SPEECH BY DEPUTY PRESIDENT F W DE KLERK TO THE EUROPEAN FEDERATION OF FINANCIAL ANALYSTS’ “SOUTHERN AFRICA INVESTMENT SUMMIT”; JOHANNESBURG, 11 SEPTEMBER 1995
Almost a year has elapsed since I addressed your Organisation in Edinburgh last September.
At that time I tried to place developments in South Africa in their global context and to show how the transformation of our society had been strongly influenced by the historic events of 1989 in Europe. I pointed out that both situations were characterised by the rejection of worn-out ideologies; that all those involved accepted the necessity of avoiding self-destructive conflict and violence in the transition process; that there was an acceptance in both situations that only market-related economic policies could assure sustained growth; and that the basis for future stability should be the establishment of genuine democratic societies.
Those of you who were present may recall that I showed some pride over the birth of our infant rainbow nation. This is understandable, in view of allegations that I am the father – or in any event was present at the conception!
Now, at the age of eighteen months, I should like to show you some snap-shots of the toddler. Like all proud fathers, you must forgive me if I boast a little.
Bye and large the baby is healthy and full of life. It is now beginning to walk – and even run. Admittedly, some of its first steps have been precarious. It still falls over and bumps into things quite a lot. It grasps at bright objects – and cries when it cannot immediately get them. It still experiences problems with hand-eye co-ordination and from time to time has bouts of colic.
These, however, are all just the normal problems of growth. The baby’s constitution is excellent and should assure it a healthy and happy future. The child is also very popular with the neighbours. They pat it on the head and make a great fuss of it. They give it sweeties and trinkets – which probably are not very good for it. All in all, it is a normal and well balanced child.
However, I must be frank.
Some of you may have read that their are tensions between the mother and me.
It is true. Ours was never a marriage of love. We come from very different backgrounds and our families don’t get on very well with one another. We were forced together by circumstances. Marriage was the only way that we could ensure that the baby would be legitimate and that it would have a secure environment during its formative years.
The honeymoon is over. We greet each other politely; we run the household jointly, and try to keep up appearances. But we both love the child very dearly and stay together for its sake.
My main concern is now for its health, its growth and its education.
The new South Africa has made a good beginning. It does have a sound constitution. Its prospects for the future are excellent. The key to that future will, however, be rapid and sustained economic growth.
Without such growth:
· we will not be able to generate the resources that we need to assure a better life for all our people:
· we will not be able to create the jobs to provide employment to the millions of our citizens who are without work; and
· we will not be able to meet the expectations of millions of our people who voted for the first time in our election last April.
We need to give them tangible benefits and prove that a multi-party, multi-racial democracy based on market principles can work for them by tangibly improving their day-to-day lives.
If we cannot do so we will pay a price in stability, law and order, and peace. Without such stability, the economy will not grow; there will be even fewer benefits and there will be more instability.
We need to grow rapidly – at least at 4,5% – 6% – if we wish to make substantial progress. At the present growth rate of approximately 3% we are barely keeping pace with our population growth
e key to rapid and sustained growth lies in the development of an outward-orientated economy. Such economies – like those of Taiwan, Korea, Chile, Malaysia and Hong Kong – have generally grown much more rapidly than inward-orientated economies like ours.
If we wish to transform our economy into an outward orientated economy we will have to take hard decisions and the necessary steps : –
· we will have to open up our economy in line with our undertakings in terms of the Uruguay round of GATT. We will have to accept the challenge of open competition, not only in international markets but in our own back yard, without the cosy protection of tariffs and subsidies.
· It follows that we will have to improve our labour productivity. This will, in turn, require a much more co-operative relationship between labour and management than we have now. We need a genuine social contract between workers, employers and Government. They will have to work together as team-mates to win and maintain markets by producing high quality products and services at the right price.
It also follows that we will have to create an environment that is more attractive to foreign investors, businessmen and tourists.
