Speech by the Deputy Minister of the Department of Telecommunications and Postal Services, Hon. Prof. Hlengiwe Mkhize during the occasion of Ekurhuleni Ward 39 Gala Dinner
Topic: “Localising Radical Social and Economic Transformation in Our Life-Time.”
Introduction
It is an honour for me to be given the opportunity to share with the leadership of Ekurhuleni Ward 39 and the community at large. Ekurhuleni will remain special and close to our hearts because of the prominent leaders who emanated from this area. When talking of Ekurhuleni one is reminded of the exceptional leadership of oBertha Gxowa, oOliver Reginald Tambo, oDr Adelaide Tambo, oMargaret Gazo and oChris Hani. These stalwarts did not only contribute to the local politics and ensured that this area is of historic significance but they also contributed largely to our national politics and we enjoy the benefits of their contribution today.
The given topic: “Localising radical social and economic transformation in our life-time” is even more relevant as we celebrate our National Heritage Month. Our country is resource-rich and boosts a rich culture and heritage from which the masses should benefit.
South African economic outlook
In the second quarter of 2015 the South Africa’s economy contracted by 1,3%, according to preliminary estimates of real gross domestic product (GDP) released by Stats SA.
The overall economic activity decreased quarter-on-quarter as a result of the decline in the five of the ten main industry groups, while the other five experienced some growth.
The agriculture industry experienced the largest fall in activity, contracting by 17,4% quarter-on-quarter. With warnings that South Africa is currently experiencing its worst drought since 1992, decreases in the production of field crops (such as maize, sunflower and sugar cane) and horticultural products (such as citrus subtropical fruit) contributed to the industry’s decline.
The mining industry on the other hand contracted by 6,8% quarter-on-quarter, mainly as a result of lower production in the mining of coal and iron ore.
Manufacturing activity declined by 6,3% quarter-on-quarter mainly as a result of decreases in two manufacturing divisions, namely basic iron and steel, non-ferrous metal products, metal products and machinery; and petroleum, chemical products, rubber and plastic products.
Electricity and trade industries were the other two industries that experienced quarter-on-quarter decreases in activity, falling by 2,9% and 0,4% respectively.
Finance, personal services, government, transport and construction industries grew over the same period.
The last time South Africa’s economy experienced a quarter-on-quarter contraction was in the first quarter of 2014, when overall economic activity decreased by 1,6%.
The unadjusted real GDP at market prices increased by 1,2% year-on-year. The estimate of real GDP for the first six months of 2015 increased by 1,6% compared with the corresponding period in 2014. Nominal GDP was estimated at R991 billion for the second quarter of 2015.
Challenges in the South African economy
In South Africa, poverty, joblessness and inequality are still deeply rooted in the economic and social systems left by apartheid. The challenge for us is to restructure these institutions and ensure more equitable access to education, employment and assets while sustaining growth and regional development.
The legacy of apartheid is also that black women are most subject to inequality, poverty and unemployment. The apartheid economy was a gendered system of oppression. A pillar of that system was the imposition of ‘Bantustan’ areas as the basis for migrant labour, with women in particular kept in these impoverished and often remote areas to bear the burden of caring for children and the elderly. This system kept African women far from economic zones and economic opportunities outside the home and exploited women’s unpaid labour by placing the burden of providing the social network the state denied.
The apartheid economy was also centred on mining and heavy industry where women were not highly represented. Furthermore, a host of laws kept black women out of the core economy. In particular, the laws kept black women from equal access to land ownership, credit or quality education.
These deep rooted structural inequalities laid the basis for today’s situation, where black women are on average more economically vulnerable and excluded compared to black men.
Prominent authors such as Thomas Piketty a Professor of Economics at the Paris School of Economics has done major historical and theoretical work on the interplay between economic development and the distribution of income and wealth. He is currently the world’s most recognised academic who has produced substantial new knowledge on the political economy of poverty and inequality in the modern world. Professor Pikettys work has now led to radically question the optimistic relationship between development and inequality, and to emphasize the role of political and fiscal institutions in the evolution of income and wealth distribution.
The Freedom Charter
On 26 June 1955 the Congress of the People met in Kliptown and adopted the Freedom Charter which, among other things, declared that: “We, the people of South Africa, declare for all our country and for all to know: that South Africa belongs to all who live in it,…that our country will never be prosperous, or free until our people live in brotherhood, enjoying equal rights and opportunities…”
The freedom charter is one of the African National Congress’ founding documents and has always been forward looking and has acted as the leading light with a message of hope, well ahead of its time. Even throughout the dark days of the colonial rule and the apartheid regime, the oppressed majority of our people, as represented by the ANC, believed in the equality of all races and sexes. This is the principle position, which have guided the ANC, throughout the 103 years of its existence.
