Black business at the crossroads

Minister of Public Enterprises, Malusi Gigaba
Minister 1.jpg

Challenging the expectations that black business has of itself.

The keynote speakers at the 2013 Motlekar Holdings Black Business Quarterly Awards may have hailed  from widely divergent  political backgrounds, but in one respect they reached  consensus: it is time for black business to examine its role in society and raise its game if it is to achieve its destiny of driving the social and economic transformation of South Africa.

First to speak was Minister of Public Enterprises, Malusi Gigaba. In an earnest and impassioned address, Gigaba urged the  illustrious crowd of celebrities, dignitaries and guests to celebrate South Africa's economic transformation achievements to date and soberly reflect on the road  ahead.

Thanking the sponsor, Motlekar Holdings, for the opportunity to attend the awards ceremony, Gigaba  praised the winners themselves, describing them as “those amongst us who continue to strive against ostensibly insurmountable circumstances and thus who serve as our guiding lights in our firmament, and as icons to be emulated.” Notwithstanding the odds, Gigaba said, “What these icons are proving is that there is nothing impossible that cannot be made possible. Impossibility is a lexicon that is confined only to idle persons and cowards.”

Reminding the audience that “five years on into the global financial crisis there remains a high level of uncertainty surrounding the prospects of the global economy”, Gigaba cited Minister Pravin Gordhan's assertion that  over the fast four and a half years, the present government had steered the country's economy through its worst recession in seventy years. “We have made bold and correct decisions which have restored growth, supported our industries and maintained a sustainable fiscal policy.” Yet  much more remained to be done: “Clearly, given the challenges we are facing, particularly subdued growth, poverty, unemployment and inequality, even more bold and correct decisions need to be made in the coming years by government, business, labour and society as a whole to lift our economy out of the current situation.”

As a particular challenge, Gigaba emphasised “the growing trust deficit between government, business, labour and citizens” and said that certain measures announced by government in the October mini-budget speech aimed to redress this trust deficit and restore faith  “so that the poor, in particular, who have been the worst victims of the current global downturn,  must not be the only ones making sacrifices and suffering whilst the elite in society continue to rake in the benefits and live as if nothing is happening.” Gigaba again  reiterated  “the call we have made repeatedly in the past to corporate and government leaders, including those of state-owned companies, to curb their remuneration and extravagance.”

Identifying the primary challenge facing developing economies – “the main drivers of global economic recovery” –  as the acceleration of industrialisation, diversification and infrastructure development efforts and the  acceleration of regional economic integration efforts, Gigaba urged South Africans “to recognise that our fundamental economic challenge is to diversify our way from our dependence on our resources, exports or export-oriented economic policies.” He recommended leveraging state investment “to promote confidence and certainty in relation to the building of the South African economy” and advised that developing economies like South Africa should “accelerate our economic integration in Africa, drastically expand intra-African trade, and explore new product destinations for our products among emerging markets.” 

South African business should not be blinded by “the relatively short-term global financial crisis” and should work on “systematically repositioning our economy in relation to the structural changes taking place in the global economy.”

To the applause of the audience, Gigaba said, “South Africa's future lies deeply embedded in Africa. Africa is the future and the future is African.”

In South Africa, Gigaba continued, the effects of the global crisis are amplified “by the triple challenges of poverty, unemployment and inequality and the social distance in particular between some political leaders, especially in municipalities and  local communities.” Further exacerbating the situation was  the advent of what Gigaba termed “neo-fascist populist demagoguery that pounces on the plight of the poor, to promise them short-term gains of a radical nature” that would succeed only in derailing South Africa's democratic project. Instead Gigaba reminded the audience of their duty “to heed the genuine plight and expectations of the poor because our own social progress as a nation and economic progress as a few can only be sustainable if together we share the fruit of our democracy.”

Gigaba went on to quote from Minister Gordhan's mini-budget speech, advocating more savings, investment, expansion and diversification, accelerated job creation and faster, inclusive job-creating growth. Growth is needed to increase the number of enterprises, create more jobs and generate the revenue needed to fund social programmes, infrastructure interventions and industrial incentives. “We have a duty to broaden opportunities for those who do not have secure incomes, formal jobs, solid homes or access to electricity or healthcare. We have to share the benefits of growth so that those of our people who are most vulnerable and disadvantaged can say, 'This economy works for me.'" This requires “cooperation and greater alignment between labour, business, government and other sectors to get things done” in order to build “a smart South Africa”.

