In January 2011, President Zuma made the bold statement that: “We must make the decisive shift to meaningful economic transformation and set in motion a very deliberate programme that will ensure that the benefits of our political liberation are shared amongst all our people. Our people have struggled selflessly for freedom from oppression. We cannot fail them when it comes to the struggle for the elimination of poverty. This will include the deepening of empowerment of black South Africans in general. We have to live the promise of the Freedom Charter, which states amongst others, that all our people will share in the wealth of the country. Political emancipation without economic transformation is meaningless.”
Fundamental and radical economic transformation was accordingly to underpin the second phase of the transition towards a national democratic society by ensuring, among others, that wealth redistribution took on a new impetus.
The public sector has played a tremendous role in this regard and would thus be expected to play an even greater role in pursuit of this decisive shift towards meaningful economic transformation that both fulfilled the promise of the Freedom Charter and created the conditions for inclusive growth and a shared wealth.
This, of course, does not absolve the private sector of its own responsibility in this regard, but at the same time we accept the leadership role of the public sector within the context of building a developmental state that does not only create conditions for a fallacious “equal opportunities for all”, but that directly intervenes in the economy to create social inclusion through its policies and programmes of growth and development, reconstruction and development.
One of the sectors that have remained economically marginalised and hence socially-excluded over years have been the youth. Their plight is reflected in stubborn unemployment that refuses to yield to any intervention, lack of skills and access to economic empowerment opportunities.
Quite clearly, whilst the view may be correct that youth unemployment is the outcome of aggregate unemployment in the entire economy, but we cannot hold the mechanical view that increasing aggregate employment in the economy would, of necessity and automatically, resolve youth unemployment. As well as creating aggregate employment, specific youth targeted interventions are required to get the youth off the streets and into gainful economic participation and restoring their hope in this democracy.
At the same time, recognising that there are stubborn structural factors causing youth unemployment means that we cannot simply say to the youth that by merely giving them a voucher to go look for a job they will then find it. The fact is that they will find a job if the economy was creating one.
Accordingly, the National Youth Employment Accord is the better and more comprehensive and integrated approach to addressing youth unemployment and yet more effort is required of all, particularly the state through State-Owned Companies, to create the opportunities for youth to get employed and address their economic plight.
This we can say it without any fear of contradiction that the biggest challenge facing the youth of South Africa today is that of economic participation, which expresses itself in the form of the inter-related challenge of lack of jobs, lacks of requisite skills and empowerment opportunities so that they can form youth-owned cooperatives and SMMEs to create the jobs for themselves and for fellow youth.
We recognise that the access to capital and cost of capital remains a serious inhibitor for black people, and particularly the youth, to grow their businesses.
The finance industry should scrutinise its role in growing the economy. It was directly to resolve this challenge that government had established Umsobomvu Youth Fund and subsequently the National Youth Development Agency.
The mistake we made was in regarding the Fund as the panacea to all the funding challenges of the youth, leaving it on its own to fend against difficult circumstances, to try resolve youth economic aspirations that it could not fulfil on its own. At the same time, for some time, the NYDA veered off the rails and lost focus and we should the renewal of its focus under the new Board.
As a measure of their own contribution, the State-Owned Companies are poised to be catalyst of economic development and economic transformation through their spending and contributing in changing the social development dimension of South African economy. Targeted procurement through set-asides will make a significant difference in our economy and will contribute to the eradication of poverty, unemployment and social inequality.
Ladies and gentlemen:
Over the next five years, Eskom will be spending over R700 billion on both their capital expenditure as well as on its operational requirements. Black youth-owned (BYO) companies accounted for 1.0% (R1.2 billion) of the total measurable procurement spend for the Financial Year 2012. In real terms, Eskom procured goods and services from 457 black youth-owned businesses in the financial year.
Eskom’s supplier development plan has identified forty two (42) priority areas for supplier development, localisation and transformation. The company has set itself the target of spending over R24 billion a year on black youth-owned businesses by 2017.
Thus far, Eskom has reserved over R10.5 billion rand of spend for youth owned businesses in a range of industries including the national electrification project, vegetation management, coal mining, metering and wooden pole production. These businesses will create over 44,700 skilled jobs, expanding our national technical skills base.
Eskom is developing skills development programmes to provide training for these skills requirements so that young people are prepared to trade in this area and supported to be successful.
