Minister Essop Pahad
Address: Enterprise Development Forum
27 November 2003
Friends and comrades in business, I should like to thank you for having me along to this occasion to speak at the Enterprise Development Forum, which does such valuable work in the cause of black economic empowerment (BEE) and other important areas of endeavour. I am delighted to be available to exchange some thoughts with you and to answer whatever questions you may wish to put.
We in South Africa are reaching a historic milestone, the end of the first ten years of our democratic life as a nation, and we shall mark this in appropriate style in April 2004. Planning is going ahead at full steam, from Cabinet level down. We also have the Presidential inauguration after the elections very much in mind.
Generally, in South Africa, we have laid the building blocks for successful nationhood, and, though much remains to be done, we are confident that our country is on track to success.
Right across the spectrum of national life, we are resolutely dealing with challenges that many other countries often baulk at tackling.
The successes we are notching up look increasingly impressive, and even our strongest critics are sounding less confident, though perhaps as strident.
We can boast no fewer than six peace and literature Nobel prizewinners, five of them in the past decade or so (what other country can match that?). We have one of the freest medias in the world. We have more women in the Cabinet and Parliament than in most other countries. We have a stable and modestly growing economy, falling inflation and a firm rand. We work tirelessly on closing the gap between what our President calls the First and Second Economies, thereby building a bridge of hope to the poor. We help as best we can to address problems of conflict and governance in Africa. We walk tall among the nations of the world. It is a privilege to serve a government and country that are able to make such boasts.
My own role, apart from being Minister in The Presidency, is to take responsibility for issues to do with gender, the place of women and the child, youth development, people with disabilities; and also Government communications. But, tonight, I would like to deal with broader matters than the details of my own office.
Something that is coming sharply into focus throughout the nation is this remarkable, imminent celebration of our ten years of democracy. We are all looking forward to this with a sense of acute anticipation.
The core message of these historic events can be summed up in the word partnership, in the same way that our international and continental core message is one of partnership with the leaders and nations of the world.
We do not want the celebrations to be seen as merely a series of government events. We want to see communities celebrating. We want to see business celebrating. We want to see schools and universities and technikons, sorry Kader, universities of technology, celebrating. We want to see the spaza shops celebrating. We want to see the hospitals and shops and professions and local councils celebrating. We want to see, yes even the official opposition, in unaccustomed celebratory mood. We want everyone to come to the party and to join in the thrill and the excitement, and also to join in this sustained focus on future success. Our nation is ready for this, as never before. Its time has come.
We have set up a special project office, headed by gifted communicator Carl Niehaus, to drive the process forward. There will be an extensive database on the web giving all the activities that are planned, by government, public sector, civil society, non-governmental organisations (NGOs), community-based organisations (CBOs), you name it. And we shall ask everyone including business, as I ask you tonight, to access that database when it is set up and to liaise and co-ordinate your activities accordingly.
We ask business and its subsectors to form alliances with other sectors and to offer what is unique to each, so as to make for all-round success. We ask that all sectors should do their own ten-year reviews, to look at what has been achieved since those heady days in the summer of 1994 when our leaders walked in from prison and exile and restriction - and also to assess what might yet be achieved in the next decade.
We want to establish a broad consensus on what it is that South Africans and indeed the whole world - which helped to establish our freedom - have cause to celebrate. The purpose is not simply to celebrate, but to review progress, to build a better and more united South Africa and to assess the challenges in alignment with the New Partnership for Africa's Development (NEPAD), United Nations Millenium goals, the African century now steadily unfolding, and a better world for all.
We wish to make South Africa a nodal point for all these things.
A centrepiece will be our democratic constitution, which walks tall internationally as an enlightened, humane, dignified statement encapsulating freedom. We want to stress the legitimacy of our democratic state. We wish to develop and consolidate the emergence of a national identity that will be the envy of the world. We want to use every possible opportunity for our international positioning and marketing. And we wish to reinvigorate the solidarity of struggle into a partnership for reconstruction and development, and the wiping out of poverty and social and medical ills like HIV and AIDS that still face us so dauntingly.
And we want to propel BEE to early and greater success. It has been noted in The Presidency's ten-year review that, of all the reforms undertaken by democratic South Africa, the one with the least parallels in other countries and which required the most innovative and original thinking is the area of black economic empowerment.
Apartheid presented us with the experience of the worst forms of racism since Nazi Germany, and this legacy required careful and sustained attention. After the seemingly impossible task of breaking out of apartheid, we had the equally daunting task of undoing its evil effects. We had to reconstruct and develop our land not only in the normal ways faced by nations, but against the crushing backdrop of apartheid.
Though many countries have experienced economic discrimination along racial lines, South Africa's circumstances were well nigh unique. Ours was a particularly brutal form of racism, which had a debilitating effect on human beings of colour. But we have had to recognise in a spirit of realism in The Presidency and government that the gross wrongs of history had to be put right without running the risk of reducing investment confidence through unpredictable and over-politicised economic policies. We also had to be careful not to nurture the emergence of a small and privileged black elite, which process would inevitably militate against a broad-based development trajectory for the policy. So it took time to put the finishing touches to BEE. As with all things this government has attempted, we were not prepared to make over-optimistic promises about what could be delivered, and we feel that our painstakingly thorough approach has been vindicated.
