N Hangana: South African Chamber of Business (Sacob) Annual
Convention

11 October 2007

The Honourable Executive President of Sacob, Penfold
The Chief Executive Officer of Sacob, Kondlo
Members and affiliates of Sacob
Distinguished business leaders
Ladies and gentlemen
Programme director

Introduction

It is indeed an honour to have an audience with a key sector of the business
leadership community in South Africa.

In the letter of invitation to this event it was indicated that the South
African Chamber of Business (Sacob) 2007 Convention's theme of Sustainability
Beyond 2010 aims to 'deal with ways and means of creating resilient
infrastructure to carry our country firmly into the future, with strong
cooperation and input between government and the business sector.'

This theme is both relevant and opportune given a number of priorities that
we have set for ourselves globally and as a country and also taking into
consideration a number of critical initiatives and programmes that are
currently underway.

Necessary conditions for sustainability beyond 2010

In 2002, South Africa hosted a successful World Summit on Sustainable
Development (WSSD), which resulted in clear set of global commitments and
timeframes to address poverty, underdevelopment, the lack of access to basic
services and the plundering of our global natural resource base.

As a country we championed and localised an approach to sustainable
development that aims to create a better life for all, coupled with a resolve
to significantly improve the performance and capacity of the state at all
levels. It is thus appropriate that I focus on some of the key inter-related
factors and conditions that directly affect our objective of achieving
sustainability in the South African context.

Enhancing good governance in local government

Four years after the inauguration of the new local government system in
December 2000, government initiated a special municipal hands-on support
programme directed at 136 municipalities. Through this project consolidate
intervention we have been able to focus the political and administrative
leadership of all three spheres of government on addressing a number of
conditions that constrain the ability of municipalities to perform optimally in
creating a conducive environment for sustainable development.

We have strengthened and complemented the management and technical capacity
of municipalities through targeted deployments of professionals and experts.
Currently we have deployed over 306 such professionals to various
municipalities in all provinces. Furthermore we issued regulations to help
stabilise and standardise the performance management practices in our
municipalities. In this regard we continue to focus our energies on minimising
the number of vacancies in our municipalities. We know that in July 2007, only
85% of our senior management (Section 57) posts were filled, which is steady
improvement from the 79% in December 2006.

Secondly, a number of service delivery challenges have been resolved or are
in the process of being addressed in our municipalities. This is being done
through increased infrastructure funding, the provision of additional project
management support, and the mobilisation of key partners such as the South
African Association of Engineers (SAACE) and the Development Bank of Southern
Africa (DBSA). Significant progress has been made with access to basic
services. For example:

* universal access to water supply increased from 59% of total households in
1994 to 86% by April 2007
* universal access to sanitation increased from 48% in 1994 to 73% by April
2007
* in 1994, 30% of houses in South Africa had access to electricity and by
2006/07 this figure had increased to 73%
* from 1994 to 2006 a total of 2 243 million houses were delivered, at an
average of 249 290 units per annum.

In the area of improving municipal financial management, we have supported a
number of municipalities to submit their annual financial statements on time
and to address key challenges identified by the Office of the Auditor-General.
Furthermore, in 12 targeted municipalities we were able to provide support,
which resulted in the revenue collection rates increasing by an average of
21,4%. This total increase in revenue amounted to R1,6 billion over a period of
12 months.

Thirdly, assisting municipalities to play an appropriate, yet decisive, role
in promoting local economic development (LED) also continued to receive our
dedicated attention. With the support of key partners such as the European
Union and the Afrikaanse Handels Instituut (AHI) we have increased the number
of credible LED Strategies adopted by municipalities and facilitated concrete
partnerships between our municipalities and organised business. By early this
year all our district and metropolitan municipalities took their LED mandate
one step further by convening Growth and Development Summits. In most instances
concrete commitments were made by the municipalities and critical local
stakeholders to address key local economic and development challenges.

Lastly, community participation is fundamental to our objective of realising
sustainable development. In this regard, we have worked hard to support
municipalities to establish ward committees. By August this year, over 98% of
all Ward Committees throughout the country have been established.

