The Development Bank of Southern Africa (DBSA) is opening up a R1.75 billion credit line to fund reconstruction and development projects in Angola.
The fund will be operated through Angolan bank Banco Africano de Investimento in partnership with the African Development Bank, and comes on the back of last week’s state visit to South Africa by Angolan President Jose Eduardo dos Santos.
Under the terms of a “declaration of intent on the utilisation of financial facilities” signed during Dos Santos’ visit, the Industrial Development Corporation and the Export Credit Insurance Corporation are also expected to expand on their financing programmes with Angola.
The credit, which could run into billions of dollars, will help South African companies secure lucrative contracts in Angola, a market previously dominated by China, Brazil and Portugal.
Aguinaldo Jaime, the head of Angola’s private investment agency ANIP, said: “The procedure and mechanism are still being worked out between the financial institutions, but the declaration is a clear signal that the political will is in place for these financial mechanisms to facilitate the co-operation between the two countries.”
He added: “I think the two countries have recognised that you can boost investment only if you have financial mechanisms in place.
“This is what we have learned relating to our experiences with Portugal, China and Brazil.”
One organisation hoping to benefit from the credit lines is the South Africa-Angola Housing Initiative (SAAHI), an umbrella management group that has been planning big infrastructure and construction projects in three provinces in Angola.
SAAHI chief executive Sello Rathete said it already had a commitment for about $500 million (R3.4bn) from the DBSA.
Other co-operation deals inked between Angola and South Africa during Dos Santos’s historic state visit, the first by an Angolan head of state since 1994, covered information and communications technology, public works and infrastructure development and a protocol on technical co-operation on veterinary services.
Although no details were given, an energy implementation plan signed by ministers is believed to relate to electricity supply, rather than oil and gas as has been suggested.
The deal between South Africa’s PetroSA and Angolanm state oil firm Sonangol, which could lead to a joint refining project, is still under discussion, according to President Jacob Zuma.
Responding to complaints about the difficulties in obtaining entry visas into Angola, Dos Santos said his government was working on possibly creating a multiple-entry visa for South African business executives.. - Louise Redvers
http://www.tios.co.za/dbsa-to-help-finance-projects-in-angola-1.1003240
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Wednesday, December 29, 2010
Tuesday, December 28, 2010
South Africa seeks trade and investor gains from joining Bric club.
South Africa EXPECTED to gain substantial trade and investment benefits when it joined Brazil, Russia, India, China in the Bric grouping of emerging economies, a top government official said yesterday.
SA appears set to join the bloc after an invitation extended last week by China, which holds the rotating chairmanship.
The invitation was made in a telephone call to International Relations and Co-operation Minister Maite Nkoana-Mashabane by her Chinese counterpart, Foreign Minister Yang Jiechi.
Although SA’s government has long aspired to be in the Bric league, most commentators feel its economy is dwarfed by those of the Bric countries, whose growth rates have been the envy of the developed world especially during the recession.
In a recent commentary, Prof Mills Soko of the University of Cape Town Graduate School of Business said SA should not be "obsessed" with joining.
Prof Soko argued that markets in the rest of Africa, the Middle East and other Latin American countries should not be neglected, and emphasised that the Bric grouping was not in fact an organisation, but the construct of an economist, and did not have a strategy, or clear objectives.
"We cannot engage in an ill- defined, ad hoc manner," Prof Soko said, emphasising SA should understand the trade policies of the Bric countries and how these would affect it, and what competitive pressures these would apply. While Bric countries represented markets for South African goods, they were also competitors in sectors such as steel, clothing and textiles and the automotive industry.
However, in an indication of SA’s foreign policy priorities, President Jacob Zuma has made state visits to each of the Bric countries since coming to office.
Goldman Sachs Asset Management chairman Jim O’Neill coined the term "Bric" in 2001 to describe the four countries whose joint output would, he said, equal that of the US by the year 2020.
China’s "invitation" to SA comes barely a week after Russian President Dmitry Medvedev’s envoy to Africa, Alexei Vasiliev, said his country expected SA to join as early as next year .
SA has argued that its accession would give it some economic and developmental advantage in Africa, while promoting the development of Bric and enhancing co-operation among these emerging market economies.
SA stands to benefit from the potential preferential trade pacts and economic co-operation agreements that could be concluded with Bric countries, whose combined population of 2,5-billion people shares between them an estimated annual gross domestic product of more than 9-trillion.
Sipho Nene, acting director- general of the Department of International Relations and Co- operation, said the department’s motivation to Mr Zuma about joining Bric was that it was for SA’s economic and political benefit. "Since Bric has no secretariat, the body does not yet have financial obligations for our country, but we anticipate huge trade and investment spin-offs from it."
On the economic front, he said SA stood a chance to negotiate positions that would enhance its trade and leverage the potential for direct foreign investment from Bric member states.
"By joining Bric we are not starting from scratch … we are merely building on already established trade agreements, standing binational commissions or bilateral relations and other diplomatic and economic links with Bric countries who are already SA’s strategic partners.
"This membership is aimed at keeping SA as an important player in various organisations outside the United Nations, which is supposed to remain the pillar of cooperation and collaboration for the world," Mr Nene said.
Mr Yang indicated that Chinese President Hu Jintao had also invited Mr Zuma to attend the third Bric leaders’ summit, to be held in China next year.
Ms Nkoana-Mashabane said SA was ready to step up communication and co-ordination with China and other Bric members.
"Our approach to intensifying our relations with emerging powers and other countries of the South is through bilateral engagement," she said.
"We also see the Nonaligned Movement and the Group of 77 as important for South-South interaction, especially in the framework of the United Nations.
"Our trilateral partnership with India and Brazil (Ibsa) will get a better balance, and become even stronger, with SA a member of the Brics. SA’s diversified foreign policy objectives and interests allow both groupings (Ibsa and Brics) to co-exist. The mandates of Brics and Ibsa are complementary," she said.
HOPEWELL RADEBE radebeh@bdfm.co.za http://www.businessday.co.za/articles/Content.aspx?id=130374
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
SA appears set to join the bloc after an invitation extended last week by China, which holds the rotating chairmanship.
The invitation was made in a telephone call to International Relations and Co-operation Minister Maite Nkoana-Mashabane by her Chinese counterpart, Foreign Minister Yang Jiechi.
Although SA’s government has long aspired to be in the Bric league, most commentators feel its economy is dwarfed by those of the Bric countries, whose growth rates have been the envy of the developed world especially during the recession.
In a recent commentary, Prof Mills Soko of the University of Cape Town Graduate School of Business said SA should not be "obsessed" with joining.
Prof Soko argued that markets in the rest of Africa, the Middle East and other Latin American countries should not be neglected, and emphasised that the Bric grouping was not in fact an organisation, but the construct of an economist, and did not have a strategy, or clear objectives.
"We cannot engage in an ill- defined, ad hoc manner," Prof Soko said, emphasising SA should understand the trade policies of the Bric countries and how these would affect it, and what competitive pressures these would apply. While Bric countries represented markets for South African goods, they were also competitors in sectors such as steel, clothing and textiles and the automotive industry.
However, in an indication of SA’s foreign policy priorities, President Jacob Zuma has made state visits to each of the Bric countries since coming to office.
Goldman Sachs Asset Management chairman Jim O’Neill coined the term "Bric" in 2001 to describe the four countries whose joint output would, he said, equal that of the US by the year 2020.
China’s "invitation" to SA comes barely a week after Russian President Dmitry Medvedev’s envoy to Africa, Alexei Vasiliev, said his country expected SA to join as early as next year .
SA has argued that its accession would give it some economic and developmental advantage in Africa, while promoting the development of Bric and enhancing co-operation among these emerging market economies.
SA stands to benefit from the potential preferential trade pacts and economic co-operation agreements that could be concluded with Bric countries, whose combined population of 2,5-billion people shares between them an estimated annual gross domestic product of more than 9-trillion.
Sipho Nene, acting director- general of the Department of International Relations and Co- operation, said the department’s motivation to Mr Zuma about joining Bric was that it was for SA’s economic and political benefit. "Since Bric has no secretariat, the body does not yet have financial obligations for our country, but we anticipate huge trade and investment spin-offs from it."
On the economic front, he said SA stood a chance to negotiate positions that would enhance its trade and leverage the potential for direct foreign investment from Bric member states.
