Transcript: Economic Sectors and Employment media briefing by Minister of Rural Development and Land Reform, G Nkwinti
10 Nov 2009
Panel: Gugile Nkwinti, Minister of Science and Technology, Naledi Pandor, Minister for Economic Development, Ebrahim Patel, Deputy Minister of Rural Development, Joe Phaahla
This is the first report on progress of the implementation of the Programme of Action under the newly reconfigured economic cluster – Economic Sector and Employment Cluster.
The cluster consists of the following departments:
Rural Development and Land Reform (Chair); Science and Technology (Deputy Chair); Agriculture, Forestry and Fisheries; Communications; Economic Development; Finance; Higher Education and Training; Labour; Mineral Resources; Public Enterprises; Rural Development and Land Reform; Tourism and Trade and Industry.
The Progress report on the priority programmes of the cluster focuses on the following milestones:
* interventions to minimise the impact of the economic downturn on the country’s productive capacity as well as on jobs
* identifying opportunities for new areas of growth
* economic participation and laying the basis to up-scale interventions, to set the economy on a development path in order to deliver decent work and sustainable livelihoods.
Speeding-up growth and transforming the economy to create decent work and sustainable livelihoods
Out of the twelve areas of the joint Framework Agreement for SA’s response to the international economic crisis, six have been implemented. These include:
* A National Jobs Fund of R2.4 billion to finance a training scheme for layoffs has been established.
* South African Revenue Service (SARS) capacity has been strengthened to address high levels of illegal imports and customs fraud that results in thousands of job losses.
* Support for distressed companies in the automotive sector, clothing and textiles sector; increased incentives for the manufacture of capital equipment, transport equipment and fabricated metal products linked to South Africa’s infrastructure development programme.
* The Industrial Development Corporation has availed R6.1 billion over the next two years to support firms in distress due to the crisis. R993 million was approved for 15 companies an increase from R485 million for 14 companies during 2008/09.
* The Competition Commission has stepped up investigations into and prosecution of firms in the food supply chain with Sasol, Tiger Brands, Foodcorp, and Lancewood as examples.
* The National Debt Mediation Association, initiated by business continues to assist indebted consumers.
Beyond these six areas identified for immediate intervention and implementation, we have begun to identify policy options to unblock the structural constraints that impact on the country’s ability to grow an economy that can create more jobs.
A three-year Industrial Policy Action Plan (IPAP) is being developed in consultations with Cluster departments. The new IPAP expands the first plan with more focus on scaling up the industrial policy interventions to alter the structure of the economy so that it supports decent work and sustainable livelihood.
Furthermore, the Automotive Production Development Programme (APDP) is facilitating the growth and development of domestic components including vehicle manufacturing.
The Automotive Investment Scheme (AIS) - guidelines on the grant to both Original Equipment Manufacturers and component manufacturers is out for public comment. The scheme is meant to deepen the domestic automotive manufacturing industry. Work is also ongoing to explore opportunities in the medium and heavy commercial vehicle value chain.
The competitiveness programme for the clothing and textile sector was launched in April 2009. The architecture of a production incentive scheme aimed at preserving production capabilities and employment within the sector is nearing completion.
On the pharmaceuticals sector, we have received expressions of interest in the production of Active Pharmaceutical Ingredient (API) for the manufacture of ARV from potential foreign and domestic investors.
A presentation was made to the Ministers of Trade and Industry, Health and Science and Technology and high-level technical discussions with investors and the Industrial Development Cooperation (IDC) is in progress.
On crosscutting industrial policy interventions, work is being undertaken to leverage procurement, trade policy, competition policy, research, and development to support industrialisation. A draft trade policy was developed in partnership with key stakeholders including business and labour. The International Trade Administration Commission (ITAC) is reviewing tariffs on a case by case basis to reduce input costs and to provide relief in the clothing sector.
Research and development work is underway to support technology development and the effective commercialisation of technological innovations. We have established centres of competence in areas of titanium; downstream fluorochemicals; battery technology; alternative energy; information security; medical devices as well as bio-composites.
Work on the ambitious Square Kilometre Array (SKA) bid continues. Two out of the seven dish Karoo Array Telescope (KAT) have been fully assembled. Work on the remaining 5 dishes is on track.
A joint dti/dpe task team was established to enhance the Competitive Supplier Development for the infrastructure build programme to support local procurement.
