Programme Director,
Mr Alan Winde – MEC for Finance, Economic Development and Tourism,
Mr Dan Plato – MEC for Minister for Community Safety,
Mayor of Stellenbosch, Mr Conrad Sedigo,
Councillors,
Consuls General,
Ladies and gentlemen.
Thank you for the opportunity to address this afternoon and for adapting your programme to accommodate me at this earlier time.
I want to address you on the National Development Plan and what it means for us as a country. Let me start by providing an understanding of the National Development Programme in respect of two distinct views. The first is its lateral positioning. The National Planning Commission is not government.
While I am a member of Cabinet the Commission is made up of 25 commissioners drawn from outside of government and our role is advisory. We are not government but we are not an NGO either nor are we an independent think-tank. We occupy a position relative to government with a strong ability to persuade both government and society. This is an important aspect of the Commission that we should not lose sight of.
The second aspect is the positioning of the National Planning Commission longitudinally. This perspective can be traced back to the struggle for democracy, the first democratic elections in 1994, the adoption of the Constitution in May 1996, the signing of the Constitution into law in December 1996, and then through a series of policy development initiatives undertaken with varying degrees of implementation.
We need to understand the National Planning Commission as part of the progression of governance and planning and in the context where we recognise that change is a dynamic process.
The National Planning Commission was established as an independent body and was tasked with taking a broad, cross-cutting view of government with the aim of developing a long term Plan for the country.
The challenge that the Commission faces in this regard was, of course, that government is complex: The Constitution provides for three spheres of government, each with its own layers of complexity.
It is important that I stress that these are spheres and not tiers of government and so in that respect the added complexity of the intergovernmental relations becomes a crucial factor. In addition, in the schedules to the Constitution, certain functions are allocated to specific spheres and the bulk of pro-poor policies or areas that deal with poverty broadly – education, social welfare, and public health – are delivered by provinces.
Many of the other functions – the provision of housing, water, electricity, roads in the built environment – are delivered by spheres other than national government. So improving on the alignment and measuring the outcomes is a fundamentally important challenge.
This perspective of the National Planning Commission allows it to take a view of the policy environment with the aim of developing a comprehensive picture by improving links between disparate or contradictory aspects. This is exceedingly important because by creating South Africa’s first ever National Planning Commission, the President has given the country an opportunity to improve on the significant progress already made.
The Commission is in the fortunate position where it is not constrained by the divisions that define the way in which government is structured or in the way that it operates. It was able to take a broad view of society in order to ask questions differently.
Are the actions appropriate to the circumstances? How can the life circumstances of people be improved upon? What risks are we prepared to take in pursuit of these objectives? As a Commission, we based our work on the provisions of the Constitution. It may be worth reminding you about some of the provisions of the Preamble.
It asks us to:
- heal the divisions of the past and establish a society based on democratic values, social justice and fundamental human rights
- lay the foundations for a democratic and open society in which government is based on the will of the people and every citizen is protected by law
- improve on the quality of life of all citizens and free the potential of each person; and
- build a united and democratic South Africa able to take its rightful place as a sovereign state in the family of nations.
The question that we must ask is what active steps are we taking to make the provisions of the Preamble a reality? What does it mean to improve the quality of life of all citizens? How will we have healed the divisions of the past? What does it mean to build a united and democratic South Africa?
It is important that we understand that the provisions of the Preamble and, in fact, the rest of the Constitution including the Bill of Rights is not about what we should not be doing but rather about what we should be actively doing. The provisions have not been phrased in the negative. Part of what we must do in society is in the active steps that we take.
These steps are certainly there in the types of regulations and legislation we adopt but they must also be there in the partnerships that we build across society. It is not simply about asking what government will do but about ensuring that as society we don’t outsource our responsibilities.
If we take any aspect of society and for the purposes of this gathering where, as the Chamber of Commerce and Industry, you represent business in this great city perhaps we should focus on the issue of work. You would know that it is not possible to raise the quality of life of each citizen as the Constitution requires of us with unemployment levels where they are.
You would also know that you haven’t worked to free the potential of each person because you don’t know what their potential is. The challenge that the National Development Plan identifies is that we need to nearly double jobs by 2030 by adding 11 million jobs to the economy to reach 24 million.
Per capita income should rise from about R50 000 per person to about R120 000, but be distributed more evenly across the population. The economy would have to expand to almost three times the present level with GDP levels growing from R3 Trillion to R9 Trillion over this period. We must also begin to grow the number of enterprises in a far more intensive manner.
