Deputy Minister Andries Nel: South African Chamber of Commerce and Industry annual convention

Address by Mr Andries Nel, MP, Deputy Minister of Cooperative Governance and Traditional Affairs, on “Building and Sustaining Strong Institutions for South Africa’s Global Competitiveness at the South African Chamber Of Commerce & Industry Annual Convention

Programme Director,

Leaders and members of the South African Chamber of Commerce and Industry,

Ladies and Gentlemen,

Fellow South Africans

Thank you for the opportunity to be with you and to engage on the fundamentally important task of building and sustaining strong institutions for South Africa.

We congratulate the newly elected leadership of the SA Chamber of Commerce and Industry led by its newly elected president, Mr Zeph Ndlovu. Best wishes also go to outgoing president, Mr Vusi Khumalo.

We commend the SACCI for setting an excellent example by asking the Independent Electoral Commission to conduct your elections. The IEC is indeed one of the central institutions supporting our constitutional democracy.

Any discussion on building and sustaining strong democratic institutions must begin with the fundamental vision and guiding document that we have adopted as a nation � the Constitution of the Republic of South Africa, signed into law twenty years ago by President Nelson Mandela on 10 December 1996.

It is an appropriate coincidence that tomorrow we celebrate the 30th Anniversary of African Human Rights Day to commemorate the entry into force of the African Charter on Human and Peoples Rights on 21 October 1986. The African Charter inspired our own Constitution, especially in its emphasis on socio-economic rights such as health and education.

It is another appropriate coincidence that we meet here a few days before we celebrate the birthday of former ANC President Oliver Tambo on 27 October. Appropriate because no telling of the history of our Constitution can be complete without recounting the role that OR Tambo played in its conception and gestation.

We recall that in the difficult year of 1987, when delivering the statement of the National Executive Committee of the ANC on 8 January 1987, OR Tambo spelled out the following vision: For us, it is of especial importance that that new reality should reinforce and entrench what we are accomplishing now, in struggle: the building of a nation of South Africans. It must reflect and enhance our oneness, breaking down the terrible and destructive idea and practice of defining our people by race, colour or ethnic group.

Of central importance also is the critical requirement that the new South Africa must guarantee the masses of our people freedom from hunger, disease, ignorance, homelessness and poverty. The democratic state will be representative of all the people of our country, and especially the ordinary working people who own neither land nor factories and neither the mines nor the banks. It will therefore be called upon to ensure that the wealth of the country increases significantly and continuously and that it is shared equitably by all the people to ensure their material and spiritual upliftment and well-being.

Two years later when delivering the statement on 8 January 1989 he announced that:

In keeping with the intensified efforts to address the question of power, the ANC has tabled for consideration by all the people of our country a set of Constitutional Guidelines. We urge everybody to discuss these and make proposals so that finally a position emerges which reflects the broadest national consensus. In building that consensus, the possibility will be created for all of us to advance more purposefully together for the birth of the new South Africa which we, together, will have helped to define.

I raise these appropriate coincidences because we must never cease to remind ourselves that our Constitution, despite being forged in the furnace of negotiations between those forces representing a dying and decaying apartheid past and those representing a democratic and progressive future, emerged true to its ancestry.

Our Constitution was not imposed upon us. We chose it. We are proud of it. It is as President Nelson Mandela said, our national soul, our compact with one another as citizens, underpinned by our highest aspirations and our deepest apprehensions.

Furthermore, it bears testimony to the fact that our struggle, even in the midst of bitter confrontation, developed moral values of human compassion and solidarity far beyond the narrow confines of its opposition to apartheid. It represented something good, not just something better than apartheid. It asserted the humanness of the human spirit.

We must never forget these values and we must never betray them.

We are proud of our Constitution and we are proud of the institutions created by our Constitution: our democratic Parliament, our Courts, our Chapter 9 institutions: The Public Protector, the Human Rights Commission, the Commission on Gender Equality, the Auditor General, the Reserve Bank, the Independent Electoral Commission, to name but a few.

We have a collective duty to support, defend and strengthen these institutions. All of them, in their different ways, indeed underpin our highest aspirations and our deepest apprehensions.

