Strategy launch
18 April 2006
Members of the Executive Council
Local government leaders
Heads of Departments and Agencies
Stakeholder representatives
Distinguished guests
Ladies and gentlemen
Todayâs launch of the Gauteng Governmentâs strategy on broad-based black
economic empowerment (BBBEE) is the result of a commitment we made in 2004, as
part of our five year programme, to address the marginalisation and exclusion
from the economy of black people, women and people with disabilities.
While Gauteng is seen as the countryâs wealthiest province, with a growing
economy and declining unemployment, we continue to bear apartheidâs legacy of
unacceptably high levels of inequality, poverty and unemployment.
As we know, this is the direct result of the pastâs deliberate policies of
exclusion of black people from access to ownership, management and control of
the economy. Black people were condemned to be, as illustrated by the words of
apartheid architect Hendrik Verwoerd, âhewers of wood and drawers of
waterâ.
Our struggle for freedom was not just about winning political rights
including the right to vote and participate in the formal institutions of
democracy; it was also about socio-economic rights and access to the commanding
heights of the economy by the majority of our people.
Since 1994 our democratic government has put in place a wide range of
measures which have significantly improved black peopleâs participation, not
just in political democracy, but in meaningful economic activity as well.
However, this needs to be dramatically accelerated and expanded if we are to
enable the people to share in the countryâs wealth and fulfil our vision of
equality, non-racialism, non-sexism and prosperity for all.
If we are to achieve our developmental objectives and ensure that all our
people reap the fruits of democracy, we therefore need to extend the gains we
have made in the political sphere into the realm of the economy.
To this end, we last year adopted a Gauteng Growth and Development Strategy
(GGDS) which, together with our strategy to build Gauteng as a globally
competitive city region, aims to stimulate shared growth in the province to
eight percent by 2014. The aim is to build on the economic successes the
province has achieved so far, including a decline in unemployment from 30,4% in
September 2001 to 22,8 in September 2005, and ensure that we are able to
contribute effectively to meeting our national targets of halving poverty and
unemployment by 2014.
Our Growth and Development Strategy identifies BBBEE as a critical mechanism
to achieve our objectives, particularly in making sure more of our people,
especially the poor and marginalised, women, youth and people with
disabilities, become active participants in economic activity.
The creation of more and quality job opportunities for black people is an
important objective of both our GDS and our BBBEE strategy. However, we would
not be doing justice to our economic objectives if we were satisfied for the
majority to remain excluded and marginalised, perpetual servants at the lower
echelons of the economy.
As our strategy indicates, BBBEE is an integrated coherent socio-economic
strategy that directly contributes to South Africaâs economic transformation
and brings about significant increases in the number of black people that
manage, own and control the countryâs economy and significant decreases in
income inequalities.
BBBEE has been widely debated over the past few years, with some critics
attempting to discredit it as a strategy to benefit only the so-called black
elite. It is therefore important to set the record straight once again that in
line with the BBBEE Act, the beneficiaries of BBBEE must be all black people,
including women, workers, youth, people with disabilities and people living in
rural areas. It also includes:
* facilitating ownership and management of enterprises and productive assets
by communities, workers, cooperatives and other collective enterprises;
* human resources and skills development;
* achieving equitable representation in all occupational categories and levels
in the workforce;
* preferential procurement; and
* investment in enterprises that are owned or managed by black people.
The debate on the most effective way to achieve BBBEE objectives is an
important one. However, there are some amongst the critics of BBBEE that must
be dismissed as thinly disguised proponents of Verwoerdian ideology. For them,
black people should not aspire to rise above their particular âstation in lifeâ
as âhewers of wood and drawers of waterâ. They object to the accumulation of
wealth by black people but have never criticised the concentration of wealth in
the hands of a minority. Others would like to see government taking a hands-off
approach in the belief that the market will correct the historical imbalances.
While the market does have a role to play, direct state intervention is
required to ensure speedy, effective and thoroughgoing economic empowerment and
shared economic growth.
The objective of BBBEE is to effect transformation and ensure the
redistribution of the countryâs wealth, as well as address the inequalities and
distortions caused by years of apartheid. But it is important to note that
BBBEE is also a fundamental requirement of stimulating economic development and
shared growth.
The state has a responsibility and a clear mandate to use its considerable
financial muscle to promote growth in the economy and reduce poverty and
unemployment, in this particular case through the mechanism of BBBEE.
As I have indicated in the past, we need to send a clear message that the
time for white monopoly capital to pay lip service to economic transformation
and empowerment, especially for women, is past and will not be rewarded in
Gauteng.
Last year we announced that our strategy would ensure that, by 2009, up to
70% of government procurement would be done through broad-based black
economically empowered companies and also addressed the issue of support for
small and emerging enterprises and compliance with BEE charters.
Today I am pleased to announce that, after extensive work and consultations
within the provincial government and with our stakeholders, we are now in a
position to launch our broad-based black economic empowerment strategy which is
in line with the commitments I have made.
An implementation plan has been developed and the strategy will come into
effect in the Gauteng Provincial Government (GPG) as from July 2006. In the
meantime, we will put in place the baselines and ensure that all Departments
have the necessary systems in place to ensure the effective implementation of
the strategy including reporting, monitoring and evaluation of its impact.
The GPG BBBEE strategy gives effect to the BBBEE Act of 2003 and other
national policy and legislation on this issue, including the Constitution, the
Employment Equity Act, the Preferential Procurement Policy Framework Act and
Public Private Partnership Guidelines.
