Address delivered by President Jacob Zuma to the meeting of the Confederation of Black Business Organisations (CBBO) Megawatt Park Eskom Conference Centre, Sunninghill, Johannesburg, September 6 2011

The CEO of Eskom,
Presidents of Black Business Organisations and leadership in general,
Distinguished delegates,

I am happy to meet again with members of the Confederation of Black Business Organisations.

I welcome this interaction because it is important for us to meet from time to time to discuss issues of transformation as well as the well being of our democracy in general.

The legacy of colonial oppression and apartheid is so enormous and pervasive that we need to work together harder and more intensively, to reverse it.

Politically we have done well, and have established a sound, stable and vibrant democracy. However, the social and economic aspects of transformation are still lagging behind.

The impact of poverty and inequality is still glaring. Human settlements still expose the gap between the rich and poor, rural and urban.

The more we achieve something, the more we remain aware of how much more we must still do.

And we cannot achieve the type of transformation we desire, working alone.

Therefore, I welcome the initiative of black business to engage in internal dialogue in order to assess the progress made with the transformation of the South African economy.

We declared 2011 the year of job creation and economic transformation in the State of the Nation Address in February. We called upon all sectors of society to help us achieve that objective.

We are happy that you are heeding this call with this Summit today, in which you will discuss economic transformation.

This is an important Summit as well as it also takes place during a period when there is uncertainty with regards to business unity.

We trust that you will have fruitful deliberations and will put the interests of the country and transformation forward.

You have to take into account the phase we entered in 2007 in Polokwane, and also in January this year when we declared economic transformation as a primary goal of this era in the democratisation of our country.

The unity of the business sector is paramount in ensuring the achievement of the transformation goals. As government we need a unified and united business voice to work with.

We therefore urge you, in your deliberations, to discuss the matter thoroughly with a view to finding solutions.

Compatriots,

As stated earlier, we have achieved a lot in less than two decades of democracy at political, social and economic levels. 

However, we have not achieved the economic transformation that is outlined in the Freedom Charter, to achieve a society in which all share in the country's wealth.

We stated as much in the ruling party's national conference in Polokwane in 2007.

The ownership and management of the economy in particular, have not changed considerably since the dawn of freedom.

With regards to the management of the economy, the recent 11th Commission for Employment Equity Annual Report revealed worrying statistics that indicated the road that must still be travelled.

While black people accounted for about 86% of employees covered in the reports analysed by the Commission, they only represent 16.9% at top management level and 35.9% at the senior management level.

The report further pointed out that while significant progress had been made in creating a critical mass of both black people and women at the professionally qualified level, these people seem to have reached a glass ceiling.

This means that affirmative action and employment equity promotion must continue to be implemented as informed by the Constitution and legislation such as the Employment Equity Act.

Chapter 2 of the Constitution of the Republic of South Africa sets out in the Bill of Rights provisions on Equality, which include the need for "National legislation to prevent or prohibit unfair discrimination and to promote equality to address imbalances that stem from our past''.

In addition, the Employment Equity Act constitutes one of the key enabling interventions to achieve equality and diversity in workplaces of our country.

We need to use this legislative environment to level the economic playing field. It is in the interests of reconciliation, economic growth and development to diversify ownership, management and control of the economy.

We have seen the effectiveness of affirmative action in the manner in which White women and Indian compatriots have benefitted, as outlined in the Employment Equity Report.

We must use lessons from that to further boost the empowerment of other designated groups, in particular Africans.
 
With regards to the ownership of the economy, while we are happy to see many black people entering various sectors of the economy, there are no visible black industrialists.

We do not see large factories or mines that are owned by black people or women.

As we build the economy through expanding manufacturing, mining, agriculture and the green economy, we have to develop the black industrial sector.

The economy must produce authentic black entrepreneurs, who own factories and manufacture textiles, furniture, metal products or whatever the market requires. 

We trust that the deliberations in this Summit will produce pointers as to how business, both emerging and established, will contribute to building this new industrial sector.

Government can help, through the preferential procurement systems of the state.

Government can also help through the provision of industrial funding, which we are now doing to a greater extent than before.

We are also contributing through the policy of Broad-Based Black Economic Empowerment.

The CBBO should look at how all these instruments can be used to produce this authentic class of black people who truly own the means of production.

