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Umsebenzi Online

Volume 2, No. 3, 19 February 2003

In this Issue:


Red Alert

The Global Transformation Charter and the Financial Services Charter: Spaces for Workers and the Poor?

By Blade Nzimande, SACP General Secretary

The developments surrounding the adoption of a Mining Charter in 2002 have created a new momentum on sector charters. This includes the government-proposed global transformation charter, and financial services’ charter. While these developments should be welcomed, there has been little public discussion or debate around the whole charter process, except regarding the mining charter. The "charter processes" are a result of two interlinked developments: on the one hand, increased pressure for meaningful black economic empowerment and, on the other, the struggles waged by the working class for economic transformation, poverty eradication and job creation.

Some sections of the bourgeoisie are bowing to pressure and would like to transform this process into an opportunity to promote and hopefully co-opt new black sections of the capitalist class, thereby consolidating a market economy. Other sections of the bourgeoisie, particularly medium and domestic capital, see these processes as part of creating a cushion against capitalism, by reducing the high levels of poverty which are a threat to any future sustained process of capital accumulation. On the side of capital, it is therefore not an act of generosity nor a process that will automatically lead to the transformation of the economy in favour of the mass of the people of our country. It cannot be a process driven by private capital alone nor a process that is overwhelmingly dominated by the interests of the capitalist class.

As we point out in the political programme of our 11th Congress, market forces are fundamentally incapable of promoting anything more than a highly distorted and stunted development of productive forces. This is a result of prioritisation of profit maximisation under capitalism. Private capital by its own volition is incapable of planning, investing and leading economic infrastructure projects that are critical to promoting investment in productive enterprises.

For the above reasons, the SACP wants to build momentum to transform this into an important component of the generalised struggle to transform the current growth path in our country in favour of the workers and the poor. It is a process that must be driven by heightened working class mobilisation in order to ensure that the primary beneficiaries are the workers and the poor. It is a process that is both an expression of the class struggles in the current period to shape a post-apartheid economy, as well as a site of class struggle in itself. Unless the working class approaches these processes in a strategic manner, other class forces will seek to shape these processes to favour their own narrow class interests.

Black Economic Empowerment

Underpinning such charters must be a struggle to ensure that they do not become instruments of a black elite economic empowerment (‘BEEE’), instead of broad-based economic empowerment (‘BEE’). In theory, there is a broad agreement within our Alliance, as well as by the BEE Commission that the point of departure of any empowerment in our country should be poverty eradication, job creation and the empowerment of the mass of our people. In practice, however, there is a tendency to equate black economic empowerment with the empowerment of a small elite.

We must constantly inject a race, gender AND class perspective into the debate about the character and direction of economic transformation. Emphasis in BEE must be placed on the aspirations and crises confronting workers and the urban and rural poor, who are overwhelmingly black. It is for this reason that we need to ensure that the black economic empowerment advisory council announced by the President in his state-of-the-nation address on Friday is constituted such that it represents all sectors of South African society, principally those who stand for the interests of the workers and the poor.

The Charters must be driven by a Growth and Development Strategy

Of particular concern to the SACP about these charters is that there seems to be no concrete connection between the drawing up of these charters and an integrated growth and development strategy. It is essential that these processes be directly linked with the forthcoming growth and development summit, otherwise we run the risk of these charters operating in parallel and even in contradiction to any growth and development strategy.

Two issues are critical in linking the drawing up of these charters to a growth and development strategy. The first is that both these charters and the growth and development strategy must be underpinned by the theme of pushing back the frontiers of poverty, through job creation and creation of wealth through redistribution of economic resources. Secondly, these charters must principally address the five key themes already identified by the Alliance as the foundations of a growth and development strategy. In other words, underpinning any economic empowerment charter must be the question of how to increase investment in our economy, particularly the mobilisation of domestic resources for job-creating investment. In addition, such charters must include clear measures and targets for social equity, particularly the empowerment of working and poor women, job creation, a clear strategy for local economic development and measures to support strategies for sustainable livelihoods for our people. We hope these linkages and perspectives will underpin the government-driven overall economic empowerment charter. These charters must feed into, and be informed by, the evolving perspectives on a growth and development strategy.

