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Chairman: Good afternoon, ladies and gentlemen. As you know Cabinet had its Lekgotla last week from Wednesday to Friday, and, starting tomorrow, the various Ministers who are coordinators of the various clusters will do detailed briefings on the outcome of the Lekgotla pertaining to each cluster. But we thought it would be of some utility to yourselves to get the President to give you a broad context within which discussions were held at the Lekgotla, as well as the major challenges facing the country in the current period.

Mr President.

President Thabo Mbeki: Thanks. Good afternoon ladies and gentlemen.

I trust that you have been given a document. The document contains notes on the Cabinet Lekgotla (See notes dated 29 July). It covers the various areas that Lekgotla dealt with. These are the matters the Ministers will address in detail, starting from tomorrow. As you will see, it covers quite a lot of areas: some review of what has happened since '94 and various elements - social grants, extended public works, social cluster, economic cluster, governance, security and stability, foreign affairs and so on. I hope you will find the document useful. Certainly it should help in identifying the areas that the Cabinet dealt with and the areas of focus in terms of what we do, and what we need to do next. So I shan't go into the detail that is in this document. I know the people in this room are very educated, very literate, and numerate.

But let me say, the Cabinet Lekgotla had to deal with two things.

Firstly, it is a mid-year Lekgotla that we normally hold in July to see what has happened with regard to the programme that had been announced for the year. It is the normal process.

But, secondly, because we are already into the tenth year of democracy, the Cabinet thought that it was necessary to look, not just at the half-yearly situation, but at the nine-year span to see what progress had been made with regard to the overall objectives that we had been pursuing in the context of reconstruction and development - so as to integrate, within that larger picture, what has happened in the last six months.

With regard to that larger picture, the conclusion we came to is that, indeed, a great deal of progress has been made with regard to all of these areas that had been identified in the reconstruction and development programme. I won't deal with all of them.

If we take the economy, for instance, I think it is now generally accepted by everybody, that we have managed to overcome the macro-economic crisis that we inherited as we came into government in '94. It was possible to deal with all those macro-economic balances.

Secondly, major restructuring of the South African economy has taken place. . You see that in terms of growth of manufactured products as opposed to raw materials. You could see the impact of the restructuring of the economy during the East-Asia crisis in '97-'98. This economy was able to survive that crisis much better than most, because it could cope with the modern economy better. We have also seen that in the process of the global economic slowdown, which has begun to catch up with us but it has taken a bit of time to come through. But you can see it in the decline in exports, for instance, which results from that economic slowdown, but does not result from incapacity of the South African economy to produce those goods. So, you have had a modernisation of the economy; you have had an expansion of that economy so that it is much better capable of dealing with the consequences of global integration.

Now, we have some problems of success, because we have been saying, quite correctly, that South Africa has got a modern, sophisticated infrastructure of all sorts. But what has happened, is that because of the expansion of the economy as a result of that whole process of transformation - and that would include the impact of the macro-economic measures - what has happened is that our transport system is finding it very difficult to cope with this expansion. The infrastructure is there, we speak well of it as we should, but the fact of the matter is that you find that the ports are unable to handle the growth in exports and imports. The railway system is unable to cope with the growth in movement of freight. And one result of that is that it is shifting a lot of the freight onto the roads, big trucks, and so on. The consequence of the growth of the economy is the creation of that bottleneck.

So, the Cabinet looked at that matter in some detail and took some decisions with regard to the Transnet group of companies. Essentially, what we need is large investments in both rail and the harbours. So you will see some of this mentioned here (in the document distributed), about locomotives for the railway system, about the Durban container port, about the building of the new port at Coega to handle some of this increased freight. We even have pressures with regard to airfreight. Johannesburg International Airport handles by far the biggest proportion of airfreight in the country, but it is clear that, even in that instance, with better capacity you would be able to move more products by air out of South Africa.

So, large investments are required in that sector, in order to meet these consequences of the successes of the economic policy that had been put in place.

The other bottleneck that is also very clear, arising out of this growth and modernisation of the economy, is the skills issue. The modernization and restructuring of the economy demands very specific skills and a different kind of person. So, again, you will see that we spent quite a lot of time on this matter, identifying the specific areas where there are these skills shortages and saying: what would we do about it?

