Address by President J G Zuma to Black Management Forum Corporate Update Dinner, Sandton Convention Centre, July 6 2012
Theme: Infrastructure
Honourable Ministers,
President of the Black Management Forum and leadership,
Businesspersons and professionals,
Members of the Diplomatic Corps,
Esteemed guests,
Compatriots
Good evening,
It is wonderful to meet with you again.
As always, we are meeting to discuss economic development and matters that are meant to take our country forward.
We are pleased that that the Black Management Forum is interested in our infrastructure development programme.
The ruling party has just completed a successful and important Policy Conference that, amongst many others, considered the role of infrastructure in economic development.
The conference confirmed the pivotal role of infrastructure in promoting labour absorbing growth as well as social and economic development.
In the 2012 State of the Nation Address, I announced the infrastructure programme.
The programme is designed to transform South Africa's socio-economic landscape in response to unacceptably high levels of unemployment and a moderate rate of economic growth and development.
Before updating you on the infrastructure programme, I would like to remind you of the crucial role you have to play as black business and black professionals in the quest for economic transformation and economic freedom.
As you know, we have done well with the process of democratising our country since 1994.
However, we still need to go much further to achieve meaningful social and economic transformation.
We inherited a legacy of poverty, under-development and the deliberate exclusion of the majority of citizens from economic activity, inflicted by both the Colonial and Apartheid periods.
Despite, eighteen years of democratic rule, this legacy is still evident and requires greater effort on the part of all stakeholders to overcome.
The ANC administration is faced with the monumental task of breaking this perpetual cycle of poverty, unemployment and the exploitation of our country's natural resources for the benefit of a few.
Compounding this situation is the tough global economic condition which relentlessly exerts pressure on our economy.
Black professionals and black business cannot be spectators in transformation. You have to continue playing an active part, providing your skills, experience and perspectives to help us turn this into a prosperous country.
Much progress has been made already by the ANC government in opening up opportunities for the black majority to access opportunities which had been deliberately closed during the period of apartheid colonialism.
Therefore, we have achieved transformation in many areas, although we still have a long way to go.
According to the National Planning Commission, the black middle class had grown by 30% in 2005.
By 2007, ANC government policies such as black economic empowerment and affirmative action had contributed to the growth of South Africa's black middle class to 2.6 million people.
We are happy with this progress, and we are proud to have you in such great numbers, but this is not enough. The struggle for economic emancipation continues.
Together as government and black professionals, we must work to improve the quality of life of all especially the poor and the working class.
Our duty is to deal a decisive blow on poverty, inequality and unemployment. It is to grow our economy in a manner that promotes job creation and inclusivity.
It is to ensure that as a black manager or businessperson, you use your advantaged position to improve the lives of others in any way possible.
Compatriots as said, we thank you for the interest shown in the infrastructure programme.
The New Growth Path, our economic blueprint, identifies infrastructure as a critical and an effective jobs driver and development tool.
We saw the value of infrastructure development during the 2009 global economic recession. We were able to survive the recession through the massive 2010 Fifa World Cup infrastructure build programme, as we built soccer stadiums, roads and renovated airports.
We know we are good at it. We did extremely well in 2009 and 2010. As a result of the World Cup success, South African infrastructure expertise is now sought in some parts of the world.
An example is the recent joint appointment of the Airports Company of South Africa to overhaul and operate the busiest and most valuable of three Brazilian airports, Guarulhos, in São Paulo.
Since we are so good at infrastructure development, we decided to take it further and redesign our country.
The programme is being rolled out in a phased approach with an initial investment of 844 billion rand over the medium-term expenditure framework period and a total investment of more than three trillion rand over the period, 2012-2020.
To drive the infrastructure programme, Government last year established the Presidential Infrastructure Coordinating Commission, or PICC, whose membership includes select Ministers, Premiers and metro mayors, under the leadership of the President, assisted by the Deputy President.
The PICC set itself the task of establishing a national infrastructure plan and to improve the capacity of the state at all levels to manage the necessary projects.
We developed the criteria for the projects. These criteria include the fact that infrastructure must address the need to bring the rural poor into the economic mainstream with roads, water and electricity.
Infrastructure must unlock the economic potential of the country, such as the rich mineral reserves of Limpopo, in coal, chromium, palladium and platinum.
It must help us to improve the overall productivity of the economy through better logistics, reliable energy supply and efficient ports.
It must produce a communications network that brings all parts of the country into the opportunities of the 21st century and the knowledge economy.
It must go beyond only economic infrastructure. It must embrace social infrastructure as well, such as schools, hospitals and clinics.
It must also connect the different African economies more clearly, as part of our regional integration efforts.
Using these criteria, the PICC identified hundreds of projects across the country and agreed to prioritize 17 Strategic Integrated Projects, or what we now call SIPs.
The SIPS cover every province and every modality of infrastructure, from road and rail to clinics, from telecommunications to the water supply.
Therefore, the nature of infrastructure is that it is needed by both businesses and communities. We just need to get the balance right.
The National Infrastructure Plan aims to ensure that we meet all of these objectives in a sustainable way, while assisting the President to keep a close check on progress made due to the leadership of the programme in the Presidency.
I wish to underscore the job creation aspects of the infrastructure programme. If we simply import the goods and services required for the build programme, we will not generate the economic stimulus we need.
Therefore, we will promote local procurement by contractors in the infrastructure programme.
