Progressive Business Forum launch

9 May 2007

Programme Director, Renier Schoeman
ANC Provincial Secretary KwaZulu-Natal, Senzo Mchunu
Deputy Minister of Communications, Ray Padayachie
Deputy Mayor of Ethekwini, Loggy Naidoo
Distinguished business leaders
Ladies and gentlemen
Members of the media

I am very delighted to have been invited this evening to be part of this
launch of the Progressive Business Forum of KwaZulu-Natal in order to share our
experiences in transforming our economy and our society for the general
improvement of the lives of the majority of South Africa's people.

Currently our country, South Africa is experiencing a huge economic boom and
we are further hoping to build our fiscal position in order to improve areas
such as infrastructure so that we can be able to help accelerate our country's
economic potential. South Africa, as you all know, faces a number of
socio-economic challenges, which span across the entirety of our sectors. Let
me therefore, take this opportunity and talk a little bit about some of these
challenges that we are facing, but more particularly, the interventions to
resolve these challenges.

Cost of doing business in South Africa

Our new democracy has opened up new opportunities and doors for businesses
in South Africa. This is however, is being negatively affected by the high
costs of doing business in South Africa. Some of these costs are much related
to the regulatory framework and poorly developed infrastructure.

Some of these challenges arise as a result of poor planning at the design
stage, inappropriate land utilisation practices and more particularly, a
failure by the previous government to invest in important infrastructure over
the past twenty years. An example of this is that as the Department of
Transport we are trying to redress some of these challenges. In 2004 Cabinet
adopted the National Freight Logistics Strategy in order to ensure that many of
these challenges in the logistics systems can be addressed. Already there are
indications that things are going to be even better.

For example, the National Ports Authority (NPA) and the South African Ports
Operations (SAPO) have put forward a capital expenditure programme to address
many of these challenges. The national budget allocations are in the region
of:

* R22 billion for NPA
* R11 billion for SAPO
* R7 billion to improve freight rail for Spoornet

In KwaZulu-Natal you will be happy to note that part of this money if not
the majority of this Capex will be to expand the capacity of the container
terminal at the Durban, Cape Town and Port Elizabeth and also the building of
the new port at Ngqurha.

It is therefore hoped that the expansion that will be heralded by this
investment will reduce congestion and also create capacity at these ports.
About a year ago our President accented to the Ports Bill, which created the
Ports Regulator that will also further facilitate improvements in the way our
ports are operating.

In January this year, I appointed the Ports Regulator whose role is largely
an economic regulation in order to ensure that the investments and expenditure
on our ports system is dedicated to all the functions that will benefit the
port system and also to set tariffs that will ensure that our country will
become internationally competitive in order to attract a lot of ships thereby
facilitating economic growth in our country.

Accelerated and Shared Growth Initiative for South Africa (AsgiSA)

AsgiSA is a strategy of our government to accelerate our economic growth,
adopted a few years ago, in order to ensure that this growth can be shared
amongst all those who live in our country.

Some of the areas diagnosed include among others, the cost, efficiency and
capacity of the national logistics system, limited new investments
opportunities and the overall regulatory environment as well as the burden on
small and medium enterprises.

Shortage of scarce skills

The shortage of scarce skills is also a major constraint on the road to
faster economic growth in our country. Part of the priorities for AsgiSA is
therefore the need to address the shortage of scarce skills.

As government we believe that the Joint Initiative for Priority Skills
Acquisition (JIPSA) which is the skills empowerment arm of the AsgiSA is
starting to bring together social partners to address skills deficit by
increasing the availability of workplace expertise in various sectors through
special training programmes, luring back skilled South Africans living abroad,
and bringing retirees back into the workforce.

Unemployment

One of our biggest challenges is for the economy to create more jobs. Last
year figures show that there has been an expansion in employment by half of a
million jobs and a number of people finding work have increased. However, in
order to achieve the level of growth required, more high-level skills are
needed. This points to:

* the need for improvements in the quality and relevance of education
* the need for continuing support for low skilled people who are unlikely to be
absorbed, even in a growing economy
* this means we need to expand our public works programme even further.