That will include even a re-focusing of the student financial aid scheme, so that we encourage young people, as they get into universities and technikons, to go into particular areas of study, as shown up by the skills shortages that have emerged as a result of growth and demand for those sorts of skills. This arises, as I was saying, from this process of modernisation, better capacity of the economy to compete internationally, and so on. So there will be matters here that would therefore deal with that element, apart from investment issues, questions about skills and the development of human capital of a particular kind.

Of course, you find the same phenomenon in the state sector within the public administration, similar sorts of pressures, as there are people here who are in excess of the requirements of the public sector, the number is about 24,000: But you would find that those people are people at the lower end in terms of skill.

Fortunately there is an agreement with the public sector unions about how to deal with this question. So, it is going to require retraining of these people to give them the capacity to engage in terms of the requirements of the modern public sector. So, I am saying, skills shortages that arise from growth and expansion and development could create a bottleneck if there are not enough people. There was even mention by one of the Ministers that employers in that sector are even thinking of importing welders from the Middle East, because we don't have enough welders.

So, you will see also reference in the document to what government is doing with regard to e-government. Again, it is part of this process of the modernisation of the society; the Gateway project we will start implementing around October, but that again needs ICT people. So, your person in the public sector who is down there, with very low levels of education and no other skill, is not the sort of person that the public sector would need. But, of course, we don't want to throw those people out into a large pool of unemployed. So it means you have got to give them new skills. You have got to give them skills - they don't have them - so that they are able to participate.

Now, this is, as it were, the modern part of South Africa, with your aeroplanes and your computers and the people sitting around this room, who read and write and so on. We, all of us, we are this modern sector. There is a sector of South African society represented, as I was saying, where you get people at low levels of education and skill in the public sector, who have to be moved elsewhere, by giving new skills and so on, so that they can do some work.

So, you then have this large part of South Africa, which is relatively uneducated. It is unskilled. It is not required in terms of modern society. I am saying "required" in the sense of employability. So, we have recognised this from the beginning, that large numbers of our people are poor and are in this condition. You can make the interventions we make about modernisation of the economy and so on, but it wouldn't necessarily have an impact on them, because of that degree of marginalisation. Therefore, you needed to make different sorts of intervention.

And so we took the decision that it was absolutely inevitable that, with regard to that sector, you needed to make sure that you expand the social security system. Otherwise, they are without income. And so you then see that there is a lot of work, that is why we focused so much on this issue over the last nine years.

Let us make sure that people, old people, get as good a pension as is possible. Let's introduce a child support grant, because lots of children whose parents are not working have to rely somewhere else in order to eat. Let's make sure we have got a proper school-feeding scheme, which is able to give food to these young people. Let's look at the Unemployment Insurance Fund - make sure it is properly funded - make sure it is properly run and is able to catch these people who lose jobs as the economy transforms. So, a lot of attention needs to be given to this matter of the social security network, indigent policies in the municipalities to make sure that people who are indigent don't get water cuts and electricity cuts and evictions, and all this kind of thing. They are indigent, they need support and they truly cannot afford any of these things. So, I am saying, we need a whole range of interventions with regard to this sector.

Now, part of the importance of the progress with regard to the macro-economic balances, the better management of the macro-economy, is that it has released funds to enable that social support take place.

And it is on that basis that we have got to manage the budget deficit down from the 8%-10% it was when we came into government - manage down because it was completely unmanageable at that level. We nevertheless said that even as we do that we must make certain that we do not reduce social grants, that, indeed, we should increase them.

So you would see that throughout these nine years, whatever we have done about the budget deficit, it has never impacted negatively on the people who required this social support. It is on that basis that it has been possible to increase social pensions and so on, and the work that we are doing now, to ensure that there is proper registration of children, that campaign continues to make sure that these children get registered who are entitled to this. Of course it throws up other challenges, such as the matter of identity documents. And you will see reference to that also. Therefore we will also have got to intensify the campaign for people to get identity documents on the basis of which they can then access social grants. So that work will continue as a response to improving the quality of life of this sector of our population in particular, that is not easily integrated within the modern sector of the economy which demands different types of skills which these people don't have.

But a second element is that it is clear that we have needed special interventions with regard to the sector of society that we might call the marginalized; and said, even if, the rate of growth and investment in South Africa were high, however high, it does not necessary follow that those higher rates of growth will result in the absorption of these people. You may get these high growth rates and make no impact on the absorption of this sector of our population.

Therefore, you need to come at that sector in different ways. And so we said, let us have this integrated and sustainable rural development programme. Let us have the urban renewal programme, so that you focus in the totality on the challenges that face this rural node, say Kgalagadi rural node. It is made up largely of very young people.

