ANC Today --------------------------------------------------------------------- Volume 3, No. 33, 22-28 August 2003 --------------------------------------------------------------------- THIS WEEK: * Letter from the President: Bold steps to end the 'two nations' divide * UDF Series III: Planting the seeds of people's power * Women in business: Finding a way through the labyrinth --------------------------------------------------------------------- LETTER FROM THE PRESIDENT Bold steps to end the 'two nations' divide On Thursday last week, the day before we went to press, the Reserve Bank announced a 1 percent reduction of the interest rate. Naturally and correctly, everybody in the country has received this very well. As many commentators have observed, the lower interest rates are good both for the investor and the consumer. They enable investors to borrow money at a lower cost, thus encouraging further investment in the economy. And as we all know, the higher rates of economic growth and development that we all seek cannot take place without such investment. The lower interest rate also reduces the debt-servicing burden on consumers. This includes all those people who are servicing house mortgages and other consumer debts, such as those that derive from the purchase of household goods, motorcars, clothing and so on. In this regard, quite correctly, various commentators have advised consumers not to use the more favourable situation created by the interest rate reduction further to increase their indebtedness. Rather, they should use this opportunity to reduce their levels of debt. The lower interest rates also give the possibility to the government itself to borrow money at cheaper rates. This assists in ensuring that the government reduces the proportion of the national budget dedicated to servicing the national debt. This increases its possibility to use the national resources that accrue to it to address the many development challenges we face. In the aftermath of the interest rate cut, it was also reported that major retail chains are expected to show higher annual earnings. In part this is a result of tax cuts that have encouraged consumer spending and, together with the interest rate reductions, boosted credit demand. These and other developments confirm the relative buoyancy of our economy. Even though the economy is growing at rates that are lower than those we need and desire, it is nevertheless growing and developing. It is in a relatively healthy state, given the global economic situation. At the end of the July Cabinet Lekgotla, we reported that a number of the economic challenges we now face arise from the fact of the further growth and expansion of the economy. In particular, we drew attention to serious constraints that have arisen in the transport sector. These affect road, rail and air transport, as well as our harbours. The problem we face in this regard is that the volumes of freight have grown to such an extent that our transport system as a whole is finding it difficult to cope with these larger volumes, including imports and exports. Accordingly, the government and the state corporations have taken the necessary decisions to act as speedily as possible to address the constraints that have emerged. This must also target the movement of people, including tourists who want to visit our country. For some time already, it has been clear that there are not enough airline seats to meet the tourist demand especially from Europe. Work is continuing in other areas to ensure the further growth and modernisation of our economy. This includes the important areas of human resource development, innovation in science, technology and engineering, and trade promotion. The Growth and Development Summit earlier this year emphasised the commitment shared by all our people, government, labour, business and civil society to work together to bring about the higher rates of growth and development that our country needs. The Summit demonstrated the determination of many of our people to join in the people's contract to push back the frontiers of poverty and underdevelopment. All the matters we are discussing have the most direct bearing on what has been described as our "first world economy". This is the modern industrial, mining, agricultural, financial, and services sector of our economy that, everyday, become ever more integrated in the global economy. Many of the major interventions made by our government over the years have sought to address this "first world economy", to ensure that it develops in the right direction, at the right pace. It is clear that this sector of our economy has responded and continues to respond very well to all these interventions. This is very important because it is this sector of our economy that produces the wealth we need to address the many challenges we face as a country. Central among these, as we all known, is the urgent challenge of poverty that continues to afflict millions of our people. A stronger "first world economy" also gives us the possibility the better to confront the task of reducing the racial and gender inequalities in standards of living and the quality of life, that continue to characterise our country. After the July Cabinet Lekgotla we also said that the successes we have scored with regard to the "first world economy" also give us the possibility to attend to the problems posed by the "third world economy", which exists side by side with the modern "first world economy". Here I am referring, for instance, to those areas the government identified earlier as the nodes for