ADDRESS BY ANC PRESIDENT JACOB ZUMA TO BUSINESS UNITY SOUTH AFRICA MEETING, FNB AUDITORIUM, SANDTON, JOHANNESBURG, FEBRUARY 25 2009

The President of Business Unity SA, Brian Molefe,
Ministers and Deputy Ministers present,
Members of the ANC National Executive Committee,
Representatives of various business sectors,
Captains of commerce and industry,
Ladies and gentlemen,

Good evening to you all.

We appreciate this opportunity to exchange views on the challenges facing our country and economy, and to discuss the tasks that we must undertake to build a better future for all our people.

This is a long overdue meeting with Business Unity South Africa, having been delayed by hectic schedules on both sides. We are pleased that it has taken place finally, as BUSA is a key player in our economy.

Compatriots, we are a diverse nation, with many different interests, experiences and expectations. Yet we are all bound together by a common desire to make this country succeed.

Central to the achievements of the last 15 years has been the fact that we have worked together to bring about change. As we work to deepen and accelerate meaningful change we need to continue to build that partnership.

The establishment of NEDLAC has provided a platform for government to interact with business and labour on matters that are of common interest.

As we go forward towards establishing a comprehensive and integrated strategy to achieve a balance between macro-economic stability as well as ensuring that we develop five essential priorities mentioned in the 2009 ANC Manifesto.

These priorities, as you would be aware, are to:

• Combat crime.

• Improve health care facilities and health care.

• Improve education and accept it as an investment in our future not merely a budget item.

• Investment in rural infrastructure and agricultural reform.

• Creation of decent work and sustainable livelihoods.

We are working against a good policy background. Our growth strategy has enabled us cope with economic meltdown. Our financial systems are sound. Public finances are in a healthy state, and even under the current conditions we are able to invest significant resources in infrastructure and social services.

Because of the policies we have pursued, we are in a position to weather this particular storm. However, clearly, we are not going to be left unscathed, and we will face new challenges running up to 2011.

Since the beginning of February, there is an increasing view that says that the world economy is not likely to recover soon and the downturn may be deeper and longer than expected. This pessimistic view is supported by the fact that with global trade collapsing, countries are becoming more protectionist.

Domestic credit markets are not turning around in countries such as the US and UK.

Capital flows to emerging markets are projected to fall by 75 percent. The fiscal stimulus packages being advocated by some counties will leave a legacy of debt that will compromise future growth.

Our own economy has had a remarkable and sustained growth path, although we are likely to see a slower rate of growth for the next year and a possible recession. Some of our regulatory mechanisms such as the National Credit Act have had a positive stabilising factor. We can expect therefore to see a recovery in household spending and business investment due to falling interest rates and strong public sector investment.

The agreement between business, labour and government in responding to the crisis provided five priorities for the budget presented by Finance Minister Trevor Manuel this month,

a) Protecting the poor.
b) Accelerating investment spending.
c) Minimising job losses.
d) Taking steps to improve long-term competitiveness.
e) Ensuring that the debt burden does not rise too much.

The public sector investment plans are an important contributor to both short-term and longer-term growth. Our challenge is how well we can work together to raise the money. Government will borrow R94 billion and the State owned enterprises plan to borrow R92 billion, the result is private sector borrowing requirements of R186 billion or 7.5% of GDP.

Through the Development Finance institutions, government will support infrastructure investment and will look to assist companies facing cyclical difficulties as a result of the downturn. The principle has to be that companies in difficulty approach the banks first and only if that fails will they approach the development finance institutions.

If our common goal is to weather the storm and have a growth rate predicted at 1.8% for the current fiscal period, we need to do some hard talking amongst the bankers and the businesses, government and labour. As nation we must roll up our sleeves and work harder, together to achieve success.

The next administration is going into the business of governance with eyes wide open and with a good understanding that we have to balance the need to invest in public services and to safeguard the poor, with the need to ensure that the fiscal position does not compromise future growth through higher interest growth.

The next administration will deepen partnership even further to achieve national goals. It is through working in partnership that we have provided support to the poorest and most vulnerable in society, and have worked to ensure that all South Africans have access to basic services.