The values enshrined within this principle have been at the core of the National Democratic Revolution, and are still the distinguishing character of the ANC, including the Constitution and policies of the democratic South Africa.
Economic transformation for women
As I’m sure you’ve experienced, many black women have broken through the many barriers to take leadership positions in our society, from the economy to politics to culture and academia. But the fact remains that on average, black women continue to face worse conditions than other South Africans.
Today, women make up over half the population but they constitute just over a third of the formally employed, while a large number labour in vulnerable jobs. Overall close to half of men who are of working age have paid work compared to a third of women.
Women also generally end up with most of the burden of caring for the ill, cooking and cleaning in the household. These tasks reduce women’s ability to earn an income outside the household. Poor and rural women are most affected by the burden of unpaid labour as they are still more likely to have inadequate electricity, clean water and sanitation. For these women, the burden of care is increased as they must spend hours labouring over collecting water and cooking over wood or kerosene stoves. This also has a bearing on the role they might be playing in leadership, either at a community level or in a corporate setting.
Government’s Nine Point Plan
During his State of the Nation Address, His Excellency President Jacob Zuma said: Having carefully these constraints, the government has developed a 9-Point Plan comprising simultaneous actions in key strategic areas, at a scale large enough to constitute a ‘Big Push’ to ignite economic growth.”
As the President highlighted, the 9-Point Plan consists of the following:
- Resolving the energy challenge;
- Revitalising the Agriculture and the agro-processing value chain;
- Advancing beneficiation and adding value to our mineral wealth;
- More effective implementation of a higher-impact Industrial Policy Action Plan;
- Encouraging private sector investment;
- Moderating workplace conflict;
- Unlocking the potential of SMMEs, Co-ops, Township and Rural enterprises;
- State reform, including boosting the role of state owned companies in broadband, water, sanitation and transport infrastructure; and,
- Growing the Ocean Economy and Tourism.
From the nine-point plan, quick wins in terms entry into the mainstream economy are the following:
Unlocking the potential of Small business
To boost small businesses government would set aside 30% of appropriate categories of procurement for SMMEs, co-operatives, and township and rural enterprises.
In addition to this, the government would continue to promote opportunities for youth-owned enterprises. This has already been evident with the National Youth Development Agency (NYDA) having disbursed R25-million to 765 youth-owned micro enterprises in 2014/15.
The NYDA has also partnered with the Industrial Development Corporation (IDC) and the Small Enterprise Finance Agency (Sefa) in a three-way partnership that has resulted in a R2.7-billion fund for young people."
Reviving the Manufacturing Sector
The country’s manufacturing sector is recovering well from the global financial crisis of 2008-09, with the government having committed more than R2.8-billion to companies through its Manufacturing Competitiveness Enhancement Programme, and the private sector responding with over R12.4-billion in investment.
The latest data from the UN Conference on Trade and Development (Unctad) showed that South Africa had doubled its foreign direct investment (FDI) inflows to R88-billion in 2013, while 2014 projections were also positive.
The government's Automotive Investment Scheme, meanwhile, unlocked private-sector investment of R24.5-billion and generated exports of R103-billion rand in 2013.
The country’s auto industry is a world-class on the African continent exporting to over 152 countries. Advantage can also be taken of the leather and footwear sector which has grown to 60-million pairs of shoes, and exports grew by 18 percent with significant benefit to the balance of trade.
Broadband Roll-out
Coming from the Department of Telecommunications and Postal Services it empirical that the leadership roles and economic opportunities I shall speak to are within the ICT Sector. You will remember that this was a sector that was initially perceived as male oriented.
Universal inclusion and active participation in the digital economy are the key forces that underpin all our policy approaches towards a knowledge-based and connected digital society. At the core of building this digital economy is the need to attract more investment into the sector, to create robust, secured and sustainable infrastructure development and to develop broadband demand stimulation strategies, as highlighted in the National Broadband Policy, SA Connect.
Earlier this year, our Honourable President, Jacob Zuma during his State of the Nation Address said that: “The year 2015 will mark the beginning of the first phase of broadband roll-out. Government will connect offices in eight district municipalities.
These are Dr Kenneth Kaunda in North West, Gert Sibande in Mpumalanga, O.R. Tambo in the Eastern Cape, Pixley ka Seme in the Northern Cape, Thabo Mofutsanyane in the Free State, Umgungundlovu and Umzinyathi in KwaZulu-Natal, and Vhembe in Limpopo.”
