by Minister of Finance Trevor A Manuel
30 August 2007
It is fitting that we announce the sound results and overall good
performance attained by the Development Bank of Southern Africa in delivering
on its mandate at a place where that mandate is being realised. Refilwe
Township and the two projects initiated by the DBSA bears testimony to a broad
consensus that the success of development finance can be achieved through joint
ownership, partnership and community involvement.
The DBSA is not a typical bank that takes deposits from individuals and
lends to people requiring capital. Instead, it is a key development finance
institution that has a crucial role to play in building capacity to undertake
and finance infrastructure and contribute to the region's achievement of the
Millennium Development Goals (MDGs) and its integration agenda. Over the past
decade DBSA has done much to align itself with the priorities of our
government. These include supporting the delivery of infrastructure that
broadens access to services, promotes regional economic integration and ensures
sustainable economic development.
Our government has made many statements and speeches about how to accelerate
economic growth. Our underlying policy thrust clearly shows that we do not
pursue economic growth for the sake of economic growth. We pursue faster
economic growth because it provides people with work opportunities, it provides
people with higher incomes to buy or build homes, acquire furniture, contribute
towards their children's education, consume water and electricity and generally
improve their quality of life.
Today, I wish to turn this question around by asking, 'what is the role of
government and its agencies during times of rapid economic growth?' There are,
in my view, three main functions or roles of government during times of rapid
growth. The first, most obvious one is to sustain high rates of economic growth
and to create the conditions for even faster growth. We do this through the
pursuit of sound macroeconomic policies, a sensible fiscal stance, appropriate
monetary policies and building high quality institutions, such as the DBSA.
Faster economic growth also provides government with additional financial
resources to spend on its priorities and delivering services to the poor.
Economic growth and sound macroeconomic policies are critical to poverty
reduction and the delivery of services to the poor, but growth alone is not
enough.
The second role and probably the most important is the mandate of this
government to ensure that many more people benefit from the fruits of faster
growth. This means using the additional resources to build schools and clinics,
electrify communities, provide clean water and adequate sanitation to people,
build roads and public transport systems and invest in the capacity to make
communities safer. I'll return to this role in the few minutes.
The third role of government is to identify and unblock obstacles or
constraints that are likely to impede economic and social development in the
future. This role often implies making long term forecasts and doing long term
planning. Our electricity shortages, congested roads, limited ports capacity,
overcrowded prisons are all symptoms of successive governments not making
adequate provision for long term growth.
The DBSA plays an important role in both the second and third roles that I
have outlined. Our policy stance has also been underpinned by the belief that
the benefits of economic growth will only be realised if it there is a shared
partnership and commitment between communities and government. Citizens are not
passive recipients of a top-down delivery of services. Such a developmental
model is never sustainable or sensible. Our developmental model requires of us
to involve local communities in the decisions that affect their lives,
especially in the priorities that local councils set. What is required are
innovative models of involving local communities through democratic
institutions linked with development partners such as the DBSA.
In South Africa, we are faced with the challenge of having to translate the
outcomes of five percent economic growth so that everyone, especially the
poorest and most vulnerable benefit. All indicators point to a continuation of
the expansion of our economy as spending on infrastructure gains momentum and
other measures address constraints on growth. These are indeed exciting, yet
challenging times. We are the first generation with the knowledge, awareness
and resources to eradicate poverty. Yet, every day we learn that achieving this
is far more complex than merely possessing the political will and resources to
do so.
Broad improvements in human welfare will not occur unless poor people
receive wider access to affordable, better quality services in health,
education, water, sanitation and electricity. Without such improvements in
services, freedom from illness and freedom from illiteracy, two of the most
important ways poor people can escape poverty will remain elusive to many. Too
often, the delivery of services falls far short of what could be achieved,
especially for the poor.
The location of today's launch, Refilwe in the Metsweding district, is
associated with two projects, partly financed by the DBSA. The first deals with
electrification and prepaid meters and the second deals with sewerage capacity
and water reticulation. These projects bring tangible benefits to the poorest
sections of our community, benefits that allow children to study late into the
evening, benefits that reduce disease levels, benefits that free up the time of
children collecting firewood. These projects are also evidence that through
partnerships with local communities, we can increase access to services even in
areas beyond our large urban metro poles.
In the past 13 years, our government has done well to increase access to
basic services, especially in the areas of schooling, healthcare, water and
electricity. We need to do more in a number of areas such as housing,
sanitation and public transport. We also see that some parts of our country are
not making as much progress as other parts. Access to basic infrastructure is
highly inequitable with the highest backlogs being in sanitation. According to
the DBSA's infrastructure barometer, the Eastern Cape has 36,2% of its
population with no access to basic sanitation, compared to Gauteng with 5,8%.
