Empowerment good for the economy and the nation

A few weeks ago, SASOL, one of our leading companies, applied for a secondary listing on the New York Stock Exchange (NYSE). To meet its obligations in this regard, which include the filing of a document numbered 20-F, it had to report the risks it faces as a corporate entity.

Accordingly, it reported that, among others, "there could be risks to shareholders that value may not be achieved in the case of black economic empowerment equity transactions". It also listed our mining legislation as yet another risk factor.

To substantiate its view, it said that it could not guarantee that black empowerment transactions would take place at fair market prices. In addition, it said that it could not promise that what it considered "forced participation" in black economic empowerment in our country, would not have a material effect on the company as a whole.

In brief, it presented black economic empowerment as a potential negative factor in terms of its performance as a publicly listed company. The obvious effect of this is that any potential investor through the NYSE would have to conclude that it may very well be unwise to buy SASOL shares, or otherwise invest in the South African economy, given the uncertainties that SASOL communicated in its submission to the NYSE.

Later, the chief economist of one of our principal companies, Barloworld, spoke out in support of SASOL. One of our national newspapers quoted him as saying "empowerment has a negative impact on productivity, on the cost of business and, therefore on the competitiveness and profitably of companies."

The message communicated by SASOL and the chief economist of Barloworld is simple and straightforward. It is that black economic empowerment is not good for business. Accordingly, the message these sought to communicate to all business people, both domestic and foreign, is that they should view our efforts to address the legacy of racism in our economy as something inimical to good business.

A good number of people spoke out against the positions taken by SASOL. One of these, Brian Molefe, Chief Executive of the Public Investment Commissioners, SASOL's largest minority shareholder, said: "We see empowerment as a strategy that will bring commercial benefits to South African companies, not something that will be a reason not to invest." The CEO of Barloworld, Tony Phillips, also distanced the company he heads from the views of its chief economist.

In response to the remarks made against its submission to the NYSE, SASOL said it embraces the challenge of transformation. It also said that the risks it listed "do not imply the company does not intend succeeding in addressing them".

As our readers are aware, the Liquid Fuels and Petroleum Industry Empowerment Summit was held on 2 November 2000, following an inclusive process of consultation, which started in 1999. Attended by all the major players in this sector of the economy, including SASOL and the Department of Minerals and Energy, the high point of the Summit was the signing by both the public and private sectors of 'The Charter for the South African Petroleum and Liquid Fuels Industry on Empowering Historically Disadvantaged South Africans (HDSAs) in the Petroleum and Liquid Fuels Industry'.

Whereas SASOL referred to "black economic empowerment equity transactions", the Liquid Fuels Charter gave a broader and more correct definition and scope of what our country means when it talks about black economic empowerment. That scope includes employment equity, skills and capacity building, ownership and equity participation, financing, procurement policies and the appropriate legislative and regulatory environment to facilitate the growth of the sector.

This broad scope, decided by all major players in the liquid fuels sector, served as a precursor to the more global and agreed national position on black economic empowerment as reflected in the broad-based black economic empowerment legislation that has now been approved by our parliament. However, seemingly, SASOL referred only to the equity ownership element of the black economic programme contained in this legislation and the Liquid Fuels Charter.

SASOL and other companies active in the liquid fuels sector belong to an organisation that represents their collective interests. This is SAPIA, the South African Petroleum Industry Association. Naturally, SAPIA was one of the central negotiators of the 2000 Liquid Fuels Charter, a task which the Association approached in a positive manner.

The SAPIA Chairperson's Report for 2001, presented by the then Chairperson, Almorie Maule, contains the following comments:

"Since our last annual report the liquid fuels industry has progressed through an exciting, challenging and eventful period. I believe that in the years ahead we will look back at the year 2000 as a watershed year. This is because it marks a time when we saw a major new public-private partnership forged; the first such significant partnership in democratic South Africa. The member companies of Sapia are pleased and privileged to be part of a new way of delivering transformation and growth in an industry which not only provides fundamental inputs into the South African economy, but also one which makes a major contribution to development, growth, value creation and employment.