Our Constitution spells out our national vision of a united, prosperous, non-racial and non-sexist society; a country that belongs to all who live in it, united in its diversity.

Our Constitution obliges the country to heal the divisions of the past, recognising that South Africa emerged from a system where the majority of its citizens were robbed of opportunity.

These dual imperatives are prerequisites for successful national development.

As our National Development Plan points out, uniting South Africa is both essential for the process of reducing poverty and inequality and a direct outcome of successful poverty reduction.

To build a socially cohesive society, South Africa needs to reduce poverty and inequality by broadening opportunity and employment through economic inclusion, education and skills, and specific redress measures; promote mutual respect and inclusiveness by acting on the constitutional imperative that South Africa belongs to all who live in it, and that all are equal before the law; and deepen the appreciation of citizens’ responsibilities and obligations towards one another.

Despite consistent progress since 1994, South Africa remains a divided society, with race still forming the main divide. Individual stereotyping of race and ethnicity is widespread and discrimination persists.

Our country’s institutional framework and its broad economic and social trends have contributed to gradual deracialisation, but progress is not sufficient or deep enough.

Although progress has been made to improve the lives of women; discrimination, patriarchal attitudes and poor access to quality education persists. The position of young people is also of serious concern.

Our nation building effort has been more difficult in periods of slower economic growth.

South Africa cannot afford a downward spiral that sharpens social tensions. Strong leadership is needed to promote the vision of the Constitution.

We need a social compact to strengthen the alignment between growth, development and nation building, generating the virtuous circle our National Development Plan seeks to create.

As the representative of over 20 000 small, medium and large business enterprises, the SACCI forms an important constituency. You must be at the forefront of helping to forge the social compact that our National Development Plan calls for.

To realise the vision of our Constitution, to implement our National Development Plan, requires leadership and partnerships across society working together towards a common purpose.

South Africa has high levels of mistrust between major social partners. We need to build trust and engage in discussion that confronts the most pressing challenges � one that takes a long term view.

The government will be responsible for a large share of the recommendations in the NDP. To implement these recommendations, it will need to strengthen its accountability chain, improve its capacity, be prepared to make difficult decisions and work with others in society to solve challenges.

This means communicating honestly and sincerely with the public, while holding citizens accountable for their actions.

Leaders, especially in government, must also face up to difficult decisions and trade-offs. Strong leadership is about making such decisions and effectively persuading society that the best path is being pursued.

The state sets the ethical bar for society as a whole. If corruption is seen as acceptable in government, it will affect the way society conducts itself. This makes it even more important that government acts to address the high levels of corruption in its ranks.

The private sector employs about three-quarters of South Africa’s workers and accounts for over two- thirds of investment and R&D expenditure.

South Africa needs a thriving private sector that is investing in productive capacity. While the profit motive drives business, companies cannot grow unless they operate in an environment where employment and income levels are rising.

In this complex context, it is in the long-term interests of all businesses for the country to grow faster and for more people to be employed.

It is also in the interests of business that the level of inequality be reduced. Inequality raises the cost of doing business, skews market structure and ultimately limits growth opportunities. It also breeds mistrust and tension.

Excessive executive remuneration does little to build a more inclusive society where everyone feels that they share in the fruits of development. Leadership is required to ensure that businesses act more responsibly.

Despite healthy balance sheets, many South African corporations are not investing. South Africa needs to break this cycle of low growth and low investment. Government has an important role to play in building trust and confidence to encourage long-term investment. Business also has a role to play � if everyone invests more, the economic gains will accrue to the private sector.

South Africa has a well-developed and vibrant trade-union movement. Historically, trade unions have played a role in politics, understanding that the issues pertinent to its members do not stop at the factory gate.

Unions advance the interests of their members and give voice to vulnerable workers, such as farm workers, domestic workers or casual workers. The rights and benefits afforded to workers and increases in living standards that most workers have seen since 1994 constitute a significant gain for the country.

To address high levels of unemployment, particularly among youth, extraordinary measures will be required. Union leadership is critical to ensuring that gains by members are sustainable in the long term. To achieve this, productivity and employment have to rise continuously.

In a developmental state, unions share responsibility for the quality of services delivered, for improving the performance of government, and for fighting corruption and inefficiency.