National Treasury is reviewing preferential procurement regulations to align with Broad-Based Black Economic Empowerment (B-BBEE) and local procurement.
A business plan is being finalised on the implementation of the Khula direct model to maximise the impact on small, medium and micro enterprises (SMMEs). A call centre to promote the 32 days payment to SMMEs was established in September at the Small Enterprise Development Agency (SEDA) offices.
Sustainable resource management and use
Ad hoc working groups on the Kyoto Protocol and on the Long-term Cooperative Action have prepared South Africa’s position papers for the negotiations at Copenhagen in December 2009 including the post 2012 negotiations; stakeholders are being consulted on the positions.
A task team was established to develop the green jobs proposals and coordinate various government initiatives. Proposals are being developed for the domestic manufacture of solar water heating geysers.
Comprehensive rural development strategy linked to land and agrarian reform and food security
Our priority is still on the expansion of employment opportunities beyond urban areas by fully exploiting comparative advantages of rural areas. This includes increasing agricultural activities and support, development of light manufacturing industries to increase value-add by rural economies and promotion of tourism related activities that will utilise indigenous cultural activities and knowledge.
The development of the Comprehensive Rural Development Programme (CRDP) is anchored on a three-pronged strategy: Agrarian transformation (increasing all types of agricultural production), rural development (improving economic rural infrastructure) and land reform (restitution, redistribution, land tenure and post-settlement), the CRDP undertakes rural development in three phases.
The first phase focuses on breaking the back of hunger at household level to meet basic human needs; the second is the entrepreneurial development stage, characterised by relatively larger-scale infrastructure development and whilst the third phase is characterised by the emergence of small, micro and medium enterprises and village markets.
The recent launch of the [programme in] Muyexe in Limpopo on 17 August 2009, followed by the CRDP currently being piloted in all provinces, is already contributing to the creation of work in the rural areas.
In conclusion the cluster will strengthen efforts directed at meeting its milestones while also being realistic about the challenges imposed by the ongoing global economic crisis.
Questions and answers:
Journalist: Minister Patel, three questions if I may. Recently there were meetings on the value of the Rand. Could he explain apart from the panel what his view is of the Rand and what can be done. On industrial policy, I think the industry is going to feel a sense of exasperation that there is more planning on the way and that maybe he could update us on how the old policy is implemented. And can Government do anything about food prices or is it just a case of moral suasion?
Journalist: Minister Nkwinti, your acting Director-General (DG) was quoted in the press last week that the period for land reform to take place, that you are considering asking that the cut-off date be put at 2025 and not 2015. Is this now your policy? And then Minister Pandor, I don’t know if I am out of order to ask a question on labour because the labour department is not here? Can I do that? I was just wondering because this is a government policy, are we not faced with a position where at this stage it's quite an important sector of our economy which provides a half a million jobs is being threatened because perhaps regulation is not done well by the Labour Department. That it has everything at its disposal to act against the rogue labour brokers but it’s not doing so and now wants to kill it off.
Journalist: Minister Patel, can you tell us how much of the National Job Fund has been accessed so far and how many lay-offs have been averted and what kind of training are people receiving. And then the future of the Motor Industry Development Programme (MIDP), if you have anything to say about that. Then to Minister Nkwinti, has your department taken a firm decision on ending the willing buyer-willing seller model because your Director-General also alluded to this in Parliament last week.
Naledi Pandor: I am going to ask Minster Patel to start on the Rand value and other issues with respect to the Rand. The DGs should be here and if they make statements in the press then they are going to answer questions about it.
Ebrahim Patel: I will start with the value of the Rand. I think Government and Ministers as a whole have been making the point that we need a competitive exchange rate. That an exchange rate is a key determinant of a country’s competitiveness, that is clear. The challenges we all face is beyond that statement. What are the tools available, what are the opportunities, what are the costs - that is really what the debate is about. If we look at the international experience and I mention this more by background rather than by illustration of what we have in mind. Countries take very different views on how to influence the price of their currency. If you take China as an example it uses direct controls that links to a basket of currencies and sets a predetermined rate. A number of Asian countries have build up very substantial foreign reserves, particular after the East Asian financial crisis of about a decade ago and they use that as a means of influencing the value of their currency. Brazil recently introduced a tax on capital flows to influence that value and other countries use other means. Chile famously use what an economist called just to illustrate they have some degree of imagination, speed bumps which were measures to slow down the entry and exit of capitals to try to reduce volatility; so there is a range of tools available.