· We will have to apply orthodox and responsible economic, fiscal and monetary policies. We intend to reduce the deficit before borrowing to approximately 4% of GDP by the year 2000. This means that we will have to continue to avoid the temptation of financing the Reconstruction and Development Programme in an irresponsible manner.
· We will have to combat the unacceptable levels of crime and violence in our society. We have already begun to implement strategies in this regard which are beginning to show results.
· We will have to defuse festering disputes, such as the conflict between the ANC and the IFP in KwaZulu Natal. We will also have to manage, with great sensitivity, the other potential flash points in our complex society – such as the Truth and Reconciliation Commission and questions relating to education, land rights and language.
· We will have to maintain the integrity and efficiency of our state administration. We must cut away red tape where it exists and make the interface between administration and business quick, efficient and user-friendly. We will also need to maintain and expand our excellent infrastructure.
· We must continue to take steps, at the appropriate time and in the appropriate manner, to abolish the remaining restrictions of the flow of capital to and from South Africa. As you are aware, we have already abolished the finrand and have committed ourselves to the abolition of exchange control.
I am confident that we will be able to address this agenda and create the circumstances for economic growth.
Foreign investors seem to agree. It was gratifying to note that according to the latest Micropal survey of emerging market equity funds, that there has been a strong inflow into Africa – mostly to South Africa. On a weighted country-by-country basis, South Africa had passed India to become the seventh favourite market of the 109 funds in the survey.
We must continue to do everything we can to make investors feel welcome. Recommendations have been made for the establishment of a National Investment Promotion Centre which would, among other things, provide information to prospective investors and co-ordinate the overseas marketing of South Africa to attract investors. The objective of a one-stop investment centre deserves support and would be another step in the right direction.
A recent survey of European firms, together employing more than 100 000 people in South Africa, contains some important pointers for policy makers in Pretoria and Cape Town. Most of the companies – and particularly the larger companies – are positive, or very positive, about their involvement in South Africa.
They are positive about the prospects for a market driven economy, the continuation of true democracy, fair treatment to foreigners and balanced company taxation.
However, they are pessimistic, or very pessimistic, with regard to violence and crime, fair labour practices, corruption and the maintenance of a competent civil service.
One of their main concerns relates to future labour relations in South Africa. The proposed Labour Relations Act has far-reaching implications in this regard. Only time will tell whether it will assure better co-operation between management and unions with a view to the promotion of economic growth. The proposed act substantially strengthens the bargaining position of the trade unions relative to that of the business sector. The future behaviour and attitude of organised labour in the work place will have important implications for
productivity, the business climate in South Africa and the competitiveness of the South African economy. As I have mentioned, our key objective is economic growth and the improvement in competitiveness that we will need to achieve this. The question is how labour policy will impact on these objectives?
Another of their concerns is evidently the future integrity and efficiency of the South African public service. South Africa can be justifiably proud of its public servants and the standards that they have thus far maintained.
The great majority of South Africans support the ideal of public institutions – particularly the civil service – that are representative of our population as a whole. Action to this effect is clearly required in terms of our Constitution. However, the Constitution also requires that the civil service should be effective. In addition, it contains a clear prohibition against any form of racial discrimination.
It is crucially important that affirmative action should be implemented in a rational and balanced manner. We cannot afford to squander the wealth of experience, dedication and expertise that existed within the old civil service. In particular, we should be doing everything we
can to retain the services of the best and the brightest from the old dispensation.
But these are mainly the teething problems and growing pains that all young nations can expect to encounter. They are, in many respects, the normal problems of governance that are encountered by governments all around the world.
They are a measure of the degree to which South Africa has returned to the normal world. Such problems are a pleasure when one considers the kind of crises that would by this time have beset South Africa had we not accepted the challenge and risks of national transformation.
Then, we would not have described our situation in terms of birth, life and the first steps of an infant democracy. Then our images would have been of death, of conflict of widows and of orphans.
My message to you this morning is that the child is well – that it shows great vitality and exuberance – and that a bright future lies ahead! Any investment in its future will produce rich dividends. The Mother and I disagree on many points, but we are in firm agreement about our baby’s prospects!