Civil society leaders represent citizens on issues closest to their hearts and must be taken seriously. Although civil society leaders sometimes only represent narrow interests in a broad and diverse society, they form an integral part of a vibrant democracy that involves people in their own development. These leaders must be responsible for ensuring that that criticism and protest are conducted with dignity and maturity.

We would like to highlight three important areas that require partnership and leadership:

Combatting corruption

Strengthening local government

Managing urbanisation and transforming apartheid spatial patterns

Combatting corruption

High corruption levels frustrate society’s ability to operate fairly and efficiently, and the state’s ability to deliver on its development mandate.

Corruption often involves both public- and private-sector participants. The perception of high levels of malfeasance at senior levels of government makes the fight against corruption that much harder.

The National Development Plan argues that to tackle corruption, there must be political will and support for anti-corruption agencies. It emphasizes that political will refers to not only public statements of support, but a commitment to providing sufficient resources and taking action against corrupt officials. The NDP also urges Political parties to maintain ethical conduct among their members and for political leaders to realise the effect of their behavior on the integrity of the political office they hold.

In addition to political will, corruption has to be fought on three fronts: deterrence, prevention and education. Deterrence helps people understand that they are likely to get caught and punished. Prevention is about systems that make it hard to engage in corrupt acts. The social dimensions of corruption need to be tackled by focusing on values, through education.

The private sector plays a role on the supply side of corruption, for example through paying bribes for government contracts. There are incidences of corruption within the private sector itself such as price-fixing and collusion between businesses, as well as charging inflated rates for government contracts.

When exposed, corruption is often investigated quietly and kept out of the public domain. Investigations often lead to dismissal but not often enough in criminal prosecution. Both government as well as the private sector must use the criminal justice system, not merely administrative sanctions, to deal with corrupt activity.

In this regard, as part of combatting corruption in local government CoGTA has taken the initiative to request 119 forensic reports conducted in municipalities. 109 of these reports have been analysed. We are collaborating with law enforcement agencies like the Special Investigating Unit (SIU), Asset Forfeiture Unit (AFU), Hawks and the National Prosecuting Authority (NPA) to accelerate investigations and prosecutions.

We have revised the Local Government Anti-Corruption Strategy and also introduced the Integrity Management Framework.

We support the Open Tender system piloted by Gauteng to improve transparency in government procurement processes, amongst others by inviting the public to observe the Bid Adjudication Committee (BAC) process.

The target for the current financial year is that 60% of the total procurement spend should go through the open tender system. This target will increase to 80% in the 2017/18 financial year and to 100% in 2018/19.

We are making progress. Financial accountability continue to improve. According to the Auditor General’s report for 2011/12 only 49% of municipalities has unqualified audits whilst 33% had disclaimers. By 2014/15 this had improved dramatically to 59% of municipalities having unqualified audits and only 11% had disclaimers. But even more encouraging was the fact that out of R347bn spent by local government, R277bn was spent by entities with unqualified audits.

As part of combatting organised crime and acting on the concerns and good work by SACCI such as the Copper Theft Barometer, CoGTA coordinated efforts to strengthen the fight against cable theft. The Criminal Matters Amendment Act was passed last year and provides for tougher bail conditions, jail terms of up to 30 years and fines of up to R1 million on conviction for the new offence of tampering, interference and the destruction of essential infrastructure which may prejudice the livelihood, well-being, daily operations/or economic activity of the public.

Telkom recently revealed that an individual involved in a copper theft syndicate received an effective 25-year jail sentence. Telkom indicated that cable theft had cost it over R200m in losses during its 2015 financial year.

Back to Basics: Strengthening Local Government

On 3 August we held our fourth fully democratic local government elections. These elections were universally accepted as a free and fair expression of the will of the people. Their results were accepted and abided by. This is yet another indication of the strength and resilience of our democracy and our institutions. We commend the IEC, government, political parties and the citizens of South Africa.

Well functioning democratic developmental local government is essential to realise the vision of our Constitution and to implement our NDP.

In September 2014 President Jacob Zuma convened a Presidential Local Government Summit that adopted the Back to Basics (B2B) programme. The programme was spearheaded first by Minister Pravin Gordhan and now Minister Des van Rooyen.

