Minister Essop Pahad
Address: Gauteng Black Management Forum
16
September 2005
Democracy and Development
Thank you for inviting me to be present today to address the Black Management Forum. I know my coming here has been long overdue. Ladies and gentlemen, human centered development requires a commitment to the fundamental tenets democracy and the forging of a people's contract between a government and its people.
True democracy is about more than the formal equality - the right to vote, to run for and hold office and equality before and under the law. True democracy is about substantive equality - creating conditions for the development of an inclusive society where there is equality of opportunities for all including those who have been historically disadvantaged.
Allow me to suggest that our government is way too modest. We have not really taken the credit, which I believe we richly deserve. In the first free, fair and democratic election in our country 11 years ago, the overwhelming majority of our people expressed utmost confidence in our ability to rule fairly, consistently, transparently and in the interests of all South Africans.
They expressed confidence in our ability to deliver on our promises, in our ability to uphold our Constitution and to respect the rule of law. Our critics expected us to falter and fail and to drive our country further into the depths of an economic recession. They expected our country to descend into anarchy. But we confounded everyone.
In the past 11 years South Africa has experienced the unique combination of economic growth, political stability, the strengthening of democracy and the implementation of socio-economic policies that have led to the creation of a better life for all South African especially those who suffered most because of the legacy of apartheid. And we have won three successive elections with ever increasing majorities.
So our government should rightly take pride in its achievements while keeping its feet firmly planted in the reality that there remains much that has yet to be accomplished.
Our government began with a number of fundamental principles in mind:
- The fight against poverty and underdevelopment is intricately linked to political and economic stability;
- In working to improve the well being of the most marginalised and the most impoverished in our society we simultaneously improve the well being of all South Africans;
- Good governance and administrations requires accountability, transparency and a dedication to providing efficient and effective service delivery.
- The commitment to upholding the tenets of democracy involves respecting, protecting and advancing human rights, respecting the rule of law and respecting and upholding the Constitution.
- A commitment to equity and social justice requires a commitment to a developmental state that consciously intervenes to promote socio-economic well being. We do not adhere to the neo-liberal notions of a lean, mean minimalist state.
- Peace and stability in South Africa requires us to be active in the promotion of peace and stability in the region and in Africa as a whole.
- The creation of a non-racial non-sexist South Africa is in the common good and is in the interests of all who live in our country.
These principles have guided our socio-economic policies, and even the International Monetary Fund agreed we have made enormous positive strides.
In a press release at the conclusion of her visit to South Africa Ms Anne O Krueger, First Deputy Managing Director, International Monetary Fund, in June of this year said: "South Africa is making impressive progress. Achievement of macroeconomic stability has resulted in higher growth rates and low inflation. As a result the living standards of many South Africans have risen.
These achievements are remarkable; all the more so given that this economic progress has been made during a period of unprecedented political and social transformation. Progress thus far has been remarkable. I am confident the authorities are determined to build on that progress and undertake the reforms that will raise the sustainable growth rate, reduce poverty and raise the standard of living for all South Africans."
We are of the view that the state has a responsibility and an obligation to fight the war on poverty and underdevelopment. As we witnessed the disastrous effects of Hurricane Katrina, and as we extended our sympathies to the people of New Orleans and other parts of the United States who lost loved ones, who lost their meagre possessions and who saw everything they built up destroyed, let us also take a moment to reflect on the role of government.
In truth, the city of New Orleans was hit by Hurricane Poverty long before it was hit by Hurricane Katrina. New Orleans is a city where two thirds of the residents are black and 28% of the residents are white. 35% of the Black people and 11% of the white residents of New Orleans live in poverty; and 40% of the residents are illiterate. So poverty has a racialised identity in that city.
Hurricane Katrina, a natural force, exposed in a most tragic way the effects of years of neglecting the poor and not investing wisely in both the physical as well as the social infrastructure of a community, a city and a society. While the wealthy and the middle classes were able to escape the wrath of the hurricane, the poor, predominantly black residents suffered tragic loss of property, assets and life.
