SPEECH BY EXECUTIVE DEPUTY PRESIDENT THABO MBEKI AT THE SACOB ANNUAL BANQUET, CARLTON HOTEL, 14 SEPTEMBER 1995
Issued by: Office of the Executive Deputy President T.M. Mbeki
Chairperson, Honourable Ministers, Distinguished Guests, Ladies and Gentlemen,
First of all, I would like to express our appreciation to SACOB for inviting us to address this anual banquet and we welcome the opportunity to interact with you as we move further into the second year of our transition.
Sixteen months ago when we installed Nelson Mandela as the first democratically elected president of the "New Republic", millions of our people, black and white, for the first time joined hands as equals to rejoice over the end of a past that has separated and oppressed them for generations.
That joyous moment also brought with it great challenges and created new opportunities. Of necessity, this historical moment enjoined us to initiate the process of addressing the consequences of more than three hundred years of racial oppression and exploitation and thereby transform the conditions of life for the majority of our people.
As we entered the new era in which our people will no longer be at war with one another, we had to work actively and purposively at defeating any tendencies that would drive us back to the dark days of conflict and disunity. As a people and a government we elected to root the transition to democracy on the noble and correct concepts of reconciliation and national unity.
We recognised the fact that without such reconciliation and unwavering commitment to the building of a common South African nationhood, the conflict and the war from which we had just emerged would not come to an end and that it would never be possible to embark on the important task of reconstruction and development.
Let me also point out that noble and correct as they are, reconciliation and nation-building, unless they are accompanied by the fundamental transformation of the entire socio-economic fabric of our society would remain but unrealisable ideals.
For those of us who have been the objects and victims of racial oppression, and social and economic deprivation, we cannot but conceive of the two processes as two sides of the same coin, or two interdependent processes each of which is incapable of realisation if its is not accompanied by the other.
Reconciliation, must therefore, of necessity encompass the transformation of everything else in addition to the political accession to power of the representatives of the formerly oppressed blacks.
It must include the transformation and deracialisation of the South African economy. For it is in the ownership, operation and management of the productive resources of our land that black people will begin to contribute to the generation of the country's wealth no longer as landless, propertyless, unskilled and semi-skilled workers or as street hawkers and marginal retailers in the formal sector.
The challenge of economic transformation demands that SACOB and other business organisations join hands with government in designing innovative policies which will ensure that we broaden the ownership and management of the economy from the privileged few to include those who were marginalised and excluded by apartheid.
We are encouraged by the tentative moves to broaden economic ownership through joint ventures and unbundling that have made by some sections of the private sector. I am certain that it is common caused among us that as laudable as these may be, they are still far from sufficient.
Moreover, we wod agree that it is necessry to move beyond the trend of just swapping paper through portfolio investments at the stock exchange and embark on green-field projects in manufacturing, tourism, the service industry and other sectors in order to generate high levels of new employment which will enable us to make a dent on unemployment.
This audience does t needany educating by me on the fact that unless we create employment, we provide clean water to rural and peri-urban residents, we provide homes for the homeless and we effectively reduce the income inequalities between blacks and whites, then surely must we expect that at some point in the near future, our society will be torn apart by a major and catastrophic racial explosion.
Let me emphasise that the responsibility to meet all of these challenges cannot be left to government alone. But as government we have the responsibility to ensure that we manage the transition very carefully and evolve policies which will produce conditions of stability and engender confidence in the private investors in our ability to manage the economy in a responsible manner.
Indeed organisations like SACOB, local and foreign investors are perfectly within their right to expect government to persist in ensuring an investor friendly environment.
The government is only too aware that without new fixed investment there will be no new jobs, and that in the long run it is mainly the private business sector, and not government, that can create sustainable employment opportunities.
Yet one of the most gratifying economic developments since South Africa's political transition last year has been the strong revival in private fixed investment.
Various measures of business confidence, such as your own SACOB Business Confidence Index, and feedback I have been receiving from international investors in my various travels abroad and interactions with visiting trade and investment missions, also reveal a distinct improvement in the mood of those who take decisions about investments.
