We should also recall that, in assessing the commitments in the GDS, they were based on a clear distinction between:-

various things that were agreed

other matters that were not agreed

issues that were not raised.

The successful conclusion of the GDS agreements a year ago hinged on keeping this classification clearly in mind, as it sets the boundaries to the GDS commitments. The GDS nonetheless represents an essential convergence of views between the social partners and government on practical steps to ameliorate unemployment and poverty.

Expectations are high that the GDS commitments are being translated into tangible outcomes. BUSA wholeheartedly supports these processes and has accepted the responsibility to act – in concert with the other NEDLAC partners – to implement the GDS agreements that were made around job creation, public investment, expanded public works, local procurement, investment challenges, black economic empowerment, as well as promoting literacy, skills and learnerships.

The emphasis must now be on delivery and, I must add, delivery on a scale that will make a real difference in the lives of as many South Africans as possible. It is encouraging to note that government finances are now in good shape and provide for substantial real increases in future spending, especially in areas such as infrastructure and capital investment that will be needed to support future economic growth.

The Nedlac Executive Director’s presentation today has given a good overall interim assessment of where we stand regarding the various GDS commitments, bearing in mind that many of the initiatives he has highlighted represent work-in-progress. I would, however, like to flesh out and emphasise some of the business commitments and to give an idea of where we stand now on a few of the specific issues from the business perspective:-

At the GDS, business committed to a proactive strategy of transformation to foster and encourage economic empowerment. This encompasses transformation of ownership, management, skills development, equity, procurement and rural development through developing codes of practice and corporate social investment programmes, as well as charters and other transformation and monitoring mechanisms at sector level.

BUSA recognises the imperative to transform South African society at large. It has supported and participated in initiatives aimed at the empowerment of previously disadvantaged South Africans, not least by championing the processes to develop Empowerment Charters. Sector charters have been finalised in the oil, mining and financial sectors. An ICT sector charter is close to being finalised. Other economic sectors are investigating introducing charters. It is encouraging to note that the total investment by 2008 in terms of the Financial Sector Charter will be above R100 billion. This Charter will result in 5000 learnerships over a three year period and ensure greatly increased access to banking points for all South Africans.

BBBEE remains a critical element of any strategies to promote not only growth and development, but also the key issue of redistribution of opportunity. What remains important here is to standardise the rules for BBBEE as soon as possible, to provide more certainty for investors, as well as to establish the Black Economic Empowerment Advisory Council as soon as possible.

At the GDS, Business undertook to contribute resources to a joint Employment Equity Campaign to promote awareness of - and compliance with - the Employment Equity Act. In addition to sending a communiqué to all its members calling on designated employers to submit their EE reports to the Department of Labour by the deadline of 1 October 2004, business has also been part of a Nedlac group organising an informational campaign. This campaign was launched by the Minister of Labour in July in Johannesburg and has been followed by very successful events in Bloemfontein, Kimberley, PE, Durban, CT and Polokwane. Business has supported these events with expertise and other capacity.

BUSA supports an aggressive strategy to give young unemployed people the opportunity to improve their skills in areas that will enhance their employability. Although an educated and trained population does not guarantee increased growth levels, in order to grow at high levels we must have an educated and trained population. BUSA recognises this and is committed to working with government to achieve the correct skills that we need to help the economy onto a higher growth plane.

At the GDS a number of business sectors made specific commitments for planned investments over the next few years. Reports received so far indicate that substantial investments are beginning to take place in terms of these GDS commitments. The automotive industry is projected to invest about R3,6 billion in 2004, in line with its GDS commitment to invest R15 billion over five years. Investment in the chemical sector is estimated at about R10 billion over the next five years. To-date, R8 billion has been invested. A total investment of R90 billion is planned in the mining sector over the next five years. The largest investments will take place in gold, platinum, diamonds, coal and base minerals. The oil industry will invest about R6 billion by 2006. It will also train 1000 people per year up until 2010.

At the GDS there was a business commitment to encourage institutional investors to work towards investing 5% of their investable income in the real economy through appropriate financial instruments. Real progress is being made on this front and it is intended to finalise the Nedlac negotiations on this matter by the end of 2004.

This should be seen in the context in which real growth in fixed investment spending in SA has gathered pace over the past two years, rising by 6,1% in 2002 and 8,4% in 2003. In the first quarter of 2004 total investment rose by nearly 21% - the highest quarterly growth rate since the late 1980s. Investment by the private sector rose nearly 10% in the first quarter of 2004, compared with 6% in the last quarter of 2003. Taken together with other emerging positive factors, the share of fixed investment in GDP could rise from the 16% referred to in the GDS, closer to 20% of GDP in the years ahead. This will help to raise the economy’s potential growth rate.

