Remarks by the Minister of Human Settlements, Mmamoloko Kubayi, Nedbank Top Empowerment Conference, Sandton, 19 July 2023
Programme Directors, Leanne Manas and Siphesihle Vazi
His Excellency, Antony Phillipson, British High Commissioner to South Africa
Mr Daniel Mminele, Chairperson of the Nedbank Board
Mr Mfundo Nkuhlu, Chief Operating Officer, Nedbank
Ralf Fletcher, Chief Executive Officer, Topco Media
Distinguished Participants,
Ladies and Gentlemen,
Yesterday was the International Mandela Day which has become an important day in the annual calendar of events, celebrating the life and the legacy of struggle for freedom to which Tata Madiba dedicated his life. It is a day in which all of us are reminded that our contribution to humanity will only be measured by what we selflessly do for others.
Madiba’s unwavering commitment to ending oppression, which he chose as his purpose, is the ultimate definition of selflessness. Because of his sacrifices, today we enjoy political freedom as if it always existed, however, it is economic freedom that remains elusive to the majority. Political freedom combined with economic freedom represent the total emancipation to which Tata Madiba dedicated most of his adult life and until the economic prosperity can be shared by the many, the objective to which he dedicated his struggle life will remain incomplete.
Resilient and robust as it may be, the South African economy is currently held back by three main constraints which are electricity supply, logistics and persisting inequality.
These constraints limit the space within which as a country we can engineer our growth because they form the nervous system of the economy.
The shortage of electricity supply has caused severe damage to our efforts to grow the economy. Small and medium businesses, as an example, have been heavily affected as they cannot operate without a reliable power supply, and they cannot afford alternative sources of electricity. The Minister of Electricity is hard at work implementing the plan to end loadshedding. His hard work is starting to pay off and we are starting to see improvement in the performance of the power stations and the reduced frequency and severity of loadshedding.
Similarly, Transnet is beginning to show positive signs in dealing with the logistics challenges. Just last week, we celebrated that Transnet Freight Rail (TFR) has completed the construction of the Mamathwane Crossing Loop in the Northern Cape 30 days ahead of schedule, unlocking extra railing capacity for manganese exports. On Monday, two days ago, Transnet announced that they have selected International Container Terminal Services Inc. (ICTSI), as the Preferred Bidder for the 25-year joint venture with Transnet Port Terminals (TPT) to develop and upgrade key Durban port facility. This is a positive step in the right direction for our economy, however we will be the first to admit that there is still a lot to be done in this sector to get our country’s logistics back on track.
Inequality, which is a product historical exclusionary economic configuration, is the area in which very little progress has been made and it remains a huge constraint to the growth of our economy. It has become trite to repeat that South Africa is the most unequal society in the world. It has become so common that hearing or reading about it no longer jolts us into action. Yet it is the most visible indicator of the failure to sufficiently grow our economy and most importantly, the failure to transform our economy so that the country’s income can be shared more equitably. Some of you might be asking why I have identified income inequality as one of the major constraints.
In the book entitled “The Spirit Level: Why More Equal Societies Almost Always Do Better”, authors Kate Pickett and Richard Wilkinson, highlight the "pernicious effects that inequality has on societies: eroding trust, increasing anxiety and illness, (and)
encouraging excessive consumption". They also highlight that health and violence, almost all the problems that are more common at the bottom of the social ladder are more common in more unequal societies – including mental illness, drug addiction, obesity, loss of community life, imprisonment, unequal opportunities and poorer wellbeing for children. Their research also showed that the effects of inequality are not confined to the
poor, that inequality damages the social fabric of the whole society.
In our country, the manifestation of these social ills is our daily experience. High levels of violent crime do not only push communities to live in fear, but it also weighs heavily against the performance of the tourism sector. The sabotage of economic infrastructure which we saw recently with the burning of cargo trucks has reached alarming levels. The construction industry has been brought to its knees by the so-called construction mafia.
We have also witnessed the rise of Zama Zamas (informal miners) in the mining sector.
In a population in which the youth are the majority, the increase in social ills means increasing loss of the demographic dividend because our future capacity to produce and consume is being decimated. Without resolving the inequality challenge, our law enforcement strategies will continue to fall short.
With the electricity and logistical challenges, government should rightly take the blame for the situation in we find ourselves. It is within this context that we are working around the clock to correct our past mistakes. However, regarding inequality, both the public and private sector have a role to play in its reduction. As government, our efforts to reduce inequality have focused on higher social spending, public employment programmes and affirmative action to diversify wealth ownership and promote entrepreneurship through empowerment programmes. These programmes are not enough. In fact, we are at a risk of creating higher dependency on government.
All societal stakeholders need to work together to ensure that we grow the economy and ensure that the income is shared equitably. This means that the measures government has been implementing need to be complemented with reforms that promote private investment, jobs, and inclusive growth.
The theme of this year’s Top Empowerment is fundamentally about the kind of change that needs to happen within the units of economic activity to be able to advance Africa’s potential. Purpose-led transformation challenges organisation to think beyond the mere pursuit of profit and incorporate long-term sustainability in their operations by creating and protecting value for a broad set of stakeholders including employees, consumers, suppliers, communities, governments, investors, and shareholders. It is this kind of thinking within businesses that can help our country to fight our triple challenges Purpose-led transformation is particularly important at a time when the world is transitioning from high carbon and low carbon emission economy. Both the carbon and the digital transition have the potential to leave communities and a large portion of the current labour force behind and further widen inequality. We have a responsibility to ensure that these transitions unfold at a pace, cost and scale that does not leave people behind hence the notion of just transition. Only when businesses understand that the creation and the protection of value for employees and communities is the only way that these transitions will be accepted as just.
Fundamentally, our economic growth and reconfiguration should be anchored on real transformation an economic imperative which can longer be deferred. Such a transformation requires that all businesses with viable business plans must have equal
access to funding and credit. Black businesses in particular should be given access to finance without which transformation would not succeed. This means that transformation of the financial sector is a necessary condition for the transformation of our economy as a whole.
To be a small, open economy means that the South African economic conditions have high sensitivity to global economic developments. In recent times, we have seen how global developments such as oil and fertilizer prices precipitated the rise in cost of living and inflation in our country which have impacted our people negatively. Such levels of sensitivity to global developments might at times leave us with a sense of helplessness, a sense that what we do in our countries does not matter in the global scheme of things.
However, working together we can move South Africa and Africa to a higher growth trajectory. We need to do the following amongst other things:
- We need to intensify efforts to grow the economy.
- We need to transform the financial sector to be more accessible especially to Small Businesses
- We need to a strong partnership amongst all social partners so that we can crowd in investment in the economy
- We need to intensify efforts to transform the economy to be more inclusive and diversified
- We need to increase efficiency in both the public and private sectors.
Your deliberations in this conference must help us to device ways in which we can achieve what I have just mentioned. You must also help us to answer question: how can we use purpose-led transformation to create a growing, inclusive economy and reduce inequality? Let’s create a South Africa and an economy that Tata Madiba would have liked to see.
I thank you
