DOCUMENTS

State capturers misused rhetoric and instruments of BEE – Cyril Ramaphosa

President says we must not allow a climate where empowerment is viewed with suspicion

Address by President Cyril Ramaphosa at the Black Business Council Gala Dinner, Gallagher Estate, Johannesburg

19 May 2022

Programme Director,
President of the Black Business Council, Mr Elias Monage,
CEO of the Black Business Council, Mr Kganki Matabane,
National Office Bearers of the BBC,
Ministers,
Directors-General,
Representatives of the business community,
Members of the diplomatic corps, 
Sponsors,
Distinguished Guests,
Friends,
It is always a great honour to attend a gathering of the Black Business Council.

Since its formation, the Black Business Council has been motivated by an abiding conviction that the people of this country shall share in the nation’s wealth.

Underpinning all its activities and all its pronouncements is a determination to fundamentally transform our economy.

This Council is far more than the voice of black business.

It is the voice of a nation that continues to free itself from the bondage of discrimination and dispossession, from poverty and unemployment, from extreme inequality and grave injustice.

We are here this evening to affirm our shared desire to forge a new economy in which all South Africans have a meaningful stake, in which all have equal opportunity, and from which all can benefit.

We undertake this monumental task at a time of great uncertainty in the global economy.

The COVID-19 pandemic has disrupted production, trade and investment across the world, across the African continent and, indeed, here in our country.

The devastating effects of the pandemic are being worsened by the impact of climate change on communities and economies.

Most recently, the conflict in Ukraine has added to these challenges, driving up fuel and food prices and intensifying geo-political tensions.

This will have a particularly damaging impact on African and other developing economies, which are most vulnerable to food and energy insecurity.

These circumstances will have lasting consequences for the organisation of work, for patterns of trade, for investment flows and for the development aspirations of countries on the continent and elsewhere in the global South.

But while there are great challenges, there are also great opportunities.

The African Continental Free Trade Area came into operation in the midst of the pandemic, yet it is the most potent instrument that the continent has ever had to drive an economic and social renaissance.

It has the potential, if we seize the opportunity, to foster industrialization, infrastructure investment, intra-African trade and the emergence of new industries across the continent.

Africa’s response to the COVID-19 pandemic has demonstrated what can be achieved when African countries work together towards the achievement of a common goal.

Initiatives like the Africa Medical Supplies Platform and the establishment of the African Vaccine Acquisition Task Team as well as the ongoing cooperation around the development of Africa’s vaccine manufacturing capabilities are testimony to the initiative and the innovation that is to be found on our continent.

Like other countries on the continent, international developments weigh heavily on the performance of our economy.

At the same time, we are confronting several domestic challenges, some of which are legacy of our apartheid past. 

Other challenges are the result of state capture and governance failures, and others still arise from the effects of the COVID-19 pandemic, the July 2021 unrest and the recent floods in KZN and Eastern Cape.

For more than a quarter of a century, we have worked together to address many challenges such as to build an economy that serves all the people of South Africa. 

We have registered great progress.

We have expanded access to skills, markets, finance and opportunities.

We have used instruments like preferential procurement, employment equity and broad-based black economic empowerment to begin to correct the huge distortions in our economy. 

Yet, despite the progress, the fundamental problem remains.

Just like the contours of our society, the distribution of wealth and opportunity in our society is still largely determined by race and by gender.

Now, as we work to rebuild our economy in the midst of the most severe global pandemic in more than a century, we have a shared responsibility to address the challenge of unemployment, eliminate poverty, reduce inequality, accelerate empowerment and deepen transformation. 

Our immediate task is to grow our economy and create jobs.

Our every effort at this moment must be directed towards placing our economy on a new trajectory and ensuring that there is inclusive growth and employment creation.

Over the last decade, we have seen the detrimental effect that slow economic growth has had on job creation, reduction of poverty and transformation. We also saw how state capture weakened state capacity.

By far one of the greatest blows were the capture of key public institutions and state owned enterprises by private interests.

Billions were looted from state entities and the capacity of the state was steadily eroded. 

A number of companies and individuals in the private sector were complicit in acts of corruption, over-charging and collusion.

The era of capture was also associated with illicit financial outflows, tax evasion and other financial crimes.

The effects of state capture have been felt across society.

State capture has deeply damaged our economy, weakened our public institutions and destabilised our democracy.

But it has also hurt the cause of black economic empowerment and the advancement of black professionals.

Many of those complicit in these acts of corruption used the language and the instruments of black economic empowerment as a cover for their crimes.

In doing so, they were further impoverishing those people they were claiming to empower.

We need to ensure that their actions do not further undermine black economic empowerment or hold back transformation.

We must not allow a climate where empowerment is viewed with suspicion, where it is harder for black-owned businesses to raise finance or struggle to transact with government. 

We must resist the calls to abandon our transformative economic policies or to defer the task of broad-based black economic empowerment.

Now, more than at any other time in our history, we need to undertake the task of empowerment with greater intensity and purpose in the face of resistance and those who use the new weapon called lawfare.

Black economic empowerment needs a business environment in which companies can grow and thrive, where they can find new markets, develop new products and employ more people.

It is therefore significant that over R36 billion of the investment commitments made at the 4th South Africa Investment Conference in March were by black industrialists.

Empowerment requires infrastructure that is robust and reliable, and network industries that are efficient and competitive.

These are the roads that must connect emerging farmers to markets; the reliable and affordable electricity that black industrialists need to operate; the accessible broadband that new start-ups rely on to develop products and reach customers.

Through Operation Vulindlela, which is an initiative of the Presidency and the National Treasury, we are undertaking far-reaching structural reforms to create these conditions.

