Address on the Occasion of the Annual President’s Award for Export Achievement – 1996/11/26

Chairperson,
Honourable Guests,
Ladies and Gentlemen

 

It is again a great honour to address you tonight at this memorable occasion where we are assembled to give recognition to our exporters. A special greeting to our achievers and champions that are among us here tonight. As we honour our achievers in the export markets, it is also worth noting that among us here tonight are some of our achievers in other areas of life. Among us here is our boxing champion Baby Jake Matlala and John Moeti a member of Bafana Bafana the African Champions.

Chairperson, myself and the Minister and Deputy Minister of Trade and Industry have just returned from a working visit to Europe. In our deliberations with our counterparts in Europe we emphasised the need for our European partners not only to open markets to our products and services, but most importantly to do so in a way that recognises our developing country status as well as our location within the region of Southern Africa. We are convinced that given the political will among the EU member states, we can negotiate a free trade agreement with the EU which will benefit our exporters and economy. As a member of SACU and SADC, we would also want to see our agreement with Europe contributing to the revival and regeneration of the SADC regional economy, on a sustainable basis.

We are satisfied that our European partners will take our concerns into account. As for the negotiations, our negotiators are fine-tuning our positions, getting ready for the negotiations.

Our visit to Europe must be seen in the context of other government activities geared towards promoting trade. I have been encouraged by the fact that in most of their travels, the Ministry of Trade and Industry takes along a business and labour delegation. In fact SA’s business people and government officials have over the past year or so travelled around the world; to North America, Europe, the Middle East, South East Asia, India and into Africa with the dual objectives of seeking and establishing markets for our goods and services and to introduce the country as an attractive investment destination.

I would like to personally encourage this practise of always, wherever possible, including our business people in our foreign travels. Coming out of isolation as we do, we have some catching up to do. This trek into the world has to continue and must be seen as an important component of the reshaping of our foreign policy around our domestic economic needs – the most important of which is job creation – and the private sector, ordinary people in all sectors of our society from sport, culture, agriculture and general business are our strategic partners in this process.

The occasions this evening is to laud and award our achievers in exporting South African goods and services. It is of primary importance that we not only honour our exporters but we also put in place the necessary structures and policies that will enable them to achieve even greater export success in the future as new opportunities arise in the global market.

This evening is a culmination of many processes and policy decisions that the government has undertaken and in future it may well be one of the annual milestones by which we measure our performance in the key areas of economic activity. Among these are:

  • The creation of an investment climate through enhanced opportunities and incentives;
  • The creation of opportunities for existing and new entrepreneurs;
  • Broadening our manufacturing base by expanding into downstream manufacturing, and
  • Increasing exports.

This has to lead to economic growth, employment creation and redistribution – the essence of the Macro-Economic Strategy for Growth, Employment and Redistribution (Gear) announced by the Minister of Finance on the 14th of June this year.

Distinguished guests, the policies and objectives embedded in the Gear are a pragmatic balance struck between our domestic economic demands and the realities of the international context. These policies and objectives emerged after a thorough analysis of global trends and the specific conditions in our economy. Our trade and industrial policies are firmly located within this context. Having said that, our economic policies, must, if anything at all, steer the drive towards reaching the twin objectives of sustained growth and the creation of new sustainable jobs.

The government knows that it cannot do this alone. Placing South Africa on the high road to prosperity has to be a collective effort and it involves creativity and innovation at all levels of society – most of all, however, it involves greater levels of investment in our people.

A story was published in a Sunday newspaper recently which reflected amazement at the low levels of achievement in mathematics and science in among South African school children. We have raised this issue repeatedly over the past two years. In 1994 the World Competitiveness Report rated South Africa last out of 41 countries polled on whether their education system met the needs of a competitive economy.

You will appreciate, I am sure, that the problem has been with us for a long time. Investment in our people should, perhaps therefore, feature in any package of measures aimed at improving our competitiveness. We also have to recognise that as government there are limits as to what we can do in this area. We need the support of business and labour, but most importantly we need parties to the productive system, business and labour, to work together in the training and retraining of workers. Government will provide the enabling mechanisms such, as those contained in the Gear. Let me take this opportunity to urge all those involved, including government departments, in the design of a new structure and system for funding training to finalise this issue as soon as possible. We need to finalise this so that the new policy can kick-in support for our GEAR and other policy initiatives.

