Lecture Delivered by the Deputy President of the Republic of South Africa Kgalema Motlanthe at the China Executive Leadership Academy, Shanghai, China, 28 September 2011
The Leadership of the Communist Party of China;
The Management of the China Executive Leadership Academy;
South African Government Ministers;
Your Excellencies, Members of the Diplomatic Corps;
Ladies and gentlemen:
It is my honour to share reflections with the China Executive Leadership Academy this morning.
Experience tells us that exchanges of this nature between nations driven by abiding concerns about the betterment of the human condition are necessary exercises for the building of a better world.
Indeed, the relationship that binds South Africa and the People’s Republic of China in mutual respect, solidarity and cooperation has a long history and a powerful logic.
In this regard, on behalf of the people of South Africa, I wish to congratulate the Communist Party of China on the celebration of its 90th Anniversary this year. Indeed, this is a great achievement in the struggle of the people of China for social justice.
Similarly, the African National Congress, the political party I come from, will be celebrating its centenary in 2012. This will also be a milestone in our struggle for a united, democratic, non-racial, non-sexist, just and prosperous society.
A rare but engaging political encounter with such a venerable entity as the China Executive Leadership Academy throws up numerous challenges in different areas of human endeavour, all of which claim equal measure of our attention.
However, for lack of time and space, I wish to restrict my contribution to two areas of mutual interests for our two nations. These are:
- The role of State Owned Enterprises (SOEs) in leading the charge for development (especially in our country, South Africa, and the Continent of Africa);
- And, up to a point, reflect on the challenges of leadership in the global arena today.
The political breakthrough of April 1994 afforded the people of South Africa the opportunity to determine their own future.
Our first task was to address decades of racially defined socio-economic inequalities that were the inexorable outcome of the Apartheid logic of racial oppression.
Then as now, our country has had to contend with three key areas that strangulate our development. These are unemployment, poverty and social inequalities.
Since ascending to power, the ANC has sought to forge a new growth path that transcends the constraints of apartheid, and which is able to progressively roll back the frontiers of poverty, drawing more and more of our people into the mainstream economy.
Before being struck by the global crisis in 2008 we had made considerable progress in reducing poverty and unemployment.
Critical elements of a new growth path have begun to emerge, underpinned by the building of a democratic and redistributive state, the progressive erosion of apartheid spatial patterns, growing integration with the regional as well as the global economy.
For our society to move towards a higher plane of development and meet the social needs of our people by raising the floor of social justice, we needed to develop an economic policy that reflects our peculiar historical realities.
Markets on their own cannot lead such fundamental change.
The State has to play a leading role in reshaping the economy so that it is better able to meet the needs of our people, particularly the working class, as well as the urban and the rural poor. This has to be done in partnership with all social forces, including capital.
In this regard, it is important to realise that South Africa is fully located within the capitalist system and is therefore limited by its inherent conditions in what it can do.
It is universally acknowledged that the continent of Africa is well-endowed with natural resources.
Productively developed, there is no doubt that these resources may advance our continent to desirable levels of development.
Natural resources that lie beneath our soil can address the immense social needs of our people only if there is investment in infrastructure to turn many pockets of our country which currently lie fallow into economic hubs of activity.
What Africa sorely needs at the moment is massive investment in infrastructure to unlock this development potential.
In this regard, a strategic partner such as the People’s Republic of China can play a leading role in a manner that is mutually beneficial to both our people.
For example, South Africa has an enormous coal belt in the province of Mpumalanga which is linked to the port of Richards Bay by inadequate railway lines.
It is estimated that four more railway lines will be needed for this area to fully realise its potential.
At the same time our marine industry is equally unable to meet the current needs.
As a port and a destination for many of the outgoing inland goods Richards Bay is currently choked for lack of enough facilities to cope with the value of trade.
This way South Africa’s marine industry is grossly undermined in a way that slows down the performance of the whole industry.
While they also boast huge potential in the area of mineral resources, countries in the Southern African Development Community are equally hamstrung by the same conditions of lack of infrastructure and the attendant limiting effects on economic growth.
Ladies and gentlemen
Our destiny as a nation is tied up with that of our continent and its people.
Our policies towards the African continent derive from this existential reality.
Africa has grown well in the past ten years, and we recognise the contribution China has made, both through direct foreign investment and in support for infrastructure development programmes.
However, as noted earlier on, Africa still has a massive infrastructure gap, retarding Africa’s GDP growth by 2% per year.