"By joining Bric we are not starting from scratch … we are merely building on already established trade agreements, standing binational commissions or bilateral relations and other diplomatic and economic links with Bric countries who are already SA’s strategic partners.
"This membership is aimed at keeping SA as an important player in various organisations outside the United Nations, which is supposed to remain the pillar of cooperation and collaboration for the world," Mr Nene said.
Mr Yang indicated that Chinese President Hu Jintao had also invited Mr Zuma to attend the third Bric leaders’ summit, to be held in China next year.
Ms Nkoana-Mashabane said SA was ready to step up communication and co-ordination with China and other Bric members.
"Our approach to intensifying our relations with emerging powers and other countries of the South is through bilateral engagement," she said.
"We also see the Nonaligned Movement and the Group of 77 as important for South-South interaction, especially in the framework of the United Nations.
"Our trilateral partnership with India and Brazil (Ibsa) will get a better balance, and become even stronger, with SA a member of the Brics. SA’s diversified foreign policy objectives and interests allow both groupings (Ibsa and Brics) to co-exist. The mandates of Brics and Ibsa are complementary," she said.
HOPEWELL RADEBE radebeh@bdfm.co.za http://www.businessday.co.za/articles/Content.aspx?id=130374
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Sunday, December 12, 2010
Hilary Clinton - Remarks Saban Center for Middle East Policy Seventh Annual Forum
Remarks at the Brookings Institution's Saban Center for Middle East Policy Seventh Annual Forum
Hillary Rodham Clinton
Secretary of State
Washington, DC
December 10, 2010
Thank you. Thank you very much. I appreciate the introduction, but nothing is imminent – (laughter) – so far as I know. But it is a great pleasure for me to be back here and part of this very important forum.
And I appreciate your introduction. I appreciate the friendship that you and Cheryl have given to me and to my family. You’ve been friends for many years. And certainly, as anyone who knows Haim understands, as an entrepreneur, a philanthropist, he is unparalleled, but also as a champion for peace. He represents in many ways in the best qualities of both Israel and America. He’s generous, he’s irrepressible, and absolutely unstoppable. And he has dedicated his energy and support to so many important causes and helped so many people. But he has probably no deeper passion than the one we are here discussing tonight – strengthening U.S.-Israeli relations and securing a just and lasting peace in the Middle East.
So I thank him and I thank Strobe Talbott, I thank Martin Indyk, and I thank all of you. And in particular, I appreciate your bringing us together to discuss the crucial issues surrounding the Middle East. I also want to acknowledge all of the colleagues from Israel who are here. Certainly, you’ll hear in a minute from Defense Minister Barak.
There are other members of the Israeli Government here – opposition leader Livni, and I’m delighted that Prime Minister Fayyad is also with us. Prime Minister Fayyad has accomplished a great deal in a short amount of time under very difficult circumstances. Along with President Abbas, he has brought strong leadership to the Palestinian Authority and he has helped advance the cause of a two-state solution by making a real difference in the lives of the Palestinian people. So Mr. Prime Minister, welcome again to Washington and thank you for your very good work. (Applause.)
Now, you don’t have to read secret diplomatic cables to know that we are meeting during a difficult period in the pursuit of peace in the Middle East. I understand and indeed I share the deep frustrations of many of you in this room and across the region and the world. But rather than dwell on what has come before, I want to focus tonight on the way forward, on America’s continuing engagement in helping the parties achieve a two-state solution that ends the conflict between Israelis and Palestinians once and for all, and on what it will take, finally, to realize that elusive, but essential goal.
Before I go further, I want to offer the deepest condolences of the American people for the lives lost in the recent fires in Northern Israel. Israelis are always among the first to lend a hand when an emergency strikes anywhere in the world. So when the fires began to burn, people and nations stepped up and offered help. It was remarkable to watch. Turkey sent planes; Egypt and Jordan donated chemicals and equipment; the Palestinian Authority dispatched firefighters and their trucks; and the United States was also part of the effort deploying expert firefighters, C-130 cargo planes, and thousands of gallons of chemicals and suppressants. It was testament once again to the deep and enduring bonds that unite our two countries, to the partnership between our governments, and the friendship between our people.
The United States will always be there when Israel is threatened. We say it often, but it bears repeating: America’s commitment to Israel’s security and its future is rock solid and unwavering, and that will not change. From our first days in office, the Obama Administration has reaffirmed this commitment. For me and for President Obama, this is not simply a policy position. It is also a deeply held personal conviction.
Over the last two years under President Obama’s leadership, the United States has expanded our cooperation with Israel and focused in particular on helping Israel meet the most consequential threats to its future as a secure and democratic Jewish state. Our security relationship has grown broader, deeper, and more intense than ever before. And we have not just worked to maintain Israel’s qualitative military edge. We have increased it through new advances like the Iron Dome, a short-range rocket defense system that will help protect Israeli homes and cities. And our military continues to work closely with the IDF through exchanges, training, and joint exercises.
For Israel and for the region, there may be no greater strategic threat than the prospect of a nuclear-armed Iran. We just heard my husband speaking to that. And let me restate clearly: The United States is determined to prevent Iran from developing nuclear weapons. And along with our international partners, we have implemented tough new sanctions whose bite is being felt in Tehran. Iran’s leaders face a clear choice, one of those tough choices that Strobe mentioned as the theme of this forum: Meet your international responsibilities or face continued isolation and consequences.
We have also stepped up efforts to block the transfer of dangerous weapons and financing to terrorist groups like Hezbollah and Hamas. But Iran and its proxies are not the only threat to regional stability or to Israel’s long-term security. The conflict between Israel and the Palestinians and between Israel and Arab neighbors is a source of tension and an obstacle to prosperity and opportunity for all the people of the region. It denies the legitimate aspirations of the Palestinian people and it poses a threat to Israel’s future security. It is at odds also with the interests of the United States.
I know that improvements in security and growing prosperity have convinced some that this conflict can be waited out or largely ignored. This view is wrong and it is dangerous. The long-term population trends that result from the occupation are endangering the Zionist vision of a Jewish and democratic state in the historic homeland of the Jewish people. Israelis should not have to choose between preserving both elements of their dream. But that day is approaching.
At the same time, the ever-evolving technology of war, especially the expanding reach of the rockets amassed on Israel’s borders means that it will be increasingly difficult to guarantee the security of Israeli families throughout the country without implementing peace agreements that answer these threats.
Continuing conflict also strengthens the hands of extremists and rejectionists across the region while sapping the support of those open to coexistence and cooperation. Radicalization of the region’s young people and growing support for violent ideologies undermine the stability and prosperity of the Middle East. The United States looks at these trends. We reflect on our deep and unwavering support of the state of Israel and we conclude without a shadow of a doubt that ending this conflict once and for all and achieving a comprehensive regional peace is imperative for safeguarding Israelis’ future.
We also look at our friends the Palestinians, and we remember the painful history of a people who have never had a state of their own, and we are renewed in our determination to help them finally realize their legitimate aspirations. The lack of peace and the occupation that began in 1967 continue to deprive the Palestinian people of dignity and self-determination. This is unacceptable, and, ultimately, it too is unsustainable.
So for both Israelis and Palestinians and, indeed, for all the people of the region, it is in their interest to end this conflict and bring a just, lasting, and comprehensive peace to the Middle East based on two states for two peoples.
For two years, you have heard me and others emphasize again and again that negotiations between the parties is the only path that will succeed in securing their respective aspirations; for the Israelis, security and recognition; for the Palestinians, an independent, viable sovereign state of their own. This remains true today. There is no alternative other than reaching mutual agreement. The stakes are too high, the pain too deep, and the issues to complex for any other approach.
Now, it is no secret that the parties have a long way to go and that they have not yet made the difficult decisions that peace requires. And like many of you, I regret that we have not gotten farther faster in our recent efforts. That is why yesterday and today I met with Israeli and Palestinian negotiators and underscored our seriousness about moving forward with refocused goals and expectations.
It is time to grapple with the core issues of the conflict on borders and security; settlements, water and refugees; and on Jerusalem itself. And starting with my meetings this week, that is exactly what we are doing. We will also deepen our strong commitment to supporting the state-building work of the Palestinian Authority and continue to urge the states of the region to develop the content of the Arab Peace Initiative and to work toward implementing its vision.
