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Reports on economy tell us we
are on course
This week
Statistics South Africa (SSA) issued figures reporting on our Gross Domestic
Product. The South African Reserve Bank (SARB) published its 2002 "Annual
Economic Report" (AER). Quite correctly, both these reports have
attracted the appropriate attention of the mass media.
The economy is one of the areas on which the ANC, our
government and the country as a whole focus. The reason for this is obvious.
The economy is about the standard of living and the quality of life of
all our people.
Economic questions are also at the heart of the discussions
at the current Johannesburg World Summit for Sustainable Development (WSSD).
The achievement of the goals of sustainable development requires the mobilisation
of adequate material resources.
For many decades, economic issues have featured prominently
among the objectives of our national liberation movement. In many respects,
our movement was ahead of other liberation movements in Africa in this
regard.
This emanated from the fact that the process of colonisation
in our country made a decisive economic impact on the colonised, certainly
more than in the majority of African countries. This made it necessary
that our movement should formulate both the political and the economic
goals of our struggle.
We are all familiar with the brutal economic history
of colonialism and apartheid in our country. This includes the massive
land dispossession, which, in 1994, resulted in 87 per cent of the land
being owned by the white minority. A less severe, but serious legacy of
armed colonial occupation, is at the centre of the international controversy
about Zimbabwe today.
In our country, to ensure that the majority remained
landless and propertyless, and therefore obliged to offer itself as labour
for hire, a body of prohibitions evolved which denied the Africans the
possibility to own and utilise productive property as entrepreneurs.
The white owners of productive property used their dominant
political position to reduce their production costs as much as possible,
to increase their profits. A critical element of this was the depression
of the cost of labour by implementing a cheap labour policy.
To maintain and protect the system of white minority
rule, it was necessary that the entire white population should be given
a stake in the perpetuation of white minority domination. This included
the white workers. Accordingly, the colonial and apartheid system divided
the workers according to race and colour. Essentially, the skilled and
higher paid jobs were reserved for the white workers. The black workers
were restricted to the category of unskilled workers.
To maintain this system, there was a racist state and
racist governments, which used brutal state force and terrorism against
all attempts to end this iniquity.
This is the legacy that continues to explain and inform
the most important socio-economic features of our country. Its eradication
is the most pressing challenge we face to achieve the successful reconstruction
and development of our country.
Many of our visitors, delegates to the WSSD, will see,
and might be surprised, at the contrast between Sandton and Alexandra
Township, and between Soweto and the Wanderers Stadium, which hosts the
Ubuntu Village, eight years after our liberation.
Hopefully, by the time the Summit ends, they will have
gained a better understanding of the challenges this country faces in
its own necessarily protracted struggle to achieve the goals of sustainable
development. Their experience should also give them a better understanding
of what we mean when we speak of North-South global apartheid.
The history we have recalled is directly relevant to
the issue of the nature, structure and performance of our economy today.
It has a direct impact on the economic policies of both the ANC and our
government.
The world of the economy is subject to different views
and interpretations, based on different political and ideological schools
of thought, and partisan interest. This contest is plainly visible both
within the venues where the WSSD discussions and negotiations are taking
place, and in the streets of the Metropolitan Municipality of Johannesburg.
So great is the divide that even as many are battling
in the WSSD negotiations for a meaningful outcome that will benefit the
billions of poor people in our country, Africa and the rest of the world,
there are others, who claim to represent the same masses, who say they
have taken it upon themselves to act in a manner that will ensure the
collapse of the Summit. These do not want any discussion and negotiations.
For this reason, they have decided to oppose and defeat
the UN, all the governments of the world, the inter-governmental organisations,
the major organisations of civil society participating in the Summit and
the world of business, all of which are engaged in processes not different
from those that take place regularly in our statutory four-chamber NEDLAC,
which includes government, business, labour and non-governmental organisations.
Those who hold these views, which they regularly express
freely in our country, without any hindrance, also have their own economic
views. As with all other ideas and views about the central question of
the future of human society, we have to consider and respond to them rationally,
whatever is happening in the streets of Johannesburg, for the benefit
of the global mass media.
At the 1999 OAU Summit Meeting of Heads of State and
Government in Algiers, having been asked to address the topic, "The
Challenge of Globalisation: The Establishment of the African Economic
Community", among other things, we said: "As politicians, (we)
must seek to gain a profound understanding of economics, so that we intervene
in an informed manner and not as King Canute, striving to wish the waves
away. "Here is what Fidel Castro had to say on this matter: 'Politicians
must be politicians with a minimum of economic knowledge and if possible
with a maximum of knowledge in that field; that today is really the basis
on which the fate of humanity depends, the basis on which our struggles
are being carried out. And the politicians who do not understand, or do
not want to understand, or who do not strive to know economics, are not
worthy of exercising the duty they exercise as such politicians.' "But
clearly, we must also be politicians who pursue the objectives to which
the World Development Report refers - ethics, equity, inclusion, human
security, sustainability and development. Obviously this relates to issues
concerning our collective security." For us to exercise our duty
as politicians, we too must have a minimum of economic knowledge, and
if possible, a maximum of knowledge in this field, the basis on which
our struggles are being carried out.
