6 JUNE 2006





I have been asked to speak to you today about the role of business and civil society in the New South Africa.


Interestingly enough, the Constitution says very little in this regard.  It does not ascribe to business or to civil society any specific role, position or priority.


Nevertheless, both institutions are intimately affected by the Constitution which guarantees their basic rights and articulates the framework of values upon which our new society has been founded.


Business and civil society cannot function effectively – or sometimes at all – without the freedoms and security that they derive from the Bill of Rights. Among these rights are freedom of religion, belief and opinion; freedom of expression; freedom of association; freedom of trade, occupation and profession; non discrimination; language and cultural rights; the rights of cultural, religious and linguistic communities; access to information; access to the courts; just administrative action; and property rights.


It is appropriate to list these rights and to revisit them frequently – because their relevance is directly dependent on our awareness of them and on our determination to claim and use them.


The founding provisions of the constitution also set out the values on which our society has been established;  They include


The rights and values articulated by our constitution provide the broad framework within which civil society and business operate in our new society.


South Africa can justifiably be proud of its many achievements during the past twelve years:


At the same time we must acknowledge some critical failures:


The most serious of these is the harsh reality that almost half our population has hardly benefited at all from our new democracy.   Ironically and unacceptably, South Africa today is a less equal society than it was in 1994. The poor have become poorer and the rich have become richer.  There were more people living below the poverty line in 2001 than there were in 1996.


The reason for the persistence of poverty is not hard to find: it lies in unemployment: depending on the definition of unemployment, more than 40% of black South Africans are now unemployed compared with 37% in 1995.   At the same time, many of those who are most seriously afflicted by poverty are experiencing a crisis with the delivery of services as a result of serious deficiencies in half of our municipalities.  The same people have to contend with the ravages of AIDS.


On the positive side, the government has dramatically increased access to clean water and electricity and far more children and pensioners now receive grants.


Nevertheless, for almost half of our population little has changed.  They are still marginalized; they are still dispossessed.  They have been left standing in the dust and deprivation of poverty while the old white – and new black – middle classes have sped on to new levels of prosperity.  Little wonder then that their frustration is bursting out in increasingly angry protests and civil disturbances.


I would submit that – together with AIDS – black poverty and unemployment are the most serious challenges that we face.  None of us in this room – black or white – can continue to sleep peacefully while they persist.


But what should the role of business and civil society be in addressing these problems?


In fact, civil society is at the forefront in addressing many of these challenges.   It is present wherever there are problems and is often used by government as an agent for the provision of social services.  It helps to feed the hungry; care for the sick and aged; its looks after children and orphans; it helps those with disabilities; it provides support to those suffering from AIDS.  Civil society also promotes culture, language, the arts, and human and social rights.  In fact, it is active in almost every sphere of national endeavour.


Civil society is, in turn, supported by the donations in time, gifts and money of millions of South Africans.  According to a recent survey by the Centre for Civil Society 92% of South Africans make some or other charitable donation that collectively amounts to an estimated total of 930 million rand a month.  Most of the donations were channeled through religious organizations. 17% of South Africans spend an average of 11 hours per month working to support charities.

Civil Society also plays an increasingly prominent role in the political affairs.   According to Robert Putnam, the American expert on government, even non-political organisations in civil society are vital for democracy. This is because they build  social capital,  trust and shared values. In the political sphere they help to hold society together, facilitating an understanding of the interconnectedness of society and interests within it.

The political role of civil society is particularly important in in South Africa’s dominant party democracy – where opposition parties in parliament often feel marginalised and disempowered.  In such circumstances civil society’s participation in the national debate and in promoting the interests of its wide-ranging constituencies has become an important factor in our democracy.  Personally, I have always been impressed by the willingness of President Mbeki and senior members of the government to engage with civil society in debate on crucial issues confronting our society.

However, more needs to be done.  Many non-governmental organisations complain that – although co-operation with government at cabinet level is good – they often experience serious difficulties when trying to communicate with government departments – particularly at the regional level.

Also, many long-established NGOs complain that the government has threatened to cut off subsidies if their boards and management do not become representative of the population as a whole.  But how on earth can an organisation – for example like Afrikaans Christian Women’s Association become representative of the population as a whole?  Nevertheless, many such organisations provide indispensable social services – often to black South Africans as well.

Business also has an important role to play in helping to support the values set out in the founding provisions of the constitution.  The reality is that without the wealth that business generates we will not be able “to improve the quality of life of all citizens and free the potential of each person”, as expressed in the preamble to the Constitution.

Most companies quite rightly attach considerable importance to social programmes and are genuinely committed to public welfare and to the goal of a more equal society.  Nevertheless, government, political parties and unions are ratcheting up demands and requests for business to play and even more active role.

It is important to note that although social responsibilities are a significant part of the activities of any company, they can never be its central concern.  In the final analysis, the business of business is business.  Businesses must compete in increasingly tough national and international marketplaces for survival.  If they succeed they make a profit – which generates tax income for government and helps to pay for the government’s social programmes.  If they fail, they go out of business: they no longer pay tax to the government and they no longer provide employment to workers.  If government saddles them with too many extraneous social responsibilities businesses will find it increasingly difficult to succeed.  Without derogating from the need for companies to be good and caring social partners, it is overwhelmingly the government’s job to address the social, educational and health needs of its citizens – and not the role of business.  That is why companies pay taxes.

The most important contribution that business can make to the general well-being of the country lies in job-creation.  However, it needs the right environment to make this contribution. In particular, government should remove all impediments to employment:


For people in the second tier, wage levels should be set on a less rigid basis and not according to idealistic formulas dictated by government and by trade unionists who already have jobs.  Is it a coincidence that the number of people working in private households declined by 9% between 2003 and 2005 – precisely during the period when minimum wage legislation came into effect?