Over recent months, Prime Minister Netanyahu and President Abbas have met face to face multiple times. I have been privileged to be present during their meetings in Sharm el-Sheikh, in Jerusalem, and in Washington. I have also had the chance to talk with each leader privately. These were meaningful talks that yielded new clarity about the gaps that must be bridged.
Significantly, both sides decided together to pursue a framework agreement that would establish the fundamental compromises on all permanent status issues and pave the way for a final peace treaty.
Reaching this goal will not be easy by any means. The differences between the two sides are real and they are persistent. But the way to get there is by engaging, in good faith, with the full complexities of the core issues and by working to narrow the gaps between the two sides.
By doing this, the parties can begin to rebuild confidence, demonstrate their seriousness, and hopefully find enough common ground on which to eventually re-launch direct negotiations and achieve that framework.
The parties have indicated that they want the United States to continue its efforts. And in the days ahead, our discussions with both sides will be substantive two-way conversations with an eye toward making real progress in the next few months on the key questions of an eventual framework agreement. The United States will not be a passive participant. We will push the parties to lay out their positions on the core issues without delay and with real specificity. We will work to narrow the gaps asking the tough questions and expecting substantive answers. And in the context of our private conversations with the parties, we will offer our own ideas and bridging proposals when appropriate.
We enter this phase with clear expectations of both parties. Their seriousness about achieving an agreement will be measured by their engagement on these core issues. And let me say a few words about some of the important aspects of these issues we will be discussing.
First, on borders and security. The land between the Jordan River and the Mediterranean is finite, and both sides must know exactly which parts belong to each. They must agree to a single line drawn on a map that divides Israel from Palestine and to an outcome that implements the two-state solution with permanent Palestinian borders with Israel, Jordan, and Egypt. The Palestinian leaders must be able to show their people that the occupation will be over. Israeli leaders must be able to offer their people internationally recognized borders that protect Israel’s security. And they must be able to demonstrate to their people that the compromises needed to make peace will not leave Israel vulnerable. Security arrangements must prevent any resurgence of terrorism and deal effectively with new and emerging threats. Families on both sides must feel confident in their security and be able to live free from fear.
Second, on refugees. This is a difficult and emotional issue, but there must be a just and permanent solution that meets the needs of both sides.
Third, on settlements. The fate of existing settlements is an issue that must be dealt with by the parties along with the other final status issues. But let me be clear: The position of the United States on settlements has not changed and will not change. Like every American administration for decades, we do not accept the legitimacy of continued settlement activity. We believe their continued expansion is corrosive not only to peace efforts and two-state solution, but to Israel’s future itself.
And finally, on Jerusalem which is profoundly important for Jews, Muslims, and Christians everywhere. There will surely be no peace without an agreement on this, the most sensitive of all the issues. The religious interests of people of all faiths around the world must be respected and protected. We believe that through good faith negotiations, the parties should mutually agree on an outcome that realizes the aspirations for both parties, for Jerusalem, and safeguard its status for people around the world.
These core issues are woven together. Considering the larger strategic picture makes it easier to weigh the compromises that must be made on both sides and see the benefits to be gained. We are not moving forward in a vacuum. From day one, the Obama Administration has recognized the importance of making progress on two simultaneous and mutually reinforcing tracks – negotiations between the parties and institution-building that helps the Palestinians as they prepare to govern their own state. Improvements on the ground give confidence to negotiators and help create a climate for progress at the peace table.
So even as we engage both sides on the core issues with an eye toward eventually restarting direct negotiations, we will deepen our support of the Palestinians’ state-building efforts. Because we recognize that a Palestinian state achieved through negotiations is inevitable.
I want, once again, to commend President Abbas and Prime Minister Fayyad for their leadership in this effort. Under the Palestinian Authority’s Two-Year State-Building plan, security has improved dramatically, services are being delivered, and the economy is growing.
It is of course true that much work remains to reverse a long history of corruption and mismanagement. But Palestinians are rightfully proud of the progress they have achieved, and the World Bank recently concluded that if the Palestinian Authority maintains its momentum in building institutions and delivering public services, it is – and I quote – “Well positioned for the establishment of a state at any point in the near future.”
The United States is continuing our efforts to support this important work along with many other international partners, NGOs and governments, including the government of Israel to bring together key players to focus on solving specific challenges in the region, including in the Palestinian territories, we have launched an initiative called Partners for a New Beginning chaired by Madeleine Albright, Walter Isaacson, and Muhtar Kent. And we are working directly with the Palestinian Authority on a range of issues. Last month I was pleased to announce the transfer of an additional $150 million in direct assistance to the Palestinian Authority.
This fall, to cite one example, American experts in partnership with the Palestinian Water Authority, began drilling new and much needed wells in Hebron. And with recent Israeli approvals, we soon will begin several water infrastructure projects in Gaza that the Palestinian Authority has identified as priorities. These and other efforts to expand wastewater treatment and provide sanitation services have already helped 12,000 Palestinian families gain access to clean water.
The United States is working with the Palestinian Authority, with Israel, and with international partners to ease the situation in Gaza and increase the flow of needed commercial goods and construction supplies while taking appropriate measures to ensure they don’t fall into the wrong hands. We are pleased with Israel’s recent decision to allow more exports from Gaza which will foster legitimate economic growth there. This is an important and overdue step, and we look forward to seeing it implemented.
Now, we also look forward to working with Israel and the Palestinian Authority on further improvements while maintaining pressure on Hamas to end the weapons smuggling and accept the fundamental principles of peacemaking – recognizing Israel, renouncing violence, and abiding by past agreements. This is the only path to achieve Palestinians’ dreams of independence.
Security is one area where the Palestinian Authority has made some of its most dramatic progress. I have seen it myself on recent trips to the West Bank, where well-trained and well-equipped Palestinian security forces stood watchful guard. Families in Nablus and Jenin shop, work, and play with a newfound sense of security, which also contributes to the improved economic conditions. As the Palestinian security forces continue to become more professional and capable, we look to Israel to facilitate their efforts. And we hope to see a significant curtailment of incursions by Israeli troops into Palestinian areas.
But for all the progress on the ground and all that the Palestinian Authority has accomplished, a stubborn truth remains: While economic and institutional progress is important, indeed necessary, it is not a substitute for a political resolution. The legitimate aspirations of the Palestinian people will never be satisfied, and Israel will never enjoy secure and recognized borders until there is a two-state solution that ensures dignity, justice, and security for all.
This outcome is also in the interests of Israel’s neighbors. The Arab states have a pivotal role to play in ending the conflict. Egypt and Jordan in particular have been valuable partners for peace. In the days ahead, as we engage with the parties on the core issues and support the Palestinian people’s efforts to build their own institutions, we will also continue our diplomacy across the region and with our partners in the Quartet. Senator Mitchell will leave this weekend for Jerusalem and Ramallah and will then visit a number of Arab and European capitals.
Our message remains the same: The Arab states have an interest in a stable and secure region. They should take steps that show Israelis, Palestinians, and their own people that peace is possible and that there will be tangible benefits if it is achieved. Their support makes it easier for the Palestinians to pursue negotiations and a final agreement. And their cooperation is necessary for any future peace between Israel and Lebanon and Israel and Syria.
We continue to support the vision of the Arab Peace Initiative, a vision of a better future for all the people of the Middle East. This landmark proposal rests on the basic bargain that peace between Israel and her neighbors will bring recognition and normalization from all the Arab states. It is time to advance this vision with actions, as well as words. And Israel should seize the opportunity presented by this initiative while it is still available.
In the end, no matter how much the United States and other nations around the region and the world work to see a resolution to this conflict, only the parties themselves will be able to achieve it. The United States and the international community cannot impose a solution. Sometimes I think both parties seem to think we can. We cannot. And even if we could, we would not, because it is only a negotiated agreement between the parties that will be sustainable. The parties themselves have to want it. The people of the region must decide to move beyond a past that cannot change and embrace a future they can shape together.
As a political figure, a Senator, and now as Secretary of State, I have seen what it takes for old adversaries to make sacrifices and come together on common ground. Unfortunately, as we have learned, the parties in this conflict have often not been ready to take the necessary steps. Going forward, they must take responsibility and make the difficult decisions that peace requires.
And this begins with a sincere effort to see the world through the other side’s eyes, to try to understand their perspective and positions. Palestinians must appreciate Israel’s legitimate security concerns. And Israelis must accept the legitimate territorial aspirations of the Palestinian people. Ignoring the other side’s needs is, in the end, self-defeating.