Inadequate and unreliable energy is Africa’s most acute problem. This holds back investment in the productive sector and improvements in the quality of life.
As productive capacity improves we expect more trade amongst African countries. Currently intra-African trade only totals 10% in contrast to the European scenario, where intra-European trade totals 80%.
Africans are virtually not trading with one another owing to the lack of diversified production, a lack of adequate infrastructure networks, persistent colonial ties and an over-reliance on commodity exports.
The diversification of production in Africa is critical. We recognise that Chinese companies are now exploring opportunities in agriculture and manufacturing in Africa.
We wholeheartedly support Chinese investment in the productive sector in Africa. We urge that Chinese companies continue to seek suitable partnerships in host countries in Africa.
South Africa is open to forming partnerships with China and tripartite ventures in investments in the productive sector on the African continent.
Building African infrastructure is a key stepping stone to regional integration.
The scale of the challenge is immense. Yet, while significant amounts of finance are needed, the infrastructure challenges in Africa present an opportunity for investment with guaranteed returns.
An Africa Infrastructure Country Diagnostic estimates annual investment needs in infrastructure in Africa at US$31 billion a year over the next ten years, with two thirds of this required for the energy sector.
The present major African infrastructure areas under the auspices of the New Partnership for Africa’s Development (Nepad), among them the North-South Road and Rail Development Corridor Project, are some of the flagship projects that call for continued strategic partnership.
With the North-South Corridor we hope to address trade facilitation and inter-connectivity, the lack of which hobbles intra-Africa trade at the moment.
Indeed, investment in these priority projects will lead to the creation of jobs, value addition.
New forms of global cooperation such as BRICS are key instruments that can help us move forward.
South Africa and China have a greater opportunity than before to help shape our global future. Deepening our discussions on these issues will help us assume our responsibilities more effectively.
We are confident that with the People’s Republic of China on board as a strategic partner we will both strengthen cooperation with regard to the implementation of the African Agenda.
South African SOEs can play a leading role in building partnerships with key Chinese, Brazilian and Indian enterprises that are building relationships in Africa.
These enterprises are essentially portals to access the entire BRICS international development aid system.
We need to start by taking some small steps and focusing on specific projects such as energy and transport logistics where South African participation can make a catalytic difference.
There are many opportunities for South African SOEs to successfully venture into Africa to explore business opportunities and thus contribute towards the creation of an environment in which African peoples and nation-States can trade, communicate and relate with one another.
The nature of infrastructure investment is long term and requires a relatively sophisticated policy, regulatory and industrial environment for it to be sustainable, apart from requiring significant operational capabilities.
As a step towards addressing this problem the African Union has decided to implement flagship infrastructure development programmes, of which the President of our Republic is the political champion.
Logistics infrastructure enables the efficient movement of goods, people and services. Telecommunications enables enhanced commercial activity, whilst an integrated energy grid enhances security of power supply for all countries.
South Africa can contribute significantly to African infrastructure development through enabling access to our core logistics, telecommunications and energy infrastructure systems as well as providing specialised technical and commercial skills.
Nonetheless, we also need to be realistic about the resources available in South Africa to contribute to the African infrastructure challenge.
We have a significant infrastructure gap in South Africa that needs to be funded.
These infrastructure backlogs constitute investment outlets with guaranteed returns.
While Africa’s developmental needs require that it engages with progressive external entities, this should not entail the exploitation of African resources without regard to ethical consideration and issues related to environmental protection and Africa’s posterity.
Therefore I am particularly pleased that in our discussion with the leadership the People’s Republic of China there is a commitment for both of us to conduct our trade and investment in ways that would benefit both partners.
In the past Africa’s trading with the outside world was to its own disadvantage. Africa was and has been seen as a source of cheap raw materials for the benefit of outsiders.
I am confident that in our relationship South Africa and the People’s Republic of China have broken new ground in that ours is a relationship based on a higher value system that seeks to be of mutual benefit.
The contribution of SOEs in the achievement of the objectives of a developmental state is indispensable.
This implies that the management of these strategic entities is of critical account.
Senior managers should appreciate that they occupy strategic positions to address basic needs of the poorest sectors of society.
As a result meeting social needs depends on their performance, which is in turn determined by their levels of skills, commitment and innovation.
Such senior management should from time to time be subjected to performance monitoring and evaluation to ensure alignment with the developmental goals of society, as opposed to the maximisation of profits as an end in itself.
To this end we are currently engaged in a process of reviewing the efficacy of the current regime and structure of our SOEs.
