Asgi-SA

Phumzile: how to get 6% growth

28 November 2005

South African Deputy President Phumzile Mlambo-Ngcuka has told the Sunday Times that black economic empowerment and protective labour legislation, both pillars of post-apartheid transformation, are under review as part of the country's programme to boost economic growth to 6% of GDP by 2014.

In July, President Thabo Mbeki put Mlambo-Ngcuka in charge of the Accelerated and Shared Growth Initiative for South Africa, which includes over R320-billion in infrastructure spending over the next five years.

In her first major interview since she was appointed Deputy President in June 2005, Mlambo-Ngcuka told the Sunday Times about a range of initiatives to remove obstacles to growth.

She said South Africans at home and abroad - including whites who had taken retrenchment packages to make way for transformation - would be the first recruits in an organised search for talent to drive the infrastructure programme.

Skills: 'Look first for South Africans'
Mlambo-Ngcuka said the government was looking to identify and recruit people with the skills needed to radically improve the quality of local government and manage the country's infrastructure programme.

Eskom, the power utility with a R95-billion capital expenditure programme planned for the next five years, has already identified about 200 suitably qualified South Africans in Britain and the Middle East willing to return.

"Eskom … already know what the skills are that they need and can get in South Africa and what the skills are that they are recruiting from outside South Africa," she told the Sunday Times.

"In that regard, they have actually gone out there in the field ... and looked for South Africans who may have the skills. That is what we are encouraging ... When you look outside, look first for South Africans, look for Africans in the diaspora and then look for anybody who is available."

Mentoring
Part of their job will be to pass on skills. "Eskom got a lot of retired people who are very excited at the opportunity to work around the assets that they created. Around each person who is a senior consultant or engineer, you have a team of about four people who are being mentored.

"For the young people, they also need to learn within a specific time [and] there are more people than you are actually likely to absorb, so there is competition. It is not a given that because they are part of the team that is being mentored they are going to get the employment.

"A structured initiative between us, the private sector and labour is under way. In particular, we will be responding to the skills we require for infrastructure, for local government and for the priority sectors - tourism and business process outsourcing in particular."

Mlambo-Ngcuka said another priority was proper civil service: "It is about the skills level, but more than anything else it is people who have a service culture. I think it takes a particular mindset to be the kind of person who is looking for solutions."

Employment and labour legislation
Mlambo-Ngcuka said that in January 2006 she would present a proposal to the Cabinet for an independent labour market review to determine the actual scale of unemployment in South Africa, and to examine the consequences of labour legislation.

She said the review's terms of reference would be decided in consultation with labour and business, and it would be conducted by an agency accepted by all.

"We're going to do this thing together," she told the Sunday Times.

"We have agreed that we need to review the labour market. We have to agree on an institution that all parties will accept. The ILO [International Labour Organisation], who did it the last time, may be one option.

"The specific complaints that people are raising would need to be investigated. We just don't want to have a knee-jerk reaction. It is too sensitive to do it clumsily."

Black economic empowerment
Mlambo-Ngcuka said the government's broad-based black economic empowerment (BEE) policy also would be tested against the goal of accelerated growth.

"I don't think there is any virtue in pure BEE if that equals poor service," she said. "We're looking at that in the shared growth initiative and also in the second-economy initiative.

"We need to review the unintended consequences of the BEE policy and adjust. There never was an intention that jobs should be given to people who are not qualified - that is indefensible. We also cannot compromise urgent service delivery because of BEE."

Mlambo-Ngcuka told the Sunday Times that a major goal was to ensure that empowerment was broadly based.

"Broad-based empowerment is about how many people who are working in an enterprise have an opportunity to break this glass ceiling through employment equity.

"For me, the best is about providing people with skills so that they can go and compete in the market."

While empowerment was aimed at improving the circumstances of the poor, access to equity would not be broad-based, she said.

"Equity was never meant to get Ma Dlamini from the back of beyond to get a slice of Absa. I mean, that's absurd. Empowerment at the grassroots level is about giving people the chance to acquire skills, for instance, so that they can change their circumstances, sustainably and forever. It's not about equity.

"Equity is and always will be for the few because we cannot force the banks to lend to people who are not credit worthy. So, yes, a few people will get richer and richer because we are in a capitalist system."

Economic growth
The Accelerated and Shared Growth Initiative for South Africa is being driven by a special task team that includes the ministers of Finance, Trade and Industry and Public Works, as well as the premiers of Gauteng and the Eastern Cape.

The team presented a provisional report to the Cabinet last month. Mbeki will announce key strategies coming out of the project in his state of the nation address in February 2006.

"It's not a new policy, it's being decisive on what infrastructure we are going to implement, financing it and addressing barriers to implementation," Mlambo-Ngcuka told the Sunday Times.

"We need a comprehensive plan to make sure that you don't have a big project being delayed in the middle of implementation because there is this one input missing that is so crucial. All of us have just realised that we need detail and we need to be meticulous. It's driving me crazy, but it's important."

She said fixing neglected infrastructure held promise for job creation.

"We have tended not to put maintenance high on the agenda. Not only are we putting it high on the agenda now ... we have asked the Department of Public Works to produce a report; an overview of the maintenance challenges of South Africa - the cost of doing it, the size of the industry, the skills gap - so that we can launch it as an industry in its own right.

"Maybe it is not a super earner, but it can absorb a lot of people and it is ongoing."

Cost of doing business
Mlambo-Ngcuka told the Sunday Times that the government was looking to make it cheaper to do business in South Africa, and would soon implement measures to cut the cost and complexity of regulatory compliance - estimated to set companies back at least R100 000 a year.

More than two years after Mbeki's policy unit first identified tourism and business process outsourcing as sectors with significant potential for growth, the government was now ready to implement concrete measures to promote them, she said.

Mlambo-Ngcuka said the cost and complexity of regulations is recognised as a barrier to integrating the formal and informal economies.

"If we are saying that we are going to change the environment, we cannot just come with a broad brush. There are specific things which have been raised. If you come with generalities again, I don't think that people are going to feel the impact.

"What we are saying is that the boldness is about taking more risks in regard to the second economy. For instance, we need to scale up on micro credit, knowing that you will not have 100% repayment. The level is just too low for what we want to do.

"Let us get more detail about what is it that we can and want to do in the second economy. Let us look at the shortcomings of service delivery and what needs to be done. We should make sure that the state that we are defining is responding to these needs."

Mlambo-Ngcuka is also keen to help private-sector companies battling to import the skills they need.

"On the surface, our regulatory environment should make it easy, but people say it doesn't really work.

"I have to say it is important to me that I intervene and that it works. The credibility of the initiative means that you do have to solve the problems when people bring them to our attention."

A tough year
Mlambo-Ngcuka (50) was elected to Parliament in 1994 and joined President Nelson Mandela's government in 1996 as deputy minister of Trade and Industry. As minister of Minerals and Energy from July 1999 she won the respect of business and industry.

In June this year she was appointed as Deputy President to replace Jacob Zuma, who was found to have had a "generally corrupt relationship" with convicted fraudster Shabir Shaik.

She has taken on the deputy presidential mandate for the development of the second economy, as well as working on South Africa's growth initiatives.