Urban Renewal and Integrated and Sustainable Rural Development. These and similar areas contain the largest numbers of poor people in our country. But this is not the only issue that characterises and sets them apart. Of central and strategic importance is the fact that they are structurally disconnected from our country's "first world economy". Accordingly, the interventions we make with regard to this latter economy do not necessarily impact on these areas, the "third world economy", in a beneficial manner. This structural disjuncture is manifested in a variety of ways. One of these is that many of the unemployed in these areas have either no skills or very low skills levels. As the economy of our country has developed, it has tended to require people with higher levels of appropriate education and training. This renders many of the unskilled both unemployable and incapable of starting any small business that requires one skill or another. Because of these realities and the fact of poverty, these sections of our population also have no access to the services offered by the modern financial sector that is part of the "first world economy." Accordingly, even where people within the "third world economy" seek micro-credit to finance the development of small business, they do not get such credit. Rather, they fall victim to unscrupulous moneylenders, omashonisa, who lend money, at exorbitant rates, to people who borrow for purposes of consumption. It is sometimes argued that higher rates of economic growth, of 6 percent and above, would, on their own, lead to the reduction of the levels of unemployment in our country. This is part of a proposition about an automatic so-called trickle-down effect that would allegedly impact on the "third world economy" as a result of a stronger "first world economy". None of this is true. The reality is that those who would be affected positively, as projected by these theories, would be those who, essentially because of their skills, can be defined as already belonging to the "first world economy". The task we face therefore is to devise and implement a strategy to intervene in the "third world economy" and not assume that the interventions we make with regard to the "first world economy" are necessarily relevant to the former. The purpose of our actions to impact on the "third world economy" must be so to transform this economy so that we end its underdevelopment and marginalisation. Thus we will be able to attend to the challenge of poverty eradication in a sustainable manner, while developing the "third world economy" so that it becomes part of the "first world economy". This means that those who benefit from the growth and development of the "first world economy" will benefit even more from its expansion, resulting from the development of the "third world economy" to the point that its loses its "third world" character and become part of the "first world economy". To get to this point will require sustained government intervention. This is because, given the structural disjuncture that separates the "first world" and "third world" economies, we cannot and should not expect that there would be any mechanism inherent within the "first world" economy that would result in the latter transferring the required resources to the former, to enable it to outgrow its "third world" nature. We mention resource transfers because this is exactly what the "third world economy" requires to enable it to break out of its underdevelopment. These resources include education and training, capital for business development and the construction of the necessary social and economic infrastructure, marketing information and appropriate technology, and the ways and means to ensure higher levels of safety and security for both persons and property. The decisions taken by our government with regard to the Urban Renewal, the Integrated and Sustainable Rural Development, and the Expanded Public Works Programmes relate exactly to the achievement of these objectives. However, for them to succeed will require that we devote more resources to these programmes than has been the case up to now. This brings us back to the broader message communicated by the recent reduction in interest rates. This action is both a consequence of the health of our economy, and a contribution to its further growth. It emphasises the fact that now, more than in the past, our "first world economy" has greater capacity to produce the resources we need to make an impact on the "third world economy." The nature and scale of the challenge we face requires that we approach this matter boldly, vigorously, and in a sustained manner. The progress we have made with regard to the "first world economy", has given us some, but, of course, not all the means we need to tackle the "third world economy". This puts us on a strong footing to make visible progress to free our country of the burdens imposed on millions of our people through their entrapment in a marginalised and underdeveloped "third world economy". The global economy is characterised by its division into two worlds, the "first world", and the "third world", the North and the South, one rich and developed, and the other poor and underdeveloped. Our country contains this global phenomenon within its boundaries, resulting in the coexistence of two nations side by side, one rich and developed, and the other poor and underdeveloped. We have it in our power to use our own intellectual and material resources to end this division. This we will achieve through a protracted process of engagement together with