Address Delivered by the Deputy President Phumzile Mlambo-Ngcuka
at the Keidanren Roundtable in Tokyo, 19 April 2006
Mr Marashiro Sakane,
Chairman of the Committee of Sub-Saharan Africa of the Nippon Keidanren, President
and CEO of Komatsu Ltd,
Mr Hiroshi Kadota, Executive Counsellor of Nippon Keidanren,
Lindiwe Hendricks, Minister of Minerals and Energy,
Mr Aziz Pahad, Deputy Minister
of Foreign Affairs,
Ms Rejoice Mabudafhasi, Deputy Minister of Environmental
Affairs and Tourism,
Mr Jabu Moleketi, Deputy Minister of Finance,
Davies, Deputy Minister of Trade and Industry,
Mr Katsuhiro Nakagawa, Vice
Chairman of the Board of Toyota Motor Corporation and Honorary Consul of South
Mr Darkey Africa, MEC of Finance and Economic Affairs,
Thusi, MEC of Arts, Culture and Tourism
Distinguished business representatives,
Ladies and gentlemen,
Thank you Ambassador
for inviting me to visit Japan, this occasion happens to be my first address to
such a large gathering of members of Nippon Keidanren in the land of the rising
sun. It is a great pleasure and honour to be here today addressing some of the
business leaders who have contributed immensely to one of the most successful
and powerful economies of the world.
On this day, my first working visit
to Japan as Deputy President, I plan to take a break from the official schedule
and join the late starters to watch the beautiful Cherry blossom (Hanami) around
Let me express my pleasure in welcoming the newly appointed Honorary
Consul of South Africa in Nagoya, Mr Katsuhiro Nakagawa, a businessman who is
familiar with both government and private sector practices. I will also like to
welcome Mr Mitsutoshi Emoto, who is also the newly appointed Honorary Consul based
currently in the city of Kitakyushu. The South African Government is also planning
to open a consulate office in Osaka in the near future to increase accessibility
and our service delivery in Japan.
Ladies and gentlemen, I am presenting
you with an invitation for a future of growth, stability and prosperity based
on mutual benefit and unique business opportunities for Japan and South Africa.
Broadly speaking, to achieve the faster levels of growth, the South African government
is focusing on three areas, namely increasing the rate of trade and investment,
improving levels of competitiveness, and broadening economic participation.
April 1994 marked a turning point in South African history. Millions of our people
were able to cast votes for the first time. We were able, for the first time,
to participate in determining our future and we proudly cast our ballots, not
forgetting all those that had laid down their lives for our freedom.
some difficulties and weaknesses associated with newly democratic states that
we acknowledge, and problems which we share with much of the developing world,
like crime, corruption, unemployment and AIDS, South Africa is a country that
is truly basking in the Age of Hope, the hopes of the vast majority of our people
are becoming a reality.
Oppressive and discriminatory laws have been swept
away. Literally millions of people, especially the poorest of the poor, have felt
the impact of government programmes to deliver basic services like clean water,
decent housing and health care, electricity and telephones.
What has made
these changes possible is the unity of our people and the peace which our nation
enjoys, as well as co-operation with our neighbours in Southern Africa; the countries
of our continent and the whole international community.
Ladies and gentlemen,
in a period of less than 50 years, Japanese companies and captains of industry
have transformed a ravaged country into the second leading economies in the world
today. As such a leader, Japan has played a role in the economic development of
other parts of the world, most notably its own backyard of Asia, particularly
Japan is also a very significant partner for South Africa,
in fact I am happy to see that in 2005, Japan became South Africa's third highest
export partner in the world, whilst we remain Japan's number one trading partner
Beyond trade, Japan is also a significant partner in Africa
through aligning the Tokyo International Conference on Africa's Development (TICAD)
programme with the New Partnership for Africa's Development (NEPAD). Because Japan
is such an important partner for us, I am here today to share with you our plans
for our own economic development.
As good friends of South Africa, you
are well aware of some of the successes we have achieved since obtaining our freedom
in 1994. The South African economy has been subject to a process of structural
transformation to promote domestic competitiveness, growth and employment and
increase the outward orientation of the economy.