To have a credible negotiating partner, each side must give the other the room, the political space to build a constituency for progress. Part of this is recognizing that Israeli and Palestinian leaders each have their own domestic considerations that neither side can afford to ignore. It takes two sides to agree on a deal and two sides to implement a deal. Both need credibility and standing with their own people to pull it off.
So this is also about how the leaders prepare their own people for compromise. Demonizing the other side will only make it harder to bring each public around to an eventual agreement.
By the same token, to build trust and momentum, both sides need to give the other credit when they take a hard step. As we begin to grapple with the core issues, each side will have to make difficult decisions, and they deserve credit when they do so. And it should not just be the United States that acknowledges moves that are made; the parties themselves must do so as well.
To demonstrate their commitment to peace, Prime Minister Netanyahu and President Abbas and their respective teams should take these steps. They should help build confidence, work to minimize distractions, and focus on the core questions, even in a period when they are not talking directly.
To demonstrate their commitment to peace, Israeli and Palestinian leaders should stop trying to assign blame for the next failure, and focus instead on what they need to do to make these efforts succeed.
And to demonstrate their commitment to peace, they should avoid actions that prejudge the outcome of negotiations or undermine good faith efforts to resolve final status issues. Unilateral efforts at the United Nations are not helpful and undermine trust. Provocative announcements on East Jerusalem are counterproductive. And the United States will not shy away from saying so.
America is serious about peace. We know the road forward will not be easy. But we are convinced that peace is both necessary and possible. So we will be persistent and press forward. We will push the parties to grapple with the core issues. We will work with them on the ground to continue laying the foundations for a future Palestinian state. And we will redouble our regional diplomacy. When one way is blocked, we will seek another. We will not lose hope and neither should the people of the region.
Peace is worth the struggle. It is worth the setbacks and the heartaches. A just and lasting peace will transform the region. Israelis will finally be able to live in security, at peace with their neighbors, and confident in their future. Palestinians will at last have the dignity and justice they deserve with a state of their own and the freedom to chart their own destiny. Across the Middle East, moderates and advocates of peace and coexistence will be strengthened, while old arguments will be drained of their venom and the rejectionists and extremists will be exposed and marginalized.
We must keep our eyes trained on this future and work together to realize it. That is what this is all about. That is what makes the compromises and difficult decisions worth it, for both sides.
We are now in the holiday season, a time of reflection and fellowship. The National Christmas Tree is lighting up the sky. Jewish families have just completed the eight days of Hanukkah, the Festival of Lights, which reminds us that even when the future looks darkest, there is light and hope to be found through perseverance and faith. Muslims around the world also recently celebrated Eid al-Adha, the Festival of Sacrifice, which teaches the story of a man whose faith was tested when he was ordered by God to give up his beloved son. Whether we call him Abraham, Avraham, or Ibrahim, this man is the father of all the faiths of the Holy Land. He is a reminder that despite our differences, our histories are deeply entwined. And so too are our futures.
Today we should remember these stories. Sometimes we will be asked to walk difficult roads together, and sometimes these roads will be lined with naysayers, second-guessers, and rejectionists. But with faith in our common mission, we can and will come through the darkness together. That is the way – the only way toward peace, and that is what I hope we will keep in mind as we make this journey – this difficult journey toward a destination that awaits.
Thank you and may God bless you in this effort.
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Hillary Rodham Clinton
Secretary of State
Washington, DC
December 10, 2010
Thank you. Thank you very much. I appreciate the introduction, but nothing is imminent – (laughter) – so far as I know. But it is a great pleasure for me to be back here and part of this very important forum.
And I appreciate your introduction. I appreciate the friendship that you and Cheryl have given to me and to my family. You’ve been friends for many years. And certainly, as anyone who knows Haim understands, as an entrepreneur, a philanthropist, he is unparalleled, but also as a champion for peace. He represents in many ways in the best qualities of both Israel and America. He’s generous, he’s irrepressible, and absolutely unstoppable. And he has dedicated his energy and support to so many important causes and helped so many people. But he has probably no deeper passion than the one we are here discussing tonight – strengthening U.S.-Israeli relations and securing a just and lasting peace in the Middle East.
So I thank him and I thank Strobe Talbott, I thank Martin Indyk, and I thank all of you. And in particular, I appreciate your bringing us together to discuss the crucial issues surrounding the Middle East. I also want to acknowledge all of the colleagues from Israel who are here. Certainly, you’ll hear in a minute from Defense Minister Barak.
There are other members of the Israeli Government here – opposition leader Livni, and I’m delighted that Prime Minister Fayyad is also with us. Prime Minister Fayyad has accomplished a great deal in a short amount of time under very difficult circumstances. Along with President Abbas, he has brought strong leadership to the Palestinian Authority and he has helped advance the cause of a two-state solution by making a real difference in the lives of the Palestinian people. So Mr. Prime Minister, welcome again to Washington and thank you for your very good work. (Applause.)
Now, you don’t have to read secret diplomatic cables to know that we are meeting during a difficult period in the pursuit of peace in the Middle East. I understand and indeed I share the deep frustrations of many of you in this room and across the region and the world. But rather than dwell on what has come before, I want to focus tonight on the way forward, on America’s continuing engagement in helping the parties achieve a two-state solution that ends the conflict between Israelis and Palestinians once and for all, and on what it will take, finally, to realize that elusive, but essential goal.
Before I go further, I want to offer the deepest condolences of the American people for the lives lost in the recent fires in Northern Israel. Israelis are always among the first to lend a hand when an emergency strikes anywhere in the world. So when the fires began to burn, people and nations stepped up and offered help. It was remarkable to watch. Turkey sent planes; Egypt and Jordan donated chemicals and equipment; the Palestinian Authority dispatched firefighters and their trucks; and the United States was also part of the effort deploying expert firefighters, C-130 cargo planes, and thousands of gallons of chemicals and suppressants. It was testament once again to the deep and enduring bonds that unite our two countries, to the partnership between our governments, and the friendship between our people.
The United States will always be there when Israel is threatened. We say it often, but it bears repeating: America’s commitment to Israel’s security and its future is rock solid and unwavering, and that will not change. From our first days in office, the Obama Administration has reaffirmed this commitment. For me and for President Obama, this is not simply a policy position. It is also a deeply held personal conviction.
Over the last two years under President Obama’s leadership, the United States has expanded our cooperation with Israel and focused in particular on helping Israel meet the most consequential threats to its future as a secure and democratic Jewish state. Our security relationship has grown broader, deeper, and more intense than ever before. And we have not just worked to maintain Israel’s qualitative military edge. We have increased it through new advances like the Iron Dome, a short-range rocket defense system that will help protect Israeli homes and cities. And our military continues to work closely with the IDF through exchanges, training, and joint exercises.
For Israel and for the region, there may be no greater strategic threat than the prospect of a nuclear-armed Iran. We just heard my husband speaking to that. And let me restate clearly: The United States is determined to prevent Iran from developing nuclear weapons. And along with our international partners, we have implemented tough new sanctions whose bite is being felt in Tehran. Iran’s leaders face a clear choice, one of those tough choices that Strobe mentioned as the theme of this forum: Meet your international responsibilities or face continued isolation and consequences.
We have also stepped up efforts to block the transfer of dangerous weapons and financing to terrorist groups like Hezbollah and Hamas. But Iran and its proxies are not the only threat to regional stability or to Israel’s long-term security. The conflict between Israel and the Palestinians and between Israel and Arab neighbors is a source of tension and an obstacle to prosperity and opportunity for all the people of the region. It denies the legitimate aspirations of the Palestinian people and it poses a threat to Israel’s future security. It is at odds also with the interests of the United States.
I know that improvements in security and growing prosperity have convinced some that this conflict can be waited out or largely ignored. This view is wrong and it is dangerous. The long-term population trends that result from the occupation are endangering the Zionist vision of a Jewish and democratic state in the historic homeland of the Jewish people. Israelis should not have to choose between preserving both elements of their dream. But that day is approaching.
At the same time, the ever-evolving technology of war, especially the expanding reach of the rockets amassed on Israel’s borders means that it will be increasingly difficult to guarantee the security of Israeli families throughout the country without implementing peace agreements that answer these threats.