"The members of Sapia would like to express their appreciation to the Minister of Minerals and Energy and her team for the constructive way in which the industry, individual member companies, and other stakeholders have been engaged. It has enabled progress to be made in areas of great complexity and sensitivity.The Charter was a demonstrable example of constructive consultation and cooperation between Government and the members of the industry."

The 2002 Sapia Annual Report contains the following comments by the Director of Sapia, Colin McClelland:

"Throughout the first eight years of its existence, Sapia has worked consistently with government and other stakeholders to find 'win-win' solutions to the many problems facing us all. The petroleum industry has been able to do this because of the willingness of the Government and other stakeholders to engage in debate and to work towards constructive solutions. Consequently, we believe that as an industry, collectively and as individual member companies, we have been able to pioneer paths of transformation within the private sector.

"We believe our preparedness to accommodate change and lead the search for novel solutions has already been demonstrated. One example is black empowerment. We were the first to sit down with government and seriously address this issue. Together with government and other stakeholders, we were able to produce the concept of an Empowerment Charter. It gives us a sense of achievement to see the concept now being adopted in other industries. We shall continue on this path in the belief that it is a fundamental goal, and that the more we toil at empowerment, the less the nation will bleed in turmoil."

The same 2002 Sapia Annual Report contains the following observations:

"Upliftment is a top priority, and is being tackled by all Sapia members on many fronts. One of the most significant efforts is Black Economic Empowerment (BEE) through black ownership and partnership in the oil industry. Progress in this field is spectacular and radical in terms of world commerce, but being carefully handled by the industry so that the value of assets being shared is not devalued. This effort in BEE is being achieved through a government-industry pact, the BEE Charter, which is embraced by all members of Sapia.

"Oil companies who are members of Sapia spend tens of millions of rands every year on nation building. One member alone budgeted in 2002 well over R100 million for social welfare, health, education and other projects which will improve the future of millions of people in southern Africa."

I have quoted somewhat extensively directly from statements made by mandated representatives of the liquid fuels industry to indicate what all of us knew to be the positions of the companies in this sector. As these have correctly indicated, this sector played a vanguard, pioneering role with regard to the challenge of black economic empowerment. We had understood that these companies did this as responsible and far-sighted corporate citizens who appreciated the reality that, as Colin McClelland put it, "the more we toil at empowerment, the less the nation will bleed in turmoil".

For more than a decade now, the majority of our people have toiled to ensure that our nation does not bleed in turmoil. We worked hard, even as thousands of our people continued to be murdered by those opposed to change, to arrive at a negotiated political settlement that would favour all our people, to end the bleeding. Necessarily, this would have to involve the political empowerment of those who had been dis-empowered politically, without dis-empowering those who belonged to the oppressor minority.

Even as we toiled after liberation to restructure the public finances, we sought to ensure that we create the conditions for economic growth and development that would benefit all our people, as well as improve the lives of especially the black poor who had been deliberately impoverished to guarantee the enrichment of the white minority.

Accordingly, even as we corrected the highly dangerous macro-economic imbalances we inherited from the apartheid years, we made certain that we did not reduce social spending. This was to ensure that the government had the possibility to direct public resources to the poor of our country, to alleviate their poverty. At the same time, the white section of our population knows very well that even as we toiled to improve the quality of life of the black majority, we made certain that, as a minority, it did not become impoverished.

We have also recognised the fact that the interventions we have made and will make to provide social grants to the black poor will not solve the problem of poverty and underdevelopment. Mere common sense says that fundamentally to address this challenge, we have to focus on a number of objectives.

We have to ensure that our economy grows at a higher sustained rate. We have to expand the domestic market by reducing the stark inequalities that limit the size of the domestic market. We have to reduce the numbers of those who are too poor to have an impact on both the supply and demand sides of our economy. We must radically increase the numbers of skilled people that are needed by our modern economy and society. We must ensure that our economy is able to compete successfully within the context of the global economy.

