NEWS & ANALYSIS

RET a call to policy action - David Mabuza

DP says this will bring the severity of unemployment, poverty and inequality to its knees

Address by Deputy President David Mabuza on the occasion of the 2nd Provincial B-BBEE Township and Rural Economies Summit in East London, Eastern Cape Province

19 July 2018

Programme Director,
Minister of Trade and Industry, Rob Davies,
Premier of the Eastern Cape, Phumulo Masaule,
Ministers and Deputy Ministers from the Economic Cluster,
Mayors and Councillors,
Distinguished Guests,
Ladies and Gentlemen,
 
Thank you for inviting me to take part in this special engagement on an important and topical aspect on the transformation of our economy.
 
The issue of Township and Rural economies, forms part of our call for radical economic transformation.
 
This is about the quest for inclusive economic development, redress and the reconfiguration of economic landscape from its current status quo.
 
Despite the economic advances of the past 24 years of freedom and democracy, the legacy of colonialism and apartheid is still deeply entrenched in our society and the manifest in the economic structure of South Africa.
 
This legacy expresses itself in the racialized patterns of poverty, unemployment and inequality. This is generally evidenced in land and spatial disparities, infrastructure and service backlogs.
 
Through this 2nd Provincial B-BBEE Township and Rural Economies Summit, we are provided with an opportunity to engage, shape policy processes and outcomes that should lead us to the successful realisation of radical economic transformation.
 
We get to talk of the Township and Rural Economy not as a characterisation of a particular sector of the economy, but as an inherent acknowledgement of the contradictions and configuration of our country’s political economic history.
 
It was on 16 June 1913, when the then Governor-General of South Africa signed into law sixteen pieces of legislation, which according to Solomon Plaatjie, were so voluminous and bulky and were “beyond the capability of any mortal human being to read and digest in just four days.”
 
Today, 105 years later, we have taken the liberty, and latitude, to quote this in its fullest form, to demonstrate its weight and its impact on the life of those it effectively marginalised.
 
By singling out one part of the many Native Land Acts, it is denuded of its full-economic meaning to set the tragedy as a common, and trite refrain, that our people seek land, when they in-fact seek full economic participation.
 
For in reality and consequence, the Native Land Act was not a singular event in history. It was in essence, to all intents and purposes, the consolidation of legislative process of dispossession and dehumanisation.

This history simply provides us with the context of why we maybe be here today. It may help explain how we have arrived at this point and what pointers do we have on the next course of action.  However, it may also prove limiting.
 
In advancing the cause of what it is we must do together to wrestle our country from the pitfalls of history, the challenge of the moment is to right the wrongs of the past that have breed the current crisis of poverty and inequality.
 
For history is only valuable to the extent that it is tells us where we come from as a reference point.  However, it is no place to dwell to an extent that blinds us to the action we must take to arrive at the tomorrowwe that we desire.
 
In it and its manifestation, we must locate the systematic displacement of women, black people in general, and Africans in particular, from the centres economic activity within its correct context.
 
Thus when we today speak of land restitution, when we speak of economic restitution, when we speak of wealth creation, we speak of Radical Economic Transformation not for sloganeering, but as call for policy action that will bring the severity of unemployment, poverty and inequality to its knees.
 
This is the defining feature of what must be understood as the reversal of the breaking down of thriving system of black economic programme steeped in well-designed programme of empowerment.
 
It is not racial ideology but a conscious programme of black economic empowerment whose outcome will lead to concrete social cohesion.
 
Perhaps, as a start, we can begin by acknowledging that an economy existed, and still exists, amongst the economic marginalised and excluded majority of our people in rural areas and townships.
 
The question for us today is how to unlock the repository of its value, how to unearth its inherent potential in a manner that addresses the aspirations of the black majority, whilst eliminating fears shaped by white privilege.
 
In every engagement that government has with aspiring entrepreneurs and those in the informal economy, which in the main are women and young people, the issue that is frequently raised is that of lack of business funding or sufficient support from financial institutions.
 
This means our people are not just lazy with no desire to uplift themselves and pull themselves through their bootstraps. What it rather means, is that they need support that will give life to their ideas, thereby contributing to the building of our economy and creation of jobs for the unemployed.

The extent and depth of this crisis, mean that our challenge is to find workable and practical solutions that would take us out of the current quagmire.
 
It is not slogans that would resolve the reality we are faced with, but practical actions that would stimulate economic growth and lead to opportinties for gainful employment.
 
We have no illusion that as a country we are going through serious challenges that are as a result of contradictions we have as a nation.

However, we must come to a point where we agree that poverty, high unemployment, and deepening crisis of inequality is not good for all of us and is actually a major threat to the sustainability and stability of democracy that we enjoy as a country.
 
It is possible and within our power to build the Rural and Township Economy in a manner that takes South Africa to the level envisioned by those who came before us, and who struggled to end economic exclusion with the aim of building a non-racial, non-sexist, democratic and prosperous South Africa.
 
Today as we seek to answer the questions about what it is we must do to help township economies, we must perhaps aim for the most obvious and most simple solutions.
 
For much has been written about the history of black business and the challenging legacies of apartheid and colonialism.
 
But an economy still exists amongst our townships and rural areas. It may be small, it may be as simple and informal, but it can make a significant difference in the lives of ordinary people.
 
And so we must treat it with seriousness and determination.
 
Among the measures we must practically implement without wasting time is the issue of localization and ring-fencing of certain economic sectors to achieve real economic transformation.
 
By so doing, we will deal with existing obstacles to meaningful and sustainable participation of black people on procurement opportunities provided by government and the private sector.
 
We cannot make meaningful progress in this regard, if we do not link procurement to government strategy as a conscious agenda for the revitalization of township and rural economy.
 
