Address to the National Council Of Provinces, 11 November 2003

Honourable Chairperson of the National Council of Provinces, Naledi Pandor,
Deputy Chairperson,
Honourable Premiers,
Leaders of SALGA,
Honourable delegates to the National Council of Provinces,
Distinguished guests:

At its Lekgotla in July, the Cabinet once more focused on the critically important issue of the struggle against poverty. In this context, it observed that our country is characterised by two parallel economies, the First and the Second. The First Economy is modern, produces the bulk of our country's wealth, and is integrated within the global economy.

The Second Economy (or the Marginalised Economy) is characterised by underdevelopment, contributes little to the GDP, contains a big percentage of our population, incorporates the poorest of our rural and urban poor, is structurally disconnected from both the First and the global economy, and is incapable of self-generated growth and development.

To respond to the challenge of this Second Economy, we have examined the system of "Structural Funds" instituted by the European Union in respect of its regional policy, which is based on financial solidarity of transferring a portion of the EU's budget to the less prosperous regions and social groups within the EU.

The EU programme is premised on the reality that ''the market cannot be relied upon to meet the development needs of the 'less favoured regions' within the EU, guarantee the achievement of the centrally important objective of social cohesion, and provide the means for the implementation of 'strategies for catching up".

In the same spirit, the Cabinet has resolved that the development of the Marginalised Economy requires the infusion of capital and other resources by the democratic state to ensure the integration of this economy within the developed sector.

The Cabinet's decisions will necessarily involve active partnership with provincial and local governments and other social partners. Among the key strategies to meet the growth and development challenges of the Second Economy, include:

the Integrated and Sustainable Rural Development Programme (ISRDP);

the Urban Renewal Programme (URP);

the Expanded Public Works Programme;

a major boost to infrastructure spending, with an emphasis on improved underdeveloped regions and communities;

further support to local government's preparation and implementation of Integrated Development Plans (IDPs);

the development of SMME's and cooperatives, in both urban and rural areas;

black economic empowerment, and special programmes for women's economic development ;

the expansion of micro-credit to enable the poorest to engage in productive economic activity;

the incorporation of the unemployed within the Skills Development Programme, especially as implemented by the SETA's;

the continued restructuring of our system of education so that it gives our youth the necessary skills to engage in economic activities of benefit to them;

agrarian reform, including a Farmers Support Programme and forestry development in the interests of communities; and,

the creation of the echelon of Community Development Workers to help build social cohesion in the Second Economy, and to help to develop strategies and forge links that can transform the Second Economy.

The Cabinet made the determination that the advances we have made with regard to the First Economy, during our first nine years of our liberation, have put us in a position to meet the objective fundamental to our strategic outlook, to reduce the numbers of those dependant on social grants, by enabling them to pull themselves out of poverty by engaging in gainful economic activity and exercising their right to human dignity.

In our first decade of freedom and democracy, we have had to tackle immense challenges with limited resources in all spheres of government. One of these challenges is meeting our water requirements in a sustainable basis.

Early in November, the Consultative Group on International Agricultural Research (CGIAR) launched their Challenge Programme on Water and Food and warned that one in three of the world's people will be affected by water shortages in 2025 and that the annual crop loss in Africa could be as much as the entire grain harvest produced by the US and India.

By 2025, CGIAR predicts that sub-Saharan Africa will show the highest increase in water consumption of any world region and that Africans without access to clean water will more than double to 401 million and possibly 523 million people.

This year, 2003, is designated as the UN International Year of Freshwater. We are proud of our own achievements in providing, as of June this year, 9 million residents with fresh, running potable water.

Following on our highly successful hosting of the World Summit on Sustainable Development, we have hosted a Commonwealth conference on local government and we are implementing intergovernmental programmes in accordance with Agenda 21, Habitat and the next WSSD cycle beginning in 2004 relating to Water, Sanitation, and Human Settlements.

It is critically important therefore that we, in South Africa, the largest economy in sub-Saharan Africa, are not complacent and take every possible measure to ensure that we implement viable policies consistent with the needs of our people and these international agreements.

These also include the Millennium Declaration Goals, the objectives of the ILO programme, Working Out of Poverty, and the New Partnership for Africa's Development (NEPAD).

Despite our resources limitations, we are pleased to say that the government has delivered services to our people in a way that has turned the tide against many centuries of colonialism and apartheid characterised by the ever-increasing impoverishment of the majority.

