The Programme Director,
Deputy Mayor of eThekwini Municipality, Councillor Logie Naidoo,
President and Chief Executive of the Albaraka Banking Group Mr Adnan Yousif,
Vice Chairman Albaraka Bank Limited South Africa Mr Shabir Randeree,
Board of Directors of Albaraka Bank Limited,
Chief Executive Mr Shabir Chohan,
Islamic Scholars,
Deputy Provincial Police Commissioner B.A Ntanja,
HOD for Community Safety and Liaison Miss Yasmin Bacus,
Honoured guests
Ladies and gentlemen,
All protocol observed
We wish to express our profound gratitude for being invited to be part of tonight's special occasion, which is a double celebration of Albaraka Bank’s achievements. We are especially pleased to be in the midst of this august audience gathered here because tonight we are toasting the success of an institution which is distinctly KwaZulu-Natal.
As all of us know that although Albaraka Bank is a subsidiary of the well-known Albaraka Banking Group in Bahrain, which has international pedigree, it is a truly KwaZulu-Natal financial institution owing to the fact that it is one of the few banks in this country which have their head-quarters in this province.
When the bank was established 20 years ago, it selected Durban as its head office, in a move which confirmed what we have always been saying that KwaZulu-Natal is a place to do business because of its strategic location. Two decades leading banks locating in Gauteng, Albaraka Bank has remained loyal to its roots.
Its head office remains in Durban and, such is its commitment to our province and the central business district of this very city that the bank is moving into an iconic new head office in Durban's emerging financial hub, the Kingsmead Office Park.
We as the KwaZulu-Natal Provincial Government applaud Albaraka Bank for its steadfast commitment to this province, in spite of having grown rapidly and developed a significant presence in all the major centres around South Africa during its glittering 20-year history.
As we celebrate the milestones of Albaraka Bank this evening, we want to assure you that the Provincial Government of KwaZulu-Natal greatly values organisations such as Albaraka Bank, which make our province the epi-centre of their business operations. Such investments contributes to the overall economic development of this region; a region still wracked by poverty and high levels of unemployment.
Programme Director, the new government which was sworn in on ninth of May faces big challenges and many opportunities.
Chief among these challenges is to ensure that we continue to use our competition advantage as the country to put on economy on the growth trajectory. As all of us know, just two weeks ago we all learned that our country, like many others in the world, has slipped into the negative growth territory. The much dreaded R-word is no longer a matter of if or when but is now a reality. This means that as a country we need to come up with innovative ways of lifting our economy from the morass of this economic decline.
As part of a basket of measures to shore up our economy, we need to continue with our resolve to shift the economy to the upper gear in terms of productivity levels by ensuring that we stimulate both the first and the second economies and creating linkages between the two. This will lead to the creation of skills, generate exports and employment and have a positive domino effect in the economy. The reality Programme Director, is that, before the economic downturn set in, our country over the past few years has enjoyed one of the longest periods of unbroken economic growth. A cursory glance at the figures tells us that the real economic growth average of 3,4% achieved during the first ten years of democracy (1995 to 2004) increased to an average of 4% over the upswing phase of the previous economic cycle. This was a big improvement in the domestic economic performance.
Programme Director, it is history now that the global financial crisis was started by banks, particularly in the US, which took controversial business decisions in a bid to maximise returns. However, what is pleasing is that in the midst of all this crisis, banks that followed the Islamic banking model, such as the Albaraka Bank, were shielded from this economic turmoil. Because of their strict adherence to Islamic business principles, Islamic banks world-wide – inclusive of Albaraka Bank – have escaped many of the negative effects of this economic turbulence.
This says much about the Islamic banking model, especially since Albaraka Bank, in particular, is widely regarded and, indeed, conducts its business as a community-based bank. Perhaps this is a sign that all of us need to explore closely the banking models of community banks and what established financial institutions can learn from the experiences and conduct of community banks.
Ladies and gentleman, as we proceed with our attempts at formulating economic recovery plans, we do expect diverging approaches on how best to soften the blow for the KwaZulu-Natal province. We expect banks such as Albaraka to also contribute in the debate. We say this because we believe that many financial institutions can learn a lot from Albarak Bank.
This will send positive signals to the markets, where we will make strong case that SA is a good place to locate in. While nobody is denying that we should in principle actively encourage fixed investment, our economic policy will focus on building productive capacity, now that our economy is more or less insulated from the global meltdown.
We have been repeatedly told that "the state can't pick winners, leave that to the markets," as if an intelligent industrial policy were reducible to a gamble on the racetrack. Likewise, remember how in the late 1990s we were told that it's the private sector and not the state that creates jobs? By nature any industrial policy is a moving target influenced by prevalent conditions, it is therefore important that we constantly review our industrial policy to ensure that it is responding to the current challenges.