the poor, in a people's contract to push back the frontiers of poverty and eradicate underdevelopment. Thabo Mbeki --------------------------------------------------------------------- UDF SERIES III Planting the seeds of people's power The United Democratic Front, which was launched 20 years ago this week, brought together a range of popular local organisations who, in exercising people's power, gave meaning to the idea of the people as their own liberators. Formed as a united front against the tricameral parliament and the infamous 'Koornhof' bills, the UDF quickly became the focal point for a massive uprising rooted in daily local struggles. These struggles were accompanied by intensive organisation and the growth of structures at a local level into which residents were mobilised. While the apartheid state worked to disempower and dispossess the majority, these structures worked to empower citizens through action. Former UDF vice president Frank Chikane, writing in a special edition of Umrabulo, says that as the notion of 'ungovernability' took root and the regime lost control of the townships, "cadres of the movement worked hard at creating alternative centres of power which further undermined the authority of the regime". Street and block committees and other people's structures like defence committees and 'people's courts' began to assume the roles of an alternative authority to the state. This is what Mark Swilling described in Work in Progress as "the second phase of UDF politics", beginning after the tricameral elections of August 1984. "Then struggles initiated by local community organisations began to centre around more basic issues of township life. Transport and rent boycotts, squatter revolts, housing movements, labour strikes, school protests and township stayaways followed. The depth and geographic extent of these actions resulted in an urban uprising which culminated in the declaration of a state of emergency in July 1985. "This shift from national anti-constitutional campaigns to local community struggles was not due to changes in national UDF policy. The shift was the product of local community organisations and activists mobilising around daily urban issues. Some of these organisations had been active since 1979 while others were only formed during 1984 and 1985," he said. Former UDF leaders Mkhuseli Jack and Janet Cherry, writing in Umrabulo on the UDF in the Eastern Cape, say the UDF really did have a 'double agenda': "On the one hand it was, of course, part of a broader ANC-led strategy of national liberation, with key leadership being closely linked to the ANC underground. On the other hand, it was concerned with a genuinely democratic project of building popular organisations, giving ordinary people a voice, and enabling participation by hundreds of thousands of people in townships around the country in political action." Sometimes this action was around very local issues and grievances; sometimes it was linked to national programmes of action. Very often, it involved the establishment of 'grassroots' structures such as street and area committees, which enabled ordinary people to exercise at least some measure of control over decision-making which affected their lives. This process, they say, was particularly successful in many of the townships of the Eastern Cape, where despite the high levels of violence and repression, many residents - including middle-aged and elderly residents -saw these structures as playing a positive role in their lives, in regulating petty crime and anti- social behaviour, facilitating development initiatives, and allowing participation in decisions over events such as consumer boycotts. The UDF stressed the necessity of organisation as a means to achieve change. An article in the UDF's journal, Isizwe, published in 1987 said: "Central to our understanding of the need for organisation is our belief that it is through our own efforts that we will be able to do something about our problems. Our experience has taught us that when we ourselves act on our problems, only then does change become possible. We have to take charge of our own lives in order to change them." "The efforts we talk about are the efforts of the mass of people. Not just a few individuals or a few enlightened leaders. Change in the true interests of the majority will come about only through the united action of the majority. So we organise to bring about the active participation of the maximum number of people in the issues of daily concern to them - issues of high rents and low wages, housing, education, land reform," it said. Mkhuseli Jack and Janet Cherry refer to research conducted some years after the decline of the UDF, which revealed that many township residents in the Eastern Cape saw this period as one which empowered them and gave them a positive experience of democratic participation. In some cases, efforts were made to transform this experience into participation in the transition and post- transition phases of the 1990s. They say the ANC now faces a real challenge in trying to recapture something of this culture of democratic participation - not only to hold public officials and political office-bearers to account, but also to ensure that people do not relate to government simply as a delivery-mechanism. "This involves, of course, a notion of 'strong democracy' - in which a strong state relates in a positive way to a strong civil society; and in which citizens are able to relate to government as active participants, rather than just as passive recipients of policy," they say. Even before its dissolution