I commend to the National Council, the government's Towards a Ten Year Review, for consideration and debate. The Review frankly assesses how far we have come since we attained our freedom in 1994. It provides important indicators of what we need to do as we strive during our Second Decade of Liberation to advance our goal of pushing back the frontiers of poverty and expanding access to a better life for all.

One of the clear conclusions of The Review is that each and every one of us in the provinces, local government and traditional authorities have to continue to work together with national government as partners in order to discharge our mandate to our people to create a prosperous, healthy and vibrant multicultural society.


In the State of the Nation address in February, I promised that we would launch an Expanded Public Works Programme (EPWP) to promote economic growth and create sustainable development.

I am pleased to report that the Department of Public Works together with other Departments, including the Departments of Environment Affairs and Tourism, Agriculture, Education, Health, Social Development and Trade and Industry, provincial and local governments and civil society formations have come up with a comprehensive business plan, approved by Cabinet on 4 November 2003, which will now be implemented in phases.

The EPWP is a nation-wide programme that will draw significant numbers of the unemployed into productive employment, so that workers gain skills while they are gainfully employed, and increase their capacity to earn an income once they leave the programme. The EPWP is targeting one million unemployed people in the first five years.

The centre-piece of the EPWP is a large-scale programme of using labour-intensive methods to upgrade rural and municipal roads, municipal pipelines, storm water drains and paving as well as fencing of roads, community water supply and sanitation, maintenance of government buildings, housing, schools and clinics, rail and port infrastructure, electrification infrastructure, and so on.

Some of the approved environmental and cultural programmes that will also contribute to the EPWP are the Department of Agriculture's Land Care Programme, the Department of Environmental Affairs and Tourism's Faranani-Pushing Back the Frontiers of Poverty Programme, People and Parks, Coastal Care, Sustainable Land-based livelihoods, Cleaning up South Africa, Growing A Tourism Economy Programmes, the Department of Water Affairs and Forestry's Working for Water, Wetlands and Fire Programmes, and the Department of Arts and Culture Poverty Relief Programmes.

The critically important area of health also forms an important part of the EPWP and includes the Department of Health's Home-based care workers, the Department of Social Development's Community-based care and support workers and the Department of Education's early childhood development workers.

The economic sector EPWP initiatives include the Department of Agriculture's community production centres and the Departments of Labour and Trade and Industry's micro-enterprise development and venture learnership programmes.

The success of the EPWP will depend on how well all our spheres of government will work together as partners to achieve practical results. I would like to share with you a concrete example of an existing provincial EPWP project, which is helping to give hope to desperately poor rural communities. There are plans to replicate this programme in other provinces.

I refer here to the Zibambele programme that was initiated in 2000 by the KwaZulu Natal Department of Transport. Its objectives are to maintain the province's rural road network and to provide poor rural households, which have no other source of income with a regular income.

The programme is based on the 'length person' contract system, which has been used extensively in Europe and Southern Africa. In 2002/3 there were approximately 10,000 Zibambele contractors maintaining approximately one-third of the KwaZulu Natal rural road network.

In return for eight days of work a month maintaining a length of road to agreed standard, households received a transfer of R334 per month.

The part-time nature of the work, which may be carried out flexibly within the month, is designed to accommodate engagement in household tasks and other wage or subsistence opportunities should they arise.

The work is allocated on a household basis, so that if the participating household member becomes unavailable, another household member may take up the activity, and thus retain the monthly income. Households are selected for participation at a district level by representatives of the local community and by the elected Rural Road Transport Fora using criteria of poverty, unemployment and female or child-headed households.

The scheme was initially reliant on support from external consultants, but in-house management and implementation capacity has been developed and the use of external consultants has been reduced. The Department planned to extend the number of contractors to 14,000 by the end of the 2002/3 financial year and, ultimately, to a maximum of 40,000 poor households. The budget for Zibambele in 2002/3 was R55.7 million.

A recent study has concluded that the programme is cost-effective in terms of transferring resources from the state to recipients, the proportion of programme costs spent on labour and the cost of the creation of a day's work. (Anna McCord, Public Works as a Response to Labour Market Failure in South Africa, Centre for Social Science Research, SALDRU, November 2002, Working Paper No 19, pp. 80-81).

This study has also pointed out that if Zibambele were expanded nationally and focused just on the maintenance of the 38% of the provincial road network estimated to be in poor condition, approximately 134 500 jobs could be created on the basis of employing one worker per kilometre, at a cost of R691 million per annum. Zibambele is a clear example of best practice, which can be drawn on in the expanded public works programme.