For an example, in the first half of this year fixed investment was an encouraging 17 per cent higher than in the fist half of 1994. What is even more encouraging is that the most marked increase occurred in investment in machinery and equipment, as industrialists started replacing outdated equipment and gearing up for the economic expansion currently underway.
In the past potential foreign investors could legitimately as why tey should invest here if South Africans were not doing so themselves. But since late 1993 our companies have started to invest, as indicated by the rise in gross domestic fixed investment.
It is clear that our successful transition to democracy was a precondition for halting the sustained decline in domestic fixed investment and the steady deterioration of most aspects of the economy that marked the last two decades of the old South Africa.
The political transition has also made possible renewed access to the world's financial markets and the multilateral institutions such as the World Bank and the IMF. As a government we have been able to successfully place South African bonds on the international markets and the country has received positive ratings from internationally renowned institutions. And for the first time in many more years South African companies have been able to raise finance internationally.
A successful transition to democracy was a necessary, but by no means a sufficient precondition for turning South Africa's economic fortunes around. Economic policies had to change radically as well. The Government of National Unity inherited major problems of inequalities, social infrastructure backlogs, poverty and unemployment.
But it also inherited major fiscal constraints on its ability to tackle these problems, which include, among others:
Given this fiscal legacy, the Government of National Unity has had to find a difficult balance between early and rapid delivery on basic needs on the one hand, and addressing the fiscal issues in a way which would avoid a crisis in government finances further down the line.
While I am certainly not complacent, we have, in my view, found a fairly good balance so far. The improvement in business confidence, the turnaround in the private sector's fixed investment, the performance of the financial markets, and the value of the rand in particular, confirm that there is a broadly favourable judgement in the local and foreign business sectors on the government's policy choices up to now.
The sixteen months since the political transition has provided many examples which indicate that we are aware of policy imperatives flowing from the need for a dynamic, internationally competitive economy, and that we are willing to face up to the inevitable trade-offs and difficult choices. Let me note a few of these:
However reassuring these policy developments are, we are conscious of the fact that some may consider sixteen months as being rather a short time to establish a firm track record. Let me assure you that as a government we are committed to staying on the track along which we are proceeding.
The recently established Presidential Ad Hoc Committee on economic policy is intended to precisely address some of the critical and difficult questions we need to deal with in the short to medium term in order to ensure that the economic recovery is susained and we fast-track some of our socio-economic programmes and the restructuring of the state sector. We are confident that decisions that will emerge from this process will reinforce the policy directions we have mentioned.
As this audience is well aware, the Government of National Unity places a premium on co-operation and partnership between itself, the private sector, organised labour, the non-governmental sectors and civil society broadly defined.
The institutional expression of this partnership is to be found in NEDLAC. It is gratifying to us to note that despite its youth NEDLAC has been able to weather the storm and the difficulties associated with the new Labour Relations Act. It is indeed a tribute to organisations such as SACOB, BSA, NAFCOC, FABCOS from the business sector, COSATU, NACTU and FEDSAL from the labour side and from government side the Minister of Labour and his team that we have been able to agree on this important piece of legislation.
We elieve that this legislation provides an important institutional framework which allows for certainty, unifies the disparate labour relations in the country, enables the parties to participate in the formulation of industrial policy, encourages worker participation in companies and productivity enhancement and seeks to reduce adversarialism which has been the hall-mark of our industrial relations up to now.
There are, however other key areas which we would like to see the strengthening of this co-operation between government and the private sector. As an example let me deal with just two such areas.
Firstly, there is the all too important area of housing and infrastructure development. As far as housing is concerned, as government we believe that the establishment of the subsidy scheme and the Mortgage Indemnity Fund provide an important framework for the delivery of houses to low income people.
The Minister of Housing has also appointed a task team to look at some of the blockages and to fast tack th delivery process.
The enormity of the housing problem demands that we find other innovative solutions in addition to the policies we have already designed. In this regard, we would like to encourage the private sector employers to continue helping their own workers to build and buy their own homes.
We believe there are other ways in which the private sector can contribute to addressing the housing issue, These could include providing discounts to communities who purchase building materials in bulk, providing material and other support such as construction, brick-laying and other house-building related skills to the community-based Housing Support Centres and donating or making land available to communities at preferential rates. We are pleased that some of the private sector companies have responded positively in this regard.