The strategy integrates existing GPG initiatives into a coherent
province-wide framework. It is binding on all GPG departments and their
agencies and will be incorporated into the performance contracts of the
relevant senior managers. It also provides a guide for municipalities in
Gauteng, who have committed themselves to developing and implementing BBBEE at
local government level.
The strategy utilises a variety of mechanisms to realise its objectives,
including preferential procurement, enterprise development, and employment
equity and skills development and prescribes a minimum set of standards and
targets to be observed. I will outline some of the key areas in which we will
intervene.
Preferential procurement
All GPG departments and agencies will apply a preferential procurement
policy when procuring all goods and services. The target to be achieved in 2009
includes 70% of total GPG procurement from BBBEE enterprises with equitable
gender participation. In order to make government tenders more accessible, we
will also pay attention to simplifying tender specifications, improving access
to tender documents and facilitating easy procurement for SMMEs.
We are well aware that SMMEs have experienced difficulties in doing work for
government as they are not paid timeously. To address these cash flow pressures
and make it more viable for SMMEs to do government work, we are committed to
ensure that micro and small suppliers are paid within 15 days upon receipt of
all the relevant documentation.
Restructuring, PPPs and licensing
The restructuring of any assets, public-private partnerships (PPPs) and the
issuing of licences, including casinos, horse racing and liquor will be guided
by BBBEE imperatives.
Enterprise development
To strengthen SMMEs and ensure that more SMMEs are able to tender for GPG
work, we will also pay attention to enterprise development, particularly
through the Gauteng Enterprise Propellor (GEP), which provides support to
SMMEs.
The strategy outlines a range of interventions in enterprise development
including the adjustment of procurement practices to enhance the growth of
small enterprises. The preferential procurement policy also sets targets for
small enterprises, micro enterprises and cooperatives.
The strategy commits us to approach small business development and BBBEE in
an integrated manner in line with the national strategy and we will seek
partnership with national, provincial and local institutions on this
matter.
Where GPG makes substantial capital and infrastructure investments, the
private sector will be expected to establish enterprise development
capacity.
Human Resource Development (HRD)
Access to education and skills development are key factors in determining
economic empowerment and in driving economic growth. The strategy sets targets
for employment equity and skills development for our own employees and also
addresses the Gauteng wide HRD strategy.
The BBBEE strategy commits us to ensure that, by 2009 we have 80% black
people and 50% black women in management positions.
Local economic development
In terms of the strategy, municipal procurement spend, access to social
infrastructure, property management and local economic development initiatives
will play a key role in altering the landscape of inequality across the
province. Through local economic development and in partnership with
municipalities, the GPG aims to increase the asset base of black people while
enhancing the economic competitiveness and generating development in local
areas.
Social and economic infrastructure
Access to social infrastructure is a necessary foundation for meaningful
participation in economic, social and political activity. Our aim is therefore
to establish integrated and productive communities where economic activity is
facilitated through the provision of social amenities including education,
health, housing and transport infrastructure. Infrastructure development will
catalyse growth in targeted economic sectors and enable people to more
effectively access economic opportunities.
Property ownership
Black people have historically been denied access to productive land,
leading to vast gender and racial inequalities in property ownership. This
severely restricted black peopleâs ability to create and accumulate wealth,
which in turn impacted negatively on the economic potential of the country,
black people and black women in particular.
The strategy outlines a range of interventions to change the skewed land
ownership, including unlocking obstacles to property ownership in
underdeveloped areas, particularly access to title deeds, formalisation of
tenure and land use rights.
Investment in targeted economic sectors
In line with the Gauteng Growth and Development Strategy, sector growth
plans will deliberately leverage and promote BBBEE participation, small, medium
and micro enterprise (SMME) development and job creation within key
sectors.
The BBBEE strategy identifies a range of sector initiatives including in
information and communications technology (ICT); pharmaceuticals; metals
fabrication; automotive; infrastructure, transport and construction; the film
sector, tourism and agriculture.
Our economic growth strategies will, amongst others, increase fixed
investment in areas with economic potential and direct capital investment in
under-resourced areas. Incentives for investors in the province with BBBEE and
SMME participation, especially in under-resourced areas, will also be
considered.
Finally, it is clear that ensuring the effective participation of the
majority of South Africans in the economy cannot be achieved by the actions of
government alone. The strategy therefore outlines the roles and
responsibilities of different social sectors, including business and civil
society, in the achievement of BBBEE in Gauteng.
The private sector, in particular, has a central role to play, including
through the implementation of sector transformation charters, where these exist
and the DTI codes of good practice on BBBEE where charters are not in
place.
We expect enterprises contracting with GPG to exceed the targets and
qualitative undertakings prescribed in the charters and generic scorecard. In
addition, the private sector has a role to play in supporting the growth of
small, micro and cooperative enterprises through enterprise development
programmes in partnership with GPG as well as in designing innovative financing
options to address development objectives including in housing, health and
infrastructure.
Civil society in turn needs to mobilise, organise and position itself to
more effectively participate in and benefit from the measures being introduced,
including improving the capacity of community based organisations and
non-governmental organisations (NGOs) and promoting dialogue and active
engagement with business and government on community requirements on social
infrastructure and local economic development.
Today we have reached an important milestone in Gauteng in realising the
vision of the Freedom Charter and in building a truly democratic, non-racial,
non-sexist and prosperous South Africa. It can only be a success if all of us,
government senior managers and staff, business, labour and communities,
organisations and individuals make an effective contribution. Let us all put
shoulder to the wheel to make it a success.
I thank you.
Enquiries:
Annette Griessel
Cell: 082 563 3614
Tel: (011) 355 6859
Issued by: Office of the Premier, Gauteng Provincial Government
18 April 2006