In our concerted effort to revitalise the township and rural economies, we must consolidate, integrate and accelerate pockets of work done across government that would meaningfully support supplier mobilization per economic sector.
 
Some of this work is in the construction and built environment that would transform the sector by supporting construction materials production at every locality in support of infrastructure development and construction of human settlements.
 
There is a need for new innovative approaches to development, in line with contemporary policy directives, so as to upscale service delivery given the current backlogs and prevailing socio-economic conditions in human settlements.
 
These initiatives must seek to promote community driven initiatives in all government led built environment initiatives, which in their implementation will boost townships and rural economies.
 
Of course, there are structural challenges with suppliers that government must attend to and provide mechanisms on how they are sub-contracted by main service providers.
 
It is common course that township and rural economies are predominantly small and medium enterprises. These may not necessarily have the same capacity and sophistication demanded by mainstream economy. In most cases, these regulatory requirements like certification of products in line with dictates of standards bodies, may be present obstacles to the success of such initiatives.

These barriers must not deter us. That is why we must consider reviewing service level agreements and tender documentation for both Consultants and Contractors in order to incorporate principles of an enterprise development model that localizes the manufacturing and supply of materials.
 
In considering and determining procurement in construction work, we must consider prescribing as part of the briefing to bigger companies that they should identify and engage local enterprises within communities in which any construction project is implemented.
 
To ensure that these enterprises are competitive and meet the demands of the market, our agencies and departments responsible for economy and industry, needs to offer support and enforce the implementation of programmes that promote and support enterprise and supplier development and enable access to procurement opportunities.
 
Think of how many cars are there in our townships or in government fleet that are serviced and repaired outside of the very township establishments. Yet as we do that, we have many small workshops and auto-body shops that could be supported in order for them to grow and become competitive.
 
For our part as government we are acutely aware that we cannot achieve any of these ideals so long as our people, the majority of who are youth, have no opportunities.
 
Our rural areas and townships can also be better served if our young people are trained and encouraged to express themselves and innovate, either for commercial and social pursuit. In our youth, we have bounds of energy, ideas and potential for unlocking prevailing socio-economic challenges.
 
All that is required is technical and economic support. More than just innovation hubs and business centres, we must build skills hubs in townships to give our youth platforms to realise their potential.
 
For those of us who are in Presidential Broad-Based Black Economic Empowerment Advisory Council, we have a responsibility to see these young people on the path to success. We can assist in making them excellent traders, entrepreneurs and industrialists who not only put food on the table, but who are also globally competitive.
 
Just as we have demonstrated through the Meerkat, as part of the SKA, we must learn to profess science as a fusion of necessity, innovation and education-driven advancement.
 
Out of our townships, we must build the stuff to drive the 4th Industrial revolution. These opportunities will depend on the extent to which we can empower ourselves by harnessing and preserving our natural endowments and resources.
 
We must encourage our people to be enterprising, to see beyond townships of old and into the future as industrialists, as people who will claim the African century, as people who see themselves as job creators and not job-seekers.
 
Herein lies the beauty of our time. We live in a time where technology is more open-sourced. Where it is becoming cheaper to enter the digital economy and the barriers are only as restrictive as far as your creativity and imagination can stretch.
 
The costs for starting a business are increasingly decreasing and the architecture is becoming easily global and accessible. Herein lies the opportunity for inter-connectivity of our townships and rural economies both technologically and geography.
 
This is where I believe we can reach an economic stage of convergence. This is where we can leap-frog our own growth potential. We must build a cohort of young people who are fascinated with new ideas, innovation and technological progress.
 
For our part as government we are hard at work to stimulate job creation and locate the SMME sector as being central to achieving these outcomes.
 
We have adopted and invested in strategies to finance small business sector to create varying degrees of labour absorbing growth.
 
We want the SMME sector to be more competitive and enable them to undo the invasive damage caused by large corporates that crowd out small business through large shopping and retail malls.
 
Through the Industrial Policy Action Plan, we are determined to build a cohort of Black Industrialist who will emerge from the SMME sector into mainstream economic activity.
 
We are bringing about this Radical Economic Transformation by focusing on value-adding sectors that combine high employment with technological progress and other growth multipliers.
 
We are also building on our trade and comparative advantages within the manufacturing and other Industrial Policy Action Plan priority sectors.  This is the space that township economies must capture. This is where you must build competitiveness in order to gain significant market share.
 
We encourage you to engage with the Department of Trade and Industry to take advantage of the numerous support measures that can assist township and rural economic players.
 
In this connection, we can also say without fear of contradiction, that our public procurement strategies will focus on SMME development, especially in sectors such as the metal fabrication, capital equipment and transport equipment, electronics and other medium as well as heavy commercial vehicles and the pharmaceutical sector.
 
We will also be strengthening our hand in ensuring that SMMEs are paid within 30-days. We cannot claim to support small business public procurement but strangle small businesses of life giving cash.
 
But all these efforts will mean nothing unless we bring these economic activities closer to where the majority of our people live. We must build factories and agro-processing centres into rural areas and within our townships.
 
The revitalisation of township and rural economies is no longer about convenience but rather, a significant developmental imperative.
 
These inclusive development interventions are intended to be practical programmes for decentralization of economic activities, narrowing inequality, creating jobs, youth employment, skills development as well as capacity building.
 
These cross-sectorial interventions will go a long way in responding to South Africa’s immediate challenges. The role of finance institutions in fostering transformation as envisioned under the programme of radical economic transformation, must be seriously looked at as it cited by many small and medium enterprises as a hindrance to their growth.
 
I am confident that these summits are bringing together the best minds and leaders to re-write our terrible history into a tolerable tale.
 
We must stand by the courage of our convictions to chart a path for what is rightfully ours.
 
I thank you.

Issued by The Presidency, 19 July 2018