Address by the Chairman of Business South Africa Mr Attie Du Plessis at the Nedlac Annual Summit

Sandton, 9 November 2002

The honourable Deputy President,
Ministers,
Colleagues from government, labour and the community constituency,
Distinguished guests.

2002 really has been a year of summits, but I think that "summit" is a particularly good title for this annual gathering.  It suggests that we have reached the top of a high peak and from this vantage point can survey all that is around us.  What a journey it has been so far!  I think that sometimes we fail to recognise the magnitude of what South Africa has achieved in less than a decade.  

The recent Medium Term Budgetary Policy Statement has given us a good overview of where we have improved our economic performance - together with some positive forecasts for the near future.  But, if there are many peaks that South Africa has already scaled, we have not yet reached the heights to which we aspire.

Broadly stated, while economic growth has steadily increased since 1994, South Africa does not yet perform well in comparison to similar economies - the average of 2,7% for the period 1994 to 2001 indicates that we still have some way to go before we reach the summit.  We have the lowest aggregate capital formation and savings ratios (to GDP), the highest unemployment rate and receive the smallest inflow of foreign direct investment of a number of comparable countries.  Our growth in per capita GDP is also the lowest.  All this translates into one thing:  many - far too many - South Africans are trapped in a vicious cycle of unemployment, poverty and hardship from which they can only escape with great difficulty.  

How then do we embark on the journey to this higher summit that we can see before us?

We all know that there is a gap between fundamentals and perceptions that makes itself felt in all sorts of ways, for example, in the exchange rate.  Perceptions, particularly negative perceptions, are hard to dispel.  The only way to do this is for government, clearly and unequivocally and with the enthusiastic and public support of its social partners, to ensure that every policy and law in South Africa has economic growth as its primary goal and central tenet.  Let us make no mistake.  Economic growth is a precondition for development.  It is a precondition for transformation, it is a precondition for black economic empowerment and it is an essential, albeit not sufficient, precondition for job creation.  Economic growth should be our overriding national priority and any existing or proposed legislation or policy that endangers this objective must be resisted - no matter how worthy some of its other aims might be.  

South Africa's low domestic savings performance has led to an increasing dependence on foreign capital.  However, there are only a few examples of a developing country being placed on a growth path by foreign investment alone.  It is only when significant growth has been achieved through local investment that foreigners join in, helping to sustain and enhance the growth path.  That total domestic investment grew by an average of 4,2% in the period 1994 to 2001 was, by and large, the result of vigorous private sector fixed investment, as total public sector fixed investment hardly grew at all.  Private business enterprise increased its real fixed capital formation by 5,5% in 2001 and by 8% in the first six months of 2002.  The increase has now been continuing for eleven consecutive quarters and has been well dispersed throughout the major productive sectors of the economy, and there cannot be any justification for talk of an "investment strike" by business.  There are also encouraging signs that the public sector is now following suit.  Domestic investment is taking place, and at significant levels, though, naturally, we can always do better.  Despite this improved news, the overall ratio of gross fixed investment is still only projected to be about 15% of GDP.  It is widely accepted that we need 25% of GDP to be invested for higher levels of growth and employment.  How then do we encourage foreign investors to join the party on a higher scale?

The key factor, I believe is certainty.

All investors, particularly foreign investors, need an institutional governance, economic and investment environment that provides certainty and predictability.  Vacillations and public arguments amongst the social partners on matters of policy undermine certainty and drive away investors.  This is not the time for arguments on ideological principles.  It is the time for us to work together to address the factors that stimulate investment, create certainty and increase the cost and risk adjusted rates of return.

Ladies and Gentlemen, what I am talking about is partnerships.  Now, more than ever, we require solid partnerships to take us forward.  We need these partnerships as a country, we need them in the SADC region and we need them as an African continent to make a success of NEPAD.

The immediate and critical challenge that faces us is to arrive at a common strategic vision that is focused on the best interests of the nation.  We simply will never go forward without a positive spirit of consensus seeking which recognises that short-term vested interests cannot be permitted to predominate over the greater and sustained good of the country as a whole.  

An important part of this strategic vision must be a mutually agreed process to facilitate successful and sustainable black economic empowerment.  Let us be absolutely clear on this.  BSA unequivocally supports the principle of the development by the various sectors of compacts on black economic empowerment which take account of their own unique circumstances.  These compacts may, for example, take the form of sectoral charters.  BSA has been encouraged by the progress already made by its members and will actively do all in its power to maintain the momentum.  The transformation of our economy is just as great a priority for business as it is for government.  Even more than this, it is an investment in the future of our country and all stakeholders should view it as such.

A little earlier I referred to the need for sound partnerships.  This concept is entrenched in, and given visible form by, NEDLAC.  Business today reaffirms its commitment to NEDLAC in the belief that it is only co-operation and the open exchange of ideas by the NEDLAC partners that will allow us to develop strategies to achieve, and then sustain, higher rates of economic growth.  NEDLAC provides a forum for real engagement on issues that affect all South Africans.  Its processes have led to a better understanding between the social partners, and to the sharing of important insights and knowledge.  We must ensure that we build on this foundation as we move into the future.  As the business community we are certain, too, that the unification of the BBC and BSA will ensure that we participate more vigorously and effectively in NEDLAC.

The challenges that face us are awesome, but they are not insurmountable.  We must remember that there is no mountain on earth whose peak has not been scaled.  Given sufficient will and resolve we can achieve anything we set our minds to and we can reach the very highest of summits.  Business is wholeheartedly committed to this journey.  In fact, we are already packed and ready to set off.  

I thank you.