It is in this spirit that we have currently reviewed our provincial industrial policy. It is against this background of active scepticism about what the state can do, that it is now encouraging to find most of our partners in government arguing that we should not to abandon the R787-billlion infrastructure construction programme. This state-led infrastructure programme is, indeed, the one sector still consistently contributing to growth and employment.
Even the London-based newpaper, "The Times", in April 2009, has carried a recent article lauding our state-led infrastructure programme, which, it says, puts South Africa ahead of developed countries in coming up with a sustainable long-term response to the current global crisis.
However, notwithstanding the dawning of some greater appreciation of the role of the state in the productive economy, profound scepticism still prevails in many quarters in SA. We are still being told that the "developmental state is a dangerous illusion," and that state-led economic planning is either hopelessly "over-ambitious", or alternatively inherently "authoritarian". Often it is the same commentators who praise our state-led infrastructure programme in one breath, and then condemn the idea of a developmental state in the next!
So where does this leave us? And what must we do in response to the crisis that is now impacting so dramatically on our economy and our people? As we have already implied, the very first requirement is that we should be honest about the nature and depth of the crisis. This involves a systematic unpacking of the relative strengths and weaknesses of our economy. Yes, this is largely an externally driven crisis, but what are the structural features of our own economy that have made us vulnerable to it? If we do not pose this question honestly, we will simply get stuck in a waiting game?
But we have just been through one of the biggest global commodity booms, and while
some key sectors of capital did very well, we did not create nearly enough jobs and the systemic problems of the South African economy (huge inequalities, spatial marginalisation of at least half the population, and crisis-levels of unemployment) persisted and were even actively reproduced in the midst of 5% growth.
So, strategically, our response to the present recession needs to ensure, as best as possible, that we sustain our state-led infrastructure construction programme. While the resourcing will now come under strain, there is a substantial national consensus that we need to sustain this programme. Some of what we have planned might now require longer time lines, and other infrastructural programmes need re-assessment? But, fundamentally, the multi-billion infrastructure spend (rather than the baling out of failing enterprises) needs to be our major response to the crisis. However, we cannot just be satisfied with a multi-billion rand infrastructure programme.
We need to ask critical questions of it. We need to assess whether the huge capital spending is transforming the systemic weaknesses of our economy. To what extent, for instance, is our infrastructure programme simply reinforcing the spatial inequities of our society? Is it really re-shaping the persisting apartheid geography of our cities, towns and rural hinterland?
Infrastructure construction cannot simply be targeted to lowering the logistics costs to our mineral exporters, moving from coal and oil fields to ports. While this is an important component, simply confining our infrastructure spend to this kind of goal will lock us into the same systemic features of the apartheid economy, while our former Bantustan rural areas continue to be marginalised through poor infrastructure.
Then, secondly, we need also to ensure that our industrial policy programme aligns much more energetically with our infrastructure construction. Too many of the construction materials, components and technologies are being imported when they could be produced locally.
This means we spend billions of rands, but fail to maximise the local job creation possibilities. It also means that we reproduce our historic trade deficit vulnerabilities? We remain an exporter of primary commodities and an importer of more expensive capital goods. These, then, are the two core strategic responses we need to make to the present recession:
* sustaining our state-led mass infrastructure programme
* aligning an industrial policy with this programme.
Together, these two major strategic interventions need to place us onto a new growth path that creates decent work and that overcomes the other systemic weaknesses in our economy. There are, of course, also many more specific and short-term interventions that we need to make in order to weather the recession. These include all of the matters agreed upon in the NEDLAC framework document, among them: the massification of the expanded public works programme; much tougher interventions to block illegal imports; the strategic application of tariff protections; a review of executive salaries; and the defense and consolidation of a comprehensive social security net.
In conclusion, ladies and gentlemen, on behalf of the KwaZulu-Natal Provincial
Government, we wish to offer our warmest congratulations to Albaraka Bank on its 20th anniversary of business. We also wish to take this opportunity to both thank and congratulate the bank on its decision to remain in the province and to be an active player in the city’s further growth and development.
Finally, I understand that tonight's celebratory function also marks another important milestone; that of the launch of a re-engineered brand, creating a single brand identity for all the Albaraka banking units around the world. Such a move truly internationalises our KwaZulu-Natal-based Albaraka Bank and, in the same vein, we wish to offer our congratulations to both the Albaraka Banking Group and Albaraka Bank on a most sound business decision.
To all those associated with Albaraka Bank and the good work it does here in Durban, in KwaZulu-Natal and throughout South Africa, we thank you most sincerely for your loyalty to both this province and the country. We are most proud of this home-grown business, which now becomes a truly international role-player in the South African financial environment.
Thank you.
Issued by: Department of Economic Development and Tourism, KwaZulu-Natal Provincial Government
9 June 20009
Source: Department of Economic Development and Tourism, KwaZulu-Natal Provincial Government (http://www.kznded.gov.za)