By promoting local procurement, we will use our large infrastructure budget to build competitive supplier industries that can employ large numbers of our people.
The infrastructure build programme is also a means to support broad-based empowerment.
This means we must find ways to provide mentoring, finance, technical assistance and other ways to help improve the performance and sustainability of smaller enterprises, especially those owned by black people, the youth and women.
In a broader sense, more black South Africans need to be brought into the various parts of the infrastructure supply-chain, and not only as minority partners or equity holders.
We want to see one or more of the big five construction companies being run and owned by black entrepreneurs, who must develop skills as construction people, or cement makers, or steel producers.
We want black people to go beyond being portfolio holders of 3% shares in this company, and 5% in that company. We want to see factories that are owned by black entrepreneurs.
Naturally, it is also expected that there will be skills transfers emerging from the infrastructure programme.
Large projects are expected to produce new artisans, technicians and technologists and create a better link between industry and FET colleges as well as Universities of Technology.
For meaningful transformation, the infrastructure development programme should also empower women, particularly in the construction industry as both entrepreneurs and workers.
We work closely with the South African Women in Construction and Women for Housing initiatives to boost women entrepreneurs.
As a result of these initiatives, an increasing number of black and women-owned companies are now competing effectively in this sector of the economy.
Women-owned construction companies now make up more than 4 000 of the black-owned construction businesses registered on the Construction Industry Development Board database.
We welcome this progressive development and there is still room for growth given that the construction sector will be immensely boosted by the infrastructure programme.
Compatriots,
Talking about new opportunities, we are aware of the concerns by black business and professional bodies that government does not always put its money where its mouth is when it comes to opening up opportunities for black people.
One of the ways of ensuring that black businesses are nurtured is for government to prioritise procuring from black firms.
Government departments should go all out to find black accounting, auditing, legal and engineering firms in order to build capacity and enable the growth of black business. We have a duty to practice transformation and not only to talk about it as government.
Another issue that you have raised with us before is the need for government to meet its undertaking of paying suppliers, especially small businesses, within one month of the provision of the service.
We agree with you that failure to do this is detrimental to small enterprises. The National Treasury has begun to police compliance with the prescript to pay within one month.
In addition, we are exploring putting this provision in the performance agreements of accounting officers and senior managers. In this way, people will be forced to comply, and it will also be a matter for which managers can face disciplinary action if they fail to comply.
We are considering these drastic measures because we want to promote small business development in our country in order to boost job creation. Failure to pay them on time is tantamount to sabotaging government objectives.
Ladies and gentlemen,
In our previous meetings you also raised concerns about the Black Economic Empowerment legislative environment and enforcement.
We are in the process of improving the legislation, thanks to the feedback we get as well from the Presidential Black Economic Empowerment Advisory Council.
The Broad Based Black Economic Empowerment Amendment Bill was gazetted in December 2011 by the Department of Trade and Industry for public comments.
The Bill will amongst others establish a B-BBEE Commission to promote, monitor and evaluate economic empowerment.
To ensure full compliance with the law, the BBBEE Amendment Bill also makes deviations an offence, for example fronting.
The Bill makes provisions for empowering the Special Investigating Unit to investigate all offences involving fronting or corruption committed by both the public and private sector with regard to the application of the Act and B-BBEE Codes of Good Practice.
There will be consequences for anyone found guilty of misrepresenting or attempting to misrepresent the B-BBEE status of an enterprise, who provide false information or misrepresents information to the Verification Personnel in order to secure a particular B-BBEE status.
Proposed penalties include imprisonment for a period not exceeding 10 years. It could also include a fine of 10% of that enterprise's annual turnover.
Compatriots,
Our infrastructure programme goes beyond the borders of our country into the region.
We are also involved in projects to generate supplies of energy and water in Mozambique, Lesotho and DRC to name a few.
These projects complement the Free Trade Area that is being established to create a market of 600 million people in South, Central and East Africa.
South Africa has also been mandated by the African Union to chair the north-south corridor road and rail projects within the continent.
Given the fact that Africa is growing while other regions are under pressure, we remain optimistic that continued investment in our continent will shield the economy and will also yield results.
As you are aware, we meet against the background of a global economic recession and uncertainty especially in the Eurozone.
The international risks to the global economy and consequently to South Africa are again mounting.
We are beginning to see the impact in reductions in export orders and pressures on the local economy.
Therefore, as it happened in 2009, we have to develop solid domestic and regional foundations for growth.
We cannot in the long run develop if we continue to rely primarily on exports of commodities like gold, platinum and iron ore.
We need to deepen domestic and regional markets as well as diversify our exports abroad.
The infrastructure build programme provides a critical path in the face of these adverse global conditions.
The global slowdown increases the difficulties and risks. But it also makes the implementation of the infrastructure programme more urgent and necessary.
We will partner with business as well as the other social partners such as organized labour, to ensure that this strategy works.
We are currently busy launching the various SIPS around the country.
Let me reiterate that the plan is to turn South Africa into a huge construction site with cranes and boulders everywhere.
The end result will be the country of our dreams. With dams, bridges, roads, water, electricity, functional ports and railways, refurbished hospitals and schools and two brand new universities in the Northern Cape and Mpumalanga provinces.
We invite the Black Management Forum to partner us in this patriotic campaign.
Working together we can do more!
I thank you.
Issued by The Presidency, July 6 2012
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