Organised business has sought to encourage local business communities to engage with their municipalities to see what role they might be able to play in assisting with the delivery of services at the local level, as outlined in the GDS agreements. We need to development a ‘new localism’ to strengthen delivery, which will include enlarging capacity to empower local government.

It has been agreed in principle to extend the Business Trust and a joint business-government leadership committee has been formed to oversee this process. It is the Business Trust’s role to combine the resources of Business and Government in areas of common interest to enhance the achievement of national objectives. The Trust’s mission is to develop and support partnerships to build capacity and reduce unemployment in South Africa. It is currently focusing on enterprises, the unemployed and communities in need of rehabilitation. In specific regard to support for the unemployed it will, amongst other things, provide support to the Department of Public Works for the extended public works programme agreed upon at the GDS and encourage labour intensive programmes.

The Business Trust has achieved impressive results in the time it has been in existence. Business, in addition to its extensive corporate social investment, has already committed almost R1 billion to the Business Trust. In a country like ours, as with so many other emerging markets, where the real challenge is not so much money, but the capacity to deliver results on the ground, the Trust has shown real results that have positively benefited some two and a half million disadvantaged South Africans. The Business Trust is a shining example of what we can achieve if we work together, in this case in a partnership between business and government.

Business committed itself to establish a stronger interaction between its representatives on the board of PSA and its member organisations - and also to encourage its members to develop sector-specific approaches to extending membership of PSA. PSA’s membership has been increased and broadened over the past twelve months.

The negotiations between the Black Business Council (BBC) and Business South Africa (BSA) were already underway when the GDS took place. The goal has been to deracialise and rationalise organised business, which was long overdue. But the issues being discussed at the GDS constituted a valuable source of ‘bonding’ for the two organisations as they contemplated merging. The vision, themes and commitments being forged under the aegis of the GDS process helped to solidify and construct the agenda which the new BUSA would eventually face when it came into existence on 1 January 2004. A key challenge facing those who were handling the negotiations to form BUSA was to create an organised business structure which could respond more inclusively to the GDS agenda. The GDS commitments helped to spur and encourage the achievement of this aim.

It is inevitable that, because the emphasis in the GDS process has all along rightly been placed on the ‘doable’ and practical – with the main focus on projects and programmes – there may have been a tendency to underestimate the intangible contribution that the GDS processes and outcomes nonetheless have made to the overall economic scene. For the extent to which the social partners and government have worked together successfully to translate the commitments of the GDS into real outcomes has, in my view, despite the GDS’s more limited agenda, also had a beneficial spin-off or ‘feel good’ impact on the broad economic and investment environment.

On all sides today there is strong evidence that over the past 18 months the SA economy has gradually strengthened further. Business and consumer confidence are at high levels. The current economic upswing - which has been underway since September 1999 - is the longest in SA’s economic history. Recently there has been a steady flow of almost uninterrupted good news about SA’s improved economic performance, which is likely to yield a growth rate of about 3% this year compared to 1,9% in 2003. This is, of course, largely the result of various real factors – such as the expanding global economy, lower domestic interest rates and other favourable policy decisions which have helped to spur the growth rate.

But I would venture to say that the GDS has also been a useful mechanism for creating a more favourable economic climate and a better mood within which more things became possible, even if they are not always quantifiable. Apart from the detailed evaluation of the specific GDS commitments, therefore, is the impact of the overall achievement - through the GDS - of laying foundations for a more collaborative approach to ensure sustainable economic and social development, as well as employment creation in SA.

Perceptions of better cooperation between social partners and government help to reduce country risk and to boost confidence – and we should not, despite the unfinished business on the GDS agenda, short-change the process on this account. The GDS process should be able to claim some modest credit for the favourable macroeconomic environment of the recent past.

These are by way of a progress report on some of the business commitments in the GDS agreements so far.

If we stand back from the detail of the GDS a picture emerges of Nedlac stakeholders who are actively committed to securing outcomes. The GDS implementation framework increasingly incorporates measures and milestones to ensure tangible and measurable delivery over time. Where obstacles are being encountered these are addressed and solutions sought.

BUSA and its members intend to continue playing a leading role in the development of South Africa in the next ten years and beyond. We are committed to helping the second decade of South Africa’s democracy see further improvement in the lives of all South Africans. Implementation of the GDS agreements is a means to achieve this objective and BUSA will work in partnership with government and its other stakeholders to make this a reality.

ENDS

GROWTH AND INVESTMENT:

DEVELOPING COUNTRIES’ PERFORMANCE ¹

1. UN Human Development Report on SA 2003, p.12

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