These figures do not show much improvement from 1996. This remains a major
challenge for all development role players.
We also know that 3 152 schools in our country do not have a water source on
or near the school, 8 470 schools have just pit latrines and 1 532 schools have
absolutely no sanitation facilities. We can list similar examples from almost
every aspect of service delivery. This is something we should not hide from; it
is something that requires action. This is the hones face of development.
We must also be mindful that access to services does not only depend on
physical infrastructure. It also depends on human interactions. An extract from
the 2004 World Development Report shows just how important these human
interactions are: In random visits to 200 primary schools in India,
investigators found no teaching activity in half of them at the time of
visit.
Up to 45 percent of teachers in Ethiopia were absent at least one day in the
week before a visit 10% of them for three days or more. A survey of primary
health care facilities in Bangladesh found the absenteeism rate among doctors
to be 74%. We do not have comparable figures for our own country, but I'm sure
all of you know that picture exist in many areas.
There are also many local and international examples of successful
improvements in service delivery. Community-managed schools in El Salvador,
where parents visited schools regularly, lowered teacher absenteeism and raised
student test scores. In Uganda, a story published by a local newspaper that
only 13% of the money due to primary schools was actually reaching the schools,
galvanised the populace. The share now is 80% and the entire budget of the
school is posted on the schoolroom door. Water projects in India and Bangladesh
experienced a higher rate of success when local communities became involved in
the schemes specifications, contributing to decisions about cost sharing,
maintenance and replacement of equipment.
The lesson from many of these successes is that the people affected by the
change are involved in the decision-making process. Our legal framework makes
provision for community involvement in schooling through school governing
boards, policing through community police forums and local development plans
through Integrated Development Plans (IDPs). In three years we will host the
2010 Soccer World Cup, the most prestigious gathering of this universal
sport.
Preparations for this as well as other infrastructure projects will provide
unprecedented spend on infrastructure. We must ensure that such a rare
opportunity like hosting the World Cup results in a real legacy. The DBSA is
involved in various projects ranging from stadium upgrades to inner-city
development with a view to contributing to this legacy.
Our massive infrastructure spend has also brought into sharp focus the
severe skills shortage found at all levels of our society, whether it is
project managers at a municipality or engineers needed to build a stadium.
Again, we need to be more creative in finding solutions. Through government's
Accelerated and Shared Growth Initiative for South Africa (AsgiSA) and Joint
Initiative on Priority Skills Acquisition (Jipsa) programmes, plans are in
place to address these issues, but we cannot do it alone.
Government requires committed and innovative partners who are willing to
work closely with it to address these issues urgently. The progress made
through our Siyenza Manje partnership must be lauded. We must be encouraged by
this to be more innovative. I understand that some of the Siyenza Manje
deployees are helping poorly-resourced municipalities to put in place working
financial management systems; processes and structures that are achieving
positive results. Some of these engineers are doing a lot more than engineering
because of capacity and skills shortages in the under-resourced municipalities.
I would like to challenge the DBSA to accelerate this initiative and profile
the good work that this initiative is doing in order to share the lessons.
As the DBSA has positioned itself as a knowledge bank � I want to challenge
it in this regard. I would like you to share the lessons that are emerging from
the work of these Siyenza Manje deployees. The experience of these engineers,
financial managers and project managers in remote rural municipalities must be
used to promote best practice in other parts of the country.
Councillors, Mayors and other local politicians play important roles in
guiding their municipalities and communities to achieve their development
targets as stated in their IDPs. Political office bearers not only play an
important oversight role of municipalities, they also provide overall strategic
direction. This happens principally through the budget process and the
development of IDPs.
We have also seen a disturbing trend of a blurring line between what local
councillors do and what officials do. Clear demarcation of responsibilities and
recognition of the need for good technical competence is a prerequisite for
improved service delivery. The Municipal Finance Management Act (MFMA) and
other complementary legislation set out these roles and responsibilities
clearly.
In conclusion, I would like to congratulate the management and staff of the
Development Bank for the sterling work that has gone into achieving their
milestones in the past year. I call on them to continue to put their shoulder
to the wheel to support the reconstruction of our country and our region.
Through innovation, you continue to teach others, through setting high
standards, you continue to define best practice.
Thank you.
Issued by: National Treasury
30 August 2007