If you look at the Census 2001 for instance, you will see that the population in the rural areas dropped sharply after the age of 19. People beyond this age migrate to other parts of the country. You see this in the statistics of Census 2001 for instance for the Eastern Cape - an actual, absolute drop, not a relative drop, an absolute drop in the numbers of people [of this age group] living in the Eastern Cape. A lot of them have emigrated to Cape Town. So you end up with a population that is very young and very old. Now you are talking about very many people, eight hundred thousand people in a district. Very young, very old. No prospects of this modern, growing, dynamic economy impacting on them to change their lives.

So you need different interventions, hence these programmes. And so, you will see again in these documents that the Cabinet discussed the matter of an Expanded Public Works Programme.

It would be incorrect to conclude that areas of this kind, which I am talking about, are capable of development through the attraction of private capital to the Kgalagadi rural district. Private capital is not going to come to the Kgalagadi rural node, except me, who might open a fish-and-chips shop, but that is about it. So, you need significant capital transfers to these areas. Regarding those significant capital transfers, in order to change the lives of the people, it would be unreasonable to expect that business people must come and make money here, where they are going to make losses. So they won't come. So the state sector then has a particular responsibility. Now that is the place of this Expanded Public Works Programme: that, in addition to the things that we are saying about urban renewal and rural development, we need a programme like this. Here, in this area, even the level of skill you need to find in the community, to lead programmes, implement projects, is not there.

I am sure most people here stay in Johannesburg. You have seen what has happened to Alexandra Township, which was one of the urban renewal places. A lot of progress has been made, in part because we have the project managers we need to manage the whole issue, such as around the Jukskei River. We have got to remove people from these banks because, when the river floods, they get drowned. There is pollution; all of these things. You have to shift these people away. You have got to clean up this river. You have got to handle it differently. We need a project manager for that. You will get a project manager in Alexandra.

But if you go to Kgalagadi and say that they are developing their goats [boerbokke] - I understand the meat is very good, the milk is very good, and some Saudi business people have placed a very big order. (I don't know why they like goats, but it seems they do.) -: a very large project, very good, hardy goats, and so on. When you say, you want people, farmers, to come and manage this large project, they don't come.

Take retention of teachers. You want teachers here; you want nurses to run clinics and so on. But, because it is out there, it is a rural area and underdeveloped - these are just examples of the skills shortages that you would find. So the public works programme must say - you are not dealing with Johannesburg or Alexandra Township - you are dealing with Kgalagadi. What do we do, to find this kind of person who will manage this process of change and development in Kgalagadi? You will have to pay them additional money, some incentive to be in this sort of area. What kind of economy is sustainable in Kgalagadi? Never mind the fact that it is rural; it does not mean necessarily that it is agricultural. So what do you do about Kgalagadi It must be apart from the social grants, so as to generate a level of economic activity, which is going to give people employment so, indeed, they come off the social grants. So the public works programme must address all of these things, roads and so on. So, it is not merely a matter of the provision of services and creation of jobs. Those are important. But, also, it is this question of the change of these societies, so that, to the extent it is possible, they become viable economic entities, which are able to support the population in these areas.

So, we discussed the expanded public works programme at some length, and agreed on additional steps that need to be taken. The planning work has not been completed with regard to this because it is not merely a matter of saying that over the next twelve months let us build so many kilometres of rural roads. It can't end there. Sure, you have got to do rural roads, but there is a lot more that you have to do to change the nature of the society so that it is able to develop.

But it is clear, then, that it became possible to increase these social grants in quantities of money and in terms of reach. How many people do we bring in? Let's register more. Let's make sure that the people entitled actually get it. Let's make sure people have got their IDs. That became possible because of the progress made with regard to macro-economic management. Rather than our having to service our debts to the bankers from whom we have borrowed money on a 10% budget deficit, you reduce that; it releases more money for us to be able to attend to the social need. That together with changes in the economy makes it possible for us now to talk about these questions that with regard to the marginalised areas of our society, both urban and rural, let's not respond to them merely by social grants. Let's also respond to them by development.

So this is the larger setting. This is the larger setting and, with regard to each, you would see we can break it down into thirty different categories. You can see the progress that has been made.

If you look at the Census 2001 figures, the average figure in terms of rates of literacy in the country is not bad. But, if you break it down, and look at different parts, you can see that the average statistics hide some truths.

