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Speaking notes by Deputy Minister Bulelani Magwanishe on the occasion of the United Arab Communities of SA: 2nd Edition of Social Cohesion Dialogue

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Speaking notes by Deputy Minister Bulelani Magwanishe on the occasion of the United Arab Communities of SA: 2nd Edition of Social Cohesion Dialogue
19/03/2015

THEME: RADICAL ECONOMIC AND SOCIAL TRANSFORMATION

Programme Director,

Please receive our heartfelt gratitude for inviting us to address this Second Edition Social Cohesion Dialogue on the topic of Radical Economic and Social Transformation.

Allow me to relay warm greetings from the Minister of Public Enterprises, Honourable Lynette Brown.

The dialogue comes at an opportune time.

Since the last election, different interests have emerged all positioned towards ownership of the very idea of Radical Economic Transformation.

In this political and public discourse, there has been an emphasis on treating economic transformation outside of social transformation.

In different forms and different platforms, we have been observing the drive of locating radical economic transformation to mean the exclusion of certain sectors of the economy.

While we argue that its focus is not only on the land question, we also believe that merely taking from the rich to give to the poor is not the solution.

But that as we proceed with our quest to radicalise the economy, it is important that social factors be afforded equal attention.

We therefore welcome the phrasing of the dialogue to show that the economic is inextricably intertwined with the social.

The patterns of ownership in South Africa remain a worrying factor.

The World Development Index rated South Africa at number 2 of the countries with most inequality.

Of course confronting these is set to present the State with a whole of social contradictions which we have to contend with.

We are concerned that income disparities are to the effect that 50% of the world's wealth is in the hands of 1% of the world's population.

This scenario perfectly plays itself in the South African socio-economic space.

We need to be seen to be responding to these.

Programme Director

Freedom Charter

This is the 60th year of the Freedom Charter.

It is important that while grappling with the subject of Radical Economic and Social Transformation that we go back to this seminal document.

Those multitudes of our people that gathered in Kliptown, representative of all sectors of our society, uttered what must remain the most seminal expression of the future that our country must be.

They envisioned:

"That our country will never be prosperous or free until all our people live in brotherhood, enjoying equal rights and opportunities" and

"[That] the national wealth of our country, the heritage of South Africans, shall be restored to the people"[2]

Programme Director,

Radical Economic and Social Transformation

The Fifth Administration through the President has sought to respond to the call as articulated in the Freedom Charter.

While cognisant of the effects of the 2008 global economic melt-down, that in itself warranted that we begin to do things differently.

We cannot expect the masses to remain patient while they observe the glaring growth of the rich in front of them.

Our people are saying that political freedom has been achieved.

It is now time for the democratic non-racial government to deliver on economic freedom by delivering them from the poverty, inequality and joblessness that colonialism and apartheid have bequeathed.

In tasking the incoming administration, President addressed this objective as follows:

"As we enter the second phase of our transition from apartheid to a national democratic society, we have to embark on radical socio-economic transformation to push back the triple challenges (of inequality, poverty and unemployment).

Change will not come about without some far-reaching interventions. The economy takes centre stage in this programme".

Which are these areas which we should focus on to redirect our economy?

There are six components that inform the focus of Radical Economic transformation.

And these are:

  • Infrastructure.
  • Industrialisation
  • Investment
  • Innovation
  • Inclusion and
  • Integration

The investment in infrastructure currently stands at R1.1 trillion.

This is in realisation of the importance infrastructure plays in the sustenance and improving our economy.

Moving with speed, it is expected that through the National Infrastructure Plan as adopted in 2012, we are able to create jobs for more people.

South Africa has invited the countries of the world to invest in the country's infrastructure and particularly through BRICS.

Critically important at home is the role expected from the private sector.

Clearly the State cannot go it all alone without any private sector confidence and participation.

The response by the private sector to a certain extent will assist in determining the speed through which we are able radicalise the economy.

A setback which we fear is when the private sector will elect to be passive and concern themselves only with areas that define benefit for them.

The formation of the Department of Small Business is critical to both the state and the private sector.

The growth of small business to means more people are absorbed in the economic activity of the country.

Through this absorption, we will be creating a pool of industrialists particularly black as we address the cases of poverty, unemployment and inequality.

The accompanying threat in this regard will be the absence of the link between the successful industrialists and the poor.

This may come in many forms such tax evasion and non-compliance with standing prescripts.

Examples of this are visible when regard is given to mining companies not complying with the mining charter.

They are visible in the agricultural sector when workers are paid with alcohol which amount to abuse.

That also applies when big businesses disinvest resulting in the slump in the economy.

Moving with speed is not only the responsibility of the state but all parties standing to benefit.

The critical sectors of the economy such as energy, mining and manufacturing must be positioned in a way that ensures that there is sustained output flowing from them.

The state through legislation will be expected to support these sectors.

