These are closing remarks by Mpumalanga ANC chairman and Premier, David Mabuza, at the end of the provincial economic summit of the tripartite alliance at Nutting House Lodge in Mbombela on 25 September 2016
David Dabede Mabuza
[Salutations]
The Context
Programme Director, we have come to the conclusion of this momentous gathering of our glorious movement – the African National Congress.
When we took a decision that to hold a provincial economic summit, we did this against a backdrop of a world economy that is stagnant, fragile and in most cases declining to levels last seen during the financial crisis.
The world economy is intertwined, interdependent and what happens globally has a direct impact on our economy.
The United Nations Conference on Trade and Development reports that due to what it calls stalled industrialization in the Sub Saharan Africa, African countries are not likely to see another commodity-led boom soon.
This is indeed a wake-up call to us South Africans who are overly depended on commodity prices that are not supported by beneficiation. It talks directly to us as a mining Province.
A call for beneficiation
We have listened to the resolutions of the commissions and all without exception are calling for urgent attention to beneficiation of all our products.
We cannot continue to pay lip-service to these calls. We export our minerals; our agricultural produce, our forestry products, our steel and some of our petro-chemical products as raw materials and buy them back from our trading partners as finished beneficiated products at exorbitant prices.
Every workshop, conference, summit even economics books written that tries to address economic challenges that we are facing, talks about the dire need for beneficiation yet nothing or very little ever gets done. We simply cannot continue on this trajectory. It is a dead end that will cost us dearly.
If we cannot convince our private sector partners about the urgent need for beneficiation of raw input materials into final products, we will be left we no other choice but consider starting our own state owned and supported initiatives that will drive beneficiation.
We have already made pronouncement on using state sponsored projects to support co-operatives that will supply the feeding schemes, build people’s housing projects and supply linen to hospitals. All these will be backed by products that are manufactured and produced by our own small enterprises and cooperatives.
Partnership with Department of Small Businesses
We welcome the commitment made by Cde Lindiwe Zulu, that her department of small business development is taking a leading role in supporting black-owned small and emerging businesses through state owned Developmental Finance Institutions (DFIs) like Small Enterprise Finance Agency ( SEFA) and Small Enterprise Development Agency (SEDA)
I therefore call upon our own finance agency, MEGA assisted by the Department of Economic Development to seize this opportunity afforded to us by Cde Zulu to work with her department and other institutions like SEFA but also leverage private sector funding and boost our capability to fund these government backed initiatives.
Partnership with Dardlea
We appreciate and are grateful of the financial and technical support that our farmers are receiving from the national department of agriculture, rural development and land affairs.
However, we call upon this department to consider working with us in the province to avoid duplication, overlapping activities, wastage, double deeping by some of our beneficiaries who get assistance from both national and provincial governments at the expense of other beneficiaries on similar projects.
We believe that by working together combining our limited resources we can do more than what we are achieving when working in silos.
We also commend the department for having acknowledged the limitations and sometimes failures in these programmes.
We all need to take stock of our farmer support programmes both at national and provincial level; asses what works and what does not work, make necessary improvements and jointly plan on how we intend uplifting our people.
The current approach is self-defeating and we will never see the impact of our efforts. Our interventions must be directed to those who are already farming and working the land.
Judging by the amount of money that has been spent by both national and provincial governments on black farmers, we should be having more black commercial farmers today than what is on the record.
The issue of access to land and how we can get back the land that was sold on auctions after it was successfully handed over to the beneficiaries through land restitution needs careful consideration.
We are also beginning to see a new phenomenon where land that was leased to black farmers is now sub-leased to white farmers. People need to know that they cannot sub-lease without the written prior concern of the land owner.
We would like to once more call upon Amakhosi nezinduna to stop allocating fertile agricultural land for settlement purpose. We appeal to them to work with municipalities on this issue and find lasting solutions on land use.
A different model for cooperatives in agriculture & agro processing
Comrades you will recall that in early 2014, I visited Italy to among others understand how and why cooperatives in that part of the world are successful.
We came back with only one answer; that small sized cooperatives that operate in silos of small groups of individuals sometimes with little or no business experience do not work.
The Portuguese and the Italians did not invent cooperatives but they have perfected this invention focussing on cooperatives that are worker owned and or worker owned and consumer owned as well as producer owned particularly in agriculture and agro-processing.
We therefore believe that time has come for us to consider a different model of cooperatives. The current model is better suited for subsistence farming and very small holder farming. It has no space or future in commercial farming of any size big or medium sized.