Now [pointing to a table] there are four columns here. The first column is of people not attending any educational institution. The second one is people attending pre-school and primary school. The next column is college, technikon, and university. The other one is adult education.

These first two columns - this is those not attending school. This one is up to primary. This is university, technikon and so on. This is adult education. You see what is happening? The total population is here. Here [pointing to a specific area on a chart], there is nobody.

Now when you look at this figure and you are sitting as government, you see that we can't be satisfied with an average statistic. Because that average statistic does not tell you this truth, that you have got a population here (in certain areas) which is largely uneducated. It goes up to primary.

So the kind of person I was talking about that is needed by both the modern economy and the modern state, the modern state administration - you are not going to find this person here. This is Kgalagadi, North West and Northern Cape and OR Tambo in the Transkei, Eastern Cape. So, again, if you say we must make sure that there is development in these areas and find local people to participate because they know this area, you are not going to get them. They are not here. You have to fish them out of Johannesburg and Cape Town and so on and they won't come. They are driving a Mercedes Benz and a BMW and would say that there are no roads but my car is going to get messed up.

Now, this is the challenge that the Cabinet was looking at. Given the progress we have made with regard to the economy and so on, we have better possibilities to address this matter in a different way. Not only with social grants but differently.

Let's address these matters on the level of education here. In the first instance we have to do it by importing people with the skills, but also find a way of getting people from this area who have access to the skills.

The country has much better possibilities now to address all of these matters that I am talking about. And so you then both see, both in this document and the presentations that will be made by the Ministers in more detail, how we are moving with regard to these matters - further expansion of social grants, maintenance of the system of food parcels, extension of the time to do this, because there are still no other possible interventions to put incomes into the hands of people, except this way. So we must continue with that, and more work needs to be done there.

There is the question of levels of education. Your education starts with that pre-school and primary and so even the matter of children who are studying under a tree, we have got to resolve as a matter of urgency, because. Because, if they can't pass beyond this stage, they will not go anywhere else. So we'll see reflections on that about work that is going on in order to make sure that, indeed, all of the children are properly housed in classrooms.

There are also other questions, such as the integrated, integrated justice system, to increase levels of security in the communities, part of which are driven by these levels of poverty and deprivation. Again, there is progress there with regard to reduction of time in terms of preparation of cases, cases awaiting trial, introduction of Saturday courts, as well and so on.

We should be able therefore to say, with regard to the progress which has been achieved in the social sector, in the economic sector and so on, we should not only maintain that but also increase the rate of progress.

Secondly, we have better capacity now, to transform the society in the way that I have been talking about, with regard to helping to bring the marginalised sectors of our society into the mainstream. That requires special interventions, public works programmes, rural development etc.

So, we believe that the country has made a lot of progress in these areas and should therefore be able further to speed up the process of change. The ten-year assessment that will be made, South Africa ten years after liberation, will of course include other elements, because we have got to answer other questions apart from these - not just how many houses have been built and how many people have been educated, how many people are employed, how many not.

These are important questions, obviously, but we have also got to discuss other elements of social change. To what extent, for instance, have we dealt with the matter required in the Constitution, of building a non-sexist society? What progress has been made with regard to that? To what extent have we moved with regard to addressing issues of building a non-racial society? To what extent have we moved with regard to questions of social cohesion?

There are various other questions that will be part of this. The Cabinet again reflected on this. Again, more work needs to be done, but it is a bit more difficult to measure than the number of houses built when you come into this area, but they become an important part of assessing the progress that has been made with regard to building a new society and, of course, identifying the challenges that remain, and there are many.

But, as I was saying, our view is that, indeed, the country has made a lot of progress with regard to this whole process of reconstruction and development, and has better possibilities to move forward faster. And so that is generally what we are dealing with.

Chairman: Thanks, Mr President, and good afternoon to Cape Town [via video link]. We will take your questions.

Member of the press: [Name unclear]:.Just to get back to the economic theme. We saw a significant slowdown in the growth rate of the economy, with GDP coming in at 1,5% from 2,4% previously. We have just heard that inflation has dipped sharply with CPIX figures coming in at 6,4 % against 7,7%. My question to you is: your view on interest rates in terms of overcoming this economic, well, I wouldn't say crisis, but potential problem. What would you like to see happen to interest rates? And what influence can you bring to bear to make that happen? Thank you.