Government should also help to create an environment in which business can succeed by addressing the skills crisis.


We must – as a national priority – work together to improve education levels.  It is scandalous that the reading and mathematics levels of our children are worse than those of most African countries that have far fewer resources than us. I know that the Minister of Education, Naledi Pandor, is wrestling with these realities.  But it is not only her problem.  It is a problem that affects us all – and all of us must help her and the education authorities to do whatever is needed to change this situation.


It would seem to me that one of the key determinants of educational success is the effectiveness of school principals.  We need to identify the brightest and best for these posts.  And perhaps we need to establish advanced academies where principals can be given special training to play their pivotal roles in our education system.


However, a key element in dealing with the skills crisis is to retain the skills that we already have and to make use of underutilized skills in our society.    When Deputy President Mlambo-Ngcuka launched the joint Initiative for Priority Skills Acquisition (JIPSA) on 27 March this year she correctly observed that “the most fatal constraint to shared growth is skills.”  She went on to note that skills are not just one of the constraints facing AsgiSA but a potentially fatal constraint.”


However, nowhere did she refer to one of the main underlying causes of the skills crisis: the precipitate implementation of unbalanced affirmative action and black economic empowerment policies.


It is this problem that lies at the root of the collapse of key services in half of our municipalities and to service delivery crises throughout the public service.  The reality is that in its perhaps understandable haste to achieve representivity in the public service the government dispensed with the services of more than 120 000 experienced white public servants.    For better or worse they were often replaced with people who, through no fault of their own, did not possess the necessary skills, experience and training.  The constitutional requirement for demographic representivity was not balanced against the requirements for ‘efficient, economic and effective use of resources’ or for ‘good human resource management’.


The effect of unbalanced affirmative action and black economic empowerment policies in the private sector might in the long run be equally disastrous.


We must maintain balance when considering questions with such high emotional content.  We must, in particular, remember that, in practice, young whites still stand far better chances of being employed and promoted than their black compatriots.  However, we are dealing with deeply ingrained perceptions – which the government needs to address.


A good point of departure would be acceptance of Solidarity’s Code of Good Practice for Affirmative Action.  It accepts the need for affirmative action policies but proposes approaches based on the Constitution, the law and court decisions that would ensure that such policies are applied in a balanced manner that do not impose absolute barriers to anyone on the basis or race.


In addition to providing assurances that there is a reasonable career future for all skilled South Africans – regardless of race, the government needs to make it easier for foreigners with skills to work in South Africa and for former residents to return.  This would require the Department of Home Affairs to cut through swathes of red tape – but unfortunately, that Department is experiencing its own skills crisis.

Business must also play a key role in working for the achievement of constitutional goal of equality.  In particular, it needs to work with government on processes that will lead to genuine and lasting black economic empowerment.

As all of you know, the government has embarked on an ambitious process of broad-based black economic empowerment that has as one of its central goals to redress ‘the imbalances of the past by seeking to substantially and equitably transfer and confer the ownership, management and control of South Africa’s financial and economic resources to the majority of its citizens’.

It has devised a Code of Good Practice that seeks among other things to determine the percentage of companies that should be owned by blacks; the percentage of management jobs that they should occupy; and the proportion of their goods and services that they should buy from black suppliers.

No-one can quarrel with BEE’s underlying goals.  Ideally, black South Africans should to be properly represented at all levels of ownership, management and employment in the economy.  The question is: how can this ideal be best achieved in the real world?

The government’s answer is to try to pursue this ideal through legislation, through codes of good practice and through sectoral charters.  However, experience teaches us that it is difficult or impossible to determine economic outcomes without taking the market process into consideration.  More often, the result of such attempts is the opposite of their authors’ intentions.  I fear that it will be the same with some unbalanced aspects of BEE.

How can the state determine ownership levels on an ethnic basis in a market economy?  How can we achieve BEE’s objective of equitably transferring ownership from whites to blacks without undermining property rights?

Experience teaches us the following hard lessons:


What then is the key to true empowerment?


In my view you do not empower people simply by transferring property to them or by appointing them to some or other job for which they are not qualified.


Real empowerment means enabling people to acquire the skills, the opportunities and the resources that they will need to add value and compete successfully in a tough and competitive world.


Once again, the key is education and training.  Once again, the challenge is to bring about a dramatic improvement in our education system.


At the same time, we need to ensure that the playing fields are even; that no barriers and ceilings are artificially placed in the way of any South African.  We must also ensure that black South Africans have easier access to the financial resources that they will require to start and develop businesses.


We need to see more black entrepreneurs building up business empires – just as Afrikaners founded and built Sanlam, General Mining and Rembrant after the Second World War.


We should encourage companies to initiate share ownership schemes for their employees – not because this is required by law – but because it makes good management sense.


Companies should appoint and promote black South Africans – not because they are required to fill quotas – but because they are the brightest and the best.  I personally have no doubt about the ability of black South Africans to hold their own in any form of competition.


Deals should be structured between black and white businessmen – not as window-dressing and share-swapping exercises – but because both partners truly add value to the enterprise.


Above all, blacks and whites should be talking to one another about how back economic empowerment can be achieved in such a way that no-one is excluded.


I believe that we will make far more rapid progress toward true empowerment and equity by these means than by trying to legislate economic outcomes.


Part of the solution is to keep talking with one another.  Business and civil society will continue to make an indispensable contribution to the success of the new South Africa and to the realization of the vision contained in our Constitution.


We can all make a positive contribution in our daily lives