Affirmative action in the workplace was a more straightforward objective, and was launched relatively early in the Employment Equity Act of 1998, and through internal programmes in individual government departments before that. For the public sector 72.5% of employees are African, 3.6% Asian, 8.9% coloured and 14.7% white, as of 31st of March 2003. With regard to gender, 52.5% of public servants are female and 47.5% are male. A t senior management level 56% are African, 8.2% Asian, 10.1% Coloured, and 25.6% white. The gender breakdown for senior management is 22.1% female and 77.9% male. As the data show, great strides have been made on employment equity within the public sector although the gender bias in senior management is still skewed in favour of males. But we have come a long way since, in 1994, a department like, for instance, Water Affairs and Forestry had only one or two director-level women staff - whites, of course - out of many thousands on the payroll. And black senior staff of either sex in the civil service in those days was few and far between.
State-owned enterprise board composition is 63% African, 2.5% Asian, 9.9% Coloured and 24.7% white. Regarding gender, 76.5% are male and 23.5% are female. At senior management levels 56.5% are white and 43.5% are black with a gender breakdown of 75% male and 25% female. Again it would be fair to say that the boards and senior management of State-owned enterprises are becoming more representative, with the caveat that gender equity requires more attention.
If we look at the top levels of occupation categories as defined in the census, we find that black South Africans constitute 61% of all professionals, technicians and associate professionals, and 44% of managerial positions in the economy. It is noticeable, however, that progress between 1996 and 2001 was slow.
If we look at the private sector on its own, we must conclude that progress has been slow and late. Department of Labour statistics show that in this sector the percentage of blacks in top management was 11.8 in 2000 and that this rose to 12.8 in 2001. The percentages for senior management were 15.4 and 16.4; for professionally qualified and experienced specialists and mid-management, 24.7 and 24.9; and for skilled technical and academically qualified workers, junior management, supervisors, foremen and superintendents, 56.6 and 59.3. These are certainly not figures that would set the Jukskei River alight.
Progress towards gender equality is similarly slow in the private sector, with only 11% of top management being female in 2001, and 18% of senior management. For both categories and for middle managers/professionals, the annual rate of progress is very slow, at between 1% and 1.7%.
Extending black ownership in the economy has been progressing fairly slowly with overall BEE ownership estimated to be 3.9% in 1997 and growing to 9.4% in 2002. Over 90% of BEE wealth in the market is held indirectly through institutions, and Public Investment Commission (PIC), the agency responsible for investing government financial assets such as pension funds, holds 58.8% of that. The majority of BEE investment-68.9 %-is invested in the resources and financial sectors. This is in line with the fact that these two sectors constitute 70% of market capitalisation on the JSE. It is hoped that the introduction of the new broad based black economic empowerment strategy would speed up the process of greater equity in ownership relations in the economy.
If we look at the boards of the JSE top 100 companies there were only 14 (1.2% of total directors) previously disadvantaged individual (PDI) directors in 1992. By 2002 there were 156 PDI directors-13% of total directors. In 2002 there were 24 PDI executive directors that is 5.2% of total executive directors and 71 of the top 100 companies had historically disadvantaged person representation in their boards. Although the data show that we are still far from achieving representivity in the private sector, it also indicates that progress is being made.
And, while on the subject, may I refer to a controversy that arose recently over the report to the New York Stock Exchange (NYSE) by a prominent South African company, which listed BEE as a potential risk factor. It is no doubt true that the NYSE arrangements require a dispassionate detailing of numerous things that are relevant to a listing. There should be no argument about that. But a question is whether BEE can remotely be listed as a risk factor. When one considers the enormous advantages of BEE - with another South African company currently running a commercial celebrating the fact that BEE can increase its client base by 5 million people - it defies logic, surely, that a company can trumpet it to the world as a risk factor. Perhaps there will be more care in future in drafting such information.
BEE should be viewed as the engine of our economic future and the factor that, more than any other, will link our two, disparate economies. In much the same way that NEPAD offers an attractive partnership to the wealthy nations in the development of Africa through sound investment, BEE offers the traditional business world of South Africa the chance to team up with previously excluded players so that all may prosper.
And we have little time to transform the lot of those who struggle on in the Second Economy, which the President referred to in his recent National Council of Provinces address as the Marginalized Economy.
As things stand, and as The Presidency has stressed in its ten-year review, we are all acutely aware that South African poor households face fundamental constraints with regard to borrowing and saving. On the one hand, in 2001 an estimated 17.6 million South Africans were unbanked, including a large number of employed people. 57% of the unbaked are women, and 72% of Africans are unbanked. On the other hand, the micro-finance regime has resulted in some over-indebtedness amongst poorer salaried South Africans (in London recently at the solidarity with South African conference I noted that it came as a surprise to many delegates to hear that interest on micro-loans arranged by reputable NGOs could be as high as 40%). Although there has been some financial deepening in South Africa (access to savings and credit facilities), poor households still have difficulty in coping with external shocks. As a consequence, these households cannot save or consume, which is a severe form of disempowerment, and impacts negatively on the entire economic performance of South Africa.
BEE is, without any doubt, a knight in shining armour in this situation of despair and neglect. We must rededicate out efforts to make it work, to work quickly, and to work in the interests not only of the few but of all our people. That will be the seal of success that we shall be able to place on our nation as we enter our second decade of freedom.
Issued by
The Presidency
27 November 2003
top |