President Thabo Mbeki: None. No influence whatsoever. No, you know very well this matter is determined by the Reserve Bank, Monetary Policy Committee and so on. I am quite certain that they are sensitive to this issue of the impact of high interest rates on rate of growth in the economy. I am quite sure they are sensitive to that. I mean, if we have to go by their last decision, when there was a correction arising out of the determination by Statistics South Africa that they had made a mistake, they responded immediately by reducing interest rates. I would imagine that they would be sensitive to that issue. We don't intervene in those processes. The Governor of the Reserve Bank and the Minister of Finance, normally they talk to each other and no doubt, from the point of view of the government, the Minister of Finance would communicate the message that we do indeed need cheaper capital. It is a very important part of what would help to increase this growth rate. I know the Governor of the Reserve Bank is very sensitive to the matter of the inflation target. And so, we have no influence over the matter, but clearly cheaper money would be good for the economy. What they decide I don't know.

Member of the press: Vukani Mde, This Day: You mentioned the inequalities between one South Africa that is represented by us, the people, gathered here in this room. And the second South Africa for whom the macro-interventions that have been made haven't had the desired impact. I wonder if the Cabinet discussed at any length the possibility of a basic income grant or any other form of non means-tested grant system, and, if so, what were the major stumbling block, as you see it, towards such a system.

President Thabo Mbeki: Well, as you know, we had discussed this matter of this basic income grant some time ago and said that the approach that we should take is to evolve a comprehensive social security system.

You know that there had been the Taylor Commission which had looked at this question, and made some recommendations. Cabinet, indeed, had studied those. So, we did indeed look at this question of the comprehensive social security system. As you can see, it is already quite big. I mentioned some of the elements of this. You see, that comprehensive social security system includes the old age pensions, it includes the disability grants and it includes a new programme that we have introduced, of the public health system that has started introducing aids for people with disabilities, wheel chairs, and all of this kind of thing free of charge as part of the social security system. The child support grant is part of that system. The Unemployment Insurance Fund is part of that system.

So, we looked at that the totality of the system. We discussed also the social health insurance. What do you do to make sure that everybody has got access to health facilities and in particular the poor? We looked at the totality of this thing, also the food aid scheme.

So the government's view is that, if you said let's give everybody R100-00 a month, it is not going to make a difference. First of all, as you say, it is not means-tested. You and I don't need R100-00 a month. If we took that R100-00 we will be taking away from somebody else who is actually in need of that. It would make no sense. And, if you look at the totality of the interventions, indigency, money with the municipalities and so on, we think that the best way to come at this matter, of the marginalised, the poor, who have no source of income, no way of living, except through public support, that is the route. The notion that it is one single intervention that can be made that is going to solve the problems is wrong. And to introduce a system of social support, which indiscriminately gives to a millionaire R100-00 and this poor old lady on a pension R100-00, it really doesn't make sense.

So, the matter is being addressed. We looked at the question: here is the totality of the social interventions with regard to social security. Are there gaps? Is there proper co-ordination? Who is falling out of the system? And that was part of the reason that there was focus on the identity documents, because you can see when you go out into the communities and talk to people that there are people who don't have IDs and therefore can't access any of these things, don't have birth certificates in order to go and apply for an identity document.

I saw on television the other day that some woman in the Eastern Cape was very proudly showing her birth certificate: now I have got this thing! Because it means a lot to them. We talked about the need to introduce this echelon of Community Development Workers as quickly as is possible. And these are multi-skilled people, who don't work in an office as public servants, but who must go out and work among the people and deal with this issue of community development. We need those sorts of people, because they would be able to access this kind of person, this old lady who doesn't have an ID, doesn't know there is a child support grant, may not even be getting her pension and so on.

So rather than go for one intervention, as though this would solve the problems, we said let's have a comprehensive social security system and make sure there is nobody who falls between the cracks. So, that matter was discussed including this important issue of the community development workers.

Member of the press: Jan-Jan Joubert, Beeld: Sir, just three matters for clarification if I may? Firstly, on the issue of railways, it seems from the Parliamentary Portfolio Committee on Transport as if rolling stock, ageing rolling stock, is our main problem. This is very expensive. Have we looked at how much this is going to cost?

President Thabo Mbeki: Yes. Let me answer them one by one. Yes we did. There were figures, actual figures mentioned. How many millions or billions of rand would you need with rolling stock, with engines, rehabilitation of railway lines and so on and how much of that might come from Transnet, how much might come form the government, how much of it might Transnet raise on the capital markets and so on. Yes, we looked at that and then charged a group of Ministers to work together to come with specific recommendations. Because they have got to liaise with Transnet with regard to that. Yes, there are specific figures. We looked at them, yes.