What we have said we would like to have an open discussion; both business and labour have approached us; they have pointed to some of the damaging effects of both volatility, which is the rapid change in the value of the rand against particularly the US dollar, but also some other key trading currencies and the value of the Rand. Now how would we wish to go about this and I deal with this cautiously given the unfortunate media report that appeared some weeks ago about our plans. We would like an open discussion so we would invite private sector economists to participate in a policy platform in which they can put to us the thoughts they have; we would invite the trade unions and that conversation. And of course we have an enormous capacity in government in the Reserve Bank, National Treasury and other economic ministries and it is through that process that we would be able to identify what are both the costs and the opportunities with different measures. So I have gone a little bit more in detail because there is so much speculation about government’s intentions in this regard. We call for an open discussion on these issues. We can’t suppress the messages coming from the private sector. There is a huge price to be paid for an exchange rate that prices South Africa out of international markets and incidentally, I am sure that all the journalists would be familiar with this, that the effect of a overvalued exchange rate of a Rand that is valued too high in markets is twofold.
On the one hand it makes exports more difficult; on the other hand it encourages high levels of imports. So unavoidably going forward we are going to have this conversation but we will have it openly, we will have it publicly, we will involve the parliamentary committees in this, we will involve the different ministries in these discussions.
On industrial policy, we recognise as government that industrial policy is at the heart of promoting competitiveness to the extent that we need to avoid the pressures of deindustrialisation. It’s a danger that I have spoken to previously. If you look at the volume of manufacturing output today, it's back to where it was in early 2004, but when you look at the trend line over this five year period you see a sharp, a steady increase in the volume of output over a four year period. And over the last year the line falls off the cliff. South Africa is the African continent’s biggest manufacturing economy, a danger that any recession holds - a classic definition of a recession is an excess of supply over demand.
People are not absorbing all the goods that are being produced during a recession. Competitive pressures increase within economies and across economies. We need to ensure at the end of the recession our manufacturing sector has not been damaged. If you take the auto sector there is global over-production which plants will close. Will there be plants in Germany, Japan or in South Africa? An industrial policy is one of the key means by which government helps to influence this. Ultimately the private sector are the key players, it's what businesses do, but as we’ve seen over the last 12 months in circumstances of crisis, of this particular crisis; government have stepped in in Germany with the Opel deal, in the United States with the General Motors deal and other countries more quietly.
So unavoidably, industrial policy is very important to us. In January this year the Department of Trade and Industry (DTI) will be presenting to the Cabinet Lekgotla an industrial policy action plan that is intended to be a lot more concrete - clear targets, identified support, sectors that can significantly grow employment and I would encourage you that after that report is released in January to talk to us again. I think you will find a well considered proposal, thoughtful, much more focused. We have certainly taken the lessons of the different sector interventions over the last two years into account in constructing the concepts, the ideas, the resource requests, the focus within the Industrial Policy Action Plan (IPAP). Because I’m sitting next to the Minister of Science and Technology I can’t avoid making the observation that industrial and technology policies are the absolute centres of what we have in mind. Technology is absolutely critical to industrial performance, it’s not an add on. When one thinks about the growth path South Africa has to take in manufacturing critically must be the injection of technology innovation in our future plans.
Final question on food prices: no we can go beyond moral suasion and that is we have sent a clear signal in the food supply chain that we will act decisively against any evidence of collusion. We believe there are some very helpful signs and we are now doing a report that we will present to the President in due course on the impact of the competition authorities' actions in the food supply area. As soon as that report has been completed and presented to the President we will be happy to share that publicly.
Naledi Pandor: On the jobs issue, you would be aware that the Department of Labour launched the Training of Layoffs Programme which is aimed at saving jobs and providing support to companies in distress. An amount of R2.4 billion was allocated for this with the intention that at least 120 000 jobs should be saved. Currently a total of 3 438 employees from 24 companies have applied for the government Training Layoffs Programme as of 2 October this year. The Commission for Conciliation, Mediation and Arbitration (CCMA) oversees this scheme while the sector education and training authority (SETA) provide the training.