Back to Basics is based on a thorough assessment of all South Africa’s municipalities that concluded that one third of them are doing well and even excellently, one third are getting many of the basics right but face challenges that need arrested and reversed, and one third are dysfunctional in one aspect or another.

Back to Basics focuses on getting the bottom third of dysfunctional municipalities back on track. It is based on five pillars: Putting People First; Delivering Basic Services; Good Governance; Sound Financial Management; and Building Resilient Institutions.

We need your support. The Ministry of Cooperative Governance and Traditional Affairs is spearheading Business Adopt a Municipality (BAaM) partnership projects with the business and State Owned Companies.

These partnerships provide support to municipalities in addressing the challenges they face in complying to their legislative mandate and developmental vision together. We urge SACCI to be involved in these initiatives.

An efficient and effective local government that provides basic services such as uninterrupted electricity and water supplies as well as good roads and efficient planning and licensing functions is vital for ensuring an enabling environment for the business sector can operate and create employment.

Last year we worked with the National Treasury, the World Bank, SA Local Government Association, the SA Cities Network and the Swiss State Secretariat for Economic Affairs in releasing the Sub-National Doing Business in South Africa Report.

The Report highlighted both the progress and shortcomings of doing business in our metros. We are using the report to make it easier to do business in our metros through, amongst others implementation of the Red Tape Reduction programme.

Urbanisation and reversing apartheid spatial patterns

Apartheid left a terrible spatial legacy. It is bad for people, bad for our nation and bad for business. We need you to be part of transforming apartheid spatial patterns.

While about 3.5 million households have benefited from new housing, and services and infrastructure have been provided to many communities, limited progress has been made in reversing entrenched spatial inequities. In some instances, post-1994 policies have reinforced the spatial divides by placing low-income housing on the periphery of cities.

The NDP proposes a national focus on spatial transformation across all geographic scales � urban and rural.

Policies, plans and instruments are needed to reduce travel distances and costs, especially for poor households.

By 2030, a larger proportion of the population should live closer to places of work, and the transport they use to commute should be safe, reliable and energy efficient. This requires:

Strong measures to prevent further development of housing in marginal places

Increased urban densities to support public transport and reduce sprawl

More reliable and affordable public transport and better coordination between various modes of transport

Incentives and programmes to shift jobs and investments towards the dense townships on the urban edge

Focused partnerships with the private sector to bridge the housing gap market.

In April this year Cabinet adopted the Integrated Urban Development Framework (IUDF) to achieve these objectives by guiding the creation efficient urban spaces through inclusion and access, inclusive growth, effective governance and spatial integration. It advocates urban spaces that are compact, connected and coordinated. It recognises the inextricable link between urban and rural development.

Reshaping South Africa’s cities, towns and rural settlements is a complex, long-term project, requiring major reforms and political will. It is, however, a necessary project given the enormous social, environmental and financial costs imposed by existing spatial divides. We need your partnership if we are to succeed.

We also need you to be part of ensuring that we manage urbanisation to the benefit of our country.

Globally cities occupy a mere 2% of total land surface, yet they account for 54% of the world population, 70% of GDP, 60% of global energy consumption, 70% of greenhouse gas emissions and 70% of global waste. The UN Habitat III Conference taking place in Quito, Ecuador at the moment is expected to adopt a New Urban Agenda.

The African Economic Outlook for 2016 produced by the African Development Bank, the OECD Development Centre and the United Nations Development Programme highlights the importance of urbanisation and spatial transformation.

The African continent is urbanising fast. By the mid-2030s, the majority of Africans will live in urban areas. Africa’s urbanisation can allow for structural transformation, if accompanied by productive employment and sufficient public goods. However, diverse urbanisation patterns across African countries show that unplanned urbanisation can hinder their structural transformation. In many African countries, a large portion of the urban labour force remains trapped in low-productivity informal services activities and access to public goods is unequal. The costs of environmental degradation are large and increasing, adding to the economic and social challenges of urbanisation.

We call upon SACCI to partner with government and to play a leading role in ensuring that we manage urbanisation and transform apartheid spatial patterns.

I thank you.

Source: Government of South Africa