10 October 2003, Sun City
Black Economic Empowerment: Mobilisation to forge a partnership for poverty eradication
President of NAFCOC, Patrice Motsepe,
Ministers,
Premier, MECs present,
General Secretary of NUM, Cde Gwede Mantashe,
Leaders of NAFCOC at various levels,
Honoured guests and delegates.
We are deeply honoured by the invitation to address this very important conference of yours. We have been watching with great interests your courageous attempts to build a stronger and more united NAFCOC. As the SACP we are deeply interested in a stronger and more united NAFCOC since there is a lot in common between our own constituency, the workers and the poor, and yours, small business. Both our constituencies still bear huge scars of oppression and marginalisation by the apartheid political and economic order, and dare I say, by the continuing rampant capitalist globalisation, characterised, as it is, by growing inequalities between the rich and poor countries, and the same phenomenon within countries. The global domination of the world economy by giant multinationals stand in the way of the attainment of the interests of both our constituencies.
We have also been together in the struggle to transform and diversify the financial sector in our country, such that it is better able to respond to the needs of the overwhelming majority of our people. It is for these reasons that we note with satisfaction the enormous progress that NAFCOC has made in rebuilding and uniting its structures. We are looking forward to the full participation of NAFCOC in the Financial Sector Campaign Coalition, to take forward the important struggle of creating a financial sector responsive to the needs of our respective constituencies.
The fundamental challenge in South Africa today: Transforming the current growth path and overcoming the dual economy
As the SACP we see the fundamental challenge of South Africa's democracy as that of a society where the democratic bloc forces have political power, albeit incomplete and contested, whilst economic power still remains with the same old forces as under apartheid - the white capitalist class. The twin challenges in this regard are that of poverty eradication and job creation. For South Africa to make any further decisive advances in consolidating its democracy, there has to be fundamental economic transformation in favour of the overwhelming majority of our people.
Unless we create jobs and a sustainable momentum towards poverty eradication, our progress as a country will be severely retarded. That is the challenge for all of us, and this should be the fundamental point of departure and the main content of black economic empowerment. That is why we appreciate this Conference focus on this question of poverty eradication.
Increasingly over the last year, leading comrades in government have been referring to South Africa's economy as a "dual economy", as a "polarised" economy - the one pole "developed", the other underdeveloped. In the SACP we very strongly endorse this general characterisation of our society. But if we speak of an underdeveloped pole what exactly are we referring to? Are we referring to an apartheid "legacy"? Yes, obviously, our crisis of underdevelopment has much to do with apartheid. But in the SACP we want to go further.
The trouble with thinking about underdevelopment simply as an apartheid legacy is that you may assume that as we move away from the apartheid years, so this reality will start, more or less spontaneously, to fade away. The idea of "legacy" fails to capture the ongoing, the active, the daily re-production of underdevelopment and poverty. It is happening as we speak.
Right now, more unemployable youth are entering the labour market; right now more workers are being casualised; right now there are new retrenchments and threats of even more of these; right now poor families are becoming poorer; right now the rich few are getting richer.
We are dealing with a deeply embedded structure, a systemic reality that is not simply evaporating. How else do you explain the fact that, despite very significant resource transfers to the poor since 1994 - water, electricity, telephones, low-cost housing - in income terms the majority of black families have actually become poorer? I think you will be familiar with the shocking Stats SA research that found that between 1995 and 2000 the average black household became 19% poorer in income terms, while the average white household became 15% wealthier.
Amongst other things, these figures relate to the massive structural unemployment and the shedding of more than a million jobs over the past decade. In 1994 the unemployment rate was 28,6%, by 2001 it had reached a shocking 41,5%. Yet these are years in which we have succeeded in returning the economy to sustained if moderate growth for the first time in decades. In pointing to these we are by no means suggesting, as our detractors are fond to say, this is the responsibility of our government. But capturing the reality that as we seek to democratise, powerful economic forces, globally and domestically, are failing to address the fundamental challenge of poverty eradication and job creation.
I repeat, we are dealing with a deeply embedded structural reality, of development and simultaneous underdevelopment - each the condition for the other. It is a structural reality that goes back to the beginnings of South Africa's industrial development in the last quarter of the 19th century -premised on export-driven industrialisation around enclave development. Much has changed in South Africa since the 1880s and 90s, but the underlying pattern of capital-intensive, export-oriented, enclave growth on the one hand, and systemic underdevelopment on the other, persists.
We believe that it is very important to understand our reality accurately.
If we are to address the challenges of mass unemployment, of deep-seated poverty, of constantly reproduced and expanded under-development, then we have to tackle the systemic character of this challenge. This applies to many issues, including the important question of black economic empowerment.
Black Economic Empowerment
There are many well-meaning versions of BEE that do not address the systemic character of the challenges we confront. In particular, there are two very prominent versions of BEE that, it seems to us, perpetuate rather than seeking to transform the systemic problems of our society.
In the first place, there is BEE that is largely confined to changing the racial patterns of existing ownership, including share ownership, and management structures. Such changes may very well result in greater equity, but they are not transformative. And because they are not transformative, they end up by making the reproduction of underdevelopment (which is always going to be an overwhelmingly black reality in South Africa) seemingly more justifiable. Much has been said about this, and we think that in theory, if not always in practice, most of us would now agree that we must have a broad and not narrow definition of BEE.
However, there is a second approach to BEE and to the challenges of underdevelopment which we think must also come under much closer scrutiny.
The present audience would know much better than I that black entrepreneurship did not just begin post-1994. Over very many decades, in the face of tremendous odds, there has been the organic, community based development of black entrepreneurship - in commerce, including in taverns; shop-owners; small-scale farming; in soccer clubs; in entertainment and cultural work; in transport; in health-care; in savings associations. Much of it has been based on family networks and on co-operative forms of organisation (stokvels, burial societies).