Of fundamental importance for both a growth and development strategy and economic empowerment charters is transforming our economy in an integrated manner. There is a danger at the moment of a dual and disjointed strategy emerging in attempting to transform our economy and address poverty. The otherwise correct emphasis and measures envisaged to address the poor and those on the periphery of the economy are sometimes seen in isolation from the need to transform the mainstream of the economy. For instance, the SACP has embarked on a programme to make a major contribution to the building of a co-operative movement in our country, including the building of a viable sector of financial co-operatives. We are acutely aware that these should not just be survivalist activities aimed solely at containing the worst forms of poverty, but should be built to become major players in the economy. In other words, co-operatives should be seen as a central component of an overarching industrial strategy. To relegate them to the margins, together with other poverty alleviation strategies, runs the danger of leaving the mainstream economy intact, thus reinforcing the enclave nature of South Africa’s capitalist economy.

The Financial Services’ Charter

While the SACP welcomes the drawing up of a financial services charter, this must not be a secretive and board-room process driven solely by finance private capital with no mass involvement, as it currently is. It must be an open and transparent process. It is not enough for the banks and insurers to say they are quietly consulting with the government without public debate and the involvement of the mass of our people, who should be the primary beneficiaries of any transformed financial sector in our country. One main obstacle to the transformation of our economy in favour of the majority of our people is the inaccessibility of finance and credit for development, including housing finance and support for small and medium enterprises. The process of drawing up the financial services charter must be directly linked to the growth and development strategy and the summit.

To this end, over the next few months, and culminating in Chris Hani month in April this year, the SACP will be convening no less than 40 public meetings throughout the country to re-energise our struggle for the transformation of the financial sector. The aim of these meetings will be to inform our people as to where we are since the NEDLAC agreement of August last year. We will also be soliciting the views of our people as to what they would like to see included in a financial services charter.

We will be embarking on these activities as part of taking forward the agreements reached at NEDLAC. We believe that any charter in the financial sector must build upon and not subtract or detract from the agreements reached at NEDLAC, and its focus should be the speeding up of the implementation of these agreements. It is therefore important to remind ourselves what was agreed upon at NEDLAC. The first and most important agreement was that we need to ensure access to basic and affordable financial services, including promoting savings and improving the quality of life of the majority of our people.

Another important agreement was that there is an urgent need to increase overall investment in particular projects that strengthen infrastructure, create jobs, meet basic needs and stimulate economic activity in the poorest regions and communities. In particular, we agreed at NEDLAC on establishing a system to identify such projects and engage on the establishment of realistic targets and monitoring mechanisms. The NEDLAC agreement also includes establishment of a code to end unfair discrimination, changing the patterns of ownership in the sector, and ending unfair discrimination against people with HIV/AIDS. With regard to the latter we further agreed that appropriate financial services for people living with HIV/AIDS must be developed, and their access to housing finance and other services must be ensured. It is urgent that we move fast on this front as the HIV/AIDS pandemic bites deep into the social and economic fabric of our communities!

A critical agreement at NEDLAC was on the regulation of the credit bureaux and the need for an urgent investigation into the regulation of micro-lending as part of addressing the very high levels of indebtedness of the working class. This indebtedness to loan-sharks is directly related to the inability of the banks to provide accessible micro-credit to the majority of South Africans. We welcome the proposed new legislation on co-operatives, including financial co-operatives, as well as the Village Banks summit to be convened by the Department of Land Affairs and Agriculture next month. We believe that these will go a long way towards addressing the time-bomb of high indebtedness of the working class and lack of micro credit for development, particularly in the rural areas.

The other danger of a financial services’ charter driven primarily by the private sector is that it might not put enough emphasis on public financial institutions like the Post Bank. In fact, one important agreement reached at NEDLAC was that proposals around the developmental impact of these institutions will be developed. As we mobilise around a financial services charter, we expect these agreements to be firmly incorporated into any charter on financial services and carried through to the growth and development summit.