These include policy reforms to improve efficiencies at our ports that include bringing in private sector operators to invest in port infrastructure and for container terminal management. 

We are working to revitalise rail infrastructure and enable third‐party access to the freight rail network. 

The auction of high-demand spectrum after a delay of over 10 years will support better connectivity for both new and aspirant businesses and bring down data costs.

Another area receiving priority attention is the water sector, where we are implementing plans to improve efficiencies in the issuing of water use licenses, which is critical for many industries including mining, manufacturing and agriculture.

The electricity landscape is being fundamentally transformed through changes to the licensing threshold for new generation projects and the opening of new bid windows for renewable energy. 

The process of unbundling Eskom is on track, with the entity meeting its December 2021 deadline for the establishment of a national transmission company. 

By December this year we hope to complete the unbundling of Eskom’s generation and distribution divisions. 

One of the critical components of transforming the electricity landscape is forging ahead with the transition to a low-carbon, climate resilient and inclusive economy. 

We are working on the details of the just transition partnership concluded with the France, Germany, the United Kingdom, the United States and the European Union late last year.

Reducing emissions in line with our international obligations is an imperative. 

At the same time, we will ensure that this transition is managed in an inclusive manner that leaves no community behind, and offers opportunities for local businesses in the low-carbon and green economy space.

Empowerment means unleashing the potential of black- and women-owned businesses.

It means creating opportunities for new businesses to emerge and for existing businesses to grow.

That is why we are focused on support to small and medium-sized business, and to the development of the informal economy, as vital drivers of economic growth.

This includes the removal of the regulatory and other impediments to small business growth through a red tape reduction unit in the Presidency.

We are also reviewing the Business Act to reduce the regulatory burden on SMMEs.

We are strengthening support to SMMEs through institutions like the Small Enterprise Development Agency.

Forty per cent of our support interventions must go to women-owned enterprises, and 30 per cent to youth-owned enterprises. 

We are using incubation to assist entrepreneurs to turn their ideas into successful businesses. 

There is already a countrywide network of 110 incubators that are being expanded to townships and rural areas. 

Initiatives by the Department of Small Business Development like the Blended Finance Programme provide funding to qualifying businesses at different stages in the life cycle and are aimed at growing more black entrepreneurs. 

The Department of Small Business Development is in the process of finalising the National Small Enterprise Amendment Bill. 

It provides for the creation of a small enterprise ombud to adjudicate matters related to the sector, including non-payment by both the private and public sectors.

The sectoral masterplans that are being concluded across several industries have clear targets on localisation, empowerment, socio-economic development and skills development.

There are initiatives like Automotive Industry Transformation Fund to facilitate transformation across the auto value chain by providing funding and capacity development for qualifying black owned entities.

In renewable energy, as another example, the IDC has taken early stage risks in independent power producer projects, prioritising BEE funding with operational involvement as a requirement, and the funding of stakes for communities and workers.

We are implementing targeted interventions to support black businesses in areas of manufacturing such as furniture, iron and steel, petroleum, chemicals, and agro-processing. 

This support aims to increase productive capacity, competitiveness and sustainability.

The Black Industrialists Programme has invested over R30 billion in black-owned and -managed firms.

Over R500 million has been invested in SMMEs through the Small Enterprise Manufacturing Support Programme to promote the growth of successful entrepreneurs in the manufacturing industry. 

The new Public Procurement Bill is another tool for advancing transformation. 

Black business can leverage this new legislation to produce products in the quantities required by the different industries. 

These are some of the initiatives that are supporting empowerment and transformation.

They are informed by the premise that empowerment is an important driver of growth.

The success of these efforts depends on a cooperative partnership that harnesses the collective capabilities of government and other social partners.

We look to the Black Business Council as a vital partner, to guide us as we address our shortcomings and to help streamline existing policies and programmes so that they meet our empowerment objectives.

We need to work together to address the financing of empowerment transactions in the constrained economic environment, and the mobilisation of capital for black business to expand.

We must continue to push for diversity and inclusion in the workplace and are introducing new measures to promote compliance through the Employment Equity Amendment Bill. 

Black business in South Africa has a critical role in our economic reconstruction and recovery, in job creation and in driving the continent’s economic integration agenda through the African Continental Free Trade Area.

We need to work together to expand the frontiers of broad-based black economic empowerment, and resist any efforts to narrow them.

We do not accept the argument that black economic empowerment has had a destructive effect on the economy. 

Rather, slow progress in the pace of economic transformation is what is holding back our nation’s development.

Black economic empowerment has not enabled corruption. 

It was the corrupt, in both the private and public sectors, who enabled state capture. 

As a country, we face many different challenges.

Overcoming these challenges requires a meaningful social compact between government, business, labour and communities.

We are determined to forge such a compact and we continue to engage with social partners on far-reaching measures that will enable growth and transform our economy.

In the State of the Nation Address, we set an ambitious timeframe of 100 working days to find agreement and we will be hard at work in the days and weeks ahead to reach consensus.

As we confront the immediate challenges, as we work at the detail of economic reform and growth, even as we engage in policy debate and refinement, we are driven by the broader vision of an inclusive economy that benefits all.

Like the Black Business Council, this government continues to aspire to a South Africa in which all its people share in the abundant wealth of this nation.

And like the Black Business Council, we are firmly committed to those actions that will accelerate our progress towards that goal.

We have worked together to address several problems and challenges. 

As businesspeople you know that a business does not become successful without encountering and overcoming a number of extremely challenging problems. 

Let us work together to restore our nation, to rebuild our economy and to make sure that no community and no person is left behind.

I thank you.

Issued by The Presidency, 19 May 2022