Speech to the Black Management Forum Annual General Meeting by Minister in The Presidency for Planning, Monitoring and Evaluation and Chairperson of the National Planning Commission, Mr Jeff Radebe
Programme Director
President of Black Management Forum, Mr Bonang Mohale
Members of the Executive of the BMF
Invited Guests
Ladies and Gentlemen
Thank you for the opportunity to address you on this important occasion, your Annual General Meeting under the theme ‘Realising Transformation Dividends through Courageous Leadership’. President Zuma asked me to convey his apology for not being able to address you this morning, due to pressing matters he is attending to.
Your conference occurs at time when the South African economy is stagnating, due to a variety of factors. This performance that serves as a sharp reminder of the fundamental developmental and transformational challenges that we still face as a country. For a while now since the global downturn of 2008, and certainly over the last four years, the domestic economy has been adversely impacted by the global economic crisis. Besides low global demand and significantly low commodity prices, the economy’s underperformance is also due to a range of domestic factors, such as decades of under-investment in economic infrastructure; energy and transport constraints; rising input prices; a volatile exchange rate, among others. These factors have markedly slowed down South Africa’s GDP growth rate, which averaged a mere 1.5% annually in 2014.
The stagnant economy has in turn restricted overall employment growth, which remains insufficient to absorb the high level of new and existing entrants into the labour market. The unemployment rate increased to 26.4% in the first quarter of 2015.
Poor economic performance means that the triple challenges of unemployment, poverty and inequality are accentuated. We can see the effects in the faces of our young people on street corners in our townships with no prospect of work; in the lands that are lying fallow in our rural villages; in the soaring number of young people in our correctional facilities; in the ravages caused by drugs in communities, in service delivery protests that often descend into violence and criminality.
These stark and disturbing images are a reminder to all of us, particularly those of us in positions of leadership in Government and in organisations like yours, the BMF, that our struggle that defeated Apartheid, that gave rise to a democratic, non-racial and non-sexist Constitution in 1994, is not over yet; that our work is not yet done.
Indeed, it is worth recalling on this occasion of your AGM that the Black business and professional sector, along with the Black intelligentsia as a whole, played a critical part in the struggle for freedom and democracy in our country, under the banner of the BMF and other formations, and side by side with the oppressed masses of our people.
It is that role, as part of our liberation struggle, which to us constitutes the roots of the Courageous Leadership that is the theme of your AGM.
Defeating Apartheid, and taking measures to restore the dignity of our people, constituted an act of courageous leadership. Providing our people with services that they were previously denied, constituted an act of courageous leadership. Dismantling Apartheid laws one by one, to give way to a democratic, non-racial and non-sexist legal framework, constituted an act of courageous leadership. Creating a Constitution that represents the aspirations of the nation we want to be, constituted an act of courageous leadership.
Building on these achievements, including adopting various policies and laws to promote socio-economic Transformation and Empowerment, we have now developed the National Development Plan, a vision and a road-map to the year 2030, of the kind of country and nation we want to be. The National Development Plan was endorsed by the democratic parliament of the country, and adopted by Cabinet in 2013. This too was an equally courageous act of leadership.
The 20 year Review of our Democratic Governance of 2014, and the Development Indicators Report of 2014 that we released two weeks ago, among other surveys, illuminate the progress we have made in transforming and advancing our country since the advent of democracy, while at same time challenging us to exert even greater effort towards the better life for all that our people aspire to.
How We are Doing on Transformation: The Development Indicators for 2014
The Development Indicators are quantitative indications of changes and long-term trends in South Africa, with some based on data ranging from 1994 to 2014. The Indicators are used to measure progress and assist government to track the effectiveness of government policies and interventions towards achieving the national developmental goals.
The indicators are clustered according to 10 themes, namely economic growth and transformation, employment, poverty and inequality, household and community assets, health, education, social cohesion, safety and security, international relations and good governance. The data is sourced from various government administrative datasets, national official statistics, and research by local and international institutions.
The Indicators Report for 2014, paints a mixed picture of progress in a number of areas, and disappointing performance in others.
Social services performance has been mostly good, for example:
- South Africans' life expectancy increased by 9 years from 52 years in 2004 to 61 years in 2014.
- Infant mortality dropped from 58 to 34 deaths per 1 000 live births between 2002 and 2014.
- South Africa contributed to halting and reversing the spread of HIV. The number of HIV positive persons on anti-retroviral treatment in South Africa was at 2.8 million in 2014, which is a significant portion of the global target of 15 million persons.
- The percentage of households in low living standards (LSM 1 to 3) decreased from 40% to 11% over the period 2000 to 2013.
- Between 2002 and 2014, the share of households accessing basic services increased from 77% to 86% in the case of electricity, from 80% to 86% for water infrastructure exceeding RDP standards and the share of households accessing sanitation went up from 62% to 80%.