Might it not be true that over a period the diversity of enterprises has decreased? In 1995 as the Minister of Trade and Industry I gave an export award to a Cape Town company that manufactured ovens for bakeries.
Does this firm still exist? Which others have shut down? It would seem that competitive pressures from China would have caused a wide range of companies, including long-standing intergenerational firms to move from manufacturing to finance or IT, sometimes because of creative destruction or because a new generation does not understand the processes.
South Africa is not alone in this. In large parts of the United States firms have shut down and successive generations have left industry. There are several places where there are many young people with no prospects. We find a similar trend in Europe.
Engaging with these challenges requires leadership at national, provincial, organisational and company level. How do we make these changes? How do you do it?
In drafting the outputs of the National Planning Commission we started with the Diagnostic to understand the depth of the challenges that we were facing as a country. We understood through this process that there are two broad objectives: the first is to eliminate poverty and the second is to reduce inequality.
It is important that we recognise that the two objectives are not the same. They may be interrelated in many aspects but they both need to be addressed. To eliminate poverty in some respects is a bit easier because you can develop a poverty line to the extent that we can get consensus about it and then determine that nobody should live below that line.
Inequality is a bit harder because it is shaped by a number of features. If we look at developing economies elsewhere in the world, we begin to see how inequality takes root. One of the interesting examples in this regard is China which just over 30 years ago was very poor but highly equal and today has a Gini coefficient that is higher than the United States of America.
We find that inequality takes root as a natural cyclical trend for countries in the process of development. We need a consciousness about these issues and know that the measures and the skill sets required to deal with inequality will be different to dealing with reality of poverty. We must be careful not to conflate the differences that arise as a result of relative deprivation with the impact of poverty.
Poverty is an absolute measure. But what does it mean to live in poverty beyond understanding it in terms of a measure of income per fixed period. The Commission defined it as the attainment of a set of elements that describe decent standard of living.
The core elements of a decent standard of living identified in the plan are:
- Housing, water, electricity and sanitation
- Safe and reliable public transport
- Quality education and skills development
- Safety and security
- Quality health care
- Social protection
- Employment
- Recreation and leisure
- Clean environment
- Adequate nutrition
If we want these things, the question we must answer is, how do we get there? What are the impediments? What is required of every member of society and specifically of every member of the Cape Chamber of Commerce and Industry represented here today? What are the impediments to employment and what are we going to do about it?
Goldman Sachs has just released a report called ‘Two Decades of Freedom’ that contains incredible stories of some of the strides that we have made since the first democratic elections in 1994.
They point to the fact that service delivery has improved across the board over the past ten years; our regional economic position has improved in the past 13 years and is set to continue growing which places South African companies in a favourable position relative to the rest of the continent to benefit from the growth potential; since 1994 our macroeconomic, fiscal and monetary balances have improved with an average GDP growth rate of 3.6% in the first 13 years and inflation being reduced to an average of 6.2% down from a 14.2% average.
They point to the growth of the African middle class with the annual disposable incomes of South Africans increasing in line with real GDP per capita gains. The rise in disposable incomes has resulted in a progression in the LSM profile of the country and the African middle class has doubled albeit off a low base. This rise in incomes has seen a boost in spending which has been supported by wage inflation and government grants. These are only a few of the positive trends contained in the report.
It is not all good news, however – the report recognises, amongst other issues, the impact that unemployment, poverty and a high disease burden has on inequality in the country. Consistent with the conclusions in the Diagnostic and National Development Plan, the challenge of structural unemployment which is characterised by a large youth component is identified as a serious problem.
Equally, the impact of low educational qualifications for the majority is highlighted as a concern. It is apparent that while South Africa has the institutional infrastructure, it must continue to invest in its people. Indicators relating to quality of education, labour employer relations, health and government regulation display a negative trend. Our research and development spend has consistently lagged the rest of the world.
It is quite possible to spend a great deal of time analysing the findings of the Goldman Sachs report, but that may be for another time. While it is important that we study the conclusions to appreciate the lessons and we recognise the gains we have made, the fundamental question is how we ensure that we build on the progress made over the past twenty years.
How does the Chamber participate in discussions? The easiest thing in the world would be to block yourself off, to be satisfied with the profits that you take for as long as you are able and then to stand back and say that it is government’s responsibility. How do you define your role and responsibilities in ensuring that you actively contribute to providing a decent standard of living? What do you do when you find out that your workers are so heavily indebted that their actual disposable income is less than half of what they go home with?
The Commission, along with the rest of the country had a serious wake-up call when we learnt about the events at Marikana. It may be worth reminding members here today that the tragedy took place less than twenty four hours after we handed the National Development Plan to the President in Parliament on 15 August 2012.
