VELLA PILLAY: OLIVER TAMBO MEMORIAL LECTURE

Statement to the Oliver Tambo Memorial Lecture Meeting by Vella Pillay - November 5 1993

President of the ANC Nelson Mandela, Archbishop Trevor Huddleston, Addelaide Tambo and friends,

It is indeed a privilege for me to take this opportunity to pay a particular tribute to the late Oliver Tambo. My tribute will focus on an aspect of his last few years that was largely unpublicised and yet particularly dear and important to him, that is that patronage he gave to the Macroeconomic Research Group since its inception in November 1991.

Oliver Tambo's patronage of MERG was an active one. He took a close interest in its research work and its emerging conclusions, bearing as they do, on the development of a framework for economic policy for post-apartheid South Africa. Over the many years of his active leadership of our democratic movement he constantly warned us of the need to recognise and to understand that, at least in the South African context, politics and economics were deeply and inextricably intertwined, and that unless we gave the notions of democracy and freedom a reality and meaning in terms of dramatically improving living conditions for all our people, we would have failed in our liberation mission.

It has been indeed that concern of the late Oliver Tambo which has guided and informed much of the research programme of MERG during the past eighteen months. The programme has been implemented by some 13 research teams, with a strong training and capacity building remit, at MERG's 5 associated universities. The outcome has been significant.

• We have modelled the South African economy with a view to assessing the possible impact of different kinds of economic policies on the growth and distribution of income, on output, on employment, and on the external balance of payments.
• We have studied and identified the types of policy initiatives which could be pursued to diversify the economy and transform our mining, farming, manufacturing and service sectors through higher value-added processes and thereby to create more jobs, higher incomes and increased foreign exchange inflows from our exports.
• We have studied the labour market and assessed how this can be reformed with a view to creating an expanding force of labour skills to meet the ever-newer technological challenges in the work process. The policies required to ensure minimum wage practices and a programme of affirmative-directed training on the job for large segments of our work force have been explored with meaningful policy conclusions.
• We have researched fiscal policy extensively and identified the means by which resources could be released for improvements in the social and economic infrastructure, and thereby generating jobs and economic growth. Mechanisms for reforming the composition of public expenditure and increasing the efficiency of the system of revenue collection have been explicitly articulated.
• We have also studied the possibilities of major reforms in the rural economy, including the need to redistribute land to landless households and the creation of a framework for the provision of food security through a stable and affordable structure of prices for basic food needs.
• In addition, we have investigated the institutional changes necessary from bringing about the democratisiation of the economy and the role of nation state in this regard. This includes studies in civil service reform, the reincorporation of the homelands, economic relations with our neighbours in Suthern Africa, and the most feasible criteria for managing financial and resource transfers between the centre and the regions.
• Our research conclusions suggest that the South African Reserve Bank should be subordinate to the government such as to allow monetary, interest and exchange rate policies and the flow and direction of credit in the economy to be consistent with the democratic state's policies in the areas of public sector expenditure and taxation, in trade, industrial diversification and development, employment generation and social and economic infrastructural investments. We have studied the instruments through which the banking institutions and the financial and capital markets could be encouraged to serve the needs the economy and open out to the those in our communities who have for long been denied entry into many sectors of the industrial and commercial economy.
• Finally, with respect to foreign trade, the policy implications of our research work indicates that export expansion is indeed possible through the higher value-added processing of our raw materials and basic commodity exports; we believe that there exists compelling arguments to broadly maintain the present level of protection for a period of at least five years while immediately simplifying and rationalising the existing import tariff structures.

Our studies call for strong legal sanctions against transfer pricing and other capital export practices which breach the exchange control regulations.

These and other issues, then, comprise the scope and the range of the studies we have undertaken in fulfillment of the MERG project.

The outcome of this research will be the publication within the next three weeks of a comprehensive report on a FRAMEWORK FOR MACROECONOMIC POLICY for South Africa. This will be presented to the African National Congress, the Congress of South African Trade Unions, the South African National Civic Organisation and others in our democratic movement.

We in MERG - that is the many economists and others in our country and from abroad who worked together on this enterprise believe that the report that has been produced, is much the most exhaustive and innovative in terms of its analysis of the economic condition of the country, and its problem-solving policy formulations for overcoming the present crisis and placing the economy on the path of sustainable growth.

In these senses, we hope that this FRAMEWORK will be seen as a fitting tribute to the vision of the late Oliver Tambo - to his abiding concerns for the upliftment of the standards life and labour in our country to levels which give meaning to our long struggle for liberation, and for a democratic South Africa.

Within the coming weeks MERG, having completed this report, will be transformed into the National Institute of Economic Policy. This will be directed by my colleague and friend Max Sisulu. That Institute will seek to continue the spirit initiated by MERG to serve the democratic cause through its research into economic policy, and to work in close contact with the universities and with post-apartheid government departments and organisations.

Of importance to the work of the Institute will be its training and capacity building functions. This is designed to produce a number of black economists trained in the various needed disciplines, and available for service in the future democratic government of our country. This too will have been strongly supported by the late Oliver Tambo.

With these words, may I thank you for listening to me.