On the other hand, these sectors will be expected to ensure their sustainability while creating employment.

The most obvious of barriers is cases such as strikes we recently experienced in the mining and metal sectors.

All these factors combined, their result will always be a weaker rand, retrenchments and cheaper imports.

To achieve speed, these sectors must be mobilised towards a common goal.

Speed in Implementation is Essential

It cannot be overemphasised that there is a need to move with speed in implementing the well-articulated plans of the democratic state.

We can see every day that our people's patience is running out.

The conceptualisation of Industrial Policy Action Plan by the Department of Trade and Industry was informed by this very realisation.

The emphasis on local content and incentives related thereto are meant to eventually lead to an increase in our local manufacturing base.

Informed by the National Industrialisation Policy Framework, we aim amongst others, to realise a vision of:

"…a broader-based industrialisation path characterised by greater levels of participation of historically disadvantaged people and marginalised regions in the mainstream of the industrial economy. "

We submit to you ladies and gentlemen unless the next wave of economic growth, in our country and the rest of the world, is not informed by addressing the social conditions of the other 99%, we are all asking for trouble. 

The Arab Spring as experienced in the Arab countries of Northern Africa and Middle East should be a lesson to all of us.

The intervention in changing the structure of the economy and ensuring increased efficiency is supported by the resolutions of the 53rd congress of the African National Congress, held in December 2013, which resolved that:

"We intend to transform the structure of the economy through industrialisation, broad-based black economic empowerment, addressing the basic needs of our people, including women and youth, strengthening and expanding the role of the state and the role of state owned enterprises"

The above statements are a call to all of us to ensure that that the lot of our people is fundamentally transformed for the sake of our country.

It is our humble view that radical economic and social transformation are two sides of the same coin, and that in changing the material conditions of our people, we cannot neglect their social, intellectual, spiritual and moral well-being.

Colonialism and apartheid had sought to dehumanise our people by ensuring their daily existence is a struggle for survival.

It sought to direct that the pursuit of self-actualisation is deprioritised.

And therefore, what we need is to ensure that we restore the national wealth of our country to the people and restore their dignity.

The economic policies of the African National Congress have understood that economic development has to address the social challenges of our country.

Further, that social development will require economic growth to ensure that the State's interventions are sustainable.

The economic blueprint of the first democratic government, the Reconstruction and Development Programme (RDP), recognised that "…growth, development, reconstruction, redistribution and reconciliation [must be linked] into a unified program…"

This has run through all the economic programmes of the various administrations of the African National Congress.

This in our view is the ultimate expression of Radical Economic and Social Transformation.

Programme Director,

Department of Public Enterprises' Response

In articulating our Department's programme and performance expectations to the state owned corporations (SOC) in our portfolio, we have listened attentively to the directives of our elders.

One of which is the Honourable Minister of Trade and Industry, Dr Rob Davies MP, who said the following during the SONA debate on 18 June 2014:

"…radical economic transformation in South Africa must mean radical transformation on a number of levels:

It must mean radical transformation of the productive structures of our economy.

It must mean radical transformation of production relations: less conflictual, characterised by more equitable benefit-sharing by local companies.

It must mean placing job creation at the heart of work programmes and promoting a more inclusive job-rich pattern of growth…"

This was in response to the President's call that:

 "…radical economic transformation programme will be taken further with the implementation of the Industrial Policy Action Plan…"

The Minister of Public Enterprises at the 2014 Budget Vote went further and said:

"…the state-owned companies must continue to serve as effective strategic instruments of industrial policy and economic transformation…"

Therefore, in articulating the role that the state-owned enterprises will play in the lightening the load carried by our people, we have ensured that similar emphasis is placed on delivery of socio-economic objectives  as it is put on the financial objectives in the performance contracts concluded with the Boards of the state-owned enterprises.

An example of the above is the R50 billion worth Transnet project for the manufacturing of 1 064 locomotives.

Part of the deal with the four biggest foreign manufacturers is that except for the first 70, the majority of the locomotives be manufactured in South Africa. This is meant to ensure that local capacity is developed through skills transfer.

CSR, CNR, Bombardier and General Electric have between them nine (9) local companies benefitting from this transaction.

Transnet with all the expertise acquired, will come out of this with the capacity to be the original equipment manufacturer.

Critical in this is the amount of jobs that would have been created by both Transnet and local companies active in the sector.

Just today ladies and gentlemen, the President of the Republic of South Africa unveiled 95 locomotives which were built locally.

In Conclusion

The Freedom Charter says that:

"…South Africa belongs to all who live in it, black and white…"

You have made a choice to live in this country. As compatriots, you have chosen to be agents of the change envisioned by those that gathered in Kliptown on the 25th to the 26th   of June 1955.

Together, we need to realise the growth of the economy in our life time. Together, we can speed the process that informs radical economic transformation.

Shukran


Page last modified:22/07/2015 16:15