You had a second question?

Member of the press: Jan-Jan Joubert, Beeld: Thank you, Sir. Those of us who ventured to Ulundi instead of Maputo in July, heard your Minister of Home Affairs complaining bitterly regarding traditional leadership and we know that this legislation is going in front of Parliament. Was it discussed by Cabinet again? Did it come up and what were the feelings?

President Thabo Mbeki: No it wasn't, it wasn't discussed. You know that the Minister of Provincial and Local Government had been working on two things. One was the White Paper on Traditional Government and then the legislation. In both instances, we constituted task teams, which included representatives of the traditional leaders. So, the White Paper included participation by the traditional leaders who made various inputs and then participation by traditional leaders in the final drafting, which took into account what had been said. The same thing has happened with regard to the legislation. So the documents that were submitted to Cabinet and approved by Cabinet to be taken forward to Parliament are those documents which were done with the participation and the agreement of the traditional leaders. We didn't discuss the matter (at the Lekgotla) but that is what happened in the process. You had a third question?

Member of the press: Jan-Jan Joubert, Beeld: Thank you. Just regarding this matter of skills shortages and the fact that we have to educate people and train them. Many South Africans who have many skills are living abroad at the moment. Is government looking at perhaps getting these people to also contribute and are you going to make it perhaps easier in the way that you make it easier for people to work in rural areas, for those people to also come into our economy and help us with that?

President Thabo Mbeki: Well yes, indeed we thought that it was important to encourage those South Africans to come back. So, you would find that in some areas, I suppose it would be the areas where you would have the largest concentrations of such people, the South African Embassy in the US, in Washington, and the South African High Commission in London, for instance, have started programmes there aimed at this particular thing. So certainly.

There are other initiatives that have been taken. I know for instance in the United States initiatives have been taken by South Africans there themselves - it was not by any government prompting, but by people who have said that they feel that they need to contribute to the development of the country. I saw one of these groups, for instance, a year ago, and they were saying what they were doing as South Africans, to contribute. So, certainly yes, we are attending to that, to that matter.

Member of the press: John Battersby, Independent Newspapers: Thank you Mr President. I am not going to ask three questions but I am going to ask one question with three parts if that is OK. And I am going to take us off the subject of the Cabinet Lekgotla and go to another matter which is very much under discussion by members of the public, regarding the investigations into the arms deal.

The three parts are, first of all, the Deputy President has said recently and has repeatedly said every time this investigation has arisen, that they are politically motivated; if you can comment on that.

Secondly, the National Director of Prosecutions, Bulelani Ngcuka, has said on several occasions now that he is the victim of what appears to be a concerted smear campaign against him, which he links to his investigations into the arms deal.

And, thirdly, the Justice Minister seems to be involved in quite a serious difference of opinion with the Deputy President over who leaked the 35 questions put to the Deputy President which was published in the country's largest Sunday Newspaper on Sunday. Thank you.

President Thabo Mbeki: John, you are perfectly free of course to ask the questions. I think I have got freedom on how to answer them. What has happened always, is that we've sought to stay out of the issues that either the Police are investigating, or the Scorpions, or somebody, not to intervene in those matters. Such information as I would have, for instance about the case that you are referring to, I would get from the Minister of Justice, because the National Director of Public Prosecutions, as you know, according to the law, reports to the Minister of Justice. And as to the substance of the charges and counter-charges, I really don't know. I don't know who is right and who is wrong, but I have said before that the law enforcement agencies must do their work as they think is right. And that, indeed, if there is any cause to charge any person, they must then proceed to do so and the courts must hear such cases and determine what is the truth. So what has happened with regard to leakages of documents and public debate about that, I doubt if it helps either the investigators or whoever is being investigated. My only wish would be that they should proceed with this matter as quickly as is possible, and do whatever they believe is correct with regard to this.

Member of the press: John Battersby, Independent Newspapers: Is the President concerned that the Deputy President, who is the second most senior politician in the country, is saying that the legal case against him is politically motivated?