Increased Investment in Public Infrastructure and Improved Government
Capacity to Spend

Programme Director,

Our approach to sustainable development is premised on increased public
sector investment in public and other enabling infrastructure and services.
This becomes the platform for business and the private sector in general to
pursue labour-absorbing economic opportunities and shared economic productive
activity.

At the forefront of public sector investments are our municipalities, who
are best placed to prioritise development spending in local spaces. Thus,
increasing local government's allocation from the national fiscus over the last
few years has been central to our objective of building the financial
capability of this local sphere of government. One example has been the steady
increase in the Local Government Equitable Share. For the 2007/08 to 2009/10
medium term period, the financial commitments to local government will increase
from R20,6 billion (in 2007/08), to R23,7 billion (in 2008/09) and R29,4
billion (in 2009/10).

Our confidence in municipalities to manage greater allocated resources is
further demonstrated by the improved expenditure patterns that we have seen in
the national Municipal Infrastructure Grant (MIG). Expenditure improved by 15%
over a three year period, from 82% in the 2004/05 municipal financial year to
97% in the 2006/07 municipal financial year.

There is little doubt that our project consolidate interventions have played
a critical part in ensuring improved municipal capacity to spend and manage
public financial resources. We know that the deployment of project management
and engineering capacity to municipalities has made a significant impact on
over 800 projects in the areas of water, sanitation, roads and related
infrastructure to a total value of R2 billion.

Consistent with these lessons and trends and our commitment to support
municipalities, we have set aside R8,4 billion for stadium construction and R9
billion for transport infrastructure in the build up to 2010. These amounts
exclude resources set aside for legacy projects and other complementary
initiatives.

Patriotic business leadership

Ladies and gentlemen,

A key element in building sustainability rests directly with the business
leadership of this country. A necessary quality must be to develop the
requisite foresight to understand and ensure that complementary linkages are
made between the work of government and the business sector.

In this regard, the various Business Working Groups with the Presidency are
central to fostering a greater patriotism and commitment to our objectives of
accelerated and especially shared growth. In the meeting between the President
and the Big Business Working Group on 23 August 2007, it was correctly observed
that business is a major and vital part of the education and skills development
in this country and that it was necessary to accelerate our initiatives in this
area.

This morning, the Department of Provincial and Local Government (dplg)
convened a landmark Nodal Economic Indaba which focused on work that we have
done with the invaluable support from the Business Trust. This Indaba made
public the findings of an economic profiling exercise that was undertaken in
each of the 21 urban and rural development nodes and also provides an
opportunity for the public and private sectors individually and collectively to
respond to the investment possibilities in each of these nodes. In total, 96
project opportunities that were identified for the 13 rural development nodes
and 25 project opportunities were presented for the eight urban development
nodes. I would like to submit that this presents an exciting and tangible point
of reference for the business sector to make a sustainable economic
contribution to areas that were historically and systematically marginalised by
the apartheid regime.

It is through joint initiatives such as the economic profiling of the 21
development nodes, that government and business can together show confidence in
our actions and ensure that the 6% growth target is realisable and not a
pipedream.

Conclusion

Potential role of Sacob

In our view Sacob has tremendous potential to play a greater role in
complementing the efforts of government in building a better life for our
people. Through Project Consolidate, government interacted with a variety of
stakeholders and prospective partners. Many of these stakeholders and partners
are members of Sacob who have made valuable offerings.

It may be useful to remind members of Sacob of a statement issued by the
Chamber at the time of the Word Summit on Sustainable Development in 2002
(August 2002, Sacob Business Confidence Index) when it said that, "In terms of
the deliberations at the WSSD and the focus on sustainable development, Sacob
believes that business has a major role to play in creating a platform from
which sustainable development can evolve."

The few ideas presented today are aimed at providing an additional menu of
possibilities for business, and Sacob in particular, to partner with government
in meeting our global and domestic commitments on sustainable development.

I thank you

Issued by: Department of Provincial and Local Government
11 October 2007
Source: Department of Provincial and Local Government (http://www.dplg.gov.za)