Item 1191 - Keynote address to the "Business Revival" Dinner Hosted by the SBDC in Association with the Star and the Sowetan

TRANSCRIPT

I bring you warmest greetings and a profound apology from our President, comrade Nelson Mandela. We also wish to record our appreciation to the SBDC , in association with the Star and the Sowetan, for the opportunity to share a few ideas here with you.

This is clearly an extremely important moment in the history of our country. For the first time in the history of our country, the representatives of the oppressed people are leading the campaign for the reintegration of South Africa into the community of nations. In just five weeks, we have succeeded in removing the legislative obstacles to investment in South Africa at all intergovernmental bodies and in most countries. This surely is a remarkable feat. In addition, a positive vision of our country still makes news headlines across the world.

The next few months must see the broad political commitment of our friends abroad translated into material reality - we must work for capital inflows. The prognosis right now looks exceedingly positive. However, there are doubts about our own readiness.

We cannot have just an additional few overheated shares, our new entrepreneurs are not quite in the starting blocks, a series of legislative obstacles remain in place and both the violence and political uncertainty still hover. A necessary condition for economic growth is a sound, certain political settlement. On this front, our country will walk a tightrope over the next few days. On the one hand, there is the very tight time frame which must see the interim constitution and the Bill of Rights finally negotiated. On the other hand, the continuing power play by the so-called Freedom Alliance which is presently excluding itself from this process. The margin for error has been shut. We should not pretend that this next period will be easy - we must try and accommodate at least some elements of this so-called Freedom Alliance yet we cannot afford any delays in the process.

Undoubtedly, South Africans of all political persuasions and from all walks of life will be seized with the political negotiations. It is however a new growth and development path which those of us gathered, amongst others, must place high on the national agenda. In addressing this, we should try and construct a consensus on the fact that our country needs more that the application of text-book economics.

We must place additional focus on the social dimension as a sine qua non for sustainable growth. It is in this context that the Reconstruction and Development Programme is so significant. In addition, we need a sound grasp of South Africa's current and past economic failures. We need to be brutally frank about the shortcomings of the growth performance of the period 1960 to 1975. We must re-examine the misdistribution of wealth and incomes; * the patterns of ownership and control must be placed back under the microscope. The rigidities and distortions which are the direct product of apartheid mismanagement must be cut to the bone; and we need a clear strategy for pulling this economy out, and
keeping it out, of the marsh into which it is still sinking. We will not attain this unless we also remain appraised of global trends, especially in countries which are at levels of development which is similar to that of our own. In these and developed countries, we need to be informed of where our markets will be and for the kinds of products that such markets exist.
We need all of this information immediately, packaged as a consensus failing which this great moment in our country's history will pass us by. Needless to say, economic revival will then remain a pipedream.

Those of us gathered here are reasonably well-versed with the broader economic debate, yet there are likely to be substantial areas of difference on the most appropriate treatment of the malaise. For example, we would all be in agreement that the South African economy is quite uncompetitive, yet there is likely to an array of opinions on the source of the uncompetitiveness.

As a nation, we cannot hope to improve on our competitiveness unless we can speedily effect the necessary policy changes. Amongst the important areas in need of rapid changes are:

* Industrial policy which must, whilst ensuring the access to quality goods and services at affordable prices for all south Africans, also be crafted to eliminate the existing anti-export bias. In addition, we need to learn the lessons of countries which have successfully factored in an important role for SME's in industry.

* Trade Policy which will seek out appropriate markets for South African manufactures and inputs. Trade policy should also seek to reverse the inefficiencies which flow from the apartheid autarchic mindset and yet be sufficiently flexible to offer some protection to infant industries.

* Investment policies which will attract both foreign investment and terminate the perceived investment strike by domestic investors.

* Human Resources policies which will see the development of the nation's richest available resource. We should be mindful of the fact that the World Competitiveness Report has listed South Africa as the country with the most abysmal human resource record and policies, the shift to a competitiveness located in knowledge-based industries will never be effected without the appropriate endeavour in human resources.

* Competition policies are necessary because competition, like charity must begin at home. Competition policy in South Africa in the absence of a strong anti-trust focus is a non-starter. Both conglomerate control and the nature of corporate governance in South Africa have been shown to contribute to the general malaise,

* Small and Medium Enterprises which have been referred to in the context of industrial policy undoubtedly requires its own policy interventions. Interventions in this area must address both the currently high barriers to entry for emerging entrepreneurs and the shift towards horizontal integration for various companies.

* Affirmative Action policies. It bears repeating that an economy which is perceived to be both owned and controlled by a little white enclave will not be able to find itself on a sustainable growth path. Delays in an affirmative action programme will cost this country dearly. We have been paying lip service to this dire need - the situation is becoming increasingly polarised, we cannot afford an explosion.

The aforementioned list of seven areas in need of exigent changes are but a shortlist for discussion here. The entire list must start with issues like fiscal and monetary policies which cannot be adequately addressed here. Policy changes can , however, never stand alone. They will only be realised if all of the institutions, both state and parastatal , are sufficiently transformed to effect the necessary changes with the due determination.

These institutions in South Africa have never been accountable and hence probably pose the single greatest threat to the attainment of the project for competitiveness.

Notwithstanding the enormity of the changes necessary, we in the ANC are confident that rapid and significant changes in the arena of economic policy will be attained sufficiently to set our country on a new growth and development path.

What's more, we are equally confident that a significant consensus platform will be constructed to ensure the effectiveness of the implementation of the changes. We have studiously avoided the use of the term 'revival' because , as mentioned earlier, we do not wish to see a return to the manner in which the fruits of the growth of 1960 to 1975 were distributed.

In conclusion, the South African reality is that the prospects for economic and political success are inextricably intertwined. Thus the genesis for real implementation occurs post 27 April 1994. However, the available time must be utilised to ensure that the foundation for growth and development is solidly in place. Much of this foundation will be in the mindsets - a government, no matter how legitimate and underpinned by a constitution however perfectly crafted will not be able to tackle these challenges single-handedly. The recipe for success must come from a partnership between the key actors in the economy, a partnership marked by a unity of purpose and a boldness which will spawn success. Failure is not part of our agenda. We will not have a second chance.

I thank you.