in 1991 following the unbanning of the ANC, Mark Swilling wrote about the UDF's lasting legacy. He said the campaigns and struggles of the UDF and its local affiliates had generated an increasingly radical conception of the road that should be followed to achieve a liberated society. "No matter how far South Africa's rulers go to crush the UDF and its affiliates, the ideas, aspirations and struggles which have made it what it is will continue to inspire present and future generations to struggle for political and economic justice," he said. MORE INFORMATION: President Mbeki's message on the UDF anniversary http://www.anc.org.za/ancdocs/pr/2003/pr0819a.html Information on the UDF http://www.anc.org.za/ancdocs/history/udf/index.html --------------------------------------------------------------------- WOMEN IN BUSINESS Finding a way through the labyrinth The poor representation of South African women in leadership positions in business is due to a complex maze of factors closely linked to corporate culture. Writing in the latest edition of the journal, Umrabulo, Phumla Mnganga likens the obstacles that women face in business to the labyrinth of the minotaur, a beast of Greek mythology. These obstacles account for the fact that while women occupy leadership positions in government, there are very few women at the helm of the country's large companies. Despite the influx of women into tertiary education and the labour market, little progress has been made towards making gender a central theme in the transformation of business in South Africa. This problem is not unique to South Africa. In most western industrialised nations the representation of women in management is significantly lower than that of men. Researchers suggest the problem lies in company cultures that don't enable the transition of women from junior to senior management. Mnganga argues that while employment equity policies and affirmative action programmes have succeeded to a limited extent in South Africa in bringing the issue of race to the forefront of business transformation, the centrality of the gender question still remains a challenge. One of the main barriers to change is the prevailing organisational culture in most companies, which is influenced by a 87 percent white male worldview. Drawing on over 10 years in corporate South Africa, Mnganga identifies a number of "invisible assumptions". Some companies are proud of their 'gender-blind' policies. While claiming to offer equal opportunities for employment, development and advancement to senior levels, these companies refuse to acknowledge the barriers that are experienced by women in particular. Some companies construct the 'marriage and children barrier', by taking the view that young women, not matter how talented, will at some point marry, follow their husband if they relocate and have children. "This means they cannot be relied on as a solid succession pipeline for senior and top management. As such it is seen as risky to promote women into key positions of responsibility," Mnganga says. These assumptions are compounded by the 'race first, gender later' argument, which suggests the dual focus on race and gender dilutes the focus of affirmative action. Achieving racial representivity is difficult enough without the added complexity of gender issues, it suggests. In order to survive in a company, many women assimilate gender-hostile company culture and even promote it. This is not an experience unique to women, but is experiences in different ways by black people, people with disabilities and other under-represented groups. Mnganga calls for a strong multifaceted approach to capitalise on women as a critical resource in our economy. She says there can be no business transformation without the participation of women in the leadership and ownership of businesses. To fox the minotaur and find a way through the labyrinth the employment equity framework must be strengthened, possibly through a Code of Good Practice to specifically provide guidelines on measures to be taken to ensure an improved gender representation at all levels. Women in business must spearhead initiatives aimed at ensuring women are represented at all levels of management. "They must represent a new way of thinking about competitiveness - that the most sustainable source of competitive advantage lies in attracting and retaining the largest pool of talent and ability," she says. In order to fox the minotaur companies, especially those that are product- oriented must become increasingly aware that women are often the primary decision makers regarding a large range of buying decisions. Women drive more than 85 percent of purchasing decisions in most consumer products. The organizations of the future needs people at all levels to reflect the demographics of the consumer base and such individuals are especially needed in top management positions providing leadership. "In order to fox the minotaur women in business must rise, organise, speak, act and strike at the rock of business culture," she says. MORE INFORMATION: 'Foxing the Minotaur', Umrabulo 19, August 2003 http://www.anc.org.za/ancdocs/pubs/umrabulo/umrabulo19/foxing.html --------------------------------------------------------------------- This issue of ANC Today is available from the ANC web site at: http://www.anc.org.za/ancdocs/anctoday/2003/at33.htm To receive ANC Today free of charge by e-mail each week go to: http://www.anc.org.za/ancdocs/anctoday/subscribe.html To unsubscribe yourself from the ANC Today mailing list go to: http://lists.anc.org.za/mailman/listinfo/anctoday