A related matter that is of fundamental importance to any financial services charter, global transformation charter and a growth and development strategy, is that of workers’ pension and provident funds. We are quite concerned for instance that the Public Investment Commission, in charge of investing the Government Employees’ Pension Fund, is happening outside of a growth and development strategy, and with no visible engagement with the trade union movement as a whole. It is absolutely critical for the trade union movement to have an effective say over how these funds are invested, including the role of union-linked investment companies. It would be a travesty to allow any new investment criteria without involving the trade union movement and its investment vehicles in setting up the criteria and in directly participating in the management of these assets. Despite its weight and strength, the South African trade union movement has very minimal say and control over one of its most important assets. The SACP has been engaging COSATU and Solidarity around the importance of taking up this issue as a critical campaign in the overall transformation of the financial sector. Workers must mobilise around this issue.

Of fundamental importance to all the transformation and empowerment charters must be the leading role of the state. All these developments need to be strategically driven by the state as part of a growth and development strategy. We must not buckle to neo-liberal pressure to turn the state into a mere referee or regulator. The working class must continually be mobilized to ensure that these charters are peoples’ charters, for the people and by the people, as is the case with the Freedom Charter. In some way, the Mining Charter has set an example.

Instability in organised business – rocky road or sinking ship?  

Most South Africans have sat seemingly unaffected by the machinations, dithering and vacillations of organised business in South Africa over the last few years. NAFCOC has had repeated leadership coups, resulting in different individuals and groupings claiming leadership of the once proud Black business chamber. SACOB, the mainly English speaking business chamber has slowly disintegrated, the final nails been driven into the coffin by the lately departed CEO Kevin Wakeford. His other claim to fame was to allege a conspiracy when the market drove the value of the Rand down to unprecedented levels. Strangely, he says no conspiracy in its current , seemingly inexplicable rise in value! AHI, the Afrikaans business chamber has positioned itself as a non-racial (read Whites and Coloureds) chamber. Apart from the bizarre notions of the chamber as being a cultural activist group for the preservation of Afrikaans, its role seems unclear. BSA, the umbrella body of White business has entered into unity talks with the BBC, the umbrella body of Black business. A host of other organisations, the NBI, the Business Trust, the South African Foundation, all compete for relevance, position and media profile. We need to understand all these gyrations, for underneath them there is a great deal going on.

Historically, big or finance capital in South Africa has been controlled by White people. Before the formal introduction of apartheid, the whites who controlled it were mainly immigrants from the UK, although some came from other countries. Afrikaners were mainly farmers and Black business people mainly operated as small business owners, shopkeepers, traders etc. The key strategic objective of the Afrikaner nationalist movement was to get control of the economy. It therefore launched a strategy that saw the creation of Afrikaner capitalists. Sanlam had been founded earlier in the century as a mutual fund that was central to the task of making Afrikaners self-reliant. It was also a fund to finance Afrikaner entrepreneurs. The Ruperts, Wieses, Venters, Ferreiras of today are a product of this subsidisation policy.

At the end of 50 years of apartheid, the scorecard was still overwhelmingly in the favour of the original Randlords. The Oppenheimers, as a prime example, continued to dominate the mining industry and through the conglomerate Anglo-American, many other sectors of the economy. Old Mutual, the first mutual fund, had grown to be the largest stock of capital and a key financier of many entrepreneurs.

Fast forward to 1990 and the unbanning of the ANC and the SACP. This period saw a process of empowerment aimed at creating the same opportunity for Black South Africans that had been given Afrikaners in the apartheid era -one that would create Black capitalists. Black Economic Empowerment was all the rage. Nail, Rail, and many other companies were formed to take advantage of this opportunity.

