Address by KwaZulu-Natal Premier Sihle Zikalala on the occasion of the KZN Economic Council Summit held at the Durban ICC on 29-30 April 2021
Programme Director;
MEC for EDTEA, Hon RR Pillay & All Members of the KZN Executive Council present;
Representatives of various labour formations;
Representatives of organised business;
Civil Society Representatives;
Government Officials;
Ladies and Gentlemen;
Expanding the frontiers freedom and creating a people-centred society
It is an honour and pleasure to partake in this important gathering of the KwaZulu-Natal Economic Council. I have no doubt in my mind that this is a meeting of patriots who are seized with the task of expanding the frontiers of freedom and human fulfillment.
In this regard, we are heartened that this gathering is being convened during Freedom Month, a month in which we as South Africans celebrate and reflect on the gains made since the 27th of April 1994, the date of our first ever democratic elections.
On Tuesday, our country commemorated this important milestone: twenty-seven years of freedom and democracy.
We recall founding President Nelson Mandela in his first State of the Nation Address on the 24th of May 1994 enjoining all South Africans to roll up their sleeves and urgently get to work to construct a people-centred society.
Madiba implored all of us to be seized with the historic task of rebuilding our nation from the ruins of division to restore the human dignity of all South Africans.
All of us are in agreement that a lot has been achieved over the past 27 years but we also acknowledge that there is more that we can still achieve, especially on the economic front.
While there is always a temptation to refer to the 1994 breakthrough as a “miracle”, we recognise that it was a product of sweat, toil, and blood. Many people, black and white, paid the ultimate price to be able to put a legitimate government based on the will of the people to change their lives.
Our Freedom Day also represented a victory of international solidarity in the global struggle to overthrow the apartheid regime. It was also a triumph for civil society, labour, and other sectors to begin a new chapter in a nation that had become synonymous with injustice and conflict for nearly four centuries.
Our collective, heroic struggle against the tyranny of racial oppression inspires us to remember that nothing can stand in the way of people united behind a common enemy.
While we have many examples to point to for our collective success since 1994, we know that there is a number of South Africans who feel we could have done much better.
These are South Africans who go to bed hungry. These are South Africans who have no income, and without a prospect of securing employment.
These are South Africans who are facing obstacles in starting enterprises to support themselves and their prospective employees. As we celebrated Freedom Day on Tuesday, many were emphatic that they have not tasted the fruits of freedom and democracy.
Today South Africa is faced with an economic crisis and deep levels of race-based and gender-based deprivation and inequality. Just like we waged a fight against the monster and enemy of apartheid, today South Africa requires immense sacrifices and a coordinated approach to reignite economic growth, create jobs, and banish hunger and poverty from the face of our beautiful land.
We are therefore pleased as government that we are gathered under one roof with you in what can only be a practical demonstration of the united front we have formed against the economic challenges we face which have been exacerbated by the deadly Covid-19 pandemic.
This venue, the ICC and the Hilton Hotel next door, are some of the casualties of the economic crisis precipitated by the pandemic which has ravaged global economies and caused untold human suffering globally. As we traverse through these adverse times, it is therefore imperative that we, as a province, remain united and not take our eyes off the ball.
Economic outlook
Compatriots, we all know that global economic prospects deteriorated dramatically in 2020. In 2020, the South African economy is said to have contracted by 7%. It will take united, focused, and disciplined action from all stakeholders to undo this setback.
It was only later in the year that the global economy began to rebound steadily from the substantial contractions following the cautious reopening of economic activities in most economies, particularly in May and June.
However, the recovery path remained uncertain as COVID-19 continued to spread in many parts of the world, forcing other countries to reinstate lockdowns. Thus, global growth is estimated to have contracted by 3.5% in 2020. The global economic growth is expected to bounce back significantly by 5.5% in 2021 before moderating to 4.2% in 2022.
The country’s overall annual economic performance, real gross domestic product, increased at an annualised rate of 6.3% in the fourth quarter of 2020. This was supported by the further easing of lockdown restrictions in the country and largely driven by the Manufacturing industry.