Indeed, Katrina has the potential to demonstrate to all of us the follies of neo-conservatism - an ideology that rejects the notion of the "common good" and instead promotes an unbridled free market where everyone looks out for himself or herself.
Katrina shows us in the most dramatic fashion what happens when natural disasters hit an area ravaged by years of conscious state neglect. The Katrina fiasco shows us what "every man for himself" really creates: a society of such rampant inequality that, even as a devastating hurricane rushes in from the sea and the affluent depart, tens of thousands who are too poor, too sick or too old are simply abandoned and left stranded on rooftops as water rises around them.
This immense tragedy has been years in the making, as the neo-conservative ideology and practice has redirected national wealth to the rich, leaving public programs, infrastructure and millions of people badly in need.
The imprint of neo-conservatism is clearly visible in the Katrina saga.
Despite the well-documented danger of a major hurricane hitting low-lying New Orleans, neo-conservatives slashed federal funding for preventative flood control and lifted a ban on developers destroying the wetlands protecting the city. It also downsized and privatised the federal disaster management agency, handing it over to inexperienced cronies who cut funding for a nationwide program aimed at reducing the impact of disasters by properly preparing for them.
The first lesson of Katrina is that governments should never undertake policies that leave the poor vulnerable to the ravages of a natural disaster while the rich have the resources to flee and escape. The second lesson of Katrina is that duly elected officials have to rededicate themselves to the war on poverty. Katrina demonstrated how a natural disaster exacerbated a social disaster that was long in the making. And the third lesson for all of us is that governments should be held accountable for the negative impacts of cuts to expenditures on social programs, of privatisation, of deregulation and of social neglect. The true measure of good government is the degree to which it cares for the well being of its most impoverished, its most marginalised and its most excluded citizens. And on this count Hurricane Katrina exposed the failure of government to govern and administer in the name of all including the impoverished.
We in South Africa can be justifiably proud that our Constitution, the highest law in our land is one of the most progressive constitutions in the world. I t requires us to engage in socio-economic and political transformation. It requires us to care for the well being of all our citizens, it requires us to provide adequate housing, health care, sufficient food and water and social security for our citizens.
Beyond the requirement to transform the conditions of existence of our citizens for the better, the Constitution also requires that we engage in a number of areas of transformation- transforming the institutions of governance and administration in both the public and private sectors (making them more representative); and transforming ownership patterns in the private sector.
To affect transformation of the economy (through Charters, BEE and employment equity), there has to be engagement with all the major players in the economy. Recognising that the key sectors of the economy are still controlled by the white minority, there has to be a dialogue that includes the captains of industry.
The International Monetary Fund in its country report noted that: "There is a broad appreciation within South Africa that initiatives to reduce income and wealth disparities will contribute to greater social cohesion. The voluntary nature of the government's BEE strategy and land reform programs are important features that should help sustain the support of all groups in the country".
There has to be transformation of the education sector, the health sector, housing etc. In addition to create social cohesion in South Africa there has to be a constructive dialogue involving all South Africans. In order to create cohesion there must be a redistribution of resources in South Africa, there must be empowerment of the historically disadvantaged and there must be open communication that in essence says that those who enjoyed "unearned privileges based on race" now have to begin the process of sharing. In the long run cohesion through wealth transfer and empowerment benefits all in society.
In the past eleven years South Africans have enjoyed political stability and economic growth that has been unprecedented. There is an enabling political and economic environment that is conducive to the development of social cohesion and economic growth and development as well as social and economic transformation and empowerment.
So what does our track record look like? We have created an enabling environment for economic growth and development as well as peace and stability. We are continually informed by big business that they have never done as well as they currently are in our country.
