesses and create jobs will expand rapidly.

They key role of business is to ensure that we have the right kind of empowerment - not just the transfer of share certificates, but a real investment in skills and new business activities. We are obviously jointly responsible in this task as in many other tasks - if we do it together in the right way it will serve our mutual long term interests of growth and employment creation.

As part of our Second Economy initiatives and plans, we launched the Expanded Public Works Programme last year, which whilst creating short-term employment opportunities, also contributes to boosting the skills base of our people who are locked within the Second Economy. At the end of the third quarter of 2004/2005 the programme had created a total of 144 000 short-to medium-term work opportunities, of which 105 000 were still active. Our targets of creating over 100 000 jobs a year was met.

We also have a new Agricultural Credit Scheme for emerging farmers. We have transferred R100 million to the provinces for Farmer Support Programmes, are setting up an APEX fund for micro-credit for very small businesses, and we will be amending several laws this year to encourage the promotion of co-operatives and banking services for the poor. These include amendments to the Co-operatives Act, and the new Co-operative Banks Bill and Dedicated Banks Bill.

These are some few highlights of our Programme of Action.

Without the effective and close co-operation between government and business not much would be achieved.

Our record in the past eleven years speaks of dedication and commitment to serious partnerships between government and business in order to meet the needs of the people. We think business has shown too how they can be effective partners.

At a national level, the Business Trust continues to invest in reconstruction and development, while Business against Crime continues to score many successes in the fight against crime.

These are all displays of patriotism and seriousness of business about building a better South Africa.

Programme Director, let me once again thank our comrades in the SACP and wish them well with this very important congress. Let me also wish business and the SACP a fruitful relationship without contradictions, if that is possible!

I thank you.

Issued by: The Presidency
9 April 2005

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