We have done so with some
measure of success and are currently enjoying high levels of macroeconomic stability
and business confidence. However, enormous challenges in alleviating poverty and
creating employment remain.
The fact that the South African economy is
currently experiencing record levels of consumer and business confidence underpinned
by low inflation, subdued interest rates, and the lowest budget deficit in decades
creates new opportunities for decisive government intervention to half poverty
and unemployment in an effort to achieve our millennium goal.
We have set
a target of at least 4.5% average economic growth until 2010 and thereafter six
percent from 2010 to 2014. Our forecast predicts that within a decade a 50% income
rise per person will be achieved. If the elasticity of employment creation relative
to Growth Domestic Product (GDP) growth can be increased to 0.8 alongside this
growth enhancement, then the rate of unemployment can be halved within the next
In order for South Africa to achieve this growth acceleration,
gross fixed capital formation (physical investment spending) will have to grow
by about 10% a year. This would lead to fixed investment rising from 16% to 25%
of the GDP in ten years' time.
My government has proven independent research
on its side that the performance of our economy in the past two years indicates
that the set targets are achievable.
An economic growth acceleration of
this magnitude will require well targeted and efficiently implemented policies
and development initiatives. I am honoured to lead the government on a co-ordinated
programme that will address these challenges. The programme I lead is known as
the Accelerated and Shared Growth Initiative for South Africa (AsgiSA), and its
purpose is to accelerate the economic growth rate, massively reduce the unemployment
rate, and broaden the impact of economic development so that South Africa can
meet its developmental goals.
We have taken stock and we have taken a long
hard honest look at ourselves. In so doing, we have identified several constraints
that are impeding on our economic development success. The identified impediments
are coincidentally similar to those raised during the visit of Minister Mpahlwa,
the South African Minister of Trade and Industry, during his courtesy call to
some of the members of Keidanren in July 2005. These constraints are:
The volatility and level of the currency;
* The cost, efficiency and capacity
of the national logistics system;
* Barriers to entry, limits to competition
and limited new investment opportunities;
* Regulatory environment and the
burden on small and medium businesses;
* Deficiencies in state organisation,
capacity and leadership; and
* A shortage of suitably skilled labour.
and gentlemen, allow me to elaborate on one of the major economic growth impediments
for those of you who are conducting business in South Africa.
of moving goods and conveying services over a distance is higher than global norms,
because of backlogs in infrastructural investment, inadequate planning, and in
some cases market structures that do not encourage competition. South Africa is
a fairly large country, with considerable concentration of production inland,
deficiencies in logistics are keenly felt.
The government believes that
logistics enhancement will increase the industry competitiveness.
for my government to counter these and other constraints, it entails a series
of decisive interventions to addressing macro-economic issues, implementing infrastructure
programmes, developing industrial strategies, implementing skills development
and education initiatives, addressing public administration issues and making
interventions in the informal economy or the "Second Economy" of South
The programme has prioritised labour intensive strategies and sector
strategies such as Tourism and Business Process Outsourcing to help reduce the
level of unemployment. Promotion of the Bio-fuels Industry will support the programme
in both job creation and develop sustainable energy consumption in South Africa.
The third category of priority sectors, are more capital intensive, it
is these sectors which we invite Japanese companies to consider participating
* Metals beneficiation including the capital goods
* Creative industries (Crafts, Film & TV Content and Music);
Durable consumer goods; and
* Wood, pulp and paper.
has already begun to ramp up public sector investment. In recent years, public
sector investment rose from four percent to six percent of GDP. Government and
public enterprise investment expenditure for the period April 2005 and March 2008
is planned to rise to around eight percent of GDP, this is about US$62 billion.
Of this about 40% will be spent by public enterprises, mostly electricity
producer Eskom (about US$14 billion) and transport and logistics organisation
Transnet (about US$8 billion).
Most of these funds will be spent on power
generation, power distribution, rail transport, harbours and oil pipeline. The
general purpose is to improve the availability and reliability of infrastructure
services in response to rapidly growing demand.
Government is responsible
for about half of the total public sector capital investment over the period through
a range of programmes at national department level. The planned rate of growth
of the capital budget of government at between 15% and 20% per year is unprecedented
in South African history.
