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2nd Annual GBR Swaziland Economic Symposium 2017



 2nd Annual GBR Swaziland Economic Symposium 2017


Order of Procedures

 

The Programme Director,

Honourable Minister of Commerce Industry and Trade, Mr. Jabulani Mabuza

The Convener of Global Business Roundtable. Mr. Sipho Mseleku

Mr. Musa Ndabandaba, interim Chair of the GBR Swaziland

Dr Alexander Chisango of the world Economic Congress

 Ladies and Gentlemen

 

Accept my sincere word of appreciation to the organisers, Mr Mabunda, the interim Chairperson of the 2nd Annual GBR Swaziland Economic Symposium 2017, in particular, for having invited us, as neighbours of Swaziland to come and share experiences on how we can identify and use competitive advantages at our disposal as nation states and as individuals to take our countries into a higher development trajectory.

 

We are expected as South Africans to share lessons of experience under the theme:

“How has SA identified and used her competitive advantages”

 

Why is this important?

 

South Africa is one of the Countries in a resource wealth-producing resource rich continent, but often called “resource cursed.”  By 2005 statistics showed that the continent boasted the abundance of the following:

·         Four countries producing 85% of the continent’s oil – Algeria, Angola, Egypt, Libya and Nigeria.

·         57% of the Production of Cobalt from only DRC, Zambia and Morocco

·         53% of Diamonds from only Angola, Botswana, Namibia and South Africa

·         39% of Manganese from Gabon, Ghana and South Africa

·         31% of Phosphates from Egypt, Morocco, Senegal, South Africa and Tunisia

·         21% of Gold from Ghana, Mali, South Africa and Tanzania

·         9% of bauxite from Ghana, Guinea, and sierra Leone

·         7,5% of Nickel from Botswana, South Africa and Zimbabwe

·         5% of Copper from DRC, South Africa and Zambia

·         12,5 % of oil

Yet Huge parts of the population leaved in slums and informal dwellings, with lack of reliable electrification and reliable energy supply infrastructure; with controllable diseases killing millions of people – Swaziland 26%; Botswana 23,4%; Lesotho 23,3%; South Africa 17,3%. About 80% of children victims of Malaria and a total of 90% of death coming from the African continent.

 

69,2% of the population in the Sub-Saharan Africa was surviving in less than $2 per day, less than 54 years of life expectancy, with Angola, Chad, Congo and Lesotho at 47 years; Around 49 years in Mozambique, Nigeria, Rwanda, Sierra Leonne, Somalia, Zambia, Zimbabwe and Mali, while Swaziland was around 35 years. South Africa at….

 

It was found that one in every three Children in Sub Saharan Africa was not going to school – 23% for boys and 32% for girls, with Sierra Leon at 36 and 56%, Burkina Faso at 53 and 67% and Mali at 64 and 77% for boys and girls respectively.

 

Land is the main natural inheritance a human being is bestowed with to mitigate his living and survival needs, yet today the indications are that in many of our sub-Saharan countries, citizens are increasingly losing their hold over the land as demand for other use of land grows and the population grows.

 

South Africa and Swaziland are not immune. Drought in the recent years has not made that good either.

 

South Africa is taken as the biggest economy in the continent, yet it is facing the same challenges, experienced by any other country in the country, though in varied forms.

 

Over the years, especially after the 1994 democratic breakthrough, significant progress has been made, including growing the South African economy from about 400 billion plus to just above 3 trillion plus.

 

Life expectancy has significantly increased from its 50s in 2005 to 60s todate.

 

 Higher Education enrolment increased to a record high of 2.2 million by 2015, yet coming with its own challenges of accommodation and high and unaffordable cost of higher education leading to protests.   

 

Questions have arisen is to whether our education and skill development is informed by the industry needs and whether institutions like TVET colleges are relevantly capitalized to respond to these needs.

 

It is quite an irony for us to speak about progress, Yet the country has just entered a technical recession in the last quarter, about 9 million people are unemployed, millions of people still live hungry to day.

 

WHAT HAS SOUTH AFRICA IDENTIFIED AND USE HER COMPETITIVE ADVANTAGE?

 

It is an interesting topic and is as if asked to account on what we did, on our part as South Africa to respond to the mandate that was given by God to humanity many centuries ago, in the Garden of Eden.

 

I think it is better to understand the development of South Africa as a product of historical evolution and in this development you will have pre- and post-colonial responses and then Apartheid response that has exploited the indigenous majority to develop for the benefit of a minority.