The Liquid Fuels Charter seeks to achieve these objectives within its sector. That is why it addresses such issues as capacity and skills development, employment equity, the use of procurement policies to create small and medium business, the provision of capital to help finance new entrepreneurs, equity participation to deracialise ownership of productive property, and the creation of a legislative and regulatory framework that would enable the liquid fuels sector to meet the agreed macro-economic and micro-economic goals.

It is difficult to understand why any thinking person would categorise the achievement of these goals as constituting a business risk. This is particularly so given the correct point made by Colin McClelland, that the process of advancing black equity participation would be handled, as agreed, in a manner that ensures that "the value of assets being shared is not devalued".

The Liquid Fuels Charter, the other Charters that have followed and the black empowerment legislation, pursue the objectives we have explained. These are also intended to help achieve the larger goal, which the majority of our people have pursued together for more than a decade - to create a new and non-racial South Africa.

In large measure, our future as a stable, democratic, peaceful and prosperous country, which includes a thriving private sector, depends on the successful implementation of these Charters and legislation. This is what Colin McClelland meant when he said, "the more we toil at empowerment, the less the nation will bleed in turmoil".

SASOL and others that think like this major corporate citizen, which our government has nevertheless not hesitated to support, will have to outgrow an outdated mindset that has become entrenched as their own particular and peculiar corporate culture. In the end, they will have to understand that black economic empowerment is in their interest, in like manner as the white population in our country, in general, is beginning to understand that democracy and non-racism guarantee them life, liberty and happiness.

SASOL would do well to take to heart the statement made by Colin McClelland, Director of its own industry Association, Sapia, that "it gives (the oil companies) a sense of achievement to see the concept (of Empowerment Charters they developed together with government and other stakeholders) now being adopted in other industries".

Surely, SASOL should also have known that to travel to New York to bad-mouth our national effort to build a non-racial society would not necessarily improve its image among the US corporate world, which has a much longer history of addressing the serious human challenge of building a non-racial society, that includes black economic empowerment. SASOL and all its kindred spirits must, at last, help to translate into reality the vision that our nation will never again bleed in turmoil, just because some could not free themselves from the chains of bigotry.

Ten Year Review VII

The challenges of the decade ahead

If South Africa is to reach a higher trajectory of development, it needs to create employment and reduce the number of citizens dependent on social welfare.

This is the overriding challenge of the next decade identified in government 's discussion document 'Towards a Ten Year Review'. In this, the last in a series of articles on the findings of the review, we highlight some of the key challenges identified in each area of governance based on the conclusions of this research and evaluation.

While the aim of the ten year review process is to critically evaluate progress over the first ten years of democracy, it is also intended to lay a basis for public debate about how to approach the challenges that remain and thereby help chart the way forward into the second decade of democracy.

Each of the key challenges has been highlighted because, if urgently implemented, "it would help unlock faster movement in all other areas - it would be a catalyst towards ascending to a higher trajectory of development".

In the area of governance and administration, the document argues there needs to be a distinct and clear shift towards practical implementation of the policy that currently exists. This should include the adoption of project management practices and the training and deployment of Community Development Workers. These would be multi-skilled workers based in communities to help people access government services and programmes.

Another task would be to build the technical capacity of provincial and local government to improve service delivery and financial management. This would need to take place alongside work to develop and maintain partnerships with civil society to implement practical programmes to improve people's lives. In many areas, like the fight against HIV/Aids and the extension of social grants, there is already an active involvement of community-based, faith-based and other non-governmental organisations. The challenge is to deepen this involvement and extend it to other areas of government delivery.

Social challenges for the immediate period ahead include more efficient delivery of social grants to rural beneficiaries, the reduction of corruption and the incorporation of these grants into a system of comprehensive social security.