Our own leaders, activists and members have a responsibility
to acquire this economic knowledge. They will learn many things from a
study of the documents to which we referred at the beginning of this Letter.
One of these is the positive news that, according to
SSA, during the second quarter of this year, our economy grew at an annualised
rate of 3,1 per cent, compared to 2,2 per cent during the first quarter.
This confirms the resilience of our economy, which achieved this result
despite the global economic slowdown as well as serious problems in some
"emerging markets".
Another thing they will learn is about the contribution
of manufacturing to this outcome. Our government has worked to ensure
the restructuring and modernisation of our economy, focusing on the strengthening
of manufacturing and ensuring its international competitiveness, after
decades of protection behind high apartheid tariff walls.
An important part of our country's achievement in this
regard has been the significant growth in labour productivity. Combined
with the decline in the external value of the Rand, this has resulted
in an increase in our market share in global trade with regard to value-added
products.
Of importance also is the fact that all the main sectors
of the economy, including the government, contributed to the higher economic
growth rate reported by SSA. This demonstrates the progress we have made
to build a balanced economy that is no longer dependent on primary production,
encompassing mining and agriculture, which is characteristic of underdeveloped
colonial and neo-colonial economies. Nevertheless, we must also take into
account the lower global commodity prices and the inflationary impact
of food and crude oil increases.
It is also important to focus on the positive impact
of government economic activity. The AER points to the long expected elimination
of government dissaving, higher government investment expenditure, improved
expenditure on service delivery and social welfare, and increased earnings
of public sector workers. This has been accompanied by tax cuts, which
increased the real earnings of our people.
All this has become possible because of fiscal discipline,
responsible SARB monetary policy and the transformation of our system
of governance, for which we called in our policy documents preceding the
democratic change, "Ready to Govern" and the "Reconstruction
and Development Programme".
As SARS and SARB issued their reports, inspectors of
the Department of Labour visited and closed down a shoe factory in Bronkhorstspruit.
They took this action because, in their view, the owners of this establishment
were violating various anti-apartheid laws affecting labour relations
and employment equity, among others. The inspectors also indicated that
the Department of Labour had not been informed of the workers employed
at this factory.
The significance of this is that, apart from its importance
to the workers concerned, it drew attention, once again, to the incomplete
information we have about our economy. This includes such issues as the
numbers of employed people and the real size and rate of growth of our
economy, used by our political opponents to communicate negative messages
about the impact of democracy.
As we improved the efficiency of the SA Revenue Service,
we have experienced significant revenue collection overruns. One of the
reasons for this is that the official statistics consistently underestimate
the size and performance of our economy. Work is continuing to ensure
that we have a more accurate picture of our economy and other social matters,
among other things to overcome the apartheid legacy, which focused its
statistical services on a minority of the population and allowed the growth
of a "grey (unregulated and unrecorded) economy".
A close study of the AER will show a number of shortcomings
with regard to the scope of the Report. These include the disjuncture
between available jobs and continuing unemployment, significant increases
in the formation of companies and reported reductions in numbers of people
employed, and the growth in the numbers of "contract workers",
representing the worrying global process of the "casualisation"
of labour.
The SSA and SARB reports communicate the message that
we are on course. The ANC and government economic policies are essentially
correct, whatever our critics say to advance their political and ideological
agendas. The Reports also indicate the problems we have to overcome.
One of these is the critical challenge of unemployment
and the need radically to increase our skills levels. Another is the need
for us to increase our savings and investment levels, to increase our
growth rate far beyond the reported 3 per cent. This draws attention to
the importance of foreign direct investment to meet the domestic shortfalls.
Yet another challenge is that we should improve our
understanding of our economy, so that we are better able to estimate the
effectiveness or otherwise of our policies. The Reports also communicate
the need for us properly to understand the impact of globalisation on
our economy and society, and to respond to this correctly and on time.
Their publication and the necessary public attention
they have attracted confirm what Fidel Castro said, that 'politicians
must be politicians with a minimum of economic knowledge and if possible
with a maximum of knowledge in that field'.
Thus armed, we will be better able to discharge our
responsibility to address the central issues of our continuing struggle,
identified in the 1999 United Nations Development Programme "World
Development Report" as ethics, equity, inclusion, human security,
sustainability and development. These are the same issues on which the
WSSD is focused, which have constituted the daily agenda of the ANC and
our government since 1994. Properly to address them, requires that we
should understand economics.
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