As government we need to consider a pilot project in agricultural sector where we assist a collective of many cooperatives to form backward and forward linkages that includes primary cooperatives, secondary cooperatives and tertiary cooperatives under one umbrella body.
This will give our people competitive advantage through economies of scale; allow them to play a meaning role in the mainstream economy like all other well established companies that started as cooperatives in this country.
If we fail to do this our people will remain in the periphery of economic activities in this province. The much talked about radical economic transformation will become a pipe dream.
Manufacturing
We believe that for manufacturing to gain any momentum, state owned enterprises need to invest and expand manufacturing activities that create employment, increase income and demand on one hand and on the other accelerate increases in productivity so that the vicious circle of quality income leads to a better buying power which again leads to an increase in demand.
We simply cannot depend on exports anymore in a world populated by consumers with insufficient buying power and too much debts and producers with large profits and no appetite to invest back these profits
We need to support our domestic industries and where possible do whatever it takes to sustain them through these difficult periods. We should have not allowed the steel industries in Middleburg to collapse.
The UN Conference and Trade Development has singled out South Africa as the only country in Sub Saharan Africa whose manufacturing has reached a scale needed to drive accumulative process of linkage building.
This is positive development for us and we need to capitalize on it. Significant investment by our SOEs and the private sector will lead to other related industries benefiting and also investing thus resulting in quality income linkages as well.
Mining
Mining is one such industry that has the capacity to positively but sometimes very negatively impact on other industries particularly manufacturing. The recent decline in mining caused by the collapse of commodity prices had a domino adverse effect on other sectors.
The demand for coal by Eskom power stations and exports of coal and other minerals should sustain this industry until we see improvements in commodity prices.
This is one industry where beneficiation needs to happen without any further delays.
We understand the call by comrades that the provincial government should explore ways and means of owning mines. We are just not sure whether under current fiscal constraints we can afford to spend money by investing on mines.
We believe that once conditions are favourable and commodity prices have improved, we can explore this proposal through Mega.
It will have to be a public private sector partnership since government alone cannot venture into this mammoth task. We have no experience of running mines. Mega does have a mine in which as government we have invested in. We already have one foot into this industry.
On several occasions our comrades have raised sharply their concerns about the attitude of the regional office of the Department of Mineral Resources (DMR ) Emalahleni. The office is said to display arrogance of unparalleled proportions and treat our people with disdain. Our young people want nothing else but opportunities to be part of this industry.
I am also made to understand that DMR was invited to this summit and for reasons unknown to us chose not to come. Our youth in this province are not given opportunities to become junior miners, yet people who come from outside the province get first preference.
I do not believe that the Ministry is aware of this and I will raise it with the Minister of DMR.
Township and rural economies
Comrades the issue of township and rural economic development is an idea whose time is long overdue. For too long our people have been indicating to us that they are not getting our attention and as a result their small businesses are suffering.
We decided to behave like ostriches, burying our heads in the sand and hoping that solutions will come from heaven. As a result of our inertia, township and rural economies are now dominated by other people from outside the country resulting in tensions.
We must turn this situation around. The revitalisation of the existing industrial parks and the building of the new ones will provide a much needed infrastructure that will boost economic activities in these areas that are impoverished and destitute.
We therefore expect MEGA in partnership with the Department of Small Business Development to occupy this space and provide much needed support to our people. This will bring hope in an environment that is devoid of hope. We expect this to be done within a very short space of time.
Tourism
Comrades, year after year – time after time we are promised that this industry will soon return to its former glory. We are now told that unresolved land claims are a deterrent to domestic and foreign investments.
The question that begs to be answered is how come have we are failing to provide solutions to this problem. The land restitution act allows us to compensate land claimants should their claims succeed. Why do we use this as an excuse when there are other alternative viable solutions?
This points to lack of creativity and absence of leadership in this area of work. We must as a matter of urgency review our tourism strategy and incorporate development of international air routes.
Sero Report
I appeal to branches of the movement to engage with the Socio economic report to provide responses and address the issues that are raised in that report.
Wayforward
We have met deliberated and made proposals. The question is what next. Is this the end of it? Are we going back home and continue with our business as usual?
I suggest that the resolutions of this conference should find expression in the Premier’s Coordinating Forum (PCF). Decisions should be taken at that forum on how and by whom and by when these resolutions should be implemented
I thank you.