This does not only come as an opportunity for government to provide services in places in most dire need but an opportunity is also presented to the business community, particularly women business owners, in terms of the last mile connectivity. As much as we need points of presence in various areas across the country we will still need to deliver broadband to people’s houses, just the same way as we do with water and electricity.
Economic Development Driven by Innovation
The uptake and usage of broadband will require the delivery of innovative and affordable services, the development of content and applications, procurement of manufacturing of ICT end-user devices and developing a digitally literate nation. These various elements of the value chain of providing broadband services presents good opportunities for women businesses at large and particularly for the development of SMME’s in the sector. The rollout of broadband infrastructure and services demands that business develop innovative and affordable solutions to respond to societal needs and use of broadband service. It also increases the demand for low cost computing devices, which women when organised can form cooperatives which deals with manufacturing.
e-Government Services
Broadband infrastructure also drives e-government and e-commerce, the growth of which is dependent on consumer confidence and the level of trust in the cyber environment. Our policies take cognisance of the potential of the ICTs to change the manner in which government communicates and provide services to the citizens for South Africa to gain efficiencies, save costs and improve public services. The potential of business-to-business, business-to-consumer electronic services has also been amply demonstrated.
In collaboration with the State Information Technology Agency and the Department of Public Service and Administration, my Department is working on the development of a coherent policy and structure for e-government services. We have noted a need to develop a well-structured distributed and secure interoperable e-government framework, that will enable ultimate migration of the frontline government services from paper based systems to paperless electronic systems. These services will be available to all citizens using a variety of access services.
Digital Opportunities
It also has to be noted that in order for the uptake of and implementation of e-government to be successful, there will be a need to identify and explore Digital opportunities. Digital opportunities come in the form of ICT applications development. In order to enjoy complete benefits brought about by Digital Opportunities, we are interfacing all programmes that support the development of ICT applications with formal Research, Development and Innovation (RDI) systems to collaborate, influence and direct efforts towards the development of ICT applications that support e-Administration, e-Health and e-Education, as prioritised in SA Connect.
Open Access Network
The coordination of infrastructure rollout measures to facilitate rapid deployment of this infrastructure and the interventions required to reduce the costs of communications and advance universal access remains central to the policy process.
In rolling out broadband infrastructure, The Department’s Policy, SA Connect, provides for the need to provide a model for the development of an open access national broadband network that would enable infrastructure sharing and promote more competition in the provision of services. This model will open up opportunities for small operators to compete with the incumbents and could therefore assist in driving down the costs to communicate. It aims at producing an effective market structure required to attract sufficient public and private investment in extending broadband, as well as facilitate the efficient management and allocation of spectrum to support the provision of ICT services.
The internet economy
Within the telecommunications sector, the role of Internet-related economic inputs continues to grow in significance. The Internet economy contributes 2% to South Africa's GDP. This contribution is rising by 0, 1% per year and it is planned to reach 2,5% by 2016. The total spent by consumers, Small and Medium Enterprises (SMEs), and Government on products and services via the Internet as well as on Internet access and infrastructures is estimated to be R59 billion. The internet economy will over time potentially become one of the new building blocks of the South African economy. This opens a flurry of opportunities for industry to be more innovative to create more internet-related jobs and skills.
Transformation in the ICT sector
The department has recently conducted a workshop on the empowerment of SMMEs within the ICT sector.
One of the outcomes of the workshop is that the ICT usage can create opportunities for SMMEs to move up the economic value chain, leading to a future economy where a much larger proportion of SMMEs operate in the ‘zone of transition’ towards more sophisticated businesses with higher turnovers, employing more staff; and towards more differentiated businesses engaged in services, construction, manufacturing, and professional pursuits.
Transformation of the ICT sector underpinned by an appropriate regulatory regime and empowerment of South African citizens through skills training also remains pivotal to the policy making discourse as the country needs to develop the skills base that is relevant to the changing technological and developmental environment.
The department has in the previous year launched the iKamva National e-Skills Institute (iNeSI). INeSI is a result of the realignment of three institutions namely: National Electronic Media Institute of South Africa (NEMISA), e-Skills Institute and Institute of Satellite Software Applications (ISSA). It is aimed at the development of local e-skills that are required by the sector and the user skills necessary for social and economic inclusion to secure and create jobs.
iNeSI brings together government, business, schools, Further Education and Training Colleges, universities, civil society and global development partners to advance the development of local ICT skills that will make South Africa globally competitive, facilitate economic and social inclusion and contribute to economic growth. This is a further opportunity for on-going professional and skills development for all of you, offering critical skills, often sponsored by the private sector and government.