We also, through the Department of Labour, through the National Skills Fund, a strategic project have provided support for the growth and development strategies of the various provinces and are assisting these to have programmes that provide employment opportunities. You also would have been aware of the detailed briefing that the Minister of Public Works gave yesterday with respect to the Expanded Public Works Programme. In order to support small businesses in growing the employment base of the country, again the Labour Department assisted 2 251 small enterprises and cooperatives in employment support initiatives. So there are a number of strategies that have been implemented as part of the programme aimed at saving jobs but also creating new employment opportunities.
Through the Mining Growth Development and Employment task team which translates into a very interesting acronym of Midget, job losses in a number of mining sector companies have been reduced through interventions that the Department of Mineral Resources through this Midget Programme has supported. What the measures do is provide mechanisms for reducing costs, introducing new technologies, energy efficiency measures, shorter working weeks, internal company transfers and training opportunities. So these are some of the interventions that have begun to assist in terms of jobs opportunities.
Finally the area of providing education to unskilled workers is a very important part of the response because a lot of the job losses are in the unskilled areas and we need more skilled workers in the country. And through the SETAs as well as the Department of Labour’s Adult Basic Education Plan there is a link of educational support alongside skills training.
The land restitution period: Minister is your DG a policy maker, or is the Minister a policy maker, has the date been changed?
Gugile Nkwinti: We are on record as having said that in 2005 there was a Land Summit held and the Land Summit concluded that the willing buyer-willing seller model doesn’t work. In 2007 the ruling party’s Polokwane conference came to the same conclusion, however, we still have to hear fully the conclusions of the other stakeholders, particularly commercial farmers who own this other part of the land. The fact of the matter is that there are many sellers here and there is one buyer with social responsibility and that is government. And therefore, for government not to purchase is not an option. The bottom line is that government therefore must deal with the 87 to 13% split in South African land.
In its wisdom government thought it could achieve a 30% land transfer by 2014 under the circumstances at that time. Current circumstances, both internally in the country right now and externally, mitigate against that being achieved. That is therefore the context in which the DG made those statements. In terms of the deadline, we are reviewing the deadline, it's not policy yet. Secondly we are also reviewing the willing buyer-willing seller policy. You have heard the President making the statement that it doesn’t work, so we are working on it, we haven’t reached finality yet.
Ebrahim Patel: Each day the numbers of people enrolling for the Training Layoffs increases so we hope we would be able to consolidate a figure that can be put out in the public domain soon. As an example, in one sector which is the auto component and engineering sector, the figure that the CEO provided this morning is that there were 7 431 workers enrolled the Training Layoffs Scheme. The training has been decentralised as we indicated, so we have left it to the SETAs together with business and labour to identify what kind of training is appropriate. We have provided three guidelines: training that is company specific and helpful to workers when they get reabsorbed at the end of the training layoff period, generic training like communications skills, literacy, numeracy which is particularly a challenge for example within the mining sector. And finally, information and communications technology (ICT) training, to use the industrial slack period to rule out knowledge and exposure to ICT so when the Industrial Policy Action Plan is released, you will see it relies very strongly on the higher road of industrialisation of skills, innovation and technology. And we want to be able to lay the basis of that as we respond to the recession now.
Naledi Pandor: In the discussion by Cabinet of this report from this particular cluster, Cabinet gave the instruction that we want to see this cluster far more outcomes oriented, less of the planning, more of the doing so your question is absolutely appropriate and it’s something that is being worked on by all of us to ensure that with this innovative use of technology new industries become a reality rather than the subject of plans being announced from year to year. We are concerned that we must be far more outcomes oriented and Cabinet has been very firm on this. On the matter of labour brokers, the discussions are underway and once Parliament has concluded its hearings and NEDLAC has finalised its viewpoint, I’m sure the Minister of Labour will make an appropriate announcement based on those processes. What is clear is something must be done to ensure that workers are treated properly and to ensure that any employer functions with due regard to their responsibility for the rights of workers and their interests. But it’s a matter on which Minister Mdladlana must make a statement based on the work that is being done by a range of institutions at this moment.
Journalist: We have a lot of debates about tug of war on economic policy, (inaudible).
Journalist: Minister Nkwinti, I just want to get clarity on the issue, we continuously read about a moratorium being placed on land reform transactions. The way I understood it is because there is no money, transactions weren’t able to go through and when there is money available the transactions will be put through. Can you just tell us if there is a moratorium so we can have final clarity?