Continuing conflict also strengthens the hands of extremists and rejectionists across the region while sapping the support of those open to coexistence and cooperation. Radicalization of the region’s young people and growing support for violent ideologies undermine the stability and prosperity of the Middle East. The United States looks at these trends. We reflect on our deep and unwavering support of the state of Israel and we conclude without a shadow of a doubt that ending this conflict once and for all and achieving a comprehensive regional peace is imperative for safeguarding Israelis’ future.
We also look at our friends the Palestinians, and we remember the painful history of a people who have never had a state of their own, and we are renewed in our determination to help them finally realize their legitimate aspirations. The lack of peace and the occupation that began in 1967 continue to deprive the Palestinian people of dignity and self-determination. This is unacceptable, and, ultimately, it too is unsustainable.
So for both Israelis and Palestinians and, indeed, for all the people of the region, it is in their interest to end this conflict and bring a just, lasting, and comprehensive peace to the Middle East based on two states for two peoples.
For two years, you have heard me and others emphasize again and again that negotiations between the parties is the only path that will succeed in securing their respective aspirations; for the Israelis, security and recognition; for the Palestinians, an independent, viable sovereign state of their own. This remains true today. There is no alternative other than reaching mutual agreement. The stakes are too high, the pain too deep, and the issues to complex for any other approach.
Now, it is no secret that the parties have a long way to go and that they have not yet made the difficult decisions that peace requires. And like many of you, I regret that we have not gotten farther faster in our recent efforts. That is why yesterday and today I met with Israeli and Palestinian negotiators and underscored our seriousness about moving forward with refocused goals and expectations.
It is time to grapple with the core issues of the conflict on borders and security; settlements, water and refugees; and on Jerusalem itself. And starting with my meetings this week, that is exactly what we are doing. We will also deepen our strong commitment to supporting the state-building work of the Palestinian Authority and continue to urge the states of the region to develop the content of the Arab Peace Initiative and to work toward implementing its vision.
Over recent months, Prime Minister Netanyahu and President Abbas have met face to face multiple times. I have been privileged to be present during their meetings in Sharm el-Sheikh, in Jerusalem, and in Washington. I have also had the chance to talk with each leader privately. These were meaningful talks that yielded new clarity about the gaps that must be bridged.
Significantly, both sides decided together to pursue a framework agreement that would establish the fundamental compromises on all permanent status issues and pave the way for a final peace treaty.
Reaching this goal will not be easy by any means. The differences between the two sides are real and they are persistent. But the way to get there is by engaging, in good faith, with the full complexities of the core issues and by working to narrow the gaps between the two sides.
By doing this, the parties can begin to rebuild confidence, demonstrate their seriousness, and hopefully find enough common ground on which to eventually re-launch direct negotiations and achieve that framework.
The parties have indicated that they want the United States to continue its efforts. And in the days ahead, our discussions with both sides will be substantive two-way conversations with an eye toward making real progress in the next few months on the key questions of an eventual framework agreement. The United States will not be a passive participant. We will push the parties to lay out their positions on the core issues without delay and with real specificity. We will work to narrow the gaps asking the tough questions and expecting substantive answers. And in the context of our private conversations with the parties, we will offer our own ideas and bridging proposals when appropriate.
We enter this phase with clear expectations of both parties. Their seriousness about achieving an agreement will be measured by their engagement on these core issues. And let me say a few words about some of the important aspects of these issues we will be discussing.
First, on borders and security. The land between the Jordan River and the Mediterranean is finite, and both sides must know exactly which parts belong to each. They must agree to a single line drawn on a map that divides Israel from Palestine and to an outcome that implements the two-state solution with permanent Palestinian borders with Israel, Jordan, and Egypt. The Palestinian leaders must be able to show their people that the occupation will be over. Israeli leaders must be able to offer their people internationally recognized borders that protect Israel’s security. And they must be able to demonstrate to their people that the compromises needed to make peace will not leave Israel vulnerable. Security arrangements must prevent any resurgence of terrorism and deal effectively with new and emerging threats. Families on both sides must feel confident in their security and be able to live free from fear.
Second, on refugees. This is a difficult and emotional issue, but there must be a just and permanent solution that meets the needs of both sides.
Third, on settlements. The fate of existing settlements is an issue that must be dealt with by the parties along with the other final status issues. But let me be clear: The position of the United States on settlements has not changed and will not change. Like every American administration for decades, we do not accept the legitimacy of continued settlement activity. We believe their continued expansion is corrosive not only to peace efforts and two-state solution, but to Israel’s future itself.
And finally, on Jerusalem which is profoundly important for Jews, Muslims, and Christians everywhere. There will surely be no peace without an agreement on this, the most sensitive of all the issues. The religious interests of people of all faiths around the world must be respected and protected. We believe that through good faith negotiations, the parties should mutually agree on an outcome that realizes the aspirations for both parties, for Jerusalem, and safeguard its status for people around the world.
These core issues are woven together. Considering the larger strategic picture makes it easier to weigh the compromises that must be made on both sides and see the benefits to be gained. We are not moving forward in a vacuum. From day one, the Obama Administration has recognized the importance of making progress on two simultaneous and mutually reinforcing tracks – negotiations between the parties and institution-building that helps the Palestinians as they prepare to govern their own state. Improvements on the ground give confidence to negotiators and help create a climate for progress at the peace table.
So even as we engage both sides on the core issues with an eye toward eventually restarting direct negotiations, we will deepen our support of the Palestinians’ state-building efforts. Because we recognize that a Palestinian state achieved through negotiations is inevitable.
I want, once again, to commend President Abbas and Prime Minister Fayyad for their leadership in this effort. Under the Palestinian Authority’s Two-Year State-Building plan, security has improved dramatically, services are being delivered, and the economy is growing.
It is of course true that much work remains to reverse a long history of corruption and mismanagement. But Palestinians are rightfully proud of the progress they have achieved, and the World Bank recently concluded that if the Palestinian Authority maintains its momentum in building institutions and delivering public services, it is – and I quote – “Well positioned for the establishment of a state at any point in the near future.”
The United States is continuing our efforts to support this important work along with many other international partners, NGOs and governments, including the government of Israel to bring together key players to focus on solving specific challenges in the region, including in the Palestinian territories, we have launched an initiative called Partners for a New Beginning chaired by Madeleine Albright, Walter Isaacson, and Muhtar Kent. And we are working directly with the Palestinian Authority on a range of issues. Last month I was pleased to announce the transfer of an additional $150 million in direct assistance to the Palestinian Authority.
This fall, to cite one example, American experts in partnership with the Palestinian Water Authority, began drilling new and much needed wells in Hebron. And with recent Israeli approvals, we soon will begin several water infrastructure projects in Gaza that the Palestinian Authority has identified as priorities. These and other efforts to expand wastewater treatment and provide sanitation services have already helped 12,000 Palestinian families gain access to clean water.
The United States is working with the Palestinian Authority, with Israel, and with international partners to ease the situation in Gaza and increase the flow of needed commercial goods and construction supplies while taking appropriate measures to ensure they don’t fall into the wrong hands. We are pleased with Israel’s recent decision to allow more exports from Gaza which will foster legitimate economic growth there. This is an important and overdue step, and we look forward to seeing it implemented.
Now, we also look forward to working with Israel and the Palestinian Authority on further improvements while maintaining pressure on Hamas to end the weapons smuggling and accept the fundamental principles of peacemaking – recognizing Israel, renouncing violence, and abiding by past agreements. This is the only path to achieve Palestinians’ dreams of independence.
Security is one area where the Palestinian Authority has made some of its most dramatic progress. I have seen it myself on recent trips to the West Bank, where well-trained and well-equipped Palestinian security forces stood watchful guard. Families in Nablus and Jenin shop, work, and play with a newfound sense of security, which also contributes to the improved economic conditions. As the Palestinian security forces continue to become more professional and capable, we look to Israel to facilitate their efforts. And we hope to see a significant curtailment of incursions by Israeli troops into Palestinian areas.
But for all the progress on the ground and all that the Palestinian Authority has accomplished, a stubborn truth remains: While economic and institutional progress is important, indeed necessary, it is not a substitute for a political resolution. The legitimate aspirations of the Palestinian people will never be satisfied, and Israel will never enjoy secure and recognized borders until there is a two-state solution that ensures dignity, justice, and security for all.