 

While it has robbed the country of its maximum potential human intellectual capacity, through denying the Black majority opportunities for growth and development, using an evil apartheid that disenfranchised over ninety percent of the population and declared persona non grata in the country of its own; both the colonial and Apartheid system managed to establish, through the sweat of the black majority and imported and internal developed intellectual and technical capacity of the minority, an economic base that the democratic government built on since 1994.

 

Throughout history of development of South Africa, what stands out is that humankind in one way or the other identified land and its inheritance as an advantage to be exploited in order to increase the capacity to survive and prosper – The South African natives from Khoi, the San and other tribes recognized land, its plants, animals, water  and environment as nature bestowed inheritance for their survival and later recognize the value of human capital in productive process and its quality of both health and intellectual abilities.

 

When the Dutch settler arrives, first thing he admired is the land and its Agricultural potential, its location and later how its people, the indigenous people can be utilized for the development of a half way station between the West and East Trade missions.

 

This geographical advantage intensified the long identified importance of trade relations with other nations and regions.

 

The British eyes, on entry through the port of Natal, were set in its interest in mineral resources that brought about industrialization, which turned most of the peasant farmers into industrial proletariat.

 

The advantage they saw was on the minerals and the abundance of potential cheap labour reserve that was to be activated through forced systemic, but chaotic and violent dispossessions.

 

This has resulted in the building of an industrial base and mercantile capacity in South Africa.

 

These two were consolidated in the 1910 unity of the settlers that formalized the land dispossession of Black majority of the people – What Pixley Ka Isaka Seme proclaimed: “the native waking up a pariah in his own land”.   

 

This was concretized in 1948, when the National party came to power and introduced apartheid as a system of minority rule over the majority.

 

Through this system and in the interest of building a dream of a recognized nation of minority served by a majority, they intensified an economy based on mineral energy complex.

 

They were to use minerals as basis of development in South Africa, coupled by Agricultural commodities.

 

The economy was then developed based on commodity trade with other nations, but mineral as a base. This meant that energy complex infrastructure was to be developed to fulfill the needs for mining.

 

The state established state owned enterprises to drive this development. It is from this that we saw the emergence of big state monopolies like Eskom for electricity generation; Sasol for oil and synthesis from coal, Moss gas.

 

We also saw the emergence of Rail transport infrastructure like Transnet, which included then also South African Airways.

 

Through these companies we have seen development of networks of pit to port rail networks and harbours to facilitate Mineral exports.

 

We have also seen huge energy networks linked to production, which was mostly in today Mpumalanga province, to the mines and later industries which were mostly concentrated around what today is called Gauteng and spread also to service the platinum mines in Rustenburg and Diamonds in Kimberly.   

 

They also extended to the coastal cities, mainly services the harbours. Due to the major demand for steel products by both Transnet, Escom and the mining industry, government also established a big state owned corporation ISCOR, now privatized Arcelo Mittal, for steel manufacturing.

 

The state had also built strong capacity within itself for road construction and maintenance.

 

All these formed a basis for industrial development in South Africa and through these small, medium and micro industries developed through exploitation of down and upstream opportunities.

 

Due to growing demand for development financing by both the state and individual citizens and groups, the state established a development Financing Institution to facilitate Industrialization, the Industrial Development Corporation, IDC.

 

Government also facilitated for establishment of Afrikaaner Cooperative banks, that later amalgamated into one bank, the Amalgamated Banks of South Africa, ABSA. 

 

This has driven the growth of South Africa until the dawn of democracy in 1994.

 

Even after democracy this mineral complex industrial policy approach continued. The South African commodity export based economy continued until this day.

 

However, during the usher of democracy in 1994, the South African economy was on a downward trend and needed boost. 

 

As part of responding to globalization, Government introduced a self-imposed structural adjustment through the adoption of program called Growth, Employment And Redistribution, GEAR in short.

 

The focus was on reduction of state expenditure, state debt and privatization of some of the state assets/ enterprises.

 

This programme have resulted into significant progress with regard to the growth in GDP that had moved from a downward trend by 1994 to an upward trend of a high of 5,5% by 2005.

 

Government debt and deficit were reduced.

 

We have also seen emergence of new black bourgeoisies as a result of a black economic empowerment policy that was introduced during the GEAR programme.

 

However, this programme was highly criticized for not having created jobs and also facilitated redistribution.