Journalist: I am very interested in the Industrial Policy Plan that you will be taking to the lekgotla next year, you refer to it as an action plan, Minister Pandor says less planning more action. So to what extent will this be a plan that says we are going to spend R3.1 billion on this project? How quickly could you get it up and running or will there be more work and task teams before it's being implemented? You say we are going to rely very strongly on the industrial high road. Wasn’t that how we got into trouble previously when the previous regime was very focused on world standards and wanted to have an IT based economy? And all these people that are now unemployed got left behind because we were focused so hard on trying to educate people to do something that we couldn’t educate them to do. Can we really afford to focus on industrial high road at this point?
Journalist: Minister Nkwinti, what are the key interventions in economic development that the department is making on the ground outside of the small pilot in each province. So apart from land reform, how is this department making a difference for the broad mass of South Africans?
Ebrahim Patel: Cabinet determines policy not any one minister. All ministries together bring their contribution,, each makes a unique contribution based on the mandate of that ministry. On the question of Industrial Policy Action Plan (IPAP); I think what Minister Pandor has raised is the central difference that drives this Cabinet. Less discussion about industrial policy, more implementation and so we are asking hard questions, we're interrogating the ideas that are coming. They should not be broad ideas they should be implementable plans and that is the test we are applying to the IPAP when it will be released for discussion.
Now a few elements that has been raised by Mr Boyle, the first is on the higher road. We should differentiate the higher road from the idea of simply an IT intensive road. By the higher road we mean for example significant investment in skill and enhancement. Just consider for a moment China’s trajectory; China is the big story of industrial production in the 21st century and China started with basic production but they have moved rapidly up the value chain. They now, if you look at Chinese products there is increasing design and other innovations embedded in the manufactured goods that they make. They have improved the sophistication of their speed to market so the logistics to get products off factory floor into the high streets stores of New York and London and Johannesburg has improved very significantly and it’s something we can learn from East Asia - the need to have innovation at the heart of what we do.
Innovation in skills, innovation in technology and I take as an example the electronic sector. If South Africa is to recapture a production foothold in a sector where we have largely lost what we had it must be on the back of some fresh new ideas either in products or alternatively in processes. We have to be able to do something that someone else doesn’t do or we need to do what others do but better, and that is really what the high road is. Its not simply saying that we will subsidise and support the production of goods and services in which we can in the long term find no competitive advantage. It's to identify that and to support that.
Now Minister Pandor is responsible for a very important institution in South Africa, the Council for Scientific and Industrial Research (CSIR) and it’s an incredibly strong and innovative institution and we are talking now to see how can we use that capacity in the market more actively in improving industrial production so when we manufacture goods and when we produce services it must be that there is something in the market place that distinguishes it. That is what the higher road of development is about. It's not the production of simply IT products, it's really taking clothing, auto production, the green jobs programme itself, electronics, all the sectors in saying what do you need to do to provide long term sustainable advantage. And let’s be frank: it would mean changes across a wide front so the IPAP is going to require changes for example to our human resource strategy as much as it will be to our research and development incentives.
Naledi Pandor: I don’t think you can educate people to participate in what you term high road activities, I think you can have a balance. I also cite the example of Sutherland where we have the southern African largest telescope and where, from having two bed-and-breakfasts you now have 45, due to the presence of this large telescope which is attracting astronomers from all over the world and where now you locate telescopes of 14 other countries because they have recognised the geographical advantage of Sutherland through putting a major infrastructure, technological product in a town which would have remained isolated and extremely marginalised have it not been for this. So that’s a higher end but it has an amazing impact in a range of areas where you now begin to see the secondary school as the potential pool for producing future astronomers. Because they see the telescope, they begin to meet scientists, they understand what its value is to the village. So it’s a question how do you balance all these features of our society and again I go back to Carnarvon where the high school is now going to become a centre of technological activities through investments and facilities for the school which would not have come, had we not recognise the geographic advantage of Carnarvon and the Northern Cape and thus decided to place the Square Kilometre Array in that very small marginal town.
Thirdly the issue of indigenous knowledge - beginning to think of the remedies available in traditional communities which have never been exploited for commercial opportunity and not just wanting to exploit to the disadvantage of communities but to develop for wider benefit. You then establish through the Medical Research Council a facility for ensuring that we grow and identify those medicinal remedies and ensure they live for a sustained period, one through being identified, two through its efficacy being tested very clear and three at looking how viable and sustainable commercial interventions could be implemented. It's job creating, communities begin to benefit and become a player both in preservation as well as sustainable exploitation of the opportunity. So I think one should not see it as the unskilled left out because you are focusing on technology, it's how the two in a developing context can be brought together for innovation and growth.