- In 2014, 84% of adults in South Africa were literate, up from 73% in 2002.
- Tax revenue has grown significantly due to economic growth, a broader tax base and more effective revenue collection. The income tax register has been expanded from 3 million taxpayers in 1996 to almost 20 million in 2014.
On Socio-Economic Transformation
Between 2000 and 2013, the proportion of Black Senior Managers increased from 18.5% to 40.1%, and the proportion Black Top Managers from 12.7% to 33.3%. The proportion of Female Senior Managers grew from 21.0% to 29.9% and Female Top Managers from 12.4% to 20.6% over the same period. While this is far from reflecting the demographics of the country, it is nonetheless impressive performance and has contributed to the massive growth of the Black middle class.
The Black middle has been the fastest economically progressing segment of the South African population, rising in number from 1.7 million individuals in 2004 to estimates of over 4.2 million currently, taking together all the surveys of this segment, including the much publicised so-called ‘Black Diamonds’ report of UCT’s Unilever Institute.
By consensus of these surveys, this phenomenal increase in the Black middle class is directly thanks to policies and measures of our democratic Government, such as Affirmative Action and Black Economic Empowerment laws.
In addition, asset transfer has occurred to upwards of 4 million houses to people who were previously denied ownership of such assets. It entailed the transfer of the top structure as well as the serviced land on which the houses are built. This is one of our major achievements since 1994, notwithstanding the challenges of location and quality of assets.
Areas of poor performance
Progress has been disappointing in the transfer of economic assets such as agricultural land and ownership of companies. In terms of land reform, the target was to transfer 30% of all agricultural land over a period of 15 years to Black people. By March 2014, only 4 345 602 hectares of land (which amounts less than 10%) had been distributed to previously disadvantaged people, and many of the redistributed farms are lying fallow.
The ownership of productive assets in the South African economy is shrouded in secrecy. The JSE puts the figure of Black ownership of the top 100 companies at 23%, which include indirect ownership by pension funds and empowerment schemes. Methodological problems have been highlighted in how the JSE calculates ownership, but even if we accept their numbers, this is extremely low and should concern all of us.
These un-transformed patterns of ownership are the cause of the very skewed distribution of income in our country. In his recent Nelson Mandela Memorial lecture, Professor Thomas Piketty estimates “that the share of total income going to the top 10% income earners in South Africa […] is between 60 and 65%...” compared with 50 – 55% in Brazil, 40 – 45% in the United States of America, 30 – 35% in most European countries.
Another area of continued poor performance, already referred to, is in the creation of jobs. Ten years ago, the rate of unemployment was at 23.9%. It declined to 22.3% in 2007, and by the first quarter of 2015 it had risen to 26.4%.
The important point to note is that our economy has not grown fast and long enough during the post- apartheid period, and this has retarded social and economic transformation.
As mentioned earlier, this has been exacerbated by the fact that the economy has struggled to fully recover from the devastating effects of the Global Financial Crisis of 2008.
We should pay greater attention to the factors that have limited the capacity of our economy to grow. Many of these are well-known and have been analysed at length in a number of publications, including the Nation Development Plan.
The combination of poor economic performance, high unemployment rate, concentration of asset ownership in a few hands, accounts for the high level of income inequality in South Africa.
It is this reality of the persisting triple challenges of unemployment, poverty and inequality that defines radical socio-economic transformation as the content of the next phase of the struggle, for which the National Development Plan: Vision 2030 constitutes the roadmap.
The National Development Plan as the road-map to Realising Transformation Dividends
The NDP provides us with the tools to tackle these persisting challenges and complexities of transformation. The plan paints a picture of a country we want to live in by 2030, and outlines the actions and measures we need to take in order to achieve our vision. It outlines the physical, human and institutional capabilities necessary to ensure socio-economic transformation. It highlights the importance of clarifying roles and responsibilities of different actors in government and society, to ensure effective implementation.
In this sense, the NDP is not the plan of government or the ruling party. It is a plan for South Africa which is inclusive of all sections of society, where the state has a specific role to play, relative to the roles of others.
The NDP thus envisages implementation through a renewed model of cooperation between the various sectors of society. It recognises that individuals have agency - the power to change their conditions that should be tapped into and channelled to drive change in society.