It is through partnership that we have managed to achieve sustained economic growth since 1994. We have stabilised most macroeconomic indicators, and have improved levels of investment. We want this partnership to continue, and to be deepened.

It is through partnership that we will enable our people to survive the current economic crisis.

We appreciate the briefing from sectors today and understand the difficulties. The manufacturing industry has reached its limit in terms of what it is capable of producing and is retooling to increase productivity. We see the result of this in the balance of payments due to an increase in the importation of new machine tools. Our partnership must look at how we can retain jobs during the retooling phase and thereafter.

The automobile industry worldwide is slowing down as less and less vehicles are exported and less are bought for national consumption. We must innovatively find ways of dealing with this situation. We have been briefed by mining, banking and other sectors too on their challenges. We are in this together and find solutions together for the good of our country.

Our greatest challenge is how to save jobs. The first reaction of business when the economy shrinks is to look at retrenchment. We must reach an understanding that we will use every possible innovative method to prevent job losses. We need the cooperation of all sectors - labour, business and community.

As politicians we will do all in our power to provide support and enabling environment. Through our election manifesto, we provide a workable plan, which was designed bearing in mind the economic challenges. We have also been careful to ensure that the plans we make are realistic and affordable.

Most of them have already been factored into government's medium term expenditure framework. They take account of projected government revenue.

At the core of our economic programme is to grow the economy and create more jobs at a faster rate.

The response of the ANC led government is as follows:

Over the next five years, the ANC government will lead a massive public investment programme for growth and employment creation. Among other things, this programme will expand and improve rail networks, public transport, port operations, dams, housing, telecommunications and energy generation.

Not only will this increase the level of fixed investment as a proportion of GDP. It will also significantly enhance the country's economic capacity, and reduce the costs of doing business. As a consequence of this programme, South Africa will become a better place in which to invest.

But we should not only rely on the investments that government will make. If we are to grow at the rates we need, we must be able to mobilise private sector investment in equal measure.

That is why we need to pay attention to those things that inhibit greater private investment, from removing bureaucratic obstacles to ensuring that we deal with the scarcity of key skills. Our skills development approach must be able to project growth and include active planning for skills development.

We are looking into the merits of factoring in a planning, monitoring and evaluation commission in the Presidency to ensure that service delivery is focused and in line with the priorities we have set.

We will also need to implement the industrial policy that provides support to key sectors and strengthen manufacturing, mining, tourism, agriculture and others.

Part of government's investment in the economy and in the people of South Africa is the massive expansion of public works. This will be linked to the infrastructure programme and meeting social needs with home-based case, crèches, school renovation and others.

We will also need to ensure that the mandates of development finance institutions are developmental and that state owned enterprises contribute to the realisation of a prosperous society.

We will necessarily continue to implement a broad-based economic empowerment policy and ensure that it benefits more broad sections of our people.

The Constitution and our own vision and mission, requires that we pursue programmes to redress the inequalities of the past. There is no question that we have to continue to implement affirmative action policies.

The form of redress that will have the greatest impact on our future is the education of our people. We want all children to be in school, learning, regardless of their economic situation.

Ladies and Gentlemen,

Another challenge that we will address is corruption within the public and private sectors alike.
Not only does it erode our social fabric, it also diverts resources away from meeting the needs of the poor.

We must pay attention to the rules and regulations that govern public institutions and the behaviour of public representatives, public servants and other people in positions of responsibility.

We must always reaffirm the principle that public representatives are servants of the people. They are custodians of the people's resources. They must at all times be accountable to the people, and scrupulous in everything they do.

This is the message we have sent to all our candidates for the upcoming elections. We have taken great care to scrutinize our lists to ensure that they consist of people who are willing and able to serve the people without interest of narrow personal gain.

Ladies and Gentleman,

In just over two months, South Africa will celebrate 15 years of democracy. We will do so as a nation united in our diversity.

We have achieved much over the last 15 years.

Working together, we can do even more.

I thank you for this opportunity.