Item 1249 - Address by President Nelson Mandela at the 702 Breakfast Club

TRANSCRIPT

Master of Ceremonies;
Distinguished Guests;

When I was informed that the captains of industry wanted to have me for breakfast I approached those who have come out of such encounters unscathed to find out what method they employed. I was advised that one needed to tailor one's message to the audience and not offend them.

I hope I will succeed in doing the opposite. To cover my flanks I have brought along younger men and experts on these matters.

I should thank you for this opportunity to exchange views with South Africa's leading opinion-makers and industrialists. I hope that this encounter will achieve more than an appreciation of one another's point of view; and help plant the seed for more productive activity.

Bold enterprise is what our economy thirsts for. It is what our country desperately needs.

We are meeting a few days after parliament has risen: at the end of the first session of the first democratic legislature in South Africa's history. Incisive post-mortems have been written about the historic nature of this parliamentary session. I will not belabour the point.

Yet we need to ask the question: what benchmarks do we use to judge the success or otherwise of our young democracy? Is South Africa succeeding?

One striking observation that has been made about this period is the lack of organisation on the part of the legislature and the executive to streamline the dissemination of information. Too many statements and press conferences often at the same time. Too many meetings of parliamentary standing committees, all of which the media can attend. Too many public events for the President.

These criticisms aside, all this underlines the sea-change in South Africa's body politic. A new culture of openness has taken root. The state has become all too human. All of us are experiencing the liberating feeling of breaking out of the straight-jacket of fear and insecurity of the individual in relation to the state.

Even if nothing else had happened in the past six months, this sense of liberty would have been a historic achievement. We are free at last!

Yet much more has happened. Policy decisions have been taken on reconstruction and development, including areas such as urban and rural renewal, education, housing, health, land reform, labour relations, broad economic policy, intelligence matters and so on. The Constitutional Court is in place and far-reaching measures to restructure the judiciary and deepen the culture of human rights are being introduced.

The statutory National Economic, Labour and Development Council is soon to be launched, allowing for joint economic strategies between government, business and labour and a social understanding around the objectives of the RDP. Impressive practical steps in the area of delivery have been taken.

Yet we do worry in the executive whether we are not simply going through the motions of government. Has the government geared itself for the ambitious plans we have?

We do have a keen perception of the extent of the fiscal crisis which we have inherited. The budget deficit is huge. There is a tradition of wasteful expenditure and little room to introduce the programmes necessary to make a difference to the nation's quality of life. We cannot merely lament the crisis - the situation calls for leadership. Hence, the government recently announced the six-point plan, whose main elements are:
- belt-tightening;
-reprioritisation of expenditure;
-restructuring of the public service to make it more equitable, representative and efficient;
-re-organisation of state assets and enterprises;
-building new inter-governmental relations; and
- developing an effective internal monitoring capacity for these programmes.

Since the public sector plays such a significant role in the implementation of the RDP, its transformation into a leaner, more effective catalyst of change is an important priority. To achieve macro-economic stability, disciplined monetary and fiscal policies are crucial. Through all this, we intend to keep government spending at this year's level, in real terms; and reduce our debt burden.

In addition, Government is doing its best to open doors in all continents for our exports; and to attract foreign investments.

In this regard, among others, negotiations are currently under way with the European Union to structure an agreement which would offer best market access for our goods and services, as part of a detailed support package. In addition to our membership of the SADC, we are renegotiating the Southern African Customs Union Agreement and bilateral trade agreements with Zimbabwe and other countries. We are re-examining Investment Laws, including taxation, and holding extensive discussions with a range of direct investors to stimulate interest in South Africa's manufacturing capability.

We also intend to make extensive input in the NEDLC regarding the restructuring of industries to comply with our obligations to the General Agreement on Tariffs and Trade (GATT) and to ensure competitiveness. Government is working out proposals on how to stimulate manufacturing, including small and medium business development. On the latter in particular, the consultations under way should culminate next March in a President's Conference in Durban.

We are convinced that South Africa is on the right road to high economic growth. That is, if all South Africans join hands.

As such, we have to address problems which have the potential of inhibiting such growth. These include the high crime rate, the culture of non-payment for services, and weaknesses in local organisation which undermine the implementation of RDP projects.

Has the culture of non-compliance with normal values, rooted in the period of illegitimate government, been eliminated from the public sector, the private sector and the public at large? This applies to the honing of tax evasion to a fine art; dereliction of duty among some customs officials, with the support of the private sector; and deals "under the counter" involving management and workers alike. The line between the legal and the illegal has often been blurred. To the extent that such practises continue, this calls for a national crusade, so that we can fully reap the fruits of democracy.

I will, however, focus more on my own perceptions of weaknesses in the business sector.

To what extent has the private sector geared itself for industrial restructuring?

Our economy relies heavily on imports. Yet we have low levels of reserves. The custom has been that our industries have been shielded from the vagaries of the market by protection on demand. To break free from this, our industries need to become more competitive on the domestic market and increase their exports.

The tendency to count more on export incentives and to rest content with tariff protection is bound to undermine us in the face of a world that is liberalising trade. My own sense is that there has been more focus within business and among trade unions on what government can do; rather than on their own bold initiatives to meet this challenge.

A higher level of economic growth also requires considerably more investments than are available today. We need to capture capital flows of the world and attract the type of investment which builds factories, employs our people, supplies affordable products and also exports them. We have to compete with other countries for scarce capital, technology and skills.

Reports indicate that some business houses are in fact discouraging foreign investors, for fear of competition. Are these accounts accurate? Are there indeed some among us who prefer to maintain the current production base so they can fix high prices for their products? Combined with this, are figures regarding the export of capital by South African companies. You will agree with me that, if these reports are accurate, then something needs to be done urgently, particularly by our business houses and organisations. We should all act, and be seen to be acting, in the national interest.

Acting in the national interest also means taking measures to tighten our belts throughout society, increasing productivity and narrowing the gap between the highest and lowest paid sectors. The government has taken the lead. The nation as a whole would have been much encouraged if there were similar exemplary action on the part of our business executives.

There are other areas such as the need for a change in the culture and style of management, including addressing such issues as racism in the work-place and affirmative action. The kind of compact that we wish to see in broader society can find expression in individual companies.

These are some of the real challenges facing not only the business community; but workers and other sectors of society as well. Only by addressing them shall we realise our desire to improve the quality of life of the people, in the context of a growing economy.

I have decided to raise these issues frankly because I am mindful of the fact that there cannot be progress without bold action; and there cannot be bold action without an honest appraisal of problems. If South Africa was capable of achieving a political miracle, we are equally capable of effecting an economic miracle.

It is generally accepted that conditions today, within the country and abroad, favour sustainable economic growth. The economy is on the road to recovery.

I am confident that the business community will rise to the occasion.