Gugile Nkwinti: On the moratorium: what’s happening is that land restitution expanded its budget during the first quarter of this year, it doesn’t have money. We have managed to reprioritise; we are hoping we will get the final letters from Treasury for approval. We have made some amount available, we are trying to clear what is on the desks in terms of signed settlement. So you can see there is no moratorium. The second aspect of land reform is this redistribution, for example acquiring land through a budget. It's ongoing, those funds are not exhausted, so I hope today we bury the matter.
With regard to the second question, the instruments that the department uses the land redistribution programme, there is a very important tool that we use in the Department that is proactive land acquisition strategy,when you buy a farm with all the implements and livestock and everything. That is one important programme for the department. Once we got on top of that one, we have established a trading unit in the department in collaboration with Treasury so that we can make it more effective. What is happening there is this agreement between the farm owner and the farm labourers; government buys equity on behalf of farmers. Now when we follow this thing up we found there hasn’t been a skill transfer, there hasn’t been a dividend. Now we have to correct that, because if it can work it will be very good. Because people were on the farms as labourers, they continued to be labourers but they are part owners of the farm and that is the thing we must get right. So the moratorium therefore as far as the Share Equity Scheme is to correct this weakness in the system, get it right. We can’t stop it because we like it, we just have to sharpen it up.
Finally in terms of this impact again, it's infrastructure development, social and economical infrastructure including ICT type of infrastructure. We have come together with the Department of Communications to look at creating this infrastructure in rural areas. The Minister has been to Limpopo and is busy working on that now, trying to make sure that in rural areas they don’t get left out of 2010. We are working in all provinces right now. You will see [an] impact has been made in terms of facilities and structure there. So we are doing this type of thing because it's cross functional, so we are making impact. Thanks very much.
Journalist: Minister Patel, do you think the issues at Eskom right now could impact on our economic development and foreign investment from overseas as well what’s been happening with their CEO and the board?
Journalist: Regarding economic policy positions, is it not contradictory for you to make statements on monetary policy and a very real risk on contradicting the Minister of Finance? Do you not recognise that as a problem? Question to Minister Nkwinti, are we not developing an obsession with this 30% of agricultural land given agriculture is a very small component of our economy, something like 4% of gross domestic product (GDP). And can we afford to disrupt working commercial farmland and provide another 20 years of instability which lead to lack of investment by commercial farmers. And have you taken into account the position mainly of Afrikaans farmers in this regard?
Journalist: I want to make a follow up on the unfolding saga at Eskom. The chairman says that Government did not back his view of what’s happening there. I just wanted to find out why they decided to keep the CEO and let the Chairman go?
Journalist: A question on this policy conference that you would like on the Rand and exchange rate. What model would suit South Africa at this stage of all the countries that you have mentioned? What can our economy afford? On the industrial policy, it has been noted that South Africa has not created jobs even when we had a very high economic growth rate. What is going to be different in this next three years? Are we going to make up the million jobs we have shed in this crisis? Are we going to see something tangible?
Journalist: Minister Nkwinti, the decision by the court on Friday on the Communal Land Rights Act. What is the immediate impact of that on your rural development plans and what does the Government intend to do? Are you appealing?
Journalist: Minister Pandor, you spoke about encouraging the local production of solar water heaters. Is Cabinet giving any consideration to actively promote more widespread use of these devices by a way of regulation or subsidy as a way of offsetting the Eskom electricity increase that is coming up?
Ebrahim Patel: On Eskom I think all the governance questions should go to the Minister responsible for Eskom, that’s Minister Hogan. On the question of foreign investment, I think what foreign and domestic investors look for in respect of energy is price, reliability of supply and investment opportunities. We operate as a team in Cabinet, the position that we support a competitive exchange rate, is one that all the Economic Ministers hold. There is no country where anyone would say they would support an uncompetitive exchange rate. It’s not a policy conference, it's what we call a policy platform. It’s a series of meetings that Economic Development has already held on a number of issues. We have these on all sorts of issues; we have debated the global economic crisis, rural economic development, income inequality. So in the normal series of activities we plan, we provide an opportunity for business, labour, economists, specialists, for policy makers to sit, reflect and think. And generally we invite the media to that, so at that point when we invite you, you will have an idea of the kind of policy ideas that the private sector economists would raise with government for our consideration.