Direct interventions by government to tackle unemployment and poverty would include an expanded public works programme involving labour intensive construction and social services. This will provide larger groups of people with income and skills while ensuring the delivery of much-needed social infrastructure and services.

This programme would not however be able to adequately meet the country's employment and skills needs. It would merely be an immediate intervention that needs to complement and be reinforced by medium and long term strategies to develop the economy and the country's skills base.

This would include matching the skills developed in the country to the requirements of the economy. Focus should also be on "restructuring higher education, improving the uptake and graduation from ABET [Adult Basic Education and Training] programmes, and reducing disparities in access to education by the poor".

It would also be important to address HIV/Aids and other emerging diseases by reducing the incidence of infection among high risk groups, treating those infected and increasing access to home-based care.

While dealing with the backlogs inherited from apartheid, government also needs to respond to changing trends over the last ten years, including the decrease in the average household size - and therefore the increased number of households - between 1996 and 2001. Government will have to meet the growing demand for housing and services generated by this trend.

Among the immediate economic challenge is to implement the recommendation of the Growth and Development Summit (GDS), held earlier this year, which requires five percent of capital from relevant funds to be invested in productive activity in key sectors of the economy. At the same time, there needs to be an improvement in the levels of public sector investment in the economy.

Following the examples of the motor industry and tourism sector, government will support focused strategies in industries that have significant potential for growth and job creation. It will support the speeding up of industry restructuring to ensure global competitiveness, low commodity prices and better access to key markets.

It should also "continue with prudent macro-economic policies leading to a more stable currency and lower real interest rates".

In the area of justice and crime prevention, immediate challenges include improving the skills and numbers of the South African Police Service (SAPS) and building an efficient and integrated criminal justice system. There is a need to improve the intelligence capabilities of the SAPS, increase visible policing and build social partnerships with communities, business and organs of civil society.

Government should accelerate the implementation of social programmes that will help reduce the incidence of crime, including urban and rural renewal and moral regeneration. There would need to be improved efficiency in border control.

A higher trajectory of development in South Africa requires substantial progress in African development and movement towards a more equitable world order. Immediate tasks include uniting the world around the "common human values" which underpin the New Partnership for Africa's Development (NEPAD), and taking practical steps to get projects going in countries that provide a stimulus for wider progress.

South Africa needs to play an active and leading role in the implementation of the NEPAD and the African Peer Review Mechanism. It needs to work with other countries to ensure African Union (AU) structures and programmes are "implemented, operationalised and consolidated". Building on work already done, South Africa should support the envisaged AU Peace and Security Council in its efforts to contribute to conflict prevention, conflict resolution and peacekeeping in Africa.

The country needs to redouble its efforts to market itself and the continent internationally, and pursue "economic diplomacy" to expand the country's economic links to Africa and other parts of the world and to encourage far higher levels of foreign direct investment.

The government's review concludes that the positive achievements of the first decade of democracy far outweigh the negative aspects. However, if this balance is to be retained, South Africa needs to work together now to lift the country onto a higher trajectory of development.

More Information:

• Towards a Ten Year Review, October 2003

Gender violence and AIDS

Partnerships key to reducing spread of HIV

As South Africa mobilises to mark 16 Days of Activism for No Violence Against Women and Children, it is important to raise awareness about the link between such violence and HIV and AIDS.

Violence is an unfortunately a reality of any society, and South African society is not exempt. Recent data has shown some progress in addressing crime and violence in the country, but much more work needs to be done.

As a society we also need to come to grips with the effects of emotional abuse, which can be even worse than physical abuse. The breaking down of a person's self-image through constant verbal abuse may not leave visible scars, but leave lasting scars on a person's soul.

We need therefore to address both physical and emotional abuse. This is work that requires a broad partnership across government, civil society and the private sector, and in many ways need to reflect some of the broad partnerships that have been established in addressing HIV and AIDS.

