Sandton, Johannesburg, Thursday, 7 October 1999
Ceremonial greetings
W E B du Bois in his 1903 classic "The Soul of Black People" writing about 'the training of black people' quotes Omar Khayyam the poet:
Why, if the Soul can fling the Dust aside,
And naked on the Air of Heaven ride,
Were 't not a Shame-were 't not a Shame for him
In this clay carcase crippled to abide?
I am privileged this evening to be in the august company of many who have taken their destiny into their own hands and who have chosen not 'in this clay carcase crippled to abide'. Women and men from the length and breadth of our beloved country, who have realised that despite the tremendous challenges confronting them, there is hope and abundance of opportunities in South Africa.
I feel deeply honoured to be associated with the Sanlam 11th Entrepreneur of the Year Awards and it gives me immense pleasure to be here this evening. I want to commend the organisers for an initiative that is visionary and recognises that South Africa's most valuable resource is not the wealth of minerals buried beneath our soil, nor our verdant valleys rich with a variety crops and vegetation, nor the fine species of fauna that roam our veld; Our most precious resource is our people; rich in latent skill and talent; divinely gifted with our ancient crafts of hand, head and heart- We proudly call it our social capital -the building blocks of our economic emancipation and the Renaissance of our African continent.
The most serious challenge we face as a nation, is developing veritable entrepreneurs who are able to seize the opportunities that this exciting period in our history is offering them. As a nation we have emerged over the past five years from one of the darkest periods in human history. A period in which the large majority of our people were denied their basic human rights and the opportunity to contribute to the country of their birth. The result was that the overwhelming majority of our people were excluded from participating in the mainstream economy of South Africa. Under such circumstances it was inevitable that the country could never attain its optimum economic output and development.
Five years of democracy under our ANC-led government and the able leadership of Nelson Mandela and Thabo Mbeki has now laid a solid foundation to overcome that horrid legacy. Along with our partners in business, labour and civil society, we are making tremendous progress towards nurturing our human resource base. Programmes such as the Sanlam Entrepreneur of the Year Award are therefore extremely valuable as they begin to acknowledge the importance of encouraging and rewarding entrepreneurship.
In my capacity as Minister of Public Enterprises I want to assure you that our government will leave no stone unturned to ensure that a coherent policy and legislative framework exists, and is implemented that ensures that South Africa's human capital is developed to its fullest. Already through the constructive engagement with all our social partners the Skills Development Act is receiving tremendous support. I am confident that as we progress towards developing the skills and entrepreneurial spirit of new entrants into the mainstream economy, our country will reap the rich rewards.
The accelerated development paradigm adopted by the government of President Thabo Mbeki will over the next five years pay close attention to a range of programmes and initiatives that will break the back of poverty still gripping our largely rural masses. In addition to developing the infrastructure to sustain such an economic intervention, much attention will undoubtedly have to be given to developing the entrepreneurial skills and talents of the historically disadvantaged.
Our challenge in Public Enterprises is to ensure that there is a greater return for government and the people of South Africa from the wealth of public funds that have been invested in state-owned enterprises over many decades. Some of these enterprises have unfortunately become cost centres and continue to make burdensome demands on the national fiscus. We are fortunate however that over the past five years a solid foundation has been laid to restructure and transform these SOEs. As a new Department of Public Enterprises we will focus on accelerating this agenda and work towards unlocking resources to achieve government's socio-economic objectives.
A key challenge as we proceed in this task is to ensure that SOEs are run on the principles of good corporate governance. There is no place for the out- moded bureaucracy and antiquated work regimes that characterised the operations and management of many parastatals. Our vision is to drastically accelerate the pace of transformation of these entities so that they can become centres of excellence that render efficient and effective services to the public.
Government, as the majority shareholder, has an obligation to the people of South Africa to ensure that SOEs are better aligned to meet the social, economic and political goals of our new dispensation. It is therefore of fundamental importance that these entities align with our country's socio- economic objectives and development priorities. This is moreso important in view of the fact that in vital sectors such as transport and energy, SOEs have a pivotal role to play as they underpin the success of many other initiatives such as our Spatial Development Initiatives(SDIs), development corridors and building economic partnerships with the Southern African Development Community and further north.
We recently had very positive interactions and developments with Namibia, Congo, Ghana and last night we returned from Nigeria as part of the delegation led by Deputy-President Jacob Zuma. We are confident that SOEs have an important role to play in all our development initiatives and particularly in translating President Mbeki's vision of an African Renaissance into concrete projects and partnerships.
In fulfilling this vision, I believe that we must strengthen the co-operative relationship between state, private sector and civil society. Our task as the Ministry of Public Enterprises is to more actively promote:
When we review our achievements to-date, there can be no doubt that the process of restructuring and privatisation has spawned a myriad of opportunities for the development of entrepreneurs and the entry of new players into the mainstream economy. This is one of the reasons that we are determined to reach our target of completing the restructuring of state-owned enterprises within our current term of office.
Our restructuring initiatives have comprised a broad range of options designed to meet the specific requirements and economically strategic importance of each and every state-owned enterprise. These include outright sale or wholesale privatisation, partial sale where the state intends to retain a certain interest, strategic equity partnerships, concessions, the employment of management contractors within certain entities, and so on. Within each of the arrangements we insist on black economic empowerment, the examination of viable employee share ownership programmes, the enhancement of the competitive environment within the sector, provisions to support the National Empowerment Fund, human resource development and investment in new technology, the promotion of public-private partnerships.