This outcome is also in the interests of Israel’s neighbors. The Arab states have a pivotal role to play in ending the conflict. Egypt and Jordan in particular have been valuable partners for peace. In the days ahead, as we engage with the parties on the core issues and support the Palestinian people’s efforts to build their own institutions, we will also continue our diplomacy across the region and with our partners in the Quartet. Senator Mitchell will leave this weekend for Jerusalem and Ramallah and will then visit a number of Arab and European capitals.
Our message remains the same: The Arab states have an interest in a stable and secure region. They should take steps that show Israelis, Palestinians, and their own people that peace is possible and that there will be tangible benefits if it is achieved. Their support makes it easier for the Palestinians to pursue negotiations and a final agreement. And their cooperation is necessary for any future peace between Israel and Lebanon and Israel and Syria.
We continue to support the vision of the Arab Peace Initiative, a vision of a better future for all the people of the Middle East. This landmark proposal rests on the basic bargain that peace between Israel and her neighbors will bring recognition and normalization from all the Arab states. It is time to advance this vision with actions, as well as words. And Israel should seize the opportunity presented by this initiative while it is still available.
In the end, no matter how much the United States and other nations around the region and the world work to see a resolution to this conflict, only the parties themselves will be able to achieve it. The United States and the international community cannot impose a solution. Sometimes I think both parties seem to think we can. We cannot. And even if we could, we would not, because it is only a negotiated agreement between the parties that will be sustainable. The parties themselves have to want it. The people of the region must decide to move beyond a past that cannot change and embrace a future they can shape together.
As a political figure, a Senator, and now as Secretary of State, I have seen what it takes for old adversaries to make sacrifices and come together on common ground. Unfortunately, as we have learned, the parties in this conflict have often not been ready to take the necessary steps. Going forward, they must take responsibility and make the difficult decisions that peace requires.
And this begins with a sincere effort to see the world through the other side’s eyes, to try to understand their perspective and positions. Palestinians must appreciate Israel’s legitimate security concerns. And Israelis must accept the legitimate territorial aspirations of the Palestinian people. Ignoring the other side’s needs is, in the end, self-defeating.
To have a credible negotiating partner, each side must give the other the room, the political space to build a constituency for progress. Part of this is recognizing that Israeli and Palestinian leaders each have their own domestic considerations that neither side can afford to ignore. It takes two sides to agree on a deal and two sides to implement a deal. Both need credibility and standing with their own people to pull it off.
So this is also about how the leaders prepare their own people for compromise. Demonizing the other side will only make it harder to bring each public around to an eventual agreement.
By the same token, to build trust and momentum, both sides need to give the other credit when they take a hard step. As we begin to grapple with the core issues, each side will have to make difficult decisions, and they deserve credit when they do so. And it should not just be the United States that acknowledges moves that are made; the parties themselves must do so as well.
To demonstrate their commitment to peace, Prime Minister Netanyahu and President Abbas and their respective teams should take these steps. They should help build confidence, work to minimize distractions, and focus on the core questions, even in a period when they are not talking directly.
To demonstrate their commitment to peace, Israeli and Palestinian leaders should stop trying to assign blame for the next failure, and focus instead on what they need to do to make these efforts succeed.
And to demonstrate their commitment to peace, they should avoid actions that prejudge the outcome of negotiations or undermine good faith efforts to resolve final status issues. Unilateral efforts at the United Nations are not helpful and undermine trust. Provocative announcements on East Jerusalem are counterproductive. And the United States will not shy away from saying so.
America is serious about peace. We know the road forward will not be easy. But we are convinced that peace is both necessary and possible. So we will be persistent and press forward. We will push the parties to grapple with the core issues. We will work with them on the ground to continue laying the foundations for a future Palestinian state. And we will redouble our regional diplomacy. When one way is blocked, we will seek another. We will not lose hope and neither should the people of the region.
Peace is worth the struggle. It is worth the setbacks and the heartaches. A just and lasting peace will transform the region. Israelis will finally be able to live in security, at peace with their neighbors, and confident in their future. Palestinians will at last have the dignity and justice they deserve with a state of their own and the freedom to chart their own destiny. Across the Middle East, moderates and advocates of peace and coexistence will be strengthened, while old arguments will be drained of their venom and the rejectionists and extremists will be exposed and marginalized.
We must keep our eyes trained on this future and work together to realize it. That is what this is all about. That is what makes the compromises and difficult decisions worth it, for both sides.
We are now in the holiday season, a time of reflection and fellowship. The National Christmas Tree is lighting up the sky. Jewish families have just completed the eight days of Hanukkah, the Festival of Lights, which reminds us that even when the future looks darkest, there is light and hope to be found through perseverance and faith. Muslims around the world also recently celebrated Eid al-Adha, the Festival of Sacrifice, which teaches the story of a man whose faith was tested when he was ordered by God to give up his beloved son. Whether we call him Abraham, Avraham, or Ibrahim, this man is the father of all the faiths of the Holy Land. He is a reminder that despite our differences, our histories are deeply entwined. And so too are our futures.
Today we should remember these stories. Sometimes we will be asked to walk difficult roads together, and sometimes these roads will be lined with naysayers, second-guessers, and rejectionists. But with faith in our common mission, we can and will come through the darkness together. That is the way – the only way toward peace, and that is what I hope we will keep in mind as we make this journey – this difficult journey toward a destination that awaits.
Thank you and may God bless you in this effort.
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Thursday, November 18, 2010
G20 - Balance of power is shifting from developed to emerging economies
The Leaders of the G20 recently had their fifth meeting since the start of the world recession in 2008. Many commentators view the outcome as neither surprising nor particularly disappointing. The Leaders build on their original commitments to support and stabilise the global economy and to lay the foundation for reform. They adopted an Action Plan which focuses on five policy areas namely: monetary and exchange rate polices, trade and development policies, fiscal policies, financial reforms, and structural reforms. However, given the complex world that we live in, these countries will have to rely on a number of international organisations such as the WTO, World Bank and IMF to pursue these reforms.
In the area of monetary and exchange rate policies, they agreed to follow “more market-determined exchange rate systems” to reflect underlying economic fundamentals. This came in response to China’s unwillingness to allow the Yuan to appreciate and America’s push for more liquidity into its banking system. However, in reference to concerns of emerging markets with overvalued flexible exchange rates such as South Africa, countries may respond with “carefully designed macro-prudential measures”. This could be interpreted as giving these countries the go-ahead to take the necessary steps to deal with the vast capital inflows into their economies, which have driven the currency gains.
On the issue of trade and development they reaffirmed their previous commitment to refrain from protectionist trade actions and to conclude the Doha Round of multilateral trade negotiations. They also agreed to formulate medium-term fiscal consolidation plans for advanced economies in line with the Toronto commitment. This commitment must ultimately bring about the stabilisation or reduction of government debt to GDP ratios by 2016 and to at least halve deficits by 2013.
The Leaders agreed to raise international financial regulation standards and to ensure that national authorities fully implement current global standards. They endorsed the policy framework by the Financial Stability Board to address problems related to systemically important financial institutions and banks that are purported to be too-big-to-fail. This latest undertaking comes in response to the financial crisis that was caused by reckless and irresponsible risk taking by banks and other financial institutions, combined with major regulatory and supervisory failures.
These decisions came amid a related debate on the reform of international financial institutions. These organisations, originally responsible for the regulation of the international economy after the Second World War, were created for a different time and purpose. Urgent reforms were necessitated by the realities of a multi-polar global economy where developing countries are now key global players. In response to better reflect these realities, the voting powers of developing and transition countries at the World Bank were increased earlier this year. The 3.13 percentage point increase in the voting power of these countries brought their share to 47.19 percent.
Similarly, the IMF’s Executive Board also announced governance reforms earlier this month. This will bring about a 6 percent shift in the voting power of developing countries. Accordingly, the top ten shareholders of the Fund; the United States, Japan, the four largest European economies (France, Germany, Italy and the United Kingdom), and the BRICs (Brazil, China, India and the Russian Federation) will better reflect their ranking in the global economy.
One thing is clear; the balance of power is shifting from developed to emerging economies.
By: JB Cronje - Tralac South Africa
http://www.tralac.org/cgi-bin/giga.cgi?cmd=cause_dir_news_item&cause_id=1694&news_id=95688&cat_id=1059
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
In the area of monetary and exchange rate policies, they agreed to follow “more market-determined exchange rate systems” to reflect underlying economic fundamentals. This came in response to China’s unwillingness to allow the Yuan to appreciate and America’s push for more liquidity into its banking system. However, in reference to concerns of emerging markets with overvalued flexible exchange rates such as South Africa, countries may respond with “carefully designed macro-prudential measures”. This could be interpreted as giving these countries the go-ahead to take the necessary steps to deal with the vast capital inflows into their economies, which have driven the currency gains.