 

Land reform programme was moving at a snail’s pace and threaten public revolt.

 

As South Africa was grappling with this, in 2008 the global financial crisis hit the world, the effect of which South Africa felt at a later stage.

 

In 2009 government introduced a central planning process, which it felt was to facilitate a national consensus on the growth trajectory of the country medium and long term. (1)

 

A commission was established that did its work and completed its consultation by 2011 and a National Development plan was completed and presented to government for adoption.

 

Meanwhile, between 2009 and 2010, Government, Business, Labour and civil society were locked in a discussion on how to respond to the Global Financial crisis challenges and by 2010 had identified growth drivers to be used to avoid economic doldrums. It also identified constraints. By 2010

 

These stake holders came up with a programme that turned the challenges and the constraints into an advantage, called New Growth Path (NGP), which was anchored on stimulating industrialization for employment creation and inclusive growth.

 

The new growth path identified new growth and employment drivers, which were in the following areas:

 

i.                    Agriculture and Agro-processing

ii.                  Mining and beneficiations

iii.                Manufacturing facilitated through Industrial Policy Action Plan

iv.                Tourism and other services

v.                   Social economy

vi.                Knowledge based sectors

vii.              The public Sectors

viii.             The green economy

ix.                 African regional economy

x.                   Infrastructure as an enabler

 

Infrastructure was identified as constraints to growth. At the time South Africa was experiencing electricity and energy shortages, ICT and water infrastructure was also identified as a challenge, road and Transport infrastructure was already a center of attention by government. So it was made an anchor to the 10 job drivers above.

 

This has seen the growth of infrastructure portfolio grew from around R400bn to R1.3 Trillion in the cycle of 5 years and expected to be R330bn only in this financial year.  The economy grew to 3%.

 

However the challenges goes on, but we continue to wrestle with it.

 

For instance, Declining rates of growth in South Africa over the last few years and a growth rate of 0,3% in 2016 as against the NDP target of at least 5%.

 

This growth rate, as well as the composition of growth, makes it difficult to meet our developmental challenges

 

16,2 million of our 56,5 million  people work (27.2%)

 

Commodity exports remain dominant which keeps us vulnerable to fluctuations to commodity prices.

The top five export products in 2016 were:

·         Platinum – 8% of total exports

·         Cars – 7% of total exports

·         Coal – 5% of total exports

·         Iron ores and concentrates – 5% of total exports

·         Ferro alloys – 5% of total exports (Numbers from Len Economy Update No 5 – numbers rounded for speech)

Interesting that our Top 5 South African Export to SADC begin to break the norm

·         1. Refined Fuel, USD 1.3 bn

·         2.  Electricity, USD 695 million

·         3. Trucks, USD 673 million

·         4. Diamonds, USD 528 million

·         5. Cars, USD 387 million

 

Another area that has developed over time is the automotive sector, where Exports of major brands of vehicles into the rest of Africa as well as other parts of the world.

 

The latest large investment being an IDC/BAIC investment of R11bn to set up a plant in the Eastern Cape that will create 2 500 direct jobs manufacturing sedans, pickups and SUVs for African markets

 

Industry is supported by local manufacturing of components using local products. One example is we use our platinum in our catalytic convertors which is also accounts for a large part of our auto component exports.

 

In 2015 the NGP was reviewed and it was agreed that improvements were to be effect. A nine point plan was adopted and announced by the President in order to accelerate.

 

This is Government’s response in growing the economy and emphasis is placed on the critical role to be played by the private sector (3)

The Job drivers:

1.      Revitalisation Agriculture and Agro-processing Value Chain

2.      More effective implementation of a higher impact Industrial Policy Action Plan

3.      Advanced beneficiation (adding value to our mineral wealth)

4.      Unlocking the potential of SMMEs, cooperatives, township and rural enterprises

5.      Growing the Oceans Economy and Tourism

      The Enablers:

1.      Resolving the energy crisis

2.      Managing workplace conflict

3.      Scaling up private sector participation

      The Cross-cutting areas to reform, boost and diversify the economy:

1.      Water and Sanitation

2.      Science and Technology

3.      Transport Infrastructure

4.      Broadband rollout

5.      Executing reforms in the SOCs

 

In conclusion

We would like to once more appreciate the invitation to share developmental views with you at this important forum. What we learnt is that for development to take place, there are things that we need to take care of. 


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Date: 2017/08/10 | Category: Global News | Posted by: GBR Admin

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