Speech by Acting President Cyril Ramaphosa on the occasion of the Black Business Council 2014 AGM Gala Dinner, Gallagher Convention Centre, Midrand

26 June 2014

Programme Director;

President of the Black Business Council, Mr Ndaba Ntsele;

Members of the BBC leadership team;

Minister of Small Business Development, Ms Lindiwe Zulu

Distinguished Guests;

Ladies and Gentlemen:

It gives me great pleasure to bring you greetings from President Jacob Zuma on the occasion of the Black Business Council gala dinner.

As you may be aware, President Zuma is attending the 23rd Ordinary Session of the African Union Assembly in Malabo, Equatorial Guinea. He has asked me to convey his best wishes to you for a successful event.

Programme Director,

This meeting of the Black Business Council comes at an important moment in this country's economic development. In the State of the Nation Address last week, President Zuma outlined some of the key elements of the radical socio-economic transformation required to address the challenges of poverty, inequality and unemployment.

It also takes place on the anniversary of the adoption of the Freedom Charter, a seminal document that continues to shape our vision of a new South Africa. Let us use this occasion to reaffirm our shared commitment to the realisation for all South Africans of the freedoms contained therein.

The economy we inherited in 1994 was built on the deliberate exclusion of black people from opportunities in the labour market and direct ownership of businesses and land.

It also limited investment in infrastructure and services in black communities, and black entrepreneurs were denied access to credit and industrial and retail sites.

The result was, on the one hand, inadequate market infrastructure to support emerging producers, and, on the other, a widespread lack of experience in starting and running enterprises.

I have always maintained that the best preparation for any aspirant young business person can be found around the family dinner table. It is here, from an early age, that children listen to their parents talking about business and become familiar with the basic principles of commerce. And they can become steeped in a particular entrepreneurial culture.

Sadly, in South Africa, thanks to our apartheid past, there are precious few dinner tables where such discussions take place.

Despite the economic progress of the last 20 years, there are several structural features that constrain our ability to address these challenges.

The structure of ownership and control established over centuries of colonialism and apartheid remains in place. Most sectors are dominated by a few large producers. The majority of households lack financial and productive assets.

The legacy of inequality in education and skills development means that our country struggles to produce the capabilities needed for a modern and diversified economy.

Yet, although we are products of our history, we refuse to be its victims.

Instead, we are determined to be the agents of our own destiny.

Just as we overcame the tyranny of apartheid, so are we determined to overcome the ongoing effects of economic marginalisation.

Programme Director,

As the Black Business Council has so clearly articulated, central to this task of economic transformation is the need to rebuild the industrial economy - and, as part of that process, to develop black industrialists.

A lack of diversification and growth in the productive sectors of our economy has in the main contributed towards the de-industrialisation of our economy over the past 30 years.

The private sector accounts for 70% of production and provides 70% of jobs, but is not investing sufficiently to drive higher growth.

Interventions such as the New Growth Path and the Industrial Policy Action Plan were introduced to reverse this trend and stimulate development in sectors such as agriculture, mining, manufacturing and construction.

These critical programmes provide the building blocks for implementing the long term vision contained in the National Development Plan.

These interventions have emphasised the importance of:

• infrastructure both to support growth and bring about greater equality;

• the need for sector strategies to encourage economic diversification and job creation; and,

• the imperative of improving basic education and skills development.

Radical economic transformation must ensure faster, inclusive growth combined with much higher levels of employment creation, reduced inequality and the deracialisation of the economy.

A critical part of this programme is our massive strategic investment in infrastructure.

We are quite literally building the nation.

Among other things, the infrastructure programme aims to promote broad-based black economic empowerment through local procurement. It is geared towards support for local suppliers and smallholders while obtaining better value for money and eliminating corruption.

Government has set an ambitious target to buy at least 75% of goods and services from South African producers.

This is eminently achievable.

A good example of what is possible is the increased local content in the production of solar water heaters.

In 2008 there was very little or no local manufacturing to support the production of solar water heating panels. Today we have a thriving solar water heating manufacturing industry. More than 60% of the content towards solar water heating panels is locally produced.

Programme Director,

Ladies and Gentlemen,

I wish to add my voice to those that have congratulated Lindiwe Zulu on her appointment as South Africa's first Minister of Small Business Development.

The establishment of the ministry will enable us to focus our efforts and concentrate our support where it will have the greatest impact.

We will need to focus in particular on marketing and supply activities to enable small scale producers to enter formal value chains and take advantage of economies of scale.

To succeed, the ministry for small business development will need the support and collaboration of a range of stakeholders. The Black Business Council, in particular, has a key role to play in identifying where needs exist and to develop proposals on how to address them.

We must create an environment that supports regulatory efficiency in areas such building licences, environmental impact assessments, company registration, tax compliance, work permits for scarce skills, mining licences, water licenses and access to municipal services.

We will improve consistency in legislation and regulations that affect business. We are creating capacity in the Presidency to conduct thorough impact assessments of new and existing legislation and regulations to ensure alignment with the National Development Plan.

We must do all we can to reduce the risk of unintended consequences.

Increasing available skills required for the economy remains key.

The poor quality of education available to many black students has limited their employment opportunities and thus impeded our progress in transforming the economy.

Business needs to support our interventions in the post-school training and education system. Together we must work towards bridging the gap between these institutions and the world of work.

Ladies and Gentlemen,

Successful black industrialists will require broader access to financial services to fund growth in existing and new sectors.

We can no longer ignore poor lending practices and excessive charges in some parts of the financial sector, and the lack of more inclusive and accessible financing opportunities.

Through our development finance institutions, we will provide increased access to affordable lending that supports diversification of the economy, broad-based black economic empowerment and investment in smaller businesses in the productive economy.

Radical economic transformation needs partnerships with organised business and labour to stabilise the labour market, improve working conditions and increase productivity.

We must develop mechanisms that can support meaningful transformation and greater equality in the workplace.

Government is prepared to do its part by fostering an environment for growth and investment through the development of adequate infrastructure, provision of services such as energy and water, mobilisation of industrial financing, consistency and certainty in regulation, removal of unnecessary burdens for business, and the improvement of our skills base.

Business should commit to broad-based ownership - including through community and employee ownership schemes - and support career mobility and pay progression for workers.

We need a dynamic and entrepreneurial class of black industrialists. We need people who will take a long term perspective, roll up their sleeves and drive the development of our productive capabilities from the shop floor up.

As a nation, we are looking to black business in particular to take this country forward. It needs to be an active agent in the implementation of the National Development Plan. It needs to be a driver in its own right of radical socio-economic change.

Black business cannot be content merely to await the opportunities that government will create. Black business must create its own opportunities. It must develop its own agenda for radically transforming not only the complexion of South African business, but also the way in which business is conducted.

Black business must lead. It must develop strategies - working with government, labour and the rest of the business community - to train tens of thousands of engineers, actuaries, accountants, teachers, doctors and project managers.

Black business must look at how emerging entrepreneurs can be financed, supported and provided with market access.

Our developmental state needs partners in the business community who support the vision of a racially integrated industrial economy.

That is why we welcome the opportunity to interact with you here this evening. It is the first of a series of engagements with business to seek alignment on a programme for radical socio-economic transformation.

The Black Business Council has a critical role to play in forging such an alignment. It needs to be preparing for the meeting of the Presidential Business Working Group, canvassing the views of its members and developing proposals that will make a meaningful and lasting difference.

We need the Council to show leadership in engaging constructively with government and promoting the kind of values that will help South Africa prosper.

Because together, we can indeed move South Africa forward.

I thank you.

Issued by the Presidency, June 26 2014

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