Our major achievements to-date include in the field of telecommunications, a 30% equity stake in Telkom was sold for R5,6 billion to SBC and Telekom Malaysia. The airline Sun Air was completely sold off in November 1997. A 20% stake in the Airports Company was sold to Aeroporti De Roma for R818,6m, with an option for them to purchase an additional 10%. 4,2% of the Airports Company was sold to BEE entities for R172,7m, with plans for 10% and 9% to be sold to the NEF and ESOP respectively. The proceeds of R510,4m from the sale of 6 radio stations have already been paid into the exchequer. The corporatisation of Aerial Technology was completed at the end of February 1999 and we are currently putting the final touches to the consolidation of the various information technology entities currently owned by the state. The diamond mine, Alexkor, was placed under a management contract in March this year that requires the implementation of a turnaround strategy for this valuable R229m asset with a turnover of some R190m.
You are also aware of the signing of the management contract last week with New Zealand Post International and Royal Mail (UK) to turn around the SA Post Office. In addition, the controlling group of Swissair purchased a 20% stake in SAA for R1,4bn. Contract, sale and shareholders agreements have already been reached and we are finalising the structures of the Employee Share Ownership Programme (ESOP) and of the Black Economic Empowerment (BEE) transaction at the moment. The state-owned leisure facility, Aventura, has been placed under a management contract with the established Protea Hotel group that includes innovative financing and BEE components. Aventura's asset value is R121m and their turnover at the moment is in the region of R150m. The share sale agreement between Transnet and a partnership between a local and international investor for the travel agency, Connex, was signed.
President Mbeki also indicated the pending sale of the state forest group, Safcol. According to our timetables, the sale process will be completed in October. Part of the significance lies in the fact that this is the largest planned sale of state forest assets in the world to date. The total asset value of Safcol is currently R693m, with an annual turnover R569m. Again, significant ESOP, BEE and NEF arrangements are being negotiated.
Other plans include the sale of various abattoir facilities during the course of October 1999. We are ready to finalise the appointment of a management contractor for OBP, the state's veterinary laboratory. Furthermore, I must indicate that besides the rather well known and large enterprises the state owns at the moment, significant progress has also been made in the disposal of a whole range of small and even micro entities that the current government inherited from the former homelands. These include numerous farms and agricultural development programmes located in the former homeland areas such as mango farms, pineapple farms and so on. Some have already been sold or transferred to local communities and buyers in a manner that benefits the economic development of these remote areas. In monetary terms these transaction are insignificant from the point of view of the fiscus, but they are critically important for the livelihood of local communities.
The major state-owned enterprises to undergo restructuring include the fourth largest electricity utility in the world, Eskom, that provides the bulk of power generation on the continent at rates that rank amongst the cheapest in the world. Eskom's asset value is in the region of R70 billion, with a turnover of just over R21 billion. Discussions are underway to identify the best way strategy for the restructuring of the generation, transmission and supply components of Eskom. Already the commercial elements of Eskom's activities have been rationalised and brought under the umbrella of Eskom Enterprises.
Transnet, the state's multifaceted transport entity with interest and activities that span everything from air, road, rail, port and harbour, freight and passenger services, has an asset value of some R43 billion with an increasing turnover that reached R22 billion in the last financial year. There are a large number of components within Transnet and the restructuring process is at different stages of completion. Priorities are in the area of Portnet, the rail network Spoornet, and the energy sector, Petronet. We are confident that final proposals concerning all of these entities will shortly be placed before government. This will mark a significant step forward and provide us with the opportunity to examine a wide number of options to attract local and international investment.
The state's arms manufacturer, Denel, is also undergoing significant transformation and restructuring at the moment. Recently the Board approved the sale of various non-core units that involve a number of local and foreign companies and partners. Significant planning has been made in the areas of ordnance, aviation and aerospace, as well as the commercial side of the business. Denel's total asset value is in the region of R4 billion, with a turnover of some R3,2 billion. Government's recent announcement of the acquisition of new systems for the SANDF will boost Denel's income, its technological redevelopment and will significantly impact on the speed of its own restructuring programme. By their very nature, the defence-related industries stand to benefit largely from the successful involvement of international strategic equity partnerships. Already we are moving significantly in the aerospace arena.
These are but some of the major developments that I believe offer tremendous business opportunities. It is opportunities such as these that can create the space to develop a new generation of entrepreneurs and business leaders that will build South Africa into a thriving , vibrant and globally competitive player. We have already attained our political emancipation, ahead of us lies the tremendous challenge of attaining economic emancipation in which each and every South African may apply the best of their talents and entrepreneurial skills on an equal footing. Our political victory, without concrete opportunities for all our people to improve the quality of their lives, will ring hollow. I believe the poet was echoing the cry of the entrepreneur when he said:
"Liberty, Freedom, Opportunity -
vouchsafe to us,
O boastful World,
the chance of living men!"
I believe that we have a responsibility to provide hope and encouragement to prospective entrepreneurs. The Sanlam Entrepreneur of the Year Awards provides such encouragement, inspiration and acknowledgement of entrepreneurial endeavours. I assure you of our continued support and may you go from strength to strength.
I thank you.