President Thabo Mbeki: Of course I am concerned about that. Presumably there would have been contact between the National Director of Public Prosecutions and the Deputy President, whether directly or through his lawyers or by whatever other means. So, both of them have much better knowledge of what is happening with regard to this matter than I do. I haven't sought to get into this matter, because the problem with it is that one can't avoid forming a judgment. If somebody comes and says to me, let me give you a detailed presentation of what it is that we are investigating, and the next person comes and says, let me give you a detailed presentation of what I think about these investigations that are taking place, you can't avoid forming a judgment. Even Presidents are ordinary human beings. You would form a judgment and you begin to be part of the process of the determination of what is right and wrong. And because you are sitting in this position of the President, you could very well do a wrong thing.

If it is a football fan who wants to discuss in the streets what he thinks is right or wrong, that is fine. That has no impact on any of these processes. But if it is the President who begins to say I think this one is right, I think this other one is wrong, we are beginning a process which I think would be quite unhealthy, of intervening in this process.

Of course I am concerned about this. I am concerned about the mere fact of the allegations, but I suppose the prosecuting authorities would not have said what they have said or done what they are doing if they didn't think they had just cause to do it. And I would imagine that the Deputy President wouldn't make the statements that he is making unless he was convinced that he had just cause to say the things that he is saying. And I think it would be a bit dangerous for the President to place himself in a position where he has got to make a determination about the rights and wrongs of these various positions. I really do wish that this matter could move forward quickly as speedily as possible, so that this thing gets resolved, whichever way it goes it gets resolved. Concerned, yes indeed, of course I am.

Member of the press: Carol Paton, Financial Mail: May I ask two questions? Firstly, do you have any kind of emergency or urgent plans on the skills crisis or are you just going to continue on the government's human resource development strategy. Do you think that is going to cover all your needs?

The second one is, in the light of your ten or nine year review, your ten year review, and particularly looking at the economy, did you discuss the question of the impact of Aids and what impact it's going to have on the economy in the future?

President Thabo Mbeki: Yes, that matter came up in the document that was done, which was reflecting on these last nine years. Indeed, yes, the question was mentioned. To my recollection there were not any figures that were attached to it. Yes, indeed, it was raised.

On the skills matter, I don't know what would constitute an emergency programme. I really don't know what would. But there are interventions that we are talking about.

You know, for instance, that for some time some of the SETAs have not been functioning properly. A lot of money is there, but unused. The Minister of Labour will have to make some very urgent interventions with regard to that, to make sure that that happens, because, if you are talking about the skills that are required, a lot of them don't require a year's training. You can provide some of the skills that are required now relatively quickly, provided that those sector education and training authorities actually do the things they are supposed to do with the money that is actually there. So that is one intervention.

There are the longer-term interventions. For instance, there is the student aid financial scheme, which we need to look at, and how to use that to encourage young people entering technikons and universities to go into particular skills. Now that is a longer-term sort of thing, and you are not going to be able to produce an engineer in six months. But we must be able to encourage more of our young people to come into that. That, of course, as you know relates to other questions about teaching of mathematics and all of that.

We have agreed that we need to have a look at the application of our immigration policies to ensure that the immigration policies don't impact negatively on the possibility to attract the sorts of skills that are required in the country.

With regard to the public sector, for instance, the training programmes within government themselves, we have looked at them, as I say, we have actually identified the specific skills shortages. I am looking for the figures somewhere in this document. We looked at the specific skills that are required by the economy, for instance, identified skills such as scientists and researchers, managers, professions, finance, ICT engineers and others, as well as artisans and related areas.

So it is that kind of spread.

With regard to artisans, it is the technical colleges, the SETAs, that are a very important point of entry, which can produce results quickly.

With regard to engineers and scientists and so on if you talking about the profile of the research scientists, they are largely middle-aged, male, and you have a very big gap between them and the younger scientists. So it is quite clear that if we don't intervene by bringing in younger scientists now, in another seven, eight, maybe ten years, you are going to have this layer of research scientists retiring with nobody to follow them. Now that intervention you make partly by the system of encouraging students to enter universities and technikons to do particular subjects.

So, it is a variety of interventions. I don't know what would constitute an emergency in this case. But, certainly, it is critically important that at this artisan level we should do the things that we said we have to do.

Member of the press: Ranjeni Munsamy, Sunday Times: Mr President, I believe that there is tension between the Police and the National Director of Public Prosecutions and you mediated a meeting between National Commissioner, Jackie Selebi, and Mr Ngcuka. Can you shed some light on what this dispute is about and what was the outcome of that meeting?

President Thabo Mbeki: Well, you might know a bit more about the tensions between them.