Eskom has identified the development of a new Integrated Demand Management industry as an opportunity to implement a flagship youth development programme, involving such areas as solar water heating, heat pumps, demand reduction and industrial process optimisation and maintenance. Energy efficiency is a relatively new and evolving technology.
It will create an opportunity for the social mobilisation of our youth and allow for youth participation at different levels of the value chain, from the most cutting-edge, technologically advanced research and design engineering to installation and maintenance. Multiple smaller demand management projects in a new evolving industry lend themselves to ease of entry for new players and the support from government will remove natural barriers.
The programme is aligned, and will give additional momentum, to government’s commitment to shifting from the energy-intensive to building the green economy, reducing carbon emissions. Eskom is using the energy auditors training programme to pilot the methodology. Thus far, fifty young people have been trained as energy auditors.
Systematically to develop the industry, Eskom has consequently established an Alternative Energy School in the Eskom Academy of Learning which will initially train 200 energy auditors and 400 alternative water technology heater installers. These programmes have been accredited with the relevant SETA. The Academy is investigating additional “green” skills programmes.
This intervention is not only correcting market failures of minimal skills development by the private sector but it is already designing the future and managing the transition between energy-intensity and green growth. In the last financial year, Eskom invested more than R1.9bn in skills development and has established an Academy of Learning offering courses to over 6 000 youth.
Eskom has also heeded the call of building strategic partnerships with Further Education and Training (FET) colleges by donating equipment to FET Colleges that focus on engineering and has provided 2 918 bursaries. The company’s long strategy is to ensure that by 2015, it provides over ten thousand apprenticeship opportunities per annum by 2015.
Ladies and gentlemen:
In the last 15 months, I had announced that Transnet will be spending R300 billion on its capital expansion and a further R325 billion on its operational requirements over the next seven years.
Transnet has developed a competitive supplier development plan which identifies areas where the company has leverage to drive a supplier development, localisation and economic transformation process.
Transnet has analysed each key operational spend area and developed specific focus areas for different aspects of transformation, including black women and youth owned companies.
These opportunities are focused on professional services, health safety and sanitation and the production and maintenance of equipment. Transnet has targeted over R18 billion of this expenditure for youth-owned businesses, particularly those in the townships and rural areas to indirectly stimulate the rural economy. The company will be using a combination of set-asides and procurement scoring methodologies to ensure an appropriately targeted procurement process.
Transnet recognises that identifying areas of procurement is the starting point for a comprehensive developmental process. We are soon to launch the Transnet Enterprise Development Hubs that will provide a one-stop shop of support services ranging from skills development opportunities to incubation facilities.
Transnet is entering into a range of partnerships with funding agencies that will specifically target providing funding and support services to black youth and women owned companies once these companies secure a contract.
The company will invest an amount of R3 million in De Aar, in a Youth Precinct which will be a youth-driven infrastructure development project offering a range of services such as a Youth Shelter for homeless children, a Youth Education Centre, a Youth Recreation Park, a Youth Enterprise Development Facility and a social club for youth volunteers.
To develop this youth precinct, young entrepreneurs in the area of construction sector and other related services will be invited through an open process to participate.
In the same province, Transnet is investing in the De Aar Logistics Material Supply Hub related to the Manganese Expansion Project which is projected at the cost of R2.4 billion, whose purpose will be to house manufacturers of materials to be supplied to Transnet for the upgrading and maintenance of the railway infrastructure. We believe that there are opportunities for Emerging Miners in the Sishen – Saldanha Ore Line.
In the short term, a facility has been created to assist emerging miners access the line to export their products/ commodities in partnership with Kumba and Assmang.
Transnet is working at developing a sustainable intervention that will result in the emerging miners’ consolidation terminal which will be after completing a feasibility study.
In addition, Transnet is driving a comprehensive skills development programme. Over the next seven years, Transnet will be spending R7.7 billion on training, dedicating R4.7 billion of this amount to bursaries and grants. Two thousand apprentices will be in training at all times.
Transnet has secured an amount of R175 million from the Department of Higher Education and Training to train an additional 1 000 learners, who will be recruited across provinces over the current financial year.
This will increase artisan learners at Transnet training facilities to 3 000 learners. The Departments of Public Enterprises and Higher Education and Training are consolidating their partnership to explore a range of areas to support FET Colleges and are engaging the Universities to align their training programmes with the needs of the SOC so that we do not import technical skills.
