Progress is tangible, but a great deal remains to be done

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BR_BR PATEL1 GCIS Economic Development Minister Ebrahim Patel. Picture: GCIS

Twenty years into democracy, where do we stand as a society? We have made significant progress across a wide front and we have serious challenges that we must still address. Let us look at some of the areas of progress first.

We have solid institutions of democracy and important freedoms, to organise, to speak, to assemble as citizens, to join trade unions and to strike when needed, to pray as we choose, rights enshrined in the Bill of Rights in our constitution. We are able to approach the courts for justice when we are aggrieved. We have a free press, able to report on the matters of the nation.

The economy is larger than it was under apartheid, with almost 6 million more people who are working today than in 1994. The gross domestic product is almost double the size it was and the growth rate is almost three times higher than it was in the last 20 years of apartheid.

Access to education has expanded greatly with 8 million learners now attending no-fee schools and 9 million getting daily meals, provided by the government.

Investment in improved health-care systems has seen many more clinics built, nurses and doctors employed and medication made available. The big crisis that is HIV is beginning to be contained through the world’s largest antiretrovirals programme, after years when we were in denial about the disease.

Public transport systems are being improved. In Johannesburg, the Rea Vaya system is under construction with more than 100 000 people, many of them factory workers, using it every day. But we are also using the opportunity to make the buses for the system locally, in the Marco Polo factory in Germiston and Busmark in Randfontein.

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The taxis that Violet Seboni (the late first deputy president of the Southern African Clothing and Textile Workers’ Union) took every day to travel to work used to be imported. In the past five years we worked closely with two investors and now the country assembles minibus taxis in Springs and eThekwini. We are manufacturing trains in factories in Koedoespoort near Pretoria and Nigel.

What this shows is how the government is taking a basic concept that many trade unions have fought for, the concept of localisation, or local manufacturing, and making it real and concrete.

Twenty years of democracy has seen a large expansion of electricity provision.

The first electricity was installed in a house in South Africa as long ago as 1890. Between that date and the dawn of our democracy, 5.2 million houses were connected to the grid. Since 1996, an additional 7.2 million homes have been connected to electricity. In other words, we did more in less than 20 years of democracy than what was achieved in 104 years of colonialism and apartheid. Soweto was a dark city under apartheid. Today, electricity is generally installed throughout the township.

In Gauteng, in the past five years alone, 112 984 additional houses were connected to electricity.

Jobs are a central concern of trade unions. Seboni died during the first recession that the democracy experienced during 2009. It was caused by the financial crisis that started in the US and rapidly spread across the world, becoming the biggest downturn in the global economy since the 1930s. We lost a large number of jobs during 2009, in what Cosatu aptly described as a “jobs bloodbath”, a phrase that Seboni used often.

Faced with this huge challenge, government developed an economic strategy in the form of the New Growth Path (NGP), which was adopted in October 2010, almost 20 months after the death of the remarkable woman whose life we are celebrating today.

Since the adoption of the NGP, the economy has created an additional 1.4 million new jobs, mainly in the public sector, finance, transport and mining.

Total employment is today more than 15 million.

The industry that Seboni worked in has been buffeted by the harsh winds of globalisation for the past 20 years or more, as the economy opened up after the sanction years of apartheid and as China entered the global trading system.

One of the first things we focused on in 2009 was to begin the rebuilding of the industry. The steps we took included:

- Increasing the tariff protection on 35 items of clothing to allow the companies to reorganise their factories;

- Providing new incentives for local producers through a competitiveness programme and loans from the Industrial Development Corporation. Together, these were worth R5.1 billion;

- Creating a training lay-off fund that can be accessed by companies as an alternative to retrenchment, that has been used by 14 factories in the sector to save 1 500 jobs;

- Linking access to government incentives with full compliance with tax and labour laws;

- Taking action against illegal imports, with raids on warehouses, better inspections at the harbours and confiscation of about R1.8bn worth of illegally imported goods from the industry in three years alone; and

- Committing that all the government agencies will only buy locally-produced clothing, textiles and footwear.

I have highlighted some of our success stories of what we have achieved during the period of democracy, particularly in the past five years.

But we have not completed all that we aim to do and the triple challenge of poverty, inequality and unemployment remains. Let me look at some of the challenges.

While we celebrate the rise in job numbers, we are not expanding employment in the core productive parts of the economy such as manufacturing, mining and agriculture. And too many jobs are temporary positions.

It is for this reason that we say that we need to transform the economy by addressing its structural and systemic features.

One area we are dealing with is the monopolies and cartels that fix prices among themselves, abuse their market dominance, overcharge consumers and weaken our capacity to industrialise.

The Competition Commission has exposed a large cartel operating in the construction industry that illegally fixed prices for the soccer stadiums and roads in Gauteng and elsewhere.

We are acting firmly against them. We have broken up the cartel, forced them to reveal information about where they met, who was involved and which projects were affected. We fined them R1.4bn and are now in discussion with them for further compensation for the state and for transformation of the industry.

In the next five years, the government will take on the fight against monopolies and cartels with even greater vigour and will change the laws if needed to strengthen the capacity of the competition authorities to dismantle them.

Another area we are addressing is the need to improve the skills base of the economy.

Infrastructure development is a further big structural feature we must address.

In the past five years, we expanded the spending to build new infrastructure. In all, the government invested about R1.1 trillion in new infrastructure, from schools and hospitals, to power stations, dams and transport systems.

We will expand this further to ensure that we develop the capacity to generate much higher levels of electricity and expand the quantity of drinkable water.

The challenges, however, at local level with regard to water, sanitation, electricity and good quality clinics, remain very big. In too many cases our people are given poor service. We will need to fix the municipal level, from getting reliable electricity accounts, to making sure that every citizen has decent and dignified access to sanitation and water.

What these point to is the fact that the struggle to build a society in which all of our people have better lives is ongoing and that the next five years must be a period of radical transformation.

* Ebrahim Patel is the Minister of Economic Development. This is an edited version of his speech at the Violet Seboni Memorial Lecture at Constitutional Hill this week.


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