Mobilising resources in the hands of the workers, the poor and small business
How have we approached this significant economic and social reality since 1994? Am I right in suggesting that we have often approached it with a degree of embarrassment? We have labelled it the "informal" sector. We have, rather ineffectively, directed our efforts at helping the "informal" sector to cross over into the "formal" sector. What this often means, in practice, is that activities that have serviced communities for many decades are now suddenly urged to compete on the terms of the enclave economy and the big players in that enclave economy - not least, the big banks. Yet even internationally in more developed economies, the failure rate of conversion is over 80% for small and micro enterprises seeking to formalise. Capitalism, by its very nature, just doesn't allow for easy conversion from small business to bigger stakes!
There are many examples in our own reality. Perhaps the current proposed taxi recapitalisation programme is a prime example. Defying the apartheid regime, the minibus industry emerged organically in the townships of our country, through the 1980s. Today, an estimated fleet of 97,000 minibuses transports over 60% of all commuters in our country. Yet, while commuter rail and buses have long been supported (as they should be) by government subsidies - both before and after 1994 - the minibus industry has never been subsidised. Clearly, minibuses are an integral part of any coherent approach to a growth and development strategy in our economy. It is quite right that government should seek to assist with recapitalisation - not just as a matter of historic redress for thousands of operators, but above all to ensure safer, more affordable, more accessible mobility for millions of South Africans.
The SACP therefore strongly believes that in approaching re-capitalisation, we should build on these historic positive developments. It is for these, and other, reasons that the SACP has been laying increasing stress on the strategic objective of building sustainable communities. If we are to achieve a sustainable growth and development strategy, if we are to overcome the crisis of underdevelopment and poverty, then we have to shift paradigms.
Instead of continuing to construct dormitory townships that are dumping grounds for the unemployed, the unemployable, the red-lined, the black-listed, the prematurely ill and orphaned, we need to physically integrate low-cost housing with job opportunities and shopping. We need to build infrastructure that is not just about a long commute between a dormitory township or impoverished rural area and enclaves of wealth. We need to build infrastructure that sustains and integrates the communities where the majority live. We need to lessen, not deepen the dependency of our communities on the so-called "formal" sector.
It is along these lines that the SACP believes that we should approach empowerment, empowerment that is truly broad and that begins to transform the current embedded systemic contradiction of development that reproduces the crises of poverty, unemployment, indebtedness, marginalisation, and general under-development.
It is also for these reasons that we have identified and campaigned for the transformation of the financial sector, as a key instrument in broad based empowerment. It is also for these reasons outlined above that we have placed the building of co-operatives as viable forms of enterprise for ordinary people, with the largest potential impact on poverty eradication. It is through such initiatives that we should seek to harness the entrepreneurial possibilities amongst ordinary people, and use our own muscles to create sustainable and self-reliable opportunities for sustainable livelihoods, rather than approaching these as perpetually condemned activities.
Let me also take one concrete example to illustrate this. Research shows that the Cape Peninsula alone has about 43 000 spaza shops. Each of these owners go individually to buy from large wholesalers. Were they to form co-operatives and do bulk buying, they would essentially take over may of the existing wholesalers. In addition this could add to lowering prices of basic foodstuffs and shorten the food chain. This is how what we regard as marginal "informal" sector could use its muscle to transform, and not just join the formal sector.
Mobilising for a partnership for broad based empowerment and poverty eradication
Underlying our belief in such activities is the fact that there is a lot of wealth in our poor communities that is being used to benefit the rich minority, because we have not organised our people to reclaim their own financial and economic resources. Similarly, our stokvels and burial societies, generate millions if not billions of rands each year, yet these are controlled and used by big banks and insurance companies not to the benefit of the workers and the poor. I think a critical challenge to an organisation like NAFCOC, is how it can or should seek to form a partnership with the workers and the poor to transform the economic conditions and address poverty in our poor areas, by reclaiming control over resources in the hands of the people? You seriously need to think about this.
We are by no means suggesting that let us merely focus on transforming the fringes of our economy and leave the whole economy intact. But what we are saying is that we need to do both things, and the "informal" economy itself has a lot of resources that needs to be harnessed properly and can be a very important lever to transform the formal economy! In fact, the entire financial sector relies heavily on resources generated from the workers and the poor (burial societies, stokvels, insurance policies, workers' pensions and provident funds, etc). In fact we could even argue that what we refer to as the "formal" sector relies heavily on the resources from the "informal" sector, not least the labour of workers. This is where the "formal" and the "informal" intersect, and we need to direct a lot of our energies into transforming the power of this intersection in favour of the majority.
An organisation like NAFCOC - whose members are still largely located in these dormitory areas characterised by high levels of poverty and unemployment - have an important role to play in forging community - small business partnerships towards transforming our economy. That would be real black economic empowerment, and a platform to transform the formal economy whilst addressing poverty and unemployment.
Unless we mobilise to tackle poverty and unemployment, there can be no meaningful black economic empowerment. BEE should therefore not just be approached as moral pressure on the rich, but also a struggle to mobilise all of ourselves and our people to reclaim control over our resources, and the creation of an appropriate legislative and policy environment to support this.
With these words we wish you a successful Conference.
CONTACT: Mazibuko Kanyiso Jara (surname Jara)
Department of Media, Information and Publicity
South African Communist Party
P.O. Box 1027,
Johannesburg,
2000
3rd floor, COSATU House,
1 Leyds Street,
Braamfontein,
2017
Tel - + 27 11 339 3621,
Fax - +27 11 339 4244/6880
Cell - +83 651 0271
Email - mazibuko@sacp.org.za;
WEBSITE - www.sacp.org.za