Optimism in this regard received a major boost from President Zuma's announcement of the trillion-rand roll-out of the Strategic Infrastructure Projects initiative. “Over the last three years,” said Gigaba, “we  have seen public-sector spending rise, especially in relation to public infrastructure investments, led by large investment in power stations, rail, ports and pipeline capacity, roads, water and dams and municipal and social infrastructure.” Crediting these “counter-cyclical investments” with absorbing “the worst of the effects of the slowdown”, Gigaba said that “one trillion rand will have been spent on infrastructure expansion” when the current administration leaves office and predicted that “our economic landscape will be significantly transformed” with the objective “not just to invest in infrastructure but to build our industrial capabilities and in the process achieve racial integration in the mainstream economy.”

Reaffirming government's unwavering commitment to Black Economic Empowerment, Gigaba listed its successes: “Together, during the past nineteen years, we have ensured that more than sixteen million South Africans are on social grants, compared to only 2.6 million awarded to a select few in 1994. More than eleven million households have access today to electricity, compared to 5.5 million in 1994. More than 80% of our schools are today no-fee schools. More than 3.3 million families have free homes, compared to the 1.2 million housing backlog we found in 1994. More than 13.5 million jobs have been created in the last 19 years, compared to what was the case in 1994 when we found an economy in a deep and irreversible crisis from which we knew it would never recover. And the glass ceiling has been removed for aspiring black people entrepreneurs and business people.”

At the same time, Gigaba admitted, business, too, had profited greatly from the past nineteen years, and not always in a transformative manner. “In this regard,” he said, “the ruling party, the ANC, made the firm observation in 2012 at its national conference, that despite many commendable gains, the working class has experienced massive challenges, including high rates of unemployment, a decline in their share of national income, growth of practices such as outsourcing and subcontracting, all of which can have the effect of weakening workers' bargaining power.”

Accordingly, Gigaba challenged the audience:  “What role has business, both black and white, decided or chosen to play, in relation to this infrastructure and broader transformation economic programme? Have you chosen to partner government or simply to become uncaring and dispassionate profiteers?”

Gigaba challenged the private sector to respond to government's infrastructure roll-out, skills development and localisation targets with its own reciprocal targets and plans. “What are your skills development targets? Are your members procuring their services and components and supplies from black suppliers? Are we building the capacity of these black local suppliers, organising them and helping them to obtain more procurement?”

Gigaba mentioned two important obstacles to transformation: that business does not speak with one voice, and that business tends “to be parasitical rather than developmental, to view itself as a recipient of policies and programmes rather than a partner in development.” Achieving business unity will require white business to make  meaningful change “not because the legislation demands so and punishes those that do not comply, but because it is necessary, worth it and important to do.”

It had always been clear to the ANC that political freedom without economic emancipation was  meaningless, continued Gigaba;  economic transformation is its most difficult and complex challenge as it provokes the entrenched resistance of dominant and established  global and domestic interests. “The posture business will take and the role it will choose to play will be critical in determining whether our economy can industrialise and diversify, whether it can develop new supplier sectors amongst blacks and female stakeholders, and whether it is thus able to create jobs and skills and accordingly spread wealth and fund the frontiers of opportunity and inclusive growth.”

Gigaba appealed to the audience: “Would you not see it as a moral imperative for you to advance economic transformation, not for personal gain but for the communities that you do business with, including the workers, in the form of worker-share schemes?” Urging the audience “to think about what type of social contribution you should be making in South Africa to eradicate poverty and unemployment”, Gigaba stated that black business has been “anointed by history” to shoulder this “enormous responsibility”, hastening to add that being a partner in development did  not preclude making profits.

“However,” the Minister concluded, “South Africa will miss out on the opportunities of the infrastructure programme and the broader economic transformation if all that this programme entailed was the state investing in infrastructure expansion and the private sector raking in the profits by any means necessary.”



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Issue 83


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