On the question of jobs, in the Medium Term Strategic Framework which was released some months ago, we made the point as Government that there is a need to significantly improve the labour absorbing capacity of the economy. And a range of measures that we have launched or that we are in the process of completing are all intended to address that central challenge of the future. We have characterised many of the discussions on this as policy reflections on the growth and development path. How to develop a growth path for South Africa that is more employment-rich then what we have been able to achieve to date. By the end of the next lekgotla we would be in a position to say more on that because clearly this requires a bit of work. Much of our thinking is evidence led. It means reviewing the performance of different sectors of the economy on an employment index. How many jobs have been created per unit of capital invested and could we have done better. So that is a very big part of our current work. And the Industrial Policy Action Plan is an element of that as is some of the other policy initiatives that have been mentioned.
Naledi Pandor: Cabinet has established an inter ministerial committee made up of Minister that are involved in the energy arena chaired by the Ministers of Public Enterprises and Energy, the two co-chair. It’s a brief is to look at issues with respect to certainly Eskom, but secondly, and I think more important brief is to address the issues of alternative sources of energy in a very serious and direct fashion and return to Cabinet with concrete proposals. There are a range of things that can be done and I think this focus we have had on Eskom as the sole provider of electricity is a problem for the country. I think we need to very seriously look at alternative sources. I have mentioned some of them in the arena of green uses, solar as well, biomass which is used in other countries, using waste as positive resource alternative fuel strategies. But also given that this country has this mineral resource which is a carbon producing one, the whole issue of clean technologies is a big issue. How do you use these old resources and fuels with new technology that helps you to have cleaner emission? There are countries that are experiencing this area; we have scientists with solutions in South Africa and we need to do more in this area. Wind technology is hardly utilised in South Africa, it’s a real opportunity and we need to make use of it. There are areas that could successfully set up wind turbines and some of our universities have begun to explore this. This whole set of opportunities has to become part of what we table before government in order to reduce dependency, create new opportunities and begin to be modern in terms of sources of energy for South Africa. So the ministerial team is working from my side, the Science and Technology, I am pushing the issue of green jobs, new technologies. I think that are real opportunities for South Africa and I think we must make more of this.
Gugile Nkwinti: We do not intend appealing the judgment, we think we should rather take the route of correcting whatever is the shortcoming through the green paper on rural development and land reform. So that’s really the answer to that one. With regards to the question on obsessions with the 30%, the answer is yes we are obsessed. Early on I referred to 87% to 13% spilt, what I didn’t say is that historically 13% of the population occupy the 87%. And 87% of the population occupy the 13%, that’s our obsession now to get that balance right. We talk about reform as a gradual redress of this imbalance. People out there are talking about justice and redress and at some point you can see this is an area which is a great potential for polarisation in South Africa. We have seen it happen next door. Our obsession is about averting the polarisation materialising in South Africa. And all South Africans must be obsessed with that question. Because the reason the founders of the democratic South Africa settled for negotiations is because they were obsessed about averting the calamity which would come about in polarisation in this country. There is this very important part that says disruption of agriculture s a very serious issue, the Afrikaner farmer particularly.
What is going on in South Africa, there are processes which from my point of view. We talk about food security, South Africa importing agricultural produce from other countries, but we are not saying, its not because land is being given to black people and they are not productive. It's because a huge chunk of South African land, there is a transformation of use. We have game farms now in this country, the meaning of that is that you are no longer producing maize, potatoes and so on, you have game. Just go to the Eastern Cape, you drive from Port Elizabeth to Grahamstown, as soon as you hit Sanderiver driving from Port Elizabeth you will see a sign of Ukhutu. When you turn off the R72 you see a sign of Ukhutu, everywhere you go you see huge fences, there is a transformation of land use in South Africa. So that is a disruption in so far as agricultural land is concerned. The 87% I referred to in terms of population now we are talking about something like 56% of people living in rural areas. The rest has gone to the urban areas; they are putting a lot of pressure on land on the 87%.
We are beginning to see that people are actually depleting the 13% and also because of the job opportunities that allow them to move towards the cities. It means that polarisation becomes a real issue when people start grabbing land and run out of land in urban areas, so you have a disruption there.
