Ladies and Gentlemen


It is a great pleasure for me to be able to welcome you to South Africa and to Cape Town.  Many of you have probably visited South Africa before.  For some of you this is probably your first trip.  There may be others among you who knew the old South Africa and who have watched our remarkable transformation over the past 14 years from apartheid pariah to a multiracial democracy.


In this beautiful old Hotel which was built at the height of the British Empire, it is sometimes difficult for guests to imagine that they are really in Africa.  But I can assure them that they are.  If they want confirmation all they have to do is to drive past the airport to Khayalitsha where more than 500 000 people live in shanty towns.  Most of them have arrived from the deep rural areas of the Ciskei and the Transkei during the past 20 years.


Three weeks ago I addressed a conference of Coparmex, the Mexican business organisation, in Mexico City.


I told them that South Africa was not like Europe or North America – although people visiting our cities and using our infrastructure would easily imagine that they were in a first world country. I said that we were also not like the rest of Africa – although we share much in common with other countries in our continent.


In fact, South Africa is in many respects, much more like other middle-income countries in Latin America and Asia.  Like Mexico and Brazil, like Malaysia and Thailand, we are a country in transition.


We share many of the same challenges as other middle income countries:

·       We are experiencing the same enormous flow of people from rural areas to our cities;

·       As a result most of us are battling with the same housing problems and proliferation of urban shanty towns;

·       We experience the problems caused by great disparities between rich and poor;

·       We all have to deal with poverty and unemployment and the crime and social problems that go hand in hand with deprivation;

·       Our economies are moving away from dependence on the export of primary products to the development of the manufacturing and services sectors;

·       Many transition countries are also wrestling with the challenge of establishing strong and abiding democracies with freedom, equality of opportunity and security for all;

·       Many of us also have to contend with the reality that our societies comprise different ethnic, cultural, language and religious communities.


We are on the road between the third and first worlds.


The following factors will determine whether we – and other middle income countries – will be able to complete this journey successfully:

·       Our ability to maintain social and political stability and cohesion.

·       Our ability to adopt and implement sound fiscal, financial and economic policies; and

·       Our ability to compete in global markets.


Our social and political stability will, in turn, depend on our success in

·       Strengthening our young democracy and in entrenching principles of constitutional government;

·       Delivering essential services to all our people through good and effective governance; and

·       in maintaining sound relations between our numerous ethnic, cultural and linguistic communities.


Nine years after the birth of the New South Africa I am pleased to be able to report that our young democracy is doing well.


We have held two free and fair national elections and municipal elections. We have an Independent Electoral Commission which is functioning independently and effectively.  We have also seen the smooth and peaceful transition from our first president to our second president after the retirement of President Mandela.


There are, however, some problems:

·        Most South Africans are still voting along ethnic lines and have yet to make the leap to non-racial value driven politics.

·       This means that the ANC will remain the governing party for the foreseeable future because of its wide support among black South Africans

·       The opposition is fragmented and will not be able to mount a credible election threat to the government until it can achieve greater unity and until it develops the ability to attract significant black support. So we do not really have a very effective multiparty system.

·       The result of single party dominance is that Parliament is not nearly the dynamic forum that it should be.  Increasingly, real decisions are being taken within ANC party structures and not in Parliament.


Democracy, however, is not confined to the national Parliament.  It also presupposes the reasonable autonomy of the organisations composing civil society to which people belong:  the clubs of which they are members; the companies for which they work; the religious institutions where they worship, the schools and universities where they educate their children.


South Africa has strong and well-developed civil society institutions, including influential and well-supported churches; a vibrant private sector, strong trade unions and professional organisations and a full range of well-developed non-governmental organisations.


Democracy also depends on the rule of law and the protection of basic rights.


We have an excellent Bill of Rights and a strong and independent Constitutional Court. We have many institutions that have been established to enable citizens to claim their rights.   Nevertheless, some warning signals are flashing in this area. Some rights – particularly those that were included in the constitution to protect minorities – are being eroded.  These include, in particular, language, education and cultural rights and freedom from discrimination.  Members of the white minority – and to a lesser extent of the coloured and Indian minorities – fear that affirmative action provisions in the constitution might be abused to introduce new forms of racial discrimination.


Good governance and the government’s ability to deliver effective services to the people, will also be an important factor in ensuring social and political cohesion.


The reality is that the Government has not always been able to deliver on the promises that it has made to the electorate – partly because many of the promises were not achievable and partly because of delivery problems that it has experienced.

In some areas the record is very impressive:

·       more than 1.4 million new houses have been built since 1994 and many others are in the pipeline.

·       More than 6.5 million people have been provided with access to fresh water.

·       Millions of South Africans have been provided with electricity.  Much remains to be done – but the progress has often been impressive.


In other areas of delivery, the performance has not been encouraging:

·       Crime remains a very serious problem – although the government claims that it has turned the corner and that it is now beginning to win the battle.  The battle will be won only when the government succeeds in reforming the whole justice chain:  we need a better-paid and more effective police force; we need greatly streamlined courts that will deal with cases quickly and effectively and give sentences that will truly deter criminals; and we need prisons that are not seriously overcrowded.