The issue is one that we have been discussing for some time; I have discussed it both with the National Director of Prosecutions and the National Commissioner. We established the Scorpions as a particular instrument in terms of law enforcement and thought that, because of the kind of work it would be doing, in order to ensure that time is not wasted in investigating cases that would collapse in the Courts, to ensure that cases are properly prepared and all of that, that it was important that we should attach prosecutors to those investigating teams. We had done this earlier with regard to the question of political violence, where special police units would be established and we would put prosecutors in those teams, to ensure that cases were properly prepared and all of that. We expanded that into the Scorpions and so that is why the Scorpions were placed where they were placed, with the National Directorate of Public Prosecutions.

That has an inherent tension because the policing authority in the country is the South African Police Service. But you took a policing unit and placed it there outside of the South African Police Service. I am saying that there is an inherent tension there, and it is not a tension between two persons. It is a structural, institutional tension. That is the one I know. I don't know, maybe you know of other tensions. There is a structural, institutional tension and we have discussed this a number of times. We have discussed this even when late Steve Tshwete was still alive and was Minister of Safety and Security.

At some point you have to deal with this, because you can't have two Police services. It has resulted, I know, occasionally, in this kind of tension, because you would find parallel investigations. The commercial branch of the Police Service would be involved in some case and somewhere along the line they would find that the Scorpions are also involved in the investigation of the same case. So, it is a matter that we shall have to deal with at some point. Because I think, inherently, within it, it has got a tension.

We had thought then that what would happen with regard to the Scorpions, was that the Scorpions would not do general Police investigations. That there would be particular matters that, because of their scale, because of the level of expertise they needed, because of the need for thorough preparation, that even the Police Service would say, look, we had rather that this particular investigation was done by the Scorpions and not by us. That was part of the rationale for establishing that unit and placing it where it is. It had to do also with the recruitment policy. I don't know now, but certainly when they started, all of these Scorpions people were university graduates. It was because of the specialised nature of this unit.

But, well, in the course of time, I have seen cases done by the Scorpions and I have been puzzled why the Scorpions were ever involved. Cases that seemed to me really rather ordinary and really should have been handled by the Police.

So I am saying there is that tension. We have to deal with it at some point. But we have been talking about it as to how we might do it, to rationalise the work between them, if they are kept separate as they are now, or to look at some other arrangement, because, as I was saying, you can't have two Police services at this national level. But the matter I am sure will at some point be sorted out.

Member of the press: Ranjeni Munsamy, Sunday Times: Does that mean that the Scorpions will fold?

No, no, no. It is not a question of the Scorpions folding. It is a question of the location. It is the question of the location of the Scorpions. They could quite easily become a specialised police unit. Of course there are other implications to that. Because, if you have prosecutors, who ordinarily are part of the establishment of the National Director of Public Prosecutions, can you take them and make them part of the establishment of the National Commissioner of Police. That is a matter that you would raise if you shifted it and made it a police unit. And other questions about which the public service is very sensitive, which would be, if these are police officers, why are they paid differently from the other police officers? So you would run into those sorts of questions.

No, it is not a matter of dissolution because the function, the task, and the specialisation that was required of the Scorpions has not gone away. But how to locate them, where to locate them, how to manage the relationship between the two, is an issue - it was inherent from the very beginning that there would be this tension.

Member of the press: Leighton Beard, 702: Yes, Mr President, I would just like to return to the issue that John raised about the investigation into the Deputy President. Have you at all expressed your concerns with the Deputy President or the National Directorate of Public Prosecutions and - just a second question - while I can appreciate that you don't want to get involved and you don't want to intervene, have you at all put pressure on the NPP to speed up their investigations?

President Thabo Mbeki: Well, I have said to the Minister of Justice that surely the sooner this matter is concluded the better. We can't have it dragging on forever. Yes, I have said that and he is, as I was saying, he is the one who maintains the contact with the National Director. And I really do hope that they can move it, whatever conclusion they come to.

Member of the press: Leighton Beard, 702: You said you were concerned about the allegations that had been made by Mr Ngcuka about the political aspect of the investigation and you said you were concerned about that and I just wondered whether you have actually raised those concerns with either him or Mr Zuma.

President Thabo Mbeki: It is a difficulty of a word, isn't it? I am concerned about it and that is all I would say. Now when you say have I raised my concerns, that is a different thing. Of course I have said that I am concerned that all of these things are happening and concerned that it is taking so long - do something about it.

Chairman: That brings us to the end of the press conference.

Issued by Government Communications (GCIS