The IMF mission in its country report on South Africa for 2004 noted "that prudent fiscal policy, in conjunction with structural budgetary reforms, had been the cornerstone of the stabilisation effort in the post-apartheid period. Relatively small budget deficits and effective tax administration and expenditure control had restored confidence in economic management, contributed to a reduction in sovereign risk spreads, and helped reduce the public debt burden. Savings from lower debt-service payments had been channeled to increased spending on social welfare and economic infrastructure. Fiscal adjustment had also helped dampen price pressures and strengthen international competitiveness".
We note with pride that the past decade was the first decade of domestic peace our country has experienced since the beginning of colonialism. In the socio-economic sphere, there is a definite upward trend in the improvement in the quality of life of the majority of our citizens. We can confidently say that for the first time in South Africa's history the "poor are not getting poorer". Since 1994, close to 2 million South African's have escaped the poverty trap and many have entered the middle strata.
We have directly waged the war on poverty through an emphasis on social housing, access to water, sanitation, electrification transportation and health care and land reform programmes.
The IMF report noted that in South Africa, "Land reform is a potentially important vehicle for maintaining social stability and reducing rural unemployment and poverty".
Our government has increased spending on education and training and on social grants to the poor and the disabled in our society. The war on poverty is a war for the health and well being of our citizens. 2 million housing subsidies have been allocated to the poor since 1994. And more than 10 million South Africans receive social grants.
Our government is also deeply concerned about the well being of our children. 1.2 million Children between the ages of 11 and 14 will be registered for child support grants, bringing the total number of children benefiting from these grants to 6.8 million. Our spending on education is now among the highest in the world with more than 20% of our national budget allocated to education. We now have over 95% primary school enrolment.
At the economic level, real GDP growth for the period 1983-93 was 0.8%.
For the period 1994-2004 it grew to 3.0%. The Reserve Bank of South Africa released a report in which it noted that the longest period of economic expansion in South Africa's history is showing no signs of coming to an end. The report noted that the economy grew at a rate of 4.8% in the second quarter of this year. This means that an economic growth rate of 6% is well within our grasp. This growth rate is important, because according to our analysts 6% growth is necessary in order to achieve our socio-economic goals of halving poverty and halving unemployment by 2014.
- Interest rates have dropped from 15.6% per annum in the 1983-93 period to 13.36% for the 1994-2004 period.
- Similarly inflation which averaged 14.32% per annum between 1983-93, has dropped to an average of 7.28% for the 1994-2003 period.
Creating economic stability, an enabling fiscal environment, and an enabling constitutional environment we initially believed were essential for continued prosperity and the data have proved that our strategy was indeed the correct one.
The Reserve Bank noted that it was lower interest rates, tax relief, and the increases in welfare payments that have been significant stimulants to the healthy economic growth that we are experiencing. However the Reserve Bank pointed out that "the only blemish is the paucity of jobs in the private sector". This means that while the first economy is expanding and expanding rapidly the second economy still requires interventions to stimulate it. So we need to identify those strategies that will bring the two sectors of our economy and society closer together. On our part the government has embarked on an Expanded Public Works Programme which we firmly believe will have very positive impacts on the second economy.
Our successes to date demonstrate the inextricable links between economic growth and development and a commitment to democracy. We must continue to strengthen our institutions of democracy. We must continue to make our institutions in the public and private sectors more representative of the people of our country.
Meaningful human centred growth and sustainable development must be purposeful. It must be directed at the eradication of poverty and underdevelopment. And more it has to be visionary and aggressive in the promotion of a non-racial, non-sexist democratic South Africa. In this endeavour we need partnerships between the private sector, civil society and government. The responsibility for the realisation of a non-racial, non-sexist South Africa that truly belongs to all who live in it is ours collectively. The economic prosperity and wealth creation which we have witnessed in South Africa in the past decade is in large measure because of peace, stability, the rule of law, respect for the Constitution and respect for democracy. Let us continue to nourish our democratic, people centred institutions of governance and administration.
Thank you.
Issued by
The Presidency
16 September 2005
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