South Africa has recently adopted the National Development Plan (NDP) whose theme, "Our Future - Make it Work", aptly captures the principal focus of this plan and what must pre-occupy the minds all South Africans.
Of course, our journey we must traverse to this future proceeds from the premise articulated in the Constitution of our Republic - the most basic document of our land - which says:
"We, the people of South Africa,
Recognise the injustices of our past;
Honour those who suffered for justice and freedom in our land;
Respect those who have worked to build and develop our country; and
Believe that South Africa belongs to all who live in it, united in our diersity."
In this regard, and most eloquently, the Constitution, in laying and articulating the foundations of our democracy, exhorted all of us to acknowledge the historic injustice experienced and suffered by the hitherto oppressed and reminded us that the basic tenet of the new dispensation was unity and inclusion, rather than the exclusion of the majority experienced during our apartheid-colonial past.
Indeed, political oppression of the majority had gone hand-in-hand with their economic exploitation and marginalisation, as well as with the gender discrimination of all women, especially the black women who suffered tripple oppression. Accordingly, it had long been recognised in our country that freedom would be meaningless and hollow if it did not entail fundamental economic freedom for the women, the workers and the poor and their inclusion in sharing the wealth of the country.
Obviously, pursuing this mandate that deliberate programmes would have to be implemented by the new government and dispensation in order permanently to negate the economic exclusion of the majority and create this society which belongs to all who live in it, united in their diversity.
The philosophy of empowerment is thus based on a policy which sought to correct the structure of the economy, which includes ownership, the structure of production, the structure of exports, the management of the economy, the spatial inequality, the financial system, health care and education system and skills.
It was important that we change the basic social and economic institutions in order to change the outcomes they generate.
The way Apartheid was structured it had marginalised black people in general and Africans in particular, with black women being the worst affected.
This social exclusion was both spatial - pushing Africans out of the economic centres – and institutional - excluding them from core market institutions.
The ethos of the empowerment had recognised that the minerals value chain contributed in the underdevelopment of the manufacturing sector in particular and services sectors – because the industrial development policy of that time supported the resource-based economy that was racially excluded.
Given this context, the question was whether government focuses on getting the cross-cutting fundamentals right or does it target particular interventions that will openly benefit some groups rather others.
The political choice the government took was to embark on corrective action that would positively favour some groups over others.
In the labour market, we introduced employment equity to institutionalise the participation of black and African people in the labour market so that we address the inequitable distribution of income.
Black and African people including women have been appointed in leadership positions both in the public and private sector, and, in fact, by granting these individuals opportunities and training them, the public sector has been an incubator for most of our business and economic leaders today.
Furthermore, the recognition that small and medium enterprises remain the engine of growth for the diversification of our economy, encouraging innovation, entrepreneurship culture as well as contributing to transformation imperative of the country.
A range of funding schemes was set up by both the public and private sector to support this sector so that our people can shift from the informal economy to a more structured small and medium enterprise.
I admit this evening that meeting this objective has not been without challenges.
For instance, the role of SMMEs in the economy is to create new industrial sites and sectors.
In our case, we had thought that this sector would fundamentally contribute to the decentralisation of industrial sites in South Africa and would be supported by the upstream industries through downstream linkages.
Government remains committed to this sector; in fact, through the infrastructure programme of State-Owned Companies (SOCS), we have developed a supplier development programme which targets this sector.
Recently, I hosted the Supplier Development Summit with the objective to give market signals on the goods and services that will be procured by the SOCS and to allow the private sector to beef up their capacity informed by this long-term planning trajectory.
We believe that the SOCS spend in the economy will change the economic landscape of South Africa and will contribute to creating a diverse private sector in terms of race, gender and class.
The Broad-Based Black Economic Empowerment strategy is a necessary intervention to address the systematic exclusion of the majority of South Africans from full participation in the economy.
The defining feature of apartheid was the use of race to restrict and severely control access to the economy.