The Limpopo Province has also taken the initiative to implementing the EPWP in its road infrastructure projects, under the banner of its Gundo Lashu programme, which is isiVhenda for "Our Victory".

This is resulting in six times more local employment creation than if conventional machine-intensive construction methods were used, without any significant overall increase in costs, and without sacrificing the quality of the roads being built.

The workers on the projects are also provided with training, with the aim of increasing their potential to earn an income once the projects are completed. By the end of next financial year, the contractors will have completed 500 km of rural roads, and created 500 000 person days of local employment.

A recent review by the British Department for International Development concluded that "the demonstration of the viability of labour-based methods is likely to be completely achieved" in the Gundo Lashu programme (Taylor, G. A. Bester and P. Delius. 2003. 'Limpopo Province Labour-Intensive Rural Roads Programme (Gundo Lashu), Output to Purpose Review'. DFID).

Madam Chairperson,

Working for Water, with a budget of about R30 million, has over 300 projects around the country, operating in all provinces, and currently is providing work and training opportunities to some 21,000 people. There is a strong focus on those living in poverty, with concomitant support for black economic empowerment, women, youth, disabled and single-parent households, among others.

Growing out of the Working for Water programme have been several aligned programmes. The Working on Fire programme is providing training and work opportunities to a similar targeted group of people, to help prevent and fight fires. Through the heroic action of a Working on Fire team, 22 people in KwaZulu-Natal were recently rescued from certain death.

Similarly, this programme was praised by the forestry industry for playing a significant role in containing devastating fires in Mpumalanga and elsewhere in August, which cost the country about R3-billion.

Working on Fire is piloting its work in seven provinces at present, with the hope of becoming a national programme to address fire in a comprehensive and co-ordinated manner. It has a R20 million per annum budget from Working for Water, supplemented by significant support from the private sector.

The Working for Wetlands programme is similarly providing training and work opportunities in the rehabilitation of wetlands. It is a fine example of co-operative governance, working across three National Departments (Department of Environmental Affairs and Tourism, Department of Water Affairs and Forestry and Department of Agriculture), Provincial capacities, local government and the private sector.

These are a few examples of how Government has been taking progressive steps with our social partners to address significant threats to our social, economic and ecological well being. Indeed, we are implementing our programmes in a pro-poor, transformation-orientated manner.

Madam Chairperson,

The youth of our country are significant stakeholders in our reconstruction and development plans. They are part of our population many of whom fall in the category of the "economically-active".

Across all levels of government, we are striving to ensure that the youth are given the opportunity to create wealth and income for themselves and for our country.

A lot of energy has gone into infusing a youth development approach in the public delivery system though the results are still uneven. Through the National Youth Commission and the Umsobomvu Youth Fund it has been possible to provide guidance to departments and interact with senior managers to ensure that youth development is supported internally.

Youth Development must become an integral part of what we do in the provinces and municipalities. Youth development and participation must form part of our development of Integrated Development Plans.

The partnership between the National Youth Commission, the Umsobomvu Youth Fund and the South African Youth Council has developed a strong impetus for the decisions we took in terms of establishing and implementing a National Youth Service. In the coming months, we must scale the National Youth Service (NYS) upwards, from pilot service projects administered through these three partners into a coherent national effort involving key national and provincial departments.

Other innovative interventions that can and must be made to address the challenges of the Second Economy are also exemplified by the Public-Private Partnership ICT initiative between Limpopo Province, Mogalakwena District Municipality and Hewlett Packard. This exciting programme is using modern communication and information technology to bring all-round development to the Mogalakwena rural area. We must work to expand this kind of programme to other rural areas.

The March 2003 Labour Force Survey of StatsSA showed that two million new jobs were created in the previous seven and a half years, bringing the total of those employed to 11.6 million. This represents an employment growth rate of over 2.5% per year.

However, as indicated in the Ten Year Review, the numbers of those joining the labour market has grown at a faster rate. Demographic changes, such as more women entering the labour market, have also intensified the need for our economy and society to create more jobs.

Our macro-economic policies and micro-economic interventions have helped to place our public finances and the First Economy on a radically better footing than they were in 1994. These improvements have helped to generate the resources we need to address the challenge of the Second Economy. This also means that we must persist in our work to ensure the further growth and development and modernisation of the First Economy, including its capacity to absorb larger numbers of work-seekers.