On a year-on-year basis, the economy contracted by -4.2% in the fourth quarter of 2020 - this was the fifth consecutive decline since fourth quarter of 2019. This indicates that economic activity has been weak prior to the Covid-19 induced slump, thus requiring more than the counter-cyclical measures put in place to reboot the economy amid the pandemic in order to rectify the state of economic activity.
KwaZulu-Natal is South Africa’s second largest economy, contributing an average of 16% to the country’s GDP.
For 2020, the province contracted by -6.9% with the construction sector hit the hardest and shrinking by 18%. One of the province’s most important sectors in terms of job creation and contribution to GDP, is the manufacturing sector, and it contracted by -11.9% in 2020.
During this time unemployment also rose. As reflected in the The Quarterly Labour Force Survey, during the fourth quarter of 2020 South Africa recorded a 32.5% unemployment rate with KwaZulu-Natal at 29.6%. Compared to 2019, total employment decreased by 1.4 million and the number of unemployed persons increased by 7.5% (507,000) during 2020.
As the economy enters into a state of recovery, it is vital for our policies to focus on inclusive economic growth that promotes both public and private sector investment in productive infrastructure, fruitful expenditures and social relief.
The KwaZulu-Natal Provincial Government will continue engaging economic development partners and stakeholders to promote key trade and investment opportunities in a more targeted way.
Priorities from the state of the nation and State of the Province Addresses
Ladies and Gentlemen, since the news of the first confirmed case of Coronavirus on the 5th of March 2020 here in Durban, the lives of South Africans have never been the same. In a period of a year, we have lost loved ones, colleagues, and neighbours because of the pandemic.
People lost jobs and businesses were forced to close down. Since the arrival of this global pandemic, we have had to change our priorities in order to manage the crisis and to find ways of thriving in it.
On 26 February 2021, I delivered the State of the Province Address (SOPA) under the theme, “Quickening the Tempo to Economic Recovery and Job Creation”. The SOPA presented a detailed programme of action which focusses on:
- Intensifying the fight against the Coronavirus;
- Re-igniting economic recovery and job creation;
- Building Social Cohesion, Fighting Crime and Corruption;
- Delivering Basic Services in particular Water;
- Building a Capable and Ethical Development State.
As the province, we are working hard to improve the capacity of our developmental state so that it can effectively deliver on its role of tackling the root causes of poverty, inequality, and unemployment.
KwaZulu-Natal remains intolerant to corruption in the public sector and we will continue to lead by example in exposing any wrongdoing and ensuring that those who steal resources meant for the development of the poor are brought to book.
We are working closely with law enforcement agencies and communities to fight crime, including economic sabotage crimes. Working with national government, we are determined to fight those who hijack construction sites and extort bribes. Such actions are not anyway close to the ANC’s interpretation of Radical Economic Transformation.
As government, we support calls that South Africans must be prioritized in employment creation initiatives including the logistics sector.
Equally, we are unambiguously opposed to acts of arson and burning of logistics infrastructure. We will continue working with all stakeholders, including faith based organisations to advance moral regeneration and good ethical behavior in the province. We call on the business community itself to partner with us in rooting out crime and creating stability in our province.
We also call on business to be good role models when it comes to adhering to the rule of law by ensuring that they prioritise South Africans in job creation in the logistics sector, hospitality sector, and many more sectors that are not designated as scarce skills.
As KwaZulu-Natal, we have said that creating new jobs, supporting manufacturing, boosting agricultural production, localisation in goods and services and igniting township economies must consume our energies in 2021.
A social compact for economic recovery and job creation
When we delivered the State of the Province Address for 2021, we declared that we are “quickening the tempo to economic recovery and job creation”. We also acknowledged that such will only be possible if all social partners work together towards that particular goal.
As Government, we have no illusion that our primary responsibility is to create employment. We understand that through our pro-poor developmental state, we have to create the necessary conditions that attract investments and allow enterprises to thrive.
Research across the world clearly shows that many of the new jobs continue to be created by small enterprises. In this regard, we will continue to support SMME development, and in line with our development objectives, support SMMEs which are owned by black people, in particular black women and the youth.
We remain serious about the need to deracialize the economy and to alter the patterns of ownership to reflect the demographics of our land. Through the Radical Economic Transformation agenda and Operation Vula, we have a direct interest in seeing previously marginalized groups entering the mainstream of the economy. We are not interested in inclusive growth which at the same time is not redistributive.
