I would like to speak today more about the new South Africa’s next ten years rather than about its first decade – even though it is much easier- with the advantage of hidsight –  to talk about the past.

But first let me deal briefly with some of the important developments during our first decade:

Perhaps the most important of these was that we made progress in consolidating our young constitutional democracy:

There were also some notable successes on the economic front:

In a somewhat lighter vein, we have now learned what the real secret of economic growth is:  it is to change the basis on which one calculates gross domestic product.  On the old basis of simply converting our rand GDP to dollars at the current exchange rate, our economy was relatively small with a GDP of just a little more than 104 billion dollars in 2002.  However, using the parity purchasing power formula now favoured by  most international financial institutions, our GDP was US$ 456 billion in 2002 – which puts us ahead of countries like Thailand, Turkey and Argentina and Poland.

We also made progress on the social front:

On the other hand, when critics look back on the past ten years they can mention

But what of the road ahead?  to what extent can any of us speak with authority about developments that have not yet taken place?

Crystal gazing remains a very inexact science.

In the mid-1980s Clem Sunter of Anglo-American produced a number of scenarios on South Africa’s future called the High Road/Low Road scenarios.  They were developed by the best and brightest minds of the time – but nevertheless failed to foresee many of the seminal developments that would radically change the world in which we now live.  In 1985 no-one predicted the imminent collapse of the Soviet Union and the bipolar competition that dominated global politics;  nobody predicted the coming of the internet and the scope of the information revolution that we have experienced;  no-one foresaw the dreadful effect that AIDS would have on the world and on our own population;  and hardly anybody would have believed that within the next ten years South Africa would have undergone a largely peaceful democratic revolution.

So how then can one try to assess the road ahead for South Africa during the next decade?

I would suggest that any predictions should be made with the greatest tentativeness and in the sure knowledge that in our rapidly changing world there will be many developments that we simply cannot foresee.

If we nevertheless wish to identify the factors that will determine South Africa’s course during the coming ten years we should, perhaps, examine the factors that determined events in the past.

The most important of these is that developments in South Africa will in the future as in the past be largely determined by developments in the world as a whole.

In the past, the course of South Africa’s history was determined by developments overseas.  Think of the effect on South Africa of European mercantilism; of the rise  of the European empires; of the great depression; of the first and second world wars; of the decolonisation of Africa; the global struggle between communism and capitalism; of the unexpected collapse of the Soviet Union and now of the huge opportunities and threats presented by globalisation.

South Africa during the coming ten years will continue to be strongly influenced by developments on the world stage.

But what are the forces that have traditionally affected developments on the world stage?  We can identify the following elements:

All of these global factors will dramatically influence the environment in which South Africa will operate in ten year time.

The progress that we make within that global framework will, however, still be determined by the decisions that we South Africans take.

In my view the success we achieve during the coming ten years will be determined by our ability to meet four great challenges:

The roots of black poverty lie on the one hand in unemployment and on the other in the fact that the poorest South Africans continue to have the largest families. The main cause of black poverty is unemployment, which increased for the black population from 36.2% in 1995 to 46.6% in 2002.   Less than 10% of the total number of people in the poorest decile of the population are employed compared with more than half of the total number of people in the top income decile.

What then is the main cause of unemployment?   Many relevant answers come to mind – including

However, another central cause is South Africa’s  present labour legislation.  The reality is that we have adopted a social democrat labour system that is not even working in countries like France and Germany.   It has raised the real cost of labour way above levels in other emerging economies with which we must compete in global markets.  High costs and over-regulation are a major disincentive to the creation of new jobs – particularly for small and medium-size businesses.

Clearly, we need to develop a labour system that establishes basic minimum standards for all. However, in a country like South Africa much greater flexibility is required, especially for meduim size and small businesses.

Family size is another factor in the perpetuation of poverty.  It stands to reason that the more people there are in a family, the fewer the resources there will be to provide decent care and education.

We also need to improve service delivery to the poorest sectors of our society.  Efficient education, social services and health services can greatly help to improve the basic living conditions in which poor people live.

All these factors lying at the root of poverty in South Africa need to be dealt with in a concerted and imaginative manner.

President Mbeki is quite right to emphasise that our second decade must focus on economic and social transformation.  If we wish our young democracy to succeed we must ensure that all South Africans benefit from our new society and that its private and public sectors are much more representative than they are now.

All of us – black and white South Africans working together – must make a success of black economic empowerment.

I am confident that if we do these things we will achieve black empowerment targets much more quickly and naturally than will be the case if we artificially interfere in market mechanisms, management autonomy and property rights.  The white population  cannot nearly provide the numbers of skilled workers, professionals and managers that a growing economy will require.  Inevitably, and quite rapidly, the South African economy will grow to reflect the population composition as a whole.

However, the economy will not grow satisfactorily if we do not appoint and promote people with appropriate skills whatever their race; if we interfere with the ability of companies to manage their affairs; or if we dilute property rights.

The third requirement for success during the coming ten years will be our ability to compete successfully in increasingly tough global markets.

The government has done well on the economic front precisely because it has consistently implemented economic policies that are in line with a tried, tested and successful global consensus.  After having done so much good work, the government must beware of the temptation of trying to legislate economic outcomes.    If we wish to attract the investment that we need for growth and if we are serious about maintaining our competitive edge we must continue to play by the basic rules that govern the globalised economy.  Any attempt to dilute property rights, economic freedoms or basic standards of administration and management will prevent South Africa from effectively competing in the international economy and will relegate us to economic and developmental marginalisation.

Finally, if we want to achieve success during our second decade we must continue to work for reconciliation and national unity.   South Africa’s constitutional transformation has worked well precisely because it was the result of negotiations and compromises between parties that represented the great majority of all South Africans from all our communities.

The problem is that South Africa’s minority communities have not been sufficiently consulted with regard to the challenges of our second decade  and particularly with regard to economic and social transformation. Minorities often perceive transformation as a new form of racial discrimination while the majority regards it as a long-overdue rectification of the deep injustices of the past.   Minorities feel less and less represented in the processes by which they are governed.

There is too little frank debate.  Many whites publicly express politically correct, but qualified, support for transformation – while they privately educate their children to work overseas.  The result is that too many whites are emigrating – either overseas – or inwardly into their own communities.  They are withdrawing behind their security fences and are not making the contribution to the broader society that they could make – and I believe would dearly like to make.  South Africa cannot afford to lose skills and commitment on this scale.

We South Africans need to talk to one another about the challenges of our second decade. We need to work toward a national understanding that will enable us all to make the fullest possible contribution to achieving the vision in our constitution of a truly free, nonracial and equal society.

The stakes involved are very high.  Our ability to reach a balanced national consensus on the challenges that confront us will be a key factor in determining whether South Africa will become the first African country to join the ranks of the first world nations.

It will determine whether South Africans from all our communities can live together in goodwill, equality and mutual respect.

And finally, it will determine whether the brave experiment that we South Africans launched fifteen years ago will continue to succeed and offer a beacon of hope for other divided societies throughout the world.

I am confident that we South Africans will rise to the occasion – just as we did between 1990 and 1994.  I believe that if we do so, South Africa in ten years time will be a much better country than it is today – and an infinitely better country than it was twenty years ago.