The accumulation process was one of restricted wealth creation and imposed underdevelopment on black communities to ensure that they were, in the main, suppliers of cheap labour.
The underdevelopment of black South Africans took the form of a progressive destruction of productive assets; deliberate denial of access to skills and jobs; and, the undermining of self-employment and entrepreneurship.
In combination these policies restricted and suppressed wealth and skill endowments in black communities, thereby structurally inhibiting their participation in the institutionalised race-based economy.
The fact that black communities had little access to technical and scientific teaching and learning further exacerbated the obstacles in our rapidly developing industrialisation process.
It is testimony to the vitality of black society that so much has been achieved in so short a space of time against such a mountain of structural challenges.
Empirical evidence suggests that societies that are characterised by entrenched class, gender inequality or racially or ethnically defined wealth disparities are not likely to be socially and politically stable, particularly as economic growth can easily exacerbate these inequalities.
Therefore, the medium-to-long-term sustainability of such unequal economies is precarious.
Accordingly, in South Africa, the socio-political and moral imperative to redress racial discrimination is also dictated by the need for sustainable growth.
Since 1994, the South African economy underwent profound restructuring.
The transactional black economic empowerment has had positive outcomes and has imposed binding constraints in the economy.
To date, we have more companies with Black/African people that are listed in the JSE than we had 10 years ago, even though they are still not sufficient.
The financial portfolio of assets for Black and African people has changed.
I accept that there is room for improvement as many African people participate in the financial system through savings accounts, stokvel or burial society.
This must change and we need to see a change in attitude from our financial industry.
The binding constraints associated with transaction BEE is that many South Africans who had come through the systems have no experience in running business entities and have no entrepreneurship genes in them.
This situation has a potential to derail the progress we have made in the economic front which is more visible in the mining sector and the most concentrated sectors of our economy like finance and retail sector.
In the portfolio I am entrusted with, I have instructed the SOCS to enter into business transactions that change the character of the sector, because we understand that industry charters which allocated 26% ownership to Black and African people were a product of political compromise and nearly a second decade later we must review their relevance.
For example:
- Many of our SOCS have appointed black audit-firms as their external and internal service providers, with Transnet leading the way,
- At Eskom, we are working on a programme for Emerging Coal Miners that will change the empowerment game in the mining sector, which could to Eskom procurring 50%+1 of their coal from black miners by 2018; and
- The Competitive Supplier Development Programme is aimed at creating black industrialists who will become game changers in the field of black empowerment.
We have taken to heart the statement made by President Zuma in 2011 that the time had come for South Africa to make a decisive shift towards economic transformation in pursuit of socio-economic freedom which benefits the majority of the people.
We understand that clarion call to mean that we must act decisively and conscientously in order radically to ensure that the economy benefits the people in the areas that are still marginalised like the townships, informal settlements and rural areas.
We must further evaluate the value these industry charters add in building sustainable economic development and growth.
As a consequence of slow structural changes in our economy, we continue to perform below our full potential in terms of economic transformation.
There is broad consensus that our country requires an economy that can meet the needs of all our citizens, hence the FRANK DIALOGUE today.
This will only be possible if our economy builds on the full potential of all persons and communities across the length and breadth of this country.
In essence, the philosophy of BBB-EE has had unintended consequences which we are correcting through the infrastructure programme, through such programmes as beneficiation, supplier development, localisation, access to affordable capital and others.
However, we must resist the temptation to condemn BEE merely on the grounds that it has had unintended consequences, instead of fixing those problems we have identified, radically if needs be.
Often, it might pretty well be tempting to aim at BEE for populist reasons and we could play right into the hands of our more right-wing and conservative counterparts and the detractors of radical social change.
South Africans are demanding a stake in the economy and the signals are written on the wall.
At this stage at which we are, and in order the more consistently and persistently to fulfil the injunctions of our Constitution and create the type of South Africa as envisaged in the NDP, South Africa needs more and not less broad-based black economic empowerment.
I thank you.
