SPEECH BY FORMER PRESIDENT F W DE KLERK TO THE STERN STEWART INSTITUTE
SCHLOSS FUSCHL, AUSTRIA,
29 OCTOBER 2004
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 hindsight – 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:
- We held three free and fair national elections;
- We have an excellent constitution and a strong and independent judiciary;
- We have a free, vibrant and active civil society;
- The institutions that we established to protect our democratic institutions are working well.
- We witnessed the seamless transfer of power from President Mandela to President Mbeki.
There were also some notable successes on the economic front:
- The government’s excellent macro-economic policies have reduced inflation, interest rates and the deficit to the lowest levels in decades;
- We have the highest business confidence levels in ages.
- We recorded ten years of uninterrupted economic growth – averaging about three per cent per annum. This is not the 5% – 7% that we need to address our social problems, but it is by no means a bad performance during a period of global volatility and uncertainty.
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 the 34th largest in the world with a relatively small 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 in the 18th position in world, ahead of countries like Thailand, Turkey and Argentina and Poland.
During our first decade we also made progress on the social front:
- We witnessed the emergence of a vibrant multiracial middle class which includes about 7.5 million South Africans of whom less than 45% are white;
- The government built more than a million new homes and provided electricity and pure water to millions of households; and
- It also substantially increased welfare payments to children and pensioners.
On the other hand, when critics look back on the past ten years they can mention
- The widening gap between rich and poor with all the social problems and tensions that this causes;
- The growth in unemployment – although there are some promising indications that the economy has, at last, started to create jobs again;
- The continuing unacceptable levels of serious and violent crime – despite the progress that we are beginning to make;
- The enormous challenge and tragedy of AIDS – and
- The lack of any serious political challenge to the ruling ANC – particularly after the last election. Healthy democracies require much more vigourous multiparty competition.
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 confrontation 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 to a great extent shaped 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.
If one analyses the forces that have traditionally affected developments on the world stage one can develop a picture of the uncertainties that might confront us during the coming decade. All me to identify a few:
- Demographic factors have had a major influence in determining the course of human history. Much of history has been driven by population growth and the migration of peoples. What effect will the almost unrestricted inflow of economic refugees from the rest of Africa have on South Africa during the coming decade? How will rapid population growth in our poorest communities affect our efforts to eradicate poverty and to build a better life for all our people?
- Human history has been defined in terms of the technologies that we have developed. We talk of the stone age, the iron age, the steam age, the atomic age and now of the information age. Just think how the internet and cellphones have affected the daily lives of billions of people all over the world during the past ten years. What new technologies will emerge during the next decade? How will rapidly developing advances in genetic engineering, computer technology, the internet and nanotechnology affect the world and – in turn – South Africa during the next ten years?
- Much of history has been determined by the interaction between peoples that has flowed from trade, cultural contact and even from war. How will our multicultural societies stand up to the globalised English-based consumer culture onslaught? What chance do our indigenous cultures – including Afrikaans – have of surviving this onslaught and what will the implications be for our own individual identities and for our ideal of multi-culturalism?
- In a globalising world all countries will be increasingly integrated into worldwide economic and trading systems. How would a global recession or continued increases in the price of oil affect South Africa’s economy? What chance do developing countries have of gaining fairer access to global markets? Will we succeed in attracting our fair share of foreign direct investment?
- How will developments in global power relationships affect us? The present unipolar domination of global politics by the United States cannot continue indefintitely – particularly if the Americans fail to achieve their goals in Iraq and the Middle East. It is likely that during the coming decade the world will move back towards a more multipolar dispensation, particularly when China, India and the European Union begin to play more prominent roles on the international stage. What will the implications of these developments be for South Africa? How will we be affected by the growing clash of cultures between Islam and the West? Will any of these developments affect our own geostrategic security?
- Perhaps the most important influence on human history during the past hundred thousand years was change in the the global environment. The development of our species was profoundly influenced by the succession of ice ages that occurred during this period. We are now receiving increasingly insistent warnings from our environment that we are once again entering an era of unstable climate. Scientists warn that dramatic changes in the global climate can occur within time frames as short as ten years. Our greatest challenge may well be to take far-reaching and urgent action to promote sustainable development.
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 depend on 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:
- Will we be able to improve the lives of the 50% of our population that continue to live in abject poverty?
- Will we make a success of black economic empowerment?
- Will we be able to compete successfully in a globalising world?
- Will we be able to maintain national cohesion and avoid racial alienation and friction?
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
- retrenchments resulting from the intense competition in the globalised economy;
- lack of skills and training;
- sluggish foreign and local investment in the economy; and
- competition for jobs from the huge and growing number of illegal immigrants.
However, another central cause is South Africa’s present labour legislation. 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 therefore quite right to emphasise that our second decade must focus on economic and social transformation and on delivery in these fields. 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.
- The best way to do this is will be to improve our education system. We need primary and secondary schools that will produce matriculants with proficient language and mathematical skills. Dilution of standards and introduction of over-sophisticated education approaches are no substitute to the development of sound basic aptitudes. . We need universities and technicons that will provide the engineering, technical, scientific and managerial skills that will enable South Africa to compete effectively in globalising markets.
- We need to remove any remaining prejudices or obstacles to appointment or promotion that might stand in the way of any South African from achieving his or her full potential.
- We need to develop natural approaches to extending ownership of economic resources to disadvantaged South Africans – particularly by enabling employees to become shareholders and through wider participation in pension and insurance schemes.
- We need to encourage and nurture entrepreneurs from disadvantaged communities.
- We need a balanced and effective approach to the very sensitive question of land reform. This process should begin with land that is already controlled by the government. The objective should be to ensure that agricultural land – whoever farms it – remains fully productive. Successful land reform will require the commitment of much greater resources; intensive agricultural training; effective follow-up services and mentoring and close co-operation and communication between all the main roleplayers – including white farmers.
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 presecribe unrealistic quotas or 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 effectively in increasingly tough global markets. During the past ten years South Africa has chalked up some major successes in global markets:
- We have increased our manufactured exports from 34% to 58% of the total;
- We now earn far more from the export of Mercedes, BMW’s and Volkswagens than we do from the sale of gold.
- International surveys have also shown that the quality of BMWs built in South Africa surpasses quality levels in Europe itself.
- We have also become a major long-haul tourist destination. Tourism now earns us more than 50 billion rand a year – compared with our gold exports of 35 billion rand.
We have been able to achieve these successes because the ANC government has, on the whole, implemented economic policies that are in line with a tried, tested and successful global consensus. However, having done so much good work, the government must beware of the temptation of trying to legislate economic outcomes in pursuit of its ideological agendas.
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 Africans from all our communities can live together in goodwill, equality and mutual respect.
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.
And finally, it will determine whether South Africa will become the first African country to join the ranks of the first world nations.
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.