While all this took place, small business people continued, to run spazas, taxis, hair salons, laundries, funeral parlours, butchers, etc. They ran these where they lived, spatially segregated as White, Coloured, Indian, and African. Pension funds, medical aids, funeral schemes, stokvels or savings clubs have been run on the same lines.

All this makes for an enclave economy but one in which there are many players who see opportunity in all this. Each duplication, each additional loop on the supply chain, each rentier, takes a cut. In terms of organised business the dynamic is the same as in trade unions. While the interest of workers is one industry one union, the interest of functionaries is one functionary, one union!

Central to any capitalist system is the relationship between the state and capital. Afrikaner capital grew mainly as a result of the apartheid state. Contracts from Spoornet, the SADF, Eskom. etc. built companies such as Altech. Mining companies were built to rival De Beers (Trans Hex). Central to the vision of the former ruling bloc of colonial capital (Afrikaner capital and increasingly international capital) for the transition in South Africa was and still is the notion of creating a deracialised capital, a deracialised bourgeoisie, who run SA INC. on their own terms and for themselves.

Unfortunately, capital is, by its nature competitive. The old (colonial, English, SACOB) money can't agree with the newish (White Afrikaner, AHI) money. Both don't trust the new (Black, NAFCOC/FABCOS/BBC) money. The Black capitalists, whether in NAFCOC, FABCOS, or all together in BBC, have to compete with one another and so constantly fight factionalist battles. In the meantime, the former bourgeoisie, have relocated to London, the old imperialist centre. Not only have the Oppenheimers left, but the managers of the biggest mutual fund, Old Mutual, left, with the money that belongs to South African workers!

What does all this signify? Is the ship sinking? Not at all! This is life in a semi-peripheral, post-colonial society. It is the rocky road of primitive accumulation and the consolidation of capital. Since the (old) bourgeoisie have left, and the newish bourgeoisie are about to leave (watch this space-Vermaak had to resign over the listing of Sanlam off-shore!), the emerging bourgeoisie must fight, tooth and nail, paw and claw, to accumulate. Is it any wonder that there is no unity in organised business? Now that the President has opened up the debate on the transformation of specific sectors of the economy, it will get worse and not better albeit with some lessons in order to protect future turf.

For example, reflecting on developments at BHP Billiton, the Business Day (January 22) conceded its earlier enthusiasm for offshore listings by major South African corporations had been badly misplaced. "The coup against Gilbertson…graphically illustrates the naivete with which the SA establishment…has given away the family silver." However, Business Day´s uncritical support for the Telkom share-offer suggests that the need to nuance ideological zeal has not been fully digested. All these point to one thing – South African private capital is objectively incapable of planning, investing in and leading economic infrastructure projects ahead of profit maximisation. The disinvestment strategy and active encouragement of privatisation form part of the capital strike by business to influence the South African transition in the direction they want.

The key issue is what should poor and working people do in this period to use this situation to advance their interests?

If you belong to the great majority of poor South Africans, you might look at the South African economy as a citizen, seeing in the economy opportunities for publicly-owned infrastructure (managed and legally-owned, on your behalf, by a democratically-elected government), enterprises collectively owned by workers, or communities (in the form of co-operatives, burial societies, etc.). From this perspective you are likely to insist that private capital must be directed and disciplined towards playing an active, developmental role in overcoming the crisis of poverty that is choking off sustainable long-term growth in our society.

Clearly, not all capitalists are the same. Some are bigger than others, some are older than others, all must compete to survive. That´s where the difference ends. Where they are all the same is in terms of the dictates of the logic of the capitalist system. There can be no patriotic bourgeoisie in the era of capitalist globalisation. A patriotic bourgeoisie is a bourgeoisie that will fail and be eaten up alive by predators. What counts is the strength of the working class, to be able to organise itself to face these fractions of capital, negotiate with them and extract the most for itself as a class. The Growth and Development Summit is critical in this regard.

In doing so the working class must organise its own funds, its own capacity and it must engage with capital whatever its colour with a single purpose in mind. It must lead capital and ultimately defeat it. The gyrations are amusing. The key issue is control of the economy.


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