Compatriots,

We are concerned that Broad-based Black Economic Empowerment (BBBEE) has not yet benefited a wide enough segment of our society.

We want to see a much stronger focus on the broad-based aspects of BEE.

These include ownership by communities and workers, increased skills development, support for small business and cooperatives and a new emphasis on procurement from local producers to support employment creation.

I recall that in our 2008 meeting, you raised concerns that the Presidential Broad-Based BEE Advisory Council had not been established then, as you felt it should be tackling such issues.

Since its formation in 2009, the Council is functioning optimally and is helping government to develop and implement more effective BEE policies.

We have been setting up institutional mechanisms for the effective implementation of BBBEE. This includes the accreditation and verification of BBBEE and gazetting of sector charters.

In addition, new procurement regulations will come into force in December 2011.

Certain sectors supplying goods and services will be targeted for local procurement by government.

This is a very important opportunity for local producers of goods and services, and especially for black business.
 
We are also strengthening the funding capacity for SMME development through consolidating some of our business financing operations, such as Khula and the IDC's small business programme.

As you are aware, Government is the biggest buyer of goods and services, including the rollout of projects worth billions of rands by state- owned enterprises.

The BBBEE Codes will ensure that both public and private sectors procure a certain percentage of goods and services from local black owned and controlled entities.

For example the BBBEE procurement spending for Transnet is estimated at 17,21 billion rand per annum over the next four years and focus will be on black women, youth and people living with disabilities.

At ESKOM, a total of R27 billion has been targeted to be spent on black women, youth, people in rural and underdeveloped areas as well as people with disabilities.
 
This demonstrates the potential of procurement and how it can contribute to the sustainable development of small enterprises and companies supplier database. 

Ladies and gentlemen,

Let me emphasise the fact that as we move ahead with transformation, we must guard against activities that may take us backwards.

We are pleased that for the first time, we will change how government does procurement by ensuring access to markets for designated groups, while dealing with the practice of misrepresentation or fronting.

Fronting has become more complex and sophisticated in nature in that many of these BBBEE transactions appear to be legitimate at face value.

This malpractice inhibits a progressive and meaningful participation in the economy by the intended beneficiaries, mainly black entities.

As we review the BEE Act we will ensure that the law provides for appropriate sanction and punitive measures against those guilty of fronting practices.

Punishment may range from blacklisting offending companies and their Directors, to imposing penalties and suspending the scorecard of companies.

Another alarming example of behaviour that takes transformation backwards is that of land claimants who sell restituted land, including back to the people it was claimed from.

While this situation has occurred in some isolated cases in some provinces such as the Northern Cape and Mpumalanga, it must not spread across the country.

It is therefore important to emphasize to the beneficiaries that the land acquired through government programmes such as land restitution should not be sold, unless the Minister of Land Reform agrees to that.

We cannot reverse or undo the process that we have so painstakingly embarked on since the dawn of this democratic era.

This is more so because land has been at the heart of our struggle for liberation in South Africa. 
 
Compatriots,

It is important to state that an economy is not simply physical infrastructure and economic sectors. It is managed by people. Therefore, we are also focusing on the skills development.

We are expanding the Further Education and Training colleges and improving access to our schools and universities for children especially those from poor households. In that way, we are investing in the future, and we are ensuring sustainability.

Going forward, we will continue implementing our transformation programmes, including the job creation imperatives outlined in the New Growth Path.

We believe we can create jobs in infrastructure development, agriculture, mining and beneficiation, manufacturing, the green economy and tourism. 

In order to expand these sectors of the economy, we need a modern infrastructure: energy, transport, dams and communication.

These will support productive activities in the economy.

This Thursday, I am convening the Presidential Infrastructure Coordinating Commission.

Members of the commission include 18 ministers, premiers and all metro mayors.

Together as the three spheres of government, we will work to unblock whatever makes it difficult to build the infrastructure we need and to get mega projects moving faster and efficiently.

Ladies and gentlemen,

There are many more issues that we should be discussing.

It indicates the need for regular interaction between black business and government, so that we understand each other's concerns and priorities better and work together for the common good of the country.

I wish you well with your deliberations and look forward to receiving the resolutions of this Summit.

I thank you.

Issued by The Presidency, September 6 2011

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