I spoke to farmers and they [say] you know Government, what you are doing. You go to individual farmers, you say we want land for redistribution, they double or triple the price of land per square meter. They say talk to us as an organisation; we know how much it costs to buy land. So I am saying this thing of disruption is real, at the same time it is due to some of government not being a good market player. We are beginning to learn from real South African farmers, who want to be a part of the solution to avoid the polarisation. That’s our obsession.
Naledi Pandor: The eTV person said the Eskom events might have an impact on our economic image. I really think we should be careful about making boardroom matters national and economic matters. The United States has had major criminal charges against leaders of investment companies; it has an impact. Banks have closed down in the United Kingdom, so just a simple boardroom matter shouldn’t be made a national economic issue and I think future approaches to funders for the Eskom board will look at how the country’s ability to meet the costs rather than the fact that there was a dispute in a boardroom. So I think we should be careful about how we transmit occurrences in companies into national events. I really worry about that. However, I think we should congratulate the Minister of Public Enterprises in having acted speedily to ensure that the board is able to function and to address the problem speedily.
Journalist: Minister Pandor, there is an obvious difference that the State is the shareholder in Eskom to a large extent and it does play a massive role. I just wanted to ask Minister Nkwinti a basic question which we asked right at the beginning of your department and I want to know whether it’s solved. We tend to focus so much on land reform that this whole rural development and where it fits in is hard to address. Have you discussed with the Departments of Agriculture and Local Government what rural is. Is it peri urban, is it small towns, commercial farming, is it communal farming - those differences between those departments. When you portfolio committee sat for the first time the chair said actually we don’t know what rural is. The IFP MP on the committee asked, do we know yet?
Journalist: I just wanted to say to the Minister of Science and Technology the eTV gentleman was expressing the views of investment bankers; I think there are a lot of people who are not happy with what’s happening at Eskom.
Naledi Pandor: Which investment banker have you spoken to? No, if you could indicate because I saw the Rand strengthening, the gold price remains high, platinum remains high, I haven’t seen a single financial sector price affected negatively this morning. So which was the investment banker you spoke to? No; I am asking you a question: which did you speak to?
Journalist: I have spoken to some personally; I don’t know who he spoke to.
Naledi Pandor: Could you name two you spoke to and the impact on the company? Oh thank you, that answers it. The point I was making while certainly we regard the developments as troubling, I don’t think we should convert them immediately into a national economic crisis. That’s the point I am making. If you disagree it's an unfortunate disagreement.
Journalist: I wanted to ask the Minister of Rural Development about the 30% but I think you last answer was better than the first one. The 30%, is it enough to evade this polarisation that you speak about?
Gugile Nkwinti: No it’s not the concept reform. I referred to it as a gradual process because you want to avoid that disruption which was referred to early on. Its got to progress visibly so the perfect situation would never be reached tomorrow; it could take a couple of generations. What people don’t want is government that is not sensitive to their needs, government has got to be proactive and sensitive to people with regards to land distribution in the country, so the answer is no. The 30% deadline was meant to demonstrate progress so that we make people understand and experience that progress. The question was the first question which said are you intending to extend the date, we are saying we are reviewing the date because we are sensitive to this matter.
The question about the definition of rural, when they ask this question it’s an ideological question. We said rurality is a way of life and a state of mind which revolve around land and livestock, that is what it is.
Therefore when we talk about land reform we are talking about transforming the relations of land, livestock and communities. For example the question about the Communal Land Rights Act (Clara), it relates to this issue that there is a question of a how in rural communities do you share ownership and use of land. We have to deal with this question as so far as this particular definition is concerned by saying women in some rural communities still do not have the right to own land because they are women. Therefore you have to deal with that gender issue in the ownership of land and therefore how women relates to land becomes a critical question. Say with cropping or livestock, there is this man who says to me you are looking for a farm, I said but I have visited your village, you have land there. He says no he's not the first born at home, he's a man and I said and so what. He said my father’s firstborn is the first heir to that piece of land, that communal land that is allocated to my family so I don’t own anything. For me this is an important issue, so community who holds power there, in communities you have a system of government in that sphere, you have councillors there, ward committees there, chiefs and headmen there. You have different power structures of all sorts there. What kind of socio-economic tapestry do you weave together so that everybody shares in the ownership of the land? I have given an extensive response, thank you.
Issued by: Department of Rural Development and Land Reform
10 November 2009
Issued by: Department of Rural Development and Land Reform
10 Nov 2009
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