We are not interested in growth which simultaneously fails to reduce the unacceptably high levels of unemployment in South Africa or KwaZulu-Natal. It is in the interest of all patriotic South Africans to ensure that black people are not left at the periphery of the economy as if we are still living in the dark days of our bitter and divisive past.
Ladies and Gentlemen, we view the coming together of all social partners to sign a social compact as a positive development. This should be a moment that inspires hope and invokes a huge sense of pride for the people of this province.
We have come here under one roof not because we do not have our differences and different ideological postures.
Rather, we have come together because we recognize that the task that lies ahead needs our collective wisdom and collective action.
We all carry the hopes of this province and in all that we do, let us remember that our province requires action now.
It is for this reason that in delivering the State of the Province Address, we committed to establish a War Room on Job Creation to be chaired by myself as Premier of KwaZulu-Natal where I will oversee the implementation of employment creation projects.
Ladies and Gentlemen, as part of the KZN economic recovery and transformation plan, we have disaggregated our economy into 15 critical sectors. These are the sectors which we have identified as having a potential for growth and ones which are key drivers for exports and investments. The sectors are:
- Agriculture and Agro-Processing
- Clothing and Textiles
- Creative Industries
- Finance and Services
- Fourth Industrial Revolution (4IR), ICT and Innovation
- Health Innovation and Manufacturing
- Industrial Development
- Informal Sector
- Infrastructure Development (Water, Energy and Sanitation)
- Investment and Trade
- Manufacturing (Automotive, paper and pulp)
- Mining and Mineral Beneficiation
- Oceans Economy
- Tourism
- Transport and Logistics (Rail, Road and Air)
Ladies and Gentlemen, the social compact we will be signing tomorrow should clearly set out firm commitments and action plans for each of these sectors. The compact should tell us exactly how we will work together to grow these sectors in line with our recovery plan as part of our economic restructuring and recovery plan.
Programme Director, this social compact is more than just a document outlining a programme of action towards reigniting economic growth. It will be accompanied by a clear monitoring and evaluation framework which will be developed within a month from now.
As part of that process we will map out clear timelines for the implementation of the commitments made by all the partners.
And so this social compact is not an event or a once-off gathering. It should stimulate continuous engagements between all social partners. This is why we also want to see these compacts being replicated at district and local levels.
The monitoring should tell us if we are meeting our targets and where we are not meeting them, we should regroup and re-evaluate our strategies and if needed change tact. This will be a difficult task given that we are not out of danger in terms of Covid-19 infections.
The process we are undertaking today is a critical part of our recovery. The inputs we are getting here will form part of the overall economic recovery plan which will be launched soon.
Radical shift for KZN Economic Council
Compatriots, this platform needs to ask itself a question on whether it is alive and relevant to tackle the contemporary challenges. I challenge you to consider the following three points:
1. We need to re-orientate ourselves to become a microcosm of the future society we are building. We need more young people and women participation. The real meaning of economic emancipation dictate that all sectors should be part of socio-economic emancipation. We must be unambiguous in stating that without women and youth, we will leave critical sectors behind.
2. We need to build capacity to implement. And this calls for a developmental and entrepreneurial state. A state that balances and promotes both developmental and growth interests of our society. The state must mobilise all sectors and drive the implementation of all programmes and interventions.
3. We need to build a productive economy. Industrialization must be a cornerstone of economic growth. On the 1st January 2021, the AfCFTA came into operation. We must ensure that this gigantic continental move is realistic. As government we are hard at work to empower both SMMEs and big conglomerates so that they are positioned to access this emerging African Market.
Before the end of May 2021, KwaZulu-Natal will sign a memorandum of understanding with Africa Export and Import Bank to provide funding for entrepreneurs intending to explore export market.
Conclusion: A call to patriots
I have taken a risk to present these three priorities as a defining-moment for us. You will know well that a moment not used is an opportunity lost and time wasted. I hope this platform will rise to the occasion and be equal to the tasks at hand.
Finally, we are all called to create a KwaZulu-Natal that we will be proud to leave for future generations.
Together Growing KwaZulu-Natal!
I thank you.