·       Health services in many parts of the country have deteriorated since 1994 – and the government has failed to come to grips with the AIDS pandemic.  Fortunately, it has now publicly accepted that AIDS is caused by the HIV virus and is greatly increasing expenditure on its anti-AIDS programmes.  Nevertheless, it has still not accepted the urgent need to provide antiretrovirals to HIV and AIDS victims on a massive scale.

·       Also, although expenditure on education is massive – the results achieved are often disappointing.


Finally, social and political stability will depend on our ability to maintain positive relations between all our diverse ethnic, cultural and language communities.  Inter-community relations are relatively positive.

·       Since 1994 we have laid the foundations for the creation of a new, overarching South African patriotism that will bring all our communities together.

·       The integration of formerly white schools has progressed with remarkable goodwill and with surprisingly few negative incidents.

·       Throughout society – in business, sport and civil society – South Africans of all races are living and working together with remarkable ease.


Inter-community relations will, however, be negatively affected if communities feel that their languages and cultures are being threatened or if they feel that they have become the subjects of unfair discrimination.


Despite  this and the other problems that I have identified I have no doubt that we in South Africa will be able to maintain the social and political stability that we will need to complete our transition to the first world.


How are we doing with regard to the second requirement that I mentioned – our ability to adopt and implement sound fiscal, financial and economic policies?


This is the area in which the ANC Government has performed most effectively.

·       The IMF has consistently praised the government’s fiscal controls and the Reserve Bank’s steadfast campaign against inflation.

·       The Government has shown its willingness to proceed with privatization and other free-market policies, even in the face of strong opposition from the trade unions and many of its own supporters.


We are beginning to reap the benefits of these sensible policies:

·       During the past year the South African Rand has regained more than 40% of the value that it had lost against the US$ – making it one of the best performing currencies in the world;

·       The International ratings agency Standard and Poor’s has revised its outlook on South Africa from stable to positive, while affirming the country’s BBB- long-term foreign currency debt rating and its A- long-term local currency debt rating.

·       All of this is opening the door to greater investment flows and predictions that our economy will grow by more than 3% this year.  This is not as fast as we would like  – but in today’s international circumstances would not be a bad performance.
The Government has been less successful with its labour policies.


Its rigid and prescriptive labour legislation has driven up the price of labour to unaffordable and uncompetitive levels and has created endless hassle factors for employers.  The result is that since 1994 the economy has lost almost half a million jobs in the formal sector at a time when job creation should have been one of its main priorities.   Unemployment, in turn, lies at the root of the unacceptable poverty and deprivation in which too many South Africans are still forced to live.


Fortunately, there are belated signs that the Government accepts the need for less rigid labour practices – but any reforms will be fought tooth and nail by the unions.


We are also doing very well with the third requirement that I identified for successful transition to the first world – our ability to compete in global markets.


·       Perhaps one of our greatest successes since 1994 has been the growth of our manufactured exports.  In 1994 they accounted for only 36% of the total compared with the 54% contribution of mining.  By 2002 our manufactured exports had grown to 58% of the total and mining’s share had diminished to less than 35%.

·       In 2001 we exported more than 100 000 cars and trucks.  Most of these were locally manufactured BMWs, Mercedes-Benzes and Volkswagens.  What is even more gratifying is that the quality was exceptionally high.  An American agency found that the quality of BMW’s produced in South Africa was better than that of any car manufactured in Europe – including BMW’s own mother company in Munich – and the second best in the whole world.

·       Tourism to South Africa is booming.  Last year it grew by 20% – faster than virtually any other destination in the world.

·       South Africa has shown that it is able to successfully host very large international events – such as the World Conference on Sustainable Development in Johannesburg last year – and the very successful World Cricket Cup competition that has just ended.  (The fact that our national team did not do very well is no reflection on the organisational success of the tournament!).

·       South Africa has also produced a number of international companies that are capable of competing on a global basis – including mining giants such as Anglo-American and Billiton; insurance companies like the Old Mutual and Sanlam and SABMiller, the world’s second largest brewery conglomerate.

·       South Africa’s banks and financial institutions have also shown that they can compete with the best.


For all these reasons, I am confident that South Africa will be the first African country to attain full first-world status.  It will not happen within the next decade or two – but we are on the right road:

·       We have the democratic and constitutional institutions to assure social and political stability;

·       We have a proven track record of sound fiscal and economic management; and

·       Year by year, we are proving that we can compete successfully on the international stage.


There is, however, no room for complacency.  It will take a great deal of hard work and communication to assure success.

·       We will need to strengthen and entrench our constitution and ensure that all South Africans will be able to enjoy all the rights that it guarantees;

·       We will need to maintain open channels of communication between our communities and between all our communities and the Government to ensure that we all pull together in the transformation or our society;

·       We will need to join hands with the government to ensure that it improves its ability to deliver essential, health, education, security and social services;

·       We – and the international community – must continually encourage the government to continue to implement the sound fiscal and economic policies that are increasingly enabling us to compete successfully in global markets.


My small foundation is working in a number of these areas – particularly in supporting and entrenching our constitution; in facilitating effective and open communication between community leaders and the government; and in encouraging minorities to become enthusiastically engaged in addressing the common problems of our society.


By doing all these things I am confident that the miracle will continue and that South Africa will successfully complete its journey to the first world.