Our president established the Presidential Review Committee in response to the acknowledgement that there is a need to strengthen the role of SOEs to ensure that they respond to a clearly defined public mandate.
In line with the principle of people-driven development, the Presidential Review Committee (PRC) on State Owned Entities has made a call to the public to make submissions which will contribute to the process of reviewing the SOEs in the country.
The Presidential Review Committee is calling for individual South African citizens, Government Departments (national, provincial, and local government), State-Owned Entities, organised business, labour, political parties, civil society, professional bodies, educational institutions, and industry associations to make submissions which will shape the review process.
Broadly this exercise will help us review the contribution of SOEs to human capital development; propose sustainable SOEs business models that balance commercial, developmental and shareholder objectives; and propose appropriate strategic frameworks on recruitment, performance and remuneration.
In light of the above perspective on our development challenges, what are the specific features of China/South Africa and China/Africa relations which currently empower or weaken our efforts at addressing the outlined scenario?
Positively, we already have a remarkable relationship in the form of the comprehensive Strategic Partnership Agreement.
Needless to say this declaration serves as a platform for closer cooperation on all major issues and sectors of importance to both countries.
We also know that at present China is South Africa’s largest trading partner.
While volumes of trade between our two countries have reached impressive levels there are still untapped opportunities to be explored.
In consequence we would encourage the People’s Republic of China to work with the African continent and the regional economic communities to further implement development programmes to expand economic growth.
While the developing world lacks access to capital for development and growth, in other words long term investment, the capital residing in the developed world is largely employed for short term returns, often for speculative purposes.
As a result capital is invariably not available for long term projects such as mining and infrastructure in the developing countries, thus depriving Africa of much needed investment opportunities.
Consequently, for a very long time now the vast majority of the world’s people have been mired in seemingly unending economic misery.
In order to clamber out of the abyss, many governments, especially in the North, have launched austerity programmes, and have been trying, without much success, to balance their budgets.
These include slashing public workers' wages and benefits, curtailing social programmes, and raising the retirement age to lower the cost of social security, all of which have had a negative impact on the lives of ordinary people.
All these crises reflect the disharmony and the sharpened contradictions between the property relations and the forces of production playing themselves out on the global stage today.
The endemic social upheavals that have struck many countries in North Africa, the Middle East and Europe are a manifestation of this chronic economic crisis.
What is striking about these social upheavals is the absence of clarity of purpose and vision reflecting low levels of political organisation.
Martin Luther King Jr. hit the nail on the head when he argued that:
‘The limitation of riots, moral questions aside, is that they cannot win and their participants know it. Hence, rioting is not revolutionary but reactionary because it invites defeat. It involves an emotional catharsis, but it must be followed by a sense of futility’.
Therefore, I submit that it is the duty of the progressive forces all over the world to develop a reading of these conditions that confront us today with a view to mobilising the consciousness of those at the receiving end to begin engaging in a transformative struggle to bring about a human-driven socio-economic formation.
Throughout human history each and every age has faced inherent challenges that it must necessarily confront, not only so that humanity survive but importantly, so that it should equally bequeath to posterity a legacy of progress in the two realms of thought and material culture.
Over the centuries since the emergence of the anatomically modern human beings, the critical matter of social development has been central to our existence as a species, and it is still central today.
From the time literate cultures emerged, everything known in human history has been caused by and resulted from social development as the fulcrum of human consciousness.
In short, human history has been forged by society’s ability to shape the physical, economic, social and intellectual environments to its own ends.
Some thinkers characterise this human experience as stages in the development of human societies, which are always driven by a particular mode of production.
They further hold that our cognitive capacity to harness our material conditions to our developmental needs is the furnace that forges human experience.
This perspective on human history equips us with a high-level understanding that enables us to discern that there is nothing intrinsically immutable about the nature of the human condition.
Human experience, including social relationships and political institutions that govern human lives both at national and international levels are not set in stone; they are not impervious to or above human will.
Therefore there is no reason for the rules that govern global trade to be elevated to dogma, even though they have proven adverse to the interests and future of humankind.
It is within the realm of possibility to ensure that the fruits of the earth are enjoyed by all humanity and that no economic system is consecrated to eternal injunctions.
There is therefore a dire need to question age old doctrines that have occasioned nothing but untold misery for people in the developing South, so that we begin to re-imagine a new world, a new humanity defined by values other than the prevailing ones of acquisitiveness, greed and sheer rapine.
Indeed, a new world is possible!
I thank you