Projects are distributed to provincial and local
government through the municipal and provincial infrastructure grant programmes,
while provinces and most municipalities have funds collected from their own revenue
sources for capital expenditure.
The electronic communications is a key
commercial and social infrastructure. Plans to be implemented in this sector include:
1. The implementation of a strategy to rapidly grow South Africa's broadband
2. Implementation of a plan to reduce telephony costs more rapidly;
The completion of a submarine cable project that will provide competitive and
reliable international access, especially to Africa and Asia; and
4. The provision
of subsidies to encourage the establishment of telecommunications and labour intensive
business in poor areas.
Other strategic interventions in the infrastructure
arena include further development of the country's research and development infrastructure,
and further improvement in the modalities for public-private-partnerships (PPP)
in the development and maintenance of public infrastructure.
infrastructure spending has considerable potential spin-offs in terms of the generation
or regeneration of domestic supply industries, small business development and
empowerment. Government is seeking to maximise the positive impact of these spin-offs
on the domestic economy.
In addition to the general infrastructure programmes,
provinces were asked to propose special projects that would have a major impact
on accelerating and sharing growth. A set of 10 projects has been selected for
finalisation of implementation plans, of which some are already underway.
the extraordinary demands of AsgiSA the provision of a predictable, competitive,
equitable and socially responsible environment for investment, enterprise and
trade remain a key focus of government.
This is one of the reasons why
I am here today to address you as champions of business in one largest and most
successful economies of the world to indicate to you our sincerity in speeding
up economic growth and development in South Africa and to encourage you to form
part of this success. Japan has itself achieved phenomenal success through a mixture
of responsive government policies and a keen desire by its people and business
to succeed. In South Africa too, business will have key role to play in our success,
and that includes Japanese businesses.
Perhaps the greatest impediment
to economic growth and development is a shortage of suitably skilled labour amplified
by the cost effects on labour of apartheid spatial patterns.
In a period
of growth it is evident that we lack sufficient skilled professionals, managers
and artisans, and that the uneven quality of education remains a contributory
factor. Local rates of university exemptions, particularly with mathematics, remain
at levels that are far too low to supply the needs of the economy. In addition
the price of labour of the poor is pushed up by the fact that many live a great
distance from their places of work.
South Africa has also launched an initiative
to overcome the skills shortage. One way in which we hope to start addressing
this skills crisis is through the Joint Initiative on Priority Skills Acquisition,
a joint initiative by government, tertiary education institutions and business
to help identify scarce skills and develop programmes through which to obtain
these skills. We have to overcome the shortage of suitable skilled labour if our
dreams for this economy are to be realised the task ahead is huge.
has really been in the forefront of developing appropriate skills for its economic
development. We are here to see how we can apply your experience to our circumstances,
and to forge closer collaboration with your country's government, business and
tertiary institutions in developing the scarce skills that our economy greatly
I would like to reiterate that South Africa is at a crucial and exciting
point of its economic development path. I believe that we will succeed in overcoming
what are admittedly sizeable challenges in alleviating poverty and creating employment.
But we will do so much faster with the help of our experienced partners who believe
as we do in our ultimate success.
In conclusion, let me thank the Japanese
government, for hosting the World EXPO 2005, in Aichi. Around this time last year,
my Embassy opened and led South Africa's eventful participation at this exposition,
highlighting many aspects of South Africa and showcasing it as a place to do business,
and as a leisure travel destination.
South Africa's best-known products
in Japan are its mineral resources, mainly gold and diamonds. I wish to inform
you that the tourism industry is regarded as the "new gold" of the South
African economy, with its contribution to foreign exchange earnings now being
greater than that of gold exports. These enlightening facts have encouraged my
government to now focus towards the sustainable growth of the tourism industry
into the future.
To that end, our efforts paid dividends when we were awarded,
for the first time in Africa, the opportunity to host the Soccer World Cup in
2010. As we prepare to welcome tens of thousands of visitors to our country, I
must admit that the key challenge is building the infrastructure for this historical
event. This includes building or upgrading the 10 stadiums to be used, and investment
in the surrounding environments and access to the stadiums.
it is an opportune time for me, to invite every one of you to join the thirty
thousand Japanese who visited South Africa last year.
Domo arigato gozaimasu.
Issued by: The Presidency
19 April 2006