Trade

Our exports activities continue to be dominated by the mineral products such
as gold, platinum, copper and diamonds, compared to main imports of petroleum
and crude oil.

This means that public and the private sectors should look at ways of
co-operation to improve the South African industry and make it more globally
competitive, by exporting final manufactured products rather than exporting raw
materials. Our industrial strategy is aimed at addressing this precise
challenge.

Challenges facing black small medium and micro enterprises

We also need to maximise the strategic role of the small, medium and micro
enterprises (SMMEs) in the socio-economic renewal of South Africa. A number of
opportunities exist in the economy, however, it is not always easy for SMMEs to
take advantage of the situation due to lack of business information and
business skills and the inability to raise and access finance.

Various government tools such as preferential procurement and institutional
support have been introduced to promote Black Economic Empowerment (BEE)
through procuring from the SMMEs and previously disadvantaged groups.

Government departments have also channelled their efforts towards developing
and implementing BEE Charters to promote economic transformation to enable
meaningful participation of black people in the economy.

I must also mention that our Integrated Small-Enterprises Development
Strategy aims at contributing to the overall vision for South Africa by 2014 of
a country with an economy that can sustainably meet the material needs of all
citizens.

Adequate capital investment

There is also a great need for capital investment for the economy to grow.
Investment in infrastructural projects and growing the second economy cannot be
overemphasized, particularly the existing physical infrastructure such as
roads, rail, harbours, airports, street lighting and sewerage systems.

This kind of investment would reduce costs and boost productivity of many
other inputs used by existing private and public enterprises.

As government we are determined to ensure favourable conditions for
investment and we are also investing billions of Rand on infrastructure to
create favourable conditions for growth. My department alone, during this
current MTEF, will inject:

* R8,5 billion for Passenger Rail Infrastructure
* R8,2 billion for Public Transport Infrastructure excluding rail
* R5,5 billion for National Roads Infrastructure
* an additional R3 billion has been allocated through the provincial
Infrastructure Grant for Expanded Public Works Programme focusing on rural
access roads
* R19,3 billion will be spent on airports infrastructure over five years and
our own growth in air travel.

As government we will continue to pursue our objectives to promote growth,
job creation, poverty eradication and social development. However, we must
understand that government alone cannot effectively address these
challenges.

Let me also take this opportunity reiterate our commitment as government to
transforming the national traffic information to great heights. The days of
long queues created by 14 years of the old Natis system are almost over. As of
yesterday there has been major improvement in the capacity of the new National
Traffic Information System (NaTIS) system, with the installation of the new
server and the proper establishment of the communication between the servers
and the database.

I am therefore glad to announce that all the functionalities of the system
are performing optimally as of yesterday. We have performed more than 600 000
transactions yesterday. Provinces and local authorities are also working
extended hours to reduce the backlog.

Once the system performs to its required capacity, it is envisaged that the
maintenance, improvements, additions and new functionalities will be a definite
necessity. These will be financed through transactions fees of R30 charged on
the renewal of vehicle licenses.

We also want to emphasise that motorists who have been issued with traffic
fines "due to no fault of their own", must approach traffic authorities in
their respective areas for their fines to be reviewed on merit and considered
for cancellation.

We however, want to unreservedly apologise for the inconvenience caused in
the past couple of days. But also to emphasise that it is our belief that the
benefits of such system will indeed outweigh such inconvenience.

Let me conclude by saying that all these government interventions will not
succeed without the private sector involvement. I also want to urge all
aspiring and existing business people to take advantage of current policies,
programmes and investment opportunities to make our goal of a sustainable
booming economy for South Africa a success. Through co-ordinated structures in
public and private partnerships, we are destined to win the battle of our
social and economic development.

I thank you.

Issued by: Department of Transport
9 May 2007
Source: SAPA