On the issue of trade and development they reaffirmed their previous commitment to refrain from protectionist trade actions and to conclude the Doha Round of multilateral trade negotiations. They also agreed to formulate medium-term fiscal consolidation plans for advanced economies in line with the Toronto commitment. This commitment must ultimately bring about the stabilisation or reduction of government debt to GDP ratios by 2016 and to at least halve deficits by 2013.
The Leaders agreed to raise international financial regulation standards and to ensure that national authorities fully implement current global standards. They endorsed the policy framework by the Financial Stability Board to address problems related to systemically important financial institutions and banks that are purported to be too-big-to-fail. This latest undertaking comes in response to the financial crisis that was caused by reckless and irresponsible risk taking by banks and other financial institutions, combined with major regulatory and supervisory failures.
These decisions came amid a related debate on the reform of international financial institutions. These organisations, originally responsible for the regulation of the international economy after the Second World War, were created for a different time and purpose. Urgent reforms were necessitated by the realities of a multi-polar global economy where developing countries are now key global players. In response to better reflect these realities, the voting powers of developing and transition countries at the World Bank were increased earlier this year. The 3.13 percentage point increase in the voting power of these countries brought their share to 47.19 percent.
Similarly, the IMF’s Executive Board also announced governance reforms earlier this month. This will bring about a 6 percent shift in the voting power of developing countries. Accordingly, the top ten shareholders of the Fund; the United States, Japan, the four largest European economies (France, Germany, Italy and the United Kingdom), and the BRICs (Brazil, China, India and the Russian Federation) will better reflect their ranking in the global economy.
One thing is clear; the balance of power is shifting from developed to emerging economies.
By: JB Cronje - Tralac South Africa
http://www.tralac.org/cgi-bin/giga.cgi?cmd=cause_dir_news_item&cause_id=1694&news_id=95688&cat_id=1059
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Wednesday, November 17, 2010
South Africa - A Very Sick Society - Vavi
Keynote address to the Civil Society Conference by Zwelinzima Vavi, General Secretary of COSATU, 27 October 2010, Boksburg, South Africa
How can we build on the World Cup success and mobilise our society to build a more egalitarian nation
Comrade COSATU President, Sidumo Dlamini
Comrade TAC Chairperson, Nonkosi Khumalo
Representatives of COSATU, NACTU, FEDUSA and CONSAWU
Representatives of civil society formations
Comrades and friends
Inspired by the African proverb that says ‘If you want to go quickly, go alone. If you want to go far, go together', we gather here - as the progressive trade unions, social movements, NGOs, progressive academics, small business and street vendor associations, taxi associations, religious bodies, youth organisations, environmental groups, indigenous peoples' groups and other progressive formations - to say to ourselves that we have the capacity to make a decisive contribution in changing our current situation for the better.
Internationally, globalisation and neoliberal have launched assaults on the working class, which include, but are not limited to: informalisation, flexibilisation, regionalisation of states, deregulation, marketisation, financialisation, and securitisation. The global governance, commercial and trade system is supported by political and ideological institutions, rules and enforcement mechanisms that only broad civil society coalitions have historically been able to challenge successfully.
In South Africa, the GEAR strategy epitomised the dominance of the neoliberal ideology within the leading sections of the government. The neoliberal logic still continues to be dominant, in spite of some talk about a developmental state. Increasingly though it has taken a more crude political expression and there are some emerging elements that tend to perceive the working class and active elements of civil society as merely being a nuisance that must be crushed with the might of the state apparatus.
Today, as we gather here, there is panic in the ranks of the predatory elite, which is a new coalition of the tenderpreneurs. Paranoia elsewhere is deepening with the political elite, convincing itself that any gathering of independent civil society formations to confront our challenges is a threat to them.
Let us right from onset state that we are not an anti-ANC and anti-government coalition. We are not here to begin a process to form any political party, nor to advance the interest of any individual. We have only one enemy - neoliberalism, that has condemned our people to poverty and unemployment. We want to roll back neoliberal advances and struggle for the adoption and implementation of alternatives. Our struggles have to be both defensive and offensive.
We are friends to all genuinely anti-neoliberal and pro-poor and working class political parties that have an undisputable record of struggle to advance our interests as the marginalised societies.
We gather here to say another South Africa is possible! Another world is possible!
On 11 July, just four months ago, all South Africans were basking in the reflected glory of our successful hosting of the best-ever FIFA world Cup. The whole world saw our country at its best - united, efficient, friendly and enthusiastic.
The question we were all asking was - if we can organise such a brilliant event so well, how can we use the qualities that contributed to that World Cup triumph to create jobs, build houses, provide education for our children, launch a free national health service and solve all the other major problems we face.
So we urged the government and every union, civil society formation, political party, business and faith organisation to sign a new declaration in support of a programme to rebuild our country and build a lasting legacy of the 2010 World Cup.
Today's historic conference takes this decision forward. It brings together the people who are best able to meet this challenge - South African civil society and trade unions. The forces we represent here today can - and indeed must - have a decisive say in the future of our country. Our goal must be to forge a strong, united movement for change.
A similar united social movement - of COSATU, the UDF, civic movements and progressive NGOs - played a critical role - alongside the unbanned ANC and SACP - in bringing the racist dictatorship to its knees in those decisive years leading up to our democratic breakthrough in 1994.
The challenges we face today are different but nevertheless very major and require a similar mobilisation of the democratic forces as we saw in those years.
Comrades and friends
In our 16 years of democracy we have achieved major advances. We have a democratic Constitution and many laws, which have given South Africans basic rights, on paper at least, to freedom, dignity and equality.
There have been significant important improvements in the lives of millions of our people. As examples: In 1996, only 3 million people had access to social grants; today the figure is 14 million. In 1996, 58% of the population had access to electricity; today the figure is 80%. In 1996, 62% of the population had access to running water; today the figure is 88%. We have built 3.1 million subsidised houses, giving shelter to over 15 million people.
Despite our historic victories on the political battlefield, however, in the economic arena, many of the problems we faced in 1994 are still very much with us in 2010.
The central challenge is that our economic structure, in particular the distribution of wealth and income, remains largely unchanged, and in one crucial respect - inequality - has worsened, to become the widest in the world, and it also still reflects the racial and gender features of apartheid, with wealth and financial power still predominantly in the hands of white males.
The top 20 paid directors in JSE listed companies earned on average 1 728 times the average income of a South African worker while state-owned enterprises paid CEOs 194 times an average worker's income.
Typical of everything that is wrong with our society today, is this week's announcement that Standard Bank, whose CEO Jacko Maree received a massive R18, 2m in 2009 alone, intends to retrench over 2000 staff, making workers pay the price for their bosses' extravagance and incompetence.
In the 21 months from January 2009 to September 2010, we have lost 1 145 000 jobs, which, as we keep saying means that because each wage earner supports on average five dependents, more than 5.7 million people were thrown into poverty. The latest figures released yesterday reveal that the official rate of unemployment is still rising, even if more slowly, to 25.3%; a further 45 000 jobs were lost in the third
quarter of 2010.
In education - although we have made progress in many areas, such as the improved access to education, in particular for girl children, reduction of the teacher to pupil ratio, the introduction of more no-fee schools, etc. - black working class students are still at the receiving end of an unequal system. We have not transformed the education system in either quality or quantity.
The drop-out rate for children who started school in 1998 was 64%. Our matric pass rate last year was 60.6%. A staggering 70% of (matric) exam passes are accounted for by just 11% of schools, where the mainly white rich can buy their children top-quality education. The culture of learning and teaching has collapsed and many of our schools, in particular in the former blacks only residential areas are dysfunctional. Many of our schools have no libraries and no laboratories.
It is the same story in our healthcare service. The apartheid fault lines persist. While the mainly white wealthy can buy world-class healthcare in the private sector, 86% of mainly black poor have to struggle to get any service at all in an under-funded, understaffed public sector where in some parts patients are told to bring their own bedding and with only Panado available, in filthy hospitals where rights of patients are hung on the wall but not their living reality.