Indeed, the Ten Year Review of Democratic Governance undertaken in 2003, clearly suggests that government is NOT the only actor capable of bringing about socio-economic transformation. The review concludes that “Government’s successes occur more often in areas where it has significant control, and its lack of immediate success occurs more often in those areas where it may only have indirect influence”
This perspective resonates with the six interlinked priorities of the NDP, which serve as the pillars of the Plan, namely:
1. Uniting all South Africans around a common programme to achieve prosperity and equity;
2. Promoting active citizenry to strengthen development, democracy and accountability;
3. Bringing about faster economic growth, higher investment and greater labour absorption;
4. Focusing on key capabilities of people and the state;
5. Building a capable and developmental state; and
6. Encouraging strong leadership throughout society to work together to solve problems.
The NDP’s Economic Strategy
The strategy for economic transformation outlined in the NDP identifies a range of key measures, such as boosting our educational levels; promoting industries that are labour absorbing such as mining, agriculture, construction, hospitality and small businesses; growing the more advanced sectors of the economy such as manufacturing, parts of financial services, telecommunications and businesses services; and the effective provision of a broader social wage to enable the poorest of our people to have a decent standard of living.
All of these actions require a number of interventions by the State, and it entails making difficult choices. The NDP provides mechanisms for weighing the different challenges and identifying what to prioritise.
Faced with a stagnating economy, it is imperative that we find effective and sustainable ways to accelerate the growth rate, in order to enhance the standard of living for all South Africans. We urgently need to dramatically increase employment creation. We need develop the country’s industrial capabilities and reduce dependence on commodity exports. The ownership and management profile of the economy must be transformed to reflect that of the broader South African population.
For all of this to happen, the developmental state needs to build a partnership with business broadly, and Black entrepreneurs and Black business and professional formations need to play a leadership role in the process.
In this context, investment in infrastructure and capital procurements of State-owned Companies, remain of paramount priority, as both drivers of growth and enablers of transformation. The very process of building infrastructure and providing related services is a key source of investment-demand and economic activity. Our perspective is that in procuring a product or service, Government and our State-owned Companies must simultaneously and more explicitly be procuring a process of industrial development and Black Economic Empowerment.
It is well-established that our investment programmes must be leveraged to develop our industrial capabilities. We note the shift in dialogue and engagement to how these programmes can also be strategically leveraged for transformation and empowerment process, including the building of a class of Black industrialists. We welcome and support this shift in discourse, which must also clarify how Black business and enterprises will should play in this space. I am aware that the agenda of your AGM includes deliberating on these matters, and we look forward to your conclusions and resolutions in this regard.
We hope, however, that in being privileged to be part of an empowerment and transformational discourse, you will also recognise and accept the responsibility that comes with being leaders. As you embark on this courageous direction, you have responsibility to those who do not have the same privilege and opportunity as you have, namely the jobless, the poor and the marginalised among the masses of our people.
At the onset of the democratic dispensation, it was recognised that redressing the economic imbalances of the past would require government to lead and all other sectors to play their role. In the words of The Reconstruction and Development Programme:
Our economy requires coordinated and effective policies that combine private sector initiatives and government support to address its structural weaknesses. Coherent strategies are required in industry, trade and commerce to meet the challenges of a changing world economy, while at the same time meeting the needs of the majority. We also require broadly accepted, well-designed programmes which minimise the costs of restructuring and change.
We need defend this perspective, which envisages the participation of different stakeholders in making and implementing economic policies to bring about change. Frequently you hear groups representing different sectors of the society complaining about the lack of transformation and making demands on government. On the contrary, all the changes we desire require contribution from all sectors.
The Black Management Forum brings together the elite section of the Black community in both the private and public sectors. We need to be always alive to, and avoid, the temptation of being too concerned about the advancement of ourselves as individuals, or the advancement of our interest-group, and forget about our responsibility to the rest of society.
The concept of leadership implies responsibility for more than oneself. We must therefore ask the difficult questions of each other: Have we played our role in advancing the NDP? Do our actions benefit society? In what ways do our actions benefit society? Have we used all avenues and platforms provided by the democratic dispensation to drive transformation?
We believe that by debating these matters honestly and critically as the intelligentsia, you will ensure that the BMF retains and sustains its relevance as a force for positive change, capable of contributing to the vision and goals of the NDP, in partnership with Government and other stakeholders.
Implementing the NDP: Initial Actions by Government
As Government, we have accepted that we have a leading role to play in the implementation of the NDP. In this regard, Government, through a decision of Cabinet after the elections of 2014, decided that the current Medium Term Strategic Framework (MTSF) for 2014 – 2019, will constitute the first five year implementation plan of the NDP. The Framework focuses on 14 Developmental Outcomes that mirror the 14 thematic areas of the NDP. Various proposals and commitments of the NDP have been incorporated into the plans and targets of respective Departments and State-owned Companies and other public entities, including at the Provincial and Local level.
Cabinet utilises the MTSF as the basis for monitoring the implementation of the NDP across government, and considers progress reports for each of the Outcomes on a quarterly basis. These progress reports on are made public through the Programme of Action (POA) website managed by the Department of Planning, Monitoring and Evaluation.