Secondly, there is the area of education and training. One of the biggest problems we have inherited from the old South Africa, is the enormous shortage of trained and skilled labour.
Government officials, private sector representatives and organised labour have been working tirelessly in the last few years to develop a national training and qualifications framework which will enable all of us to tackle this enormous problem.
In this connection, we are pleased that yesterday the National Assembly approved the National Qualifications Framework Bill, which was jointly prepared by the Ministers of Education and Labour. We have now established the framework within which we can seriously begin to address the problem. Here I refer to Adult Basic Education and Training (ABET). Government has accordingly committed an amount of R50 million to ABET.
We would like to take this opportunity to invite SACOB and other business organisations to join hands with us and contribute materially and otherwise to ensure that this initiative succeeds. As business people you know too well that a trained, literate and educated workforce is an asset and is a sine qua non for higher productivity.
At the tertiary education level the government is working towards the establishment of a Student Loan Scheme, to make what can only be a modest beginning towards assisting the 70 000 needy students. We hope that the private sector will join hands with us in addressing this matter.
If we have so far been focusing on purely domestic matters, let us now turn, albeit briefly, to our relations with the Southern African region and the world.
Angola is moving towards peace. We would like to believe that the people of this sister country are committed to reconciliation and reconstruction. Thus today we can say without any fear of contradiction that the region of Southern Africa is very firmly set on the road to the strengthening of democracy and the guarantee of peace and stability.
In recognition of our shared and common destiny as a region, we have committed ourselves to all-round and mutually beneficial co-operation among ourselves, which itself will be a very powerful factor for the stability and prosperity of our sub-continent.
We are confident that the establishment of the conditions of peace and stability will create the necessary environment within which high rates of investment could occur. We are aware that investment in the productive sector is one of the critical and necessary elements if the region is to meet the challenge of improving the quality of life of its peoples.
We in the Government of National Unity are very proud of the fact that South African companies are forming partnerships with their counterparts in the sub-region and are therefore leading the investment revival in our region. As you are well aware, the region offers a market base of around 120 million people and great investment opportunities in tourism and eco-tourism agro-industry, mineral based industries, infrastructure development, transport and so on.
As a government we are committed to the strengthening of the South African Custom Union (SACU) and the Southern African Development Community (SADC). We are presently renegotiating the SACU and are working to reaching an agreement which will benefit all the members, big and small.
The recent SADC Summit reached agreements on energy and water whh together with existing agreements on transport and communica- tion systems form the core of our co-operation in infrastructure development. We hope to build on these agreements as we progress towards a prosperous Southern Africa in the 21st century.
In dispensing its responsibility as the co-ordinator of the financial and investment sector within SADC, South Africa is working very hard with its partners to ensure that the Community evolves a credible strategy in this sector, including the attraction of investors to the region.
Balanced development, equity and mutual benefit are the watch- words guiding our approach to regional co-operation.
We are also determined to evolve maximum co-operation with regard to crime prevention, including trafficking in drugs, illegal weapons, stolen goods as well as money laundering and violent crime. I want to assure you that the governments of the sub-region are determined to ensure that the criminals find no refuge anywhere in our region.
One of the most important initiatives with regard to relations beyond the sub-region is the current negotiations between ourselves and the European Union which are aimed at working out an agreement that, inter alia, will allow South African products better access to the EU market.
It will be very important for the private sector to assist our negotiators and continuously interact with them so that you can ensure that the outcome of these negotiations truly benefits our business community and consumers. This will include providing tech- nical back-up, research teams and any other assistance that may be necessary to the negotiating team.
Let me conclude by saying that the Government of National Unity which you helped put in place has every determination to live up to the dreams of our people, to strive for democracy, empowerment of the disadvantaged majority, human rights, deracialisation of our society and economy, non-sexism, development, prosperity, peace and stability.
We once again call upon SACOB and the general business community to join hands with us, to become true partners in all of these.
Let us now get down to the serious business of eating our dinner!
THANK YOU