What that has done was to allow us to address the issue of poverty by using this incident and the mineworkers’ lives as a proxy. Understanding that the work of the Farlam Commission is ongoing and that a comprehensive report is likely to emerge from that process, one of the factors that have transpired is the level of indebtedness being suffered by the miners to the extent that nett salaries are reduced by more than half as a result of emolument attachments.
In fact, the Marikana mine was being ‘serviced’ by no less than 14 micro-lenders with miners being indebted to several at the same time. It is near impossible to expect workers to live on less than half their income, an issue that simply exacerbates the problem of indebtedness. This pattern is replicated when remittances are sent back home and there too, micro-lenders act to recover debt.
It is this type of constant descent into debt that results in labour demands for wage increases of 100%. The micro-lending industry appears to target the most vulnerable in our society by taking advantage of both their precarious financial position as well as their ignorance of their rights.
The question is what are employers doing about this situation? Are you able to alleviate this burden? Is it your responsibility? Bearing in mind the excessive interest and other charges being levied by micro-lenders, are companies able to take over that burden using their cash- flow reserves and reduce the pressure.
I concede that what I am suggesting is fraught with a range of pitfalls that will require mitigation. How will the cycle of debt be stopped? Is this not simply a matter of shifting the risk? It is exceedingly important that Business understands its role as active citizens in this scenario. How do responsibilities play out?
How does the Chamber articulate views on regulations and legislation about these matters? What responsibilities do you have to your employees? What responsibilities do you have when there is bad practice around you? How conscious are we about the societal responsibilities that we hold?
What responsibility do we have to ensure that the labour force has the requisite skills and qualifications? Three days ago, there was a news report that indicated that in terms of a study by the Department of Basic Education, Western Cape schools have been ranked the best in the country.
The study that looked at a range of categories, such as including professional development, teacher absenteeism, curriculum coverage, access to a library, effective school governing bodies, special needs training and district support and found that the Western Cape outperformed other provinces. This is undoubtedly an incredible achievement but the reality may be different when one looks at the disparities between schools in the townships and those in the leafy suburbs. Differences we see manifesting in terms of infrastructure, administrative support and parental involvement.
We know that in terms of the implementation of education policies since 1994 there are a number of positive issues. We have near-universal enrolment in school, certainly up to the age of 16 and the ratios between male and females are broadly within demographic trends. Contrary to the apartheid period, it can be stated without fear of contradiction that spending per learner is equal.
That change was a significant achievement and if we look at the breakdown of education spending it is comprised of educator salaries that have been equalised regardless of the type of school that the teacher is based at, learner support material that is meant to be equally spent, costs of the department and infrastructure costs which, unfortunately, has remained an ongoing issue. Sixty percent of learners are at no-fee schools. Funds are budgeted for a school nutrition programme based on the understanding that children cannot learn on an empty stomach.
In terms of our appreciation of the requirements of the Constitution, including the Bill of Rights that deals with education and its history, the financial resources are there. If we look at the legislation, the Schools Act sets the requirement that every school will have a School Governing Body. We find that in urban areas, especially in those leafy suburbs, School Governing Bodies tend to be very effective.
However, in townships or in the rural areas, we find that they exist in the exception in spite of the legislation. In many ways, we see this reflected in the results of the Annual National Assessments or the Matric results depending on the type of school that it is. Where the relationships with the parents are non-existent, it is mirrored in the education outcomes.
These issues are reflected in the teaching of mathematics and science at schools. It becomes apparent that the old divides of the past find resonance in the way that certain subjects are taught. We know that in many primary schools, mathematics is poorly taught and in many high schools learners are actively discouraged from studying mathematics and encouraged instead to do something called mathematical literacy. While the pass rate increases, the young people are ill-equipped to be absorbed into the labour market which will depend on skills and knowledge differently applied.
How does Business get involved to assist with equalising the outcomes achieved? How do we get an organisation such as the Cape Chamber of Commerce and Industry to appreciate that it is in all our interests that you get involved? I was recently involved with an organisation called Symphonia where they assist with developing partnerships between needy schools and business people who take time to assist with providing administrative support.
What struck me most about these partnerships was the impassioned involvement of the business people and how moved they were by their experiences because many had not anticipated the challenges of teaching at an impoverished school.
What I’ve tried to convey this afternoon, is the importance of your role as leading business people in society and as active citizens in ensuring that we remain true to the values of our Constitution. We have all embarked on this journey of building our country together and it is your responsibility as much as it is government’s to ensure that we reach our objectives.
I thank you!
