“Reaching greater heights in enterprise”
Introduction
As we progress though life as individuals and as a nation the heights we need to reach are getting higher. As we approach the forever rising peaks we find that it requires greater effort to get there. And without a shot of good old fashioned realism, stamina and above all, a common vision, we don’t get there. In a nutshell; we must keep our feet on the ground while our thoughts are at lofty heights.
Looking back
It is sometimes easy to overlook the heights that we have reached as a nation when looking at the many negative headlines in the media; the service delivery protests and the utterances of some individuals. Therefore it becomes crucial that we remind ourselves that we have to look at the big picture.
As the Financial Mail of 5 March said, “some repetition is needed before people are prepared to believe that things really are improving”. The editorial was referring to the economic recovery, which is also cause for celebration. “Real gross domestic product (GDP) growth came in far stronger than expected in the final quarter of last year, at 3.2 percent. The overall purchasing managers index (PMI) improved, rising to 60.4 percent from 53.6 percent in January, the highest in three years.
New passenger car sales rose by 21.4 percent year on year. House prices are rising, exports have improved and the inflation outlook has brightened. Add world cup fever to all this good news and South Africa’s prospects certainly appear to have brightened,” says the editorial.
We would not have met in this atmosphere of optimism tonight had the South African government not made key economic reforms by implementing macro-economic policies, aimed at promoting domestic competitiveness, growth and employment. South Africa is now rated sixth out of 133 countries for “soundness of banks” (up from 15th position last year).
Economically our country enjoyed an unprecedented 62 quarters of uninterrupted economic growth from the first quarter of 1993 to the second quarter of 2008. KwaZulu-Natal’s economic performance matched the national performance in general. This long period of growth, as well as prudent fiscal management and lower taxes resulted in government revenue hitting an all time high of R697.8 billion in 2008/09.
Today we can debunk many myths around the South African economy, e.g.
* Myth number one: South Africa has a small economy
Fact: South African economy has been ranked 27th out of 230 countries (World Bank)
* Myth number two: People are afraid to come to South Africa
Fact: Tourist visits have risen from 3.4 million in 1994 to nine million in 2007 (Department of Environment and Tourism)
* Myth number three: Investors find South Africa too risky
Fact: Out of 185 nations it is ranked 55th in terms of “country risk”.
Black Economic Empowerment (BEE) and inequality
The promotion of black business and black professionals (young people and women in particular) remains a priority. A focal point of our growth strategy is Broad-Based Black Economic empowerment (BBBEE), through effective supply chain management policies we will continue to target the South African economy’s weakest point, namely inequality.
The implementation and execution of BEE had already led to significant benefits for some black South Africans. This is evident when one compares ownership and participation in investments, loans, life policies, annuities, pension funds, and medical and funeral policies with pre-democratic South Africa.
For example, in 1993 black South Africans had only 28.2 percent ownership of medical insurance. This ownership had increased to 44.9 percent by 2007, while the ownership of annuities and pension funds had increased from 35.2 percent in 1993 to 47.4percent in 2007.
In addition a 2007 University of Cape Town and Unilever study entitled Black Diamonds: On the Move, reported that more than 12 000 “black diamond” families or 50 000 people are moving from the townships to the suburbs of South Africa’s metro each month. This week it has been announced that black prospective home buyers for the first time in our history accounted for 50 percent of the applications for home loans.
Three years ago the figure was only 30 percent, as indicated by new figures from mortgage originator bond choice. The number of successful black mortgage applicants was 15 percent up as a percentage of the company’s successful bond applications. The average home loan in the affordable housing market was R450 000.
While acknowledging the advances that have been made in the first 16 years, we are well aware that we still have much to do to close the gap between rich and poor. A major concern to us is that the gap between the rich and poor in South Africa is widening, not only between race groups but also within race groups.
According to a report published by the Organisation for Economic Co-operation and Development (OECD), income inequality in South Africa increased between 1993 and 2008, making inequality levels in the country among the highest in the world. The purpose of South Africa’s policy of Black Economic Empowerment has never been to enrich only a few people.
We have to broaden the base that is associated with growth, development and enterprise development, and not merely redistribute existing wealth. Empowerment is about building capabilities so that people can contribute to economic development and improve their lives and livelihoods, not about extracting large economic rents from government.
Working together we can do more
Unemployment among our young people is frighteningly high. Statistics South Africa reports that 48.3 percent of young people between 15 and 24 and 28.5 percent of young people between 25 and 34 are unemployed. We appeal to our business people to offer a lifeline to these young people. We dare not let a generation slip into oblivion. Many of our children cannot get work because they are either not suitably skilled or they don’t have experience.
Use the internship and learnership programmes that government offers. But use them to the advantage of these learners. I have heard too many horror stories of assessors who found learners to be working as cheap labour doing work they are not supposed to be doing, like cleaning the owner’s house or acting as a messenger, instead of being exposed to the much needed experience in their particular fields.
The allowance that businesses receive serves as an incentive to use the programme for the right purposes. In due course we will also hear more about the wage subsidies that Finance minister Pravin Gordhan mentioned in his budget speech.
Government not a cash cow, value for money
Martin Luther King Junior said: “An individual has not started living until he can rise above the narrow confines of his individualistic concerns to the broader concerns of all humanity.”
A broader concern would also be for business not to “milk government with inflated prices.” We want value for our money. Every single action we take should be geared towards faster economic growth, higher employment and reduced levels of poverty. Help us to DO MORE WITH LESS by giving our people the best value for our money, which in fact is your money.
Inflating prices just because it is government can never be justified. Do not collude with corrupt officials; it is stealing from the poorest. We need to change the mindset from “making a killing” to “making a living” if we want all our people to benefit. Government will try its best to provide ideal conditions for economic growth. But ultimately it is up to business to explore these opportunities, not to exploit government!
Building the South African economy through your business
I urge you not to overlook small opportunities. Very often they are the beginning of great enterprises. United Kingdom business tycoon Richard Branson started Virgin as a mail order record retailer in 1971. Today the Virgin Group has expanded into leisure, travel, tourism, mobile, broadband, television, radio, music festivals, finance and health with 200 companies in more than 30 countries.
Issued by: Provincial Treasury, KwaZulu-Natal Provincial Government
24 March 2010
Source: Provincial Treasury, KwaZulu-Natal Provincial Government
(http://www.kzntreasury.gov.za/)