The Department is also working with Women in ICT Forum to promote women inclusion as part of women empowerment. We are also calling the industry to take pro-active steps to promote women empowerment including in skills development; in leadership within companies; ownership and control, and other aspects of empowerment. We must work closely together to address inequality in the market and also implement the employment equity policy to ensure that we meet the set equity targets.
Government’s economic opportunities for women
Broad-Based Black Economic Empowerment
As government we have in the past introduced the Broad Economic Empowerment legislation to address inequality, but later realised that it only benefitted few individuals especially men. We have since amended the BEE legislation to be Broad-Based Black Economic Empowerment in order for it to cater for the broader society. The legislation gives preference to women in business to ensure their inclusion in the mainstream economy and full participation thereof.
Support for small businesses
We encourage women to voluntarily participate in business ventures such as cooperatives and small businesses whereby they will give each other support. There is also a deliberate move by government to support small businesses and cooperatives which is more reason why women should be encouraged to participate in these business ventures. Government has also introduced a new ministry which will focus solely on the needs for small businesses. This new Ministry is aimed at fostering development of small businesses. We acknowledge that the main issue hindering women participation in the economy has always been access, access to financing and access to the markets.
Business funding opportunities for women
There are funding opportunities provided by government exclusively for women. An example of such funding is the Women Entrepreneurial Fund offered by the Industrial Development Corporation (IDC). This fund applies to businesses with a minimum shareholding by women of at least 50%. The fund can apply to a start-up business or for expansions purposes. There is also the Isivande Women's Fund (IWF) aims to accelerate women's economic empowerment by providing more affordable, usable and responsive finance than is currently available. The IWF assists with support services to enhance the success of businesses. It pursues deals involving start-up funding, business expansion, business rehabilitation, franchising and bridging finance. This just goes to show how committed our government is in ensuring the inclusion of women into the mainstream economy.
Continued education for women
The other important factor which will ensure continued inclusion and participation of women in the economy is education. Government has removed all the barriers which were hampering our people to have access to quality education. There are various efforts available to ensure that we are an educated nation. For those who were not able to finish the high school education there are Further Education and Training (FET) Colleges which assists in augmenting those lessons that were not acquired from high school and can act as a stepping stone towards Universities of technology. FETs are an education and training programme provided from Grades 10 to 12, including career-oriented education and training offered in technical colleges, community colleges and private colleges. FET colleges are playing a growing role in the provision of the intermediate to higher-level skills required to support economic growth and development. The other opportunities are available in Universities. There are a lot of bursary opportunities available today than they were in the past. We should always work together to ensure that we succeed and must always remain organised around economic issues.
Industrialisation
One of the key economic priorities is industrialisation. As women we should be thinking about ways in which we can make every household an industrial centre. I do agree that in most cases a spaza shop is a starting point but we need to think beyond this, we should come up with innovative industrial ideas. We should align ourselves with the priorities of government in order to benefit our societies and also benefit from incentives offered by government. I believe that as women we are capable and we can come up with industrial ideas which can later graduate from being backyard operations into huge firms which will employ the majority of our unemployed society.
As part of government’s radical economic transformation programme of this term of government, we aim to create hundred black industrialists in the next three years, who will participate in the productive sectors of the economy. Other measures include reforms to the Preferential Procurement Policy Framework Act (PPPFA), customising incentive schemes offered by government and its agencies, launching a new financial support scheme suitable for black industrialists and the establishment of an advisory panel on black industrialists.
Local production and procurement
Local procurement and increased domestic production will be at the centre of efforts to transform our economy and will be buoyed by a government undertaking to buy 75% of goods and services from South African producers.
Conclusion
Access to capital remains one of the biggest challenges facing entrepreneurs, despite the existence of development finance institutions. There are many lessons to be learnt from countries who are growing their economy around financing of small, medium enterprises in an accessible, simple and user-friendly for new entrants.
South Africa needs to re-industrialise off the back of the opportunities identified in the New Growth Path. We then need to introduce new ways of thinking about how we think about how women should benefit from economic development. Women should identify sectors which they can participate in and identify product niches which they can develop. South Africa has access to a number of markets with which these can be traded.
We also need to look to achieving substantive gender equality. We need to consider the implications for women in the current push towards industrial reconstruction (rather than economic reconstruction).
I thank you.