Ladies and gentlemen:
Denel has a focused human capital investment strategy in specialised civil aviation authority certified courses through its Academy. The Academy provided 827 courses last year and Denel admits 300 apprentices a year. Denel also intends to complete a 100 bursary recipients three-year cycle, who are studying towards technical qualifications.
To date, all the bursars who complete their studies are employed within the Denel group. Denel also takes 20 engineering graduates annually to a structured one-year internship programme. By design Denel procures niche engineering products and capabilities with minimal procurement budget.
In the past financial year, 72 enterprises benefited from Denel’s Enterprise Development Programme. Emerging component manufacturers get technical training at the Denel Academy and use specific Denel facilities and equipment as part of their learning and development processes.
Furthermore, our forestry company, SAFCOL, is currently running five learnership programmes with a total of 176 learners in different forestry-related disciplines from processing to furniture manufacturing.
The Industrial Development Strategy (IPAP) for the forestry industry has been identified as a critical sector due to its intensive labour opportunities it creates as well as the opportunities it further creates for the revival of rural economies through furniture production. The Training on Furniture manufacturing includes carpentry and upholstery for 78 unemployed youth, providing them with both skills and enterprise development.
SAFCOL business strategy is based on building strong relations with surrounding communities and uses their financial contribution in a sustainable way. To date, they have initiated 133 community projects which focus at building computer centres, supporting maths and science programmes, refurbishing class rooms, multi-purpose centres and has built seven domestic violence victim centres for women and youth.
In the current financial year, the company has employed 80 employees, mostly youth, in job creation projects. Soon, Alexkor will announce 310 jobs, the training of which will commence this year and work will start in January 2014, which is a 300% on the current establishment of 106 employees.
Two more mining sites will be opened next year with additional employment of 200 people per site. 200ha of land have been farmed by the Department of Rural Development and Land Affairs and 30 young people are going to be sent for training in Saldanha.
Ladies and gentlemen:
A month ago, I launched the Cadet Pilot Programme for both SAA and South African Express aimed at radically transforming the sector and ensuring that the aviation sector is accessible to individuals from previously disadvantaged backgrounds. The transformation of air transport is a non-negotiable and critical imperative for South Africa.
As part of the transformation strategy, SAA will soon open SAA flying school through its flight academy with its own curriculum aimed at developing more cadets within a minimal time without compromising safety.
The SAA Flight Academy will be a centre of excellence and will focus its training on new pilots for South Africa and Africa. Our commitment is to ensure that we make a developmental impact in the African countries in which we have a footprint through SAA by building sustainable partnerships. It is estimated that the costs per candidates will be at R1 million to R2 million for the total 3.5 years of training.
This investment highlights SAA’s commitment to the development of quality pilots and the transformation of the industry as a national carrier and state-owned company.
Ladies and gentlemen:
The integration of rural communities into the mainstream of our economy is both a moral imperative and strategic objective of our developmental state. Our big SOC construction projects located in rural areas as well the ongoing operations from these facilities provide a powerful platform to create economic opportunities for rural communities and revive rural economies.
Massive additional opportunities will be created through the Strategic Infrastructure Implementation Process. Eskom and Transnet have developed a procurement methodology called “local to site” where, in certain instances, lead suppliers need to involve local enterprises and in other instances, the SOC contract directly with a local enterprise.
However, a key lesson learnt in this process, is for the economic development impact of SOC projects and operations to be optimised, it is vital to organise and capacitate the local community, and particularly unemployed young people living in these areas, to respond coherently to the opportunities presented by these projects.
This is a highly specialised process requiring a range of capabilities that the SOC do not possess.
We are aware that the call for set-asides for youth and women in the SOC creates anxiety among some; yet we cannot compromise on the moral imperative to include in the economy important sectors such as women and youth and ensure they also benefit from shared growth.
There is recognition between my department and national treasury that we do need a different regulatory regime for the strategic acquisition of SOC and procurement projects that are intended to transform the economy through enterprise development and business opportunities.
We have established a team to develop a SOC procurement framework which will take into account the peculiar nature of SOC procurement and how it should impact into industrialisation and economic transform.
Only this way can we make the President’s injunction a reality that: “We must make the decisive shift to meaningful economic transformation and set in motion a very deliberate programme that will ensure that the benefits of our political liberation are shared amongst all our people.”
I thank you.