The Department of Health has a particular role to play in addressing issues of gender and violence. The Department has a Gender Directorate that addresses issues of gender specifically, as well as programmes within the Maternal, Child and Women's Health Cluster.

In 2002, the Department of Health and the Royal Danish Government entered into discussions to start a programme that would contribute towards the reduction of the incidence of HIV and AIDS by raising awareness on the linkages between violence against women and children and HIV and AIDS. The Department of Health and the Danish Government then brought in the United Nations Children's Fund (UNICEF).

This programme is aimed at addressing key social issues and to demonstrate the value of and need for partnerships. A key focus of the programme is on creating capacity to respond to the needs of adult and adolescent females, and the girl child, who are victims of domestic and sexual violence, and increasing awareness and community responses to those affected.

The programme is based in KwaZulu Natal, Eastern Cape, Limpopo and the Free State and has four key objectives:

• Create public awareness on the linkage between violence against women and HIV and AIDS through informed research and analysis.
• Support programmes aimed at service providers within statutory, non-governmental and community-based organisations to understand the link, define appropriate service responses and develop capacity for referral, care and support.
• Social mobilisation to create an enabling environment for safe behaviour choices and human development.
• Support policy review and development.

Some of the main activities of this project include support for the 'Stop Women Abuse' help line, research to inform policy and action, policy and law reform, advocacy, and support for the Girls Education Movement.

The design of this programme is based on the reality that in South Africa, the prevalence rate of HIV in girls and young women aged 15 to 24 is almost twice that of boys and young men of the same age. This is largely due to biological and social vulnerability of women. This vulnerability is heightened by other factors that are still prevalent, such as economic dependence on men; lack of access to education; unemployment and poverty; sexual exploitation, coercion and rape; as well as engagement in commercial sex work.

One of the stigmatising effects of this in the area of HIV and AIDS is that women are perceived as the cause and spreaders of HIV and therefore are reluctant to establish or disclose their HIV status. The Prevention of Mother-to-Child Transmission of HIV (PMTCT) programme is a very real example of this fear. Despite the fact that the PMTCT intervention is now available in more than 60 percent of facilities that have antenatal services, uptake of the programme remains at about 55 percent.

This programme thus has an important role to play in addressing gender socialisation, stigma, discrimination and violence. Since the programme commenced in June 2002, significant progress has been made. The programme has drawn in additional partners, notably the South African National AIDS Council, the National Network on Violence Against Women, Women in Partnership Against AIDS, and the Commission on Gender Equality.

Several research studies have been commissioned and drafts of three key documents are being processed for publication. The first document is a bibliography on gender-based violence and HIV and AIDS in South Africa which reviews research that has been done in this field over the last few years.

The second draft report reviews issues of rape and post-exposure prophylaxis in South Africa. This provides a good review of the post-exposure prophylaxis programme for non-occupation transmission policy that was implemented in May 2002.

The third important document looks at organisational responses to gender-based violence and HIV and AIDS in South Africa.

These documents are expected to be launched on International Women's Day in March 2004. Other documents that will be finalised and launched are:

• The Handbook on Child Sexual Abuse for Parents and Care-givers;
• The Report on Alternative Justice mechanisms to address rape perpetrators;
• A strategy and plan of action to respond to rape in the context of policy and interdepartmental task teams.

The research that has been conducted will feed into strategies and interventions at national, provincial and local level. Some of the main strategies include an interdepartmental approach to developing an anti-rape strategy, including increasing the rate of reporting, improving the effectiveness of the response of the criminal justice system to rape, and improving the effectiveness of support programmes.

In addition, through this partnership, training on forensic evidence has been provided to justice legislators, prosecutors, police officers, nurses, social workers and teachers.

This broad government, donor and civil society partnership is making a positive contribution in the fight against the spread of HIV and addressing violence against women and children. We are confident that even more positive results are to be reported this time next year.

** Manto Tshabalala-Msimang is Minister of Health and an ANC National Executive Committee member.

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