This also relates to the important issue of black economic empowerment, which remains one of the priorities of our government, both to end the racial disparities in our economy and society and to address the challenge of poverty and underdevelopment. Government has also made significant sums of money available for this empowerment. The state corporations are also important partners in this regard.

The adoption of the Black Economic Empowerment Bill will also help to expedite the process of this empowerment. Government and black business have already held a two-day indaba to follow up on this development.

The fact of this indaba emphasised the need for our government to continue to interact with a broad cross-section of our people further to strengthen the people's contract to build the kind of people-centred society we all want. Once again, the Ten Year Review emphasised the need for us to strengthen this people's contract, pointing to challenges we face to ensure that our social partners perform to capacity and consistent with the agreements they enter into.

The successful Growth and Development Summit held last June, served as a positive signal of the ability of South Africans to work together to meet our economic goals.

Madam Chairperson:

The government is paying the closest attention to the proper functioning of the Presidential Working Groups, further to consolidate the people's contract for a better future.

The Presidential Working Groups create the possibility for an on-going dialogue between government and representatives of civil society formations, NGOs, business and trade unions. As the Council knows, they include the Big Business Working Group, the Black Business Working Group, Commercial Agriculture Working Group, the Trade Union Working Group, the Religious Leaders Working Group, the Higher Education Working Group, and the Youth Working Group.

I am pleased to report to the National Council that our dialogue with the various Working Groups has been highly successful. We are considering the publication of a Report to the Nation covering the areas covered by these Working Groups as a practical example of how much our people are giving practical expression to the need for all our people to come together in the people's contract of which we have spoken, to confront the challenges we face as a country.

On 6 May, we established the Higher Education Working Group to create a shared understanding of the challenges of transformation that confront our universities and technikons. It is critically important that these institutions produce the relevantly qualified and skilled people we require to build our society and economy, and sustain our drive to advance ours as a winning nation.

Recently we also launched the Youth Working Group directly to engage this important sector of our society. We also hope to engage in the near future with another very significant constituency - women, who represent the majority of our population. Consultations are proceeding to establish this Women's Working Group.

Since April 2001, the Presidency has engaged with the masses of our people across South Africa in the form of the iimbizo. This year, we have gone to the provinces of the North West and the Western Cape. We still have to visit KwaZulu Natal, the Northern Cape and Mpumalanga.

The iimbizo have given all of us a unique and personal insight into the lives of the masses of our people who have elected us into office. Our top priority is to ascertain what the actual needs of our people are; how efficient the delivery of services at all levels of government is, and to address problems; and whether governments' policies have had a positive and regenerative impact on our communities.

In all provinces, we heard compelling personal stories of genuine concerns and yet we also encountered real progress and partnerships between the rich and the poor, the young and the old, men and women - indeed, it is inspiring to witness at first hand the spirit of vuk'unzenzele.

These direct interactions with the ordinary masses of our people are an important part of the process of building and strengthening the people's contract for a better future. That people's contract will have meaning only if it impacts on these masses to transform their lives. That is why it is critically important that we constantly listen to what the people are saying and work with them to encourage their involvement in the struggle to change their lives for the better.

In this regard, I would like to express my sincere appreciation of the work done by this Council, and the elected provincial and municipal representatives to reach out to the people through their own izimbizo. We must sustain this work and ensure that we follow up on the observations made by the people to confirm that we are truly committed to a people-driven process of social transformation.

Similarly, we must continue to work both to refine and strengthen our system of inter-governmental relations and improve our governance capacity in all spheres of our government. A strong and effective system of cooperative government is one of the keys to our further advance during our Second Decade of Liberation.

Equally, we need a strong and effective people's contract to meet the challenges of the decisive Second Decade.

This Second Decade of Liberation will be decisive for our country because it will determine whether we succeed to meet the challenges posed by the existence of the Second Economy in our country. I am certain that we will meet our goals in this regard.

But equally, I am certain that we will not achieve this historic victory unless we join hands in a truly meaningful manner, in a real people's contract that unites the majority of our people in action to eradicate the legacy of colonialism and apartheid.

Hopefully, in the debate, which follows in the House, we will have the opportunity to address areas of mutual concern to ensure that we formulate and implement policies and programmes in which the people in all nine provinces and all our municipalities have an active and significant role.

We must move forward together in unity to push back the frontiers of poverty, to expand access to a better life for all, to extricate millions of our people from the Second Economy which condemns them to poverty, underdevelopment, marginalisation and loss of human dignity.

Thank you.

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