In this way, accountability has been enhanced in Government. Also, the President has signed performance agreements with all Cabinet ministers that set out what each minister is expected to deliver. This is in addition to the established practice of concluding performance agreements with directors-general and other senior managers in the public service. The President also meets with ministers periodically to review performance against the signed performance agreements.
This is undeniably an act of courageous leadership.
Another significant development is the establishment of the planning, monitoring and evaluation function at the centre of government. The Department of Planning Monitoring and Evaluation is tasked with supporting the President in his role of providing strategic direction to the rest of Government, and ensuring that programmes deliver what they set out to deliver.
A unit has been established in the DPME to assess all strategic plans and annual performance plans of departments, to ensure that they are in line with the MTSF and NDP.
Also, as you may already be aware, Cabinet last month appointed the new Secretary of Planning in the DPME, whose responsibilities will include supporting the implementation of the NDP and the work of the National Planning Commission. And, two weeks ago, the President announced the new National Planning Commission and outlined its new mandate, in line the National Development Plan and the renewed focus on implementation. Among others, the mandate will include undertaking detailed planning in selected sectors, to facilitate more effective implementation of the National Development Plan.
The Commission will facilitate implementation partnerships across sectors, and continue to advise Government on broader planning and policy issues that have implications for the long-term development of the country.
As Government, we are always looking for more effective ways of accelerating implementation of priority transformation initiatives, working with other stakeholders outside Government. Many of you will be aware of Operation Phakisa, an approach to implementation that has been adapted from the Malaysian methodology called Big Fast Results. The methodology is firmly based on cooperative partnerships around shared goals between Government and private sector and civil society stakeholders.
We have introduced Operation Phakisa in the Oceans Economy, and in the Health and Education sectors, the latter which was launched by the President last Friday. We are in the process introducing this methodology in the Mining sector.
Substantive progress is being made in a number of areas, such as in the appointment in 2013 of a Chief Procurement Officer at National Treasury to oversee public procurement and ensure that it is ‘conducted in a fair, equitable, transparent, competitive and cost effective’, as envisaged in the NDP. Legislation has already been passed by Parliament to prohibit government officials from doing business with the state as a mechanism to regulate conflict of interest and reduce levels of corruption. A partnership has recently been established to improve education and skills development, namely the National Education Collaboration Trust, which brings together government, the private sector, unions and parents organisations.
Many of you participate in the various dialogue and engagement forums that the President has established the practice of convening with key business and other stakeholders on different matters of national importance. These engagements sometimes yield concrete results and undertakings to solve specific problems.
For example, a problem that has found a response from engagement with business in these forums is the poor performance of government in paying its suppliers within 30 days of receipt of a valid invoice. This led to a Cabinet decision in 2013 for a special unit to be established in the Department of Planning, Monitoring and Evaluation, to proactively address the payment of suppliers within 30 days from receipt of a legitimate invoice.
This area has now become one of the indicators where Government performance is monitored, given the contribution of the problem to the failure rate of especially small and medium businesses, in particular black-owned enterprises. A comparative analysis of national departments between 2013 and 2014 showed that there has been an improvement in the average number of invoices paid within 30 days. However, delays in payment remain a major challenge, with significant negative impact on small business, and on economic growth and employment creation.
For instance, national departments reported 155 572 invoices worth R3.8 billion which were paid after 30 days. However, at the same time, 62 887 invoices older than 30 days and worth R2.1 billion had not been paid. Provincial departments for the same period reveal a marginal improvement of 5% in the average number of invoices paid within 30 days. Provinces reported 241 332 invoices worth R13.4 billion which were paid after 30 days and 356 079 invoices worth R21.8 billion invoices older than 30 days which were not paid.
It is important, however, to bear in mind that the quality of our institutions and the ability to implement policies are strongly dependent on public trust. This trust is not automatic, and requires that we constantly keep building it.
Our people need to trust that the decisions that we take on their behalf are in their best interest and the sacrifices that they are expected to make will reap tangible benefits in the future.
Vigorously and consistently implementing the NDP is critical to building the trust of our people. We now have a plan and a road-map; we must now implement it, even as we recognise that the plan can be improved in various respects. It is in implementing the NDP that our ability for courageous leadership will be tested.
In this regard, the NDP advocates for a social compact among all the social partners and others who can make a contribution to build a more cohesive and equitable society. This call is made in the context of South Africa’s history of collectively finding solutions, such as the political settlement of the 1990s and the drafting of the Constitution being prime examples. It is therefore important that we rally South Africans around a common vision so that we can all take ownership of it.
By establishing the social compact on a shared vision, we must also acknowledge that while the diverse elements of South African society have different histories, we all share a common, minimum set of objectives which are aimed at improving South African society as a whole. It is only when, as a collective, we acknowledge our challenges and our strengths that we can move forward.
I wish you fruitful deliberations in your AGM.
I thank you