Following the release of our Macro-economic Strategy, a new set of manufacturing investment incentives, the so-called Manufacturing Development Programme was announced recently, in order to:

  • Raise fixed investment in manufacturing;
  • Restrictive domestic manufacturing towards international competitiveness;
  • Facilitate a higher degree of labour absorption, and,
  • Encourage small and medium-sized manufacturing.

The Manufacturing Development Programme forms part of Government’s package of supply-side measures and includes:

  • An accelerated depreciation allowance.
  • The small and medium-sized manufacturing development programme for new enterprises with assets of R3m or less, and,
  • A tax holiday of up to 6 years for new enterprises with assets in excess of R3m.

The incentives are equally accessible to local and foreign firms and their favourable impact on investment returns promises a significant stimulus to investment in South African manufacturing. They have been designed to be targeted, easily administered and are of a fixed duration. The focus is on labour absorption and regional and industrial sensitivity. Ultimately their worth will be measured in the amount of value-added exports and how this contributes to growth, job creation and the upliftment of our people. This will place South Africa on the path to prosperity.

In reviewing the recent economic performance of the South African economy, the macro-economic strategy once more referred to the traditional balance of payments constraint on South Africa’s growth prospects. To break this constraint requires structural changes in our economy, the essence of which is to improve the productive efficiency of our economy and in relative terms to reduce the share of minerals and primary products in our export mix.

We are confident that the above-mentioned measures, including the programme tariff reform, increasing private sector fixed investment and improving export performance will achieve the required structural changes.

Indeed it is our view that despite the recent exchange rate volatility, the real economy is still strong. Although consumer inflation has shown a slight upward trend during the last three months, it is still some way before touching the double digit level of the pervious decades. The real economy has recorded an output growth of 3.5% during the second quarter of 1996 compared to 3.3% in the first quarter. In particular the agricultural sector grew by an impressive 41.2% during the last four months.

Trade figures appear to have started reflecting the stimulus on exports and the constraining effect on imports emanating from the currency depreciation. A trade surplus of R4.3 billion for the first nine months of the year compares well with R2,9 billion for the corresponding period in 1995.

Recognising the importance and significance of these positives, it is however, important to deal decisively with excessive volatility. The Reserve Bank and the Ministry of Finance will continue to monitor the situation and will advise government accordingly.

The issue of foreign exchange controls has been raised by both our own businesspeople and international investors. The government is committed to the lifting of the remaining controls.

However, as the Minister and the Governor indicated, we will want to do this in a gradual and responsible manner that preserves the financial integrity of our economy.

Allow me to return to tonight’s main purpose and that is to celebrate with the cream of South African exporter their successes. I am told that this year attracted an all time record of entrants. This indicates that our companies are succeeding in their efforts to enter the global market place.

It is worth noting that our companies are succeeding in global markets at the same time as we reduce our protective barriers in line with our WTO obligations. Some of our WTO obligations have necessitated the phasing out of old support programmes. Committed as we are to the promotion of exports, we in government acted swiftly and introduced WTO-friendly support measures. The new schemes are more focused and include supply-side measures such as: the Competitiveness Fund which is a matching grant fund, the Human Resources for Industry Programme, the Programme to Support Industrial Innovation and Technology and the World Player Scheme of the Industrial Development Corporation.

Experience in other countries has shown that it is not only larger firms which can compete on the exports markets. In South Africa too, we have some very dynamic and successful SMME’s which have been able to penetrate international markets with very promising results. We would like to see these joined by an increasing number of black-owned firms. As government we are committed to assisting many more firms in penetrating global markets, especially black firms.

Tonight’s ceremony is the annual highlight of the government’s efforts in creating export awareness and an export culture amongst as many firms, large and small, as possible.

Finally let me conclude by saying that in congratulating the winners tonight and rewarding them I also like to thank all our exporters for their contribution and efforts to enhance our economic development.

 

THANK YOU!

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