Although we rank 79th globally in terms of GDP per capita, we rank 178th in terms of life expectancy, 130th in terms of infant mortality, and 119th in terms of doctors per 1000 people.
The HIV and AIDS epidemic has worsened our situation, with life expectancy dropping from 62 years in 1992, to 50 years in 2006. Yet we know that in terms of South African Institute of Race Relations survey in 2009, the life expectancy of a white South African now stands at 71 years and that of a black South African at 48.
Comrades and friends
The high levels of poverty and inequality aggravate many other anti-social phenomena which we see increasingly - violent community protests, xenophobia crime, corruption and the collapse of social and moral values. We face not just personal and family disasters but a national catastrophe, a ticking bomb, which has already begun to explode in our poorest communities.
This was our reasoning behind calling this summit. We can't stand there making speeches without developing a programme that will mobilise our society to stop this ticking bomb from exploding. "The ultimate measure of a man is not where he stands in moments of comfort, but where he stands at times of challenge and controversy." Martin Luther King, Jr.
Corruption in particular is a matter of life and death for our democracy. Day after day we see allegations of trusted public representatives being accused of using their position to enrich themselves and their families. Some allegations may be groundless; most public officials are honest servants of the people. But only full investigations into every allegation will clear the innocent and lead to the conviction and punishment of those who steal from the poor who put them in power. We should give our full support to the government's efforts to bring offenders to justice.
The source of the problem has always been the capitalist system, which is run on the principle of ‘me-first'. Whilst workers' universal slogan is "an injury to one is an injury to all" the capitalist mentality daily practises: "an injury to one is an opportunity to another".
For every official who receives a bribe there is a businessperson who gives the bribe to ‘persuade' the official to use his or her political power to advance private commercial interests. This is the biggest threat to our efforts to establish a transparent and corruption-free government.
It is even worse when the public representatives themselves, or family members, are getting rich from government tenders. The mere fact that they are in business to make money creates an inevitable conflict of interest when they are legislating in parliament, a provincial legislature or municipal council.
The danger always exists that in formulating policy, they will be guided by the impact this will have on their businesses rather than the broader public interest. We have called on our public representatives and union leaders to choose between being people's representatives or being in business.
It is greed that is inspired by the conspicuous consumption of the new elite - the BEE types who blow up to R700 000 on one-night in parties that makes the public representatives not want to live within the means provided by their salaries and rather hefty perks.
The corrupting morality our public representatives is seen in these parties. where I am told in one party sushi was served from bodies of half naked ladies. It is the sight of these parties where the elite display their wealth often secured in questionable methods that turn my stomach. It is this spitting on the face of the poor and insulting their integrity that makes me sick. Next year this elite will not go out door-to-door to get our people to vote. But soon thereafter they will host victory parties to scavenge on the carcass of our people like the typical hyenas that they are.
Our belief is that if we were to confiscate all the medical aids, that most of us here have; if our cabinet Ministers and MPs were forced to take their children to the public hospitals and be subjected to the same conditions as the poor; if we were to burn their private clinics and hospitals and private schools; if the children of the bosses were to be loaded into unsafe open bakkies to the dysfunctional township schools; if the high walls and electronic wired fences were to be removed; if all were forced to live on R322 a month, as 48% of the population has to do, and if their kids were to die without access to antiretrovirals, we would have long ago seen more decisive action on many of these fronts.
Our society in many ways is a very sick society. In addition to allowing these massive inequalities and for apartheid to continue in the economy, we are now sitting indifferent when the new elite is on rampage, humiliating the very motive force of our liberation struggle.
A few kilometres from where we are today hundreds of workers have not been paid for 10 months by their black empowerment bosses in the company called Aurora. Young people in their 20s and 30s have become overnight multimillionaires. A message is being sent out to our students that says:
‘Why work so hard when few correct political-sounding speeches and demagoguery can make you a multimillionaire'.
It says to the genuine entrepreneurs:
‘Why sweat when political connections and greasing the hand of those in political office can make you an instant billionaire?'
We are rewarding laziness, greed and corruption and discouraging hard work, honesty and integrity.
In the process we making our political organisations new battlegrounds where we have replaced the apartheid regime in killing and poisoning those identified as a threat to the march to gain these not-worked-for riches. Look at what is happening in COPE, IFP? Now even Lucas Mangophe is not safe. Look at what is happening in the ANC in some provinces. Look at the number of splits in every political party.Genuineness is fast becoming a rare commodity!
But as the poor and the black people in general, we can't afford to sit on our laurels and do nothing about these conditions. Our dream is that of a mobilised poor that takes its destiny into its own hands.
Why must we allow our schools not to function when we have numbers to flood the school governing bodies, and insist that teachers must be at school all the time, must prepare for classes and must teach for 7 and half hours for five days a week?
Why are we not mobilising to deal with the ill-discipline of our own kids? Why are we not mobilising to change the culture of mainly working class parents and taking an active interest in the education our children? Why have we not mobilised to change the work ethics of our members in the public sector so that they give the first-class treatment to the poor who have no money to go and get better services in the private sector?
Why have we allowed criminals to take our freedom away and return to our townships after 1994, only to rape and murder us daily, one by one, when we have the power of the numbers to drive them out? Why are today allowing a new class of tenderpreneurs to threaten our freedom and impose stinking morality of greed?
Yes we are angry! Yes COSATU is angry! Yes our tolerance levels are running thin! We can no longer just fold our arms and do nothing. Today we are here to say we want our freedom back from the elite and all these rogue elements of our society. Their party must come to an end. We demand a more egalitarian society today and moving forward!
Comrades and friends
The roots of nearly all these problems lie in the failed economic policies adopted in 1996, centred around the misnamed Growth, Employment and Redistribution (GEAR) strategy. It led to growth at a snail's pace, higher unemployment and only redistributed wealth from the poor to the rich! It was a policy based on the misguided free-market, neoliberal policies of the ‘Washington consensus', which led directly to the devastating worldwide economic crisis of 2008 and 2009.
The government yesterday announced its new growth path, which aims to create 5 million jobs by 2020, bringing the unemployment rate down to 15%. While we obviously welcome and support such a target, we shall have to study in detail how the government's new growth plan will achieve this.
COSATU has accepted the challenge to produce its alternative strategy. In "A Growth path Towards Full Employment", we set out a path which will transform our economy into one based on the expansion of manufacturing industry and the creation of decent and sustainable jobs. Let us hope we have persuaded government to base their new growth path strategy on the same principles.
But most important is that the strategy must be turned from words into deeds. It will be a tragedy if we miss this historic opportunity to build a developmental state and turn the economy around.
It would be a disaster if the government were to believe that we can continue with the status quo. It would mean condemning another generation of living with no jobs, no money and no hope.
So I appeal to every organisation represented here today to sign the post-World Cup Declaration, which will commit us all to:
1. Remain united behind Bafana Bafana and do everything possible to promote soccer, which remains the biggest and most popular sport, yet is seriously under-developed. We need to develop academies to hone the skills of unknown South African Peles, Drogbas and Ronaldos, who have no opportunity for their skills to be recognised.
2. Bring down the astronomical levels of unemployment, poverty and inequality, which blight our land. Even as we prepare to host the World Cup, jobs continued to disappear, inequalities continued to grow and poverty remain widespread after the World Cup. We need a new economic growth path that will help address these challenges with necessary urgency and speed.
3. Address the challenges of our education system. The 1-Goal Campaign and the Nelson Mandela Day celebrations offer an opportunity to take our international icon's dream to new heights. We call on government to prioritise building and refurbishing schools and to ensure that all schools receive adequate support from the education departments at all levels. We must move beyond the call for all to donate books and build school libraries on Nelson Mandela Day and run for 12 months until every school functions and is a centre of empowerment to build a new generation that can take our dreams to a new height.
4. Unite behind a goal of transforming our health system and implementing the National Health Insurance Scheme. We have to fix our public hospitals and defeat the scourge of HIV/AIDS to build a healthy nation and improve our country's life expectancy.
5. Address underdevelopment and poverty in rural areas. This campaign should address food insecurity and empower our people to use land that currently lies unused, so that people can produce the food they need and escape from their deep levels of unemployment and poverty.
6. Lead a campaign against crime and corruption. We can build on the successes of the World Cup by sending out an unequivocal message that crime does not pay. Corruption is stealing from the poor to feed into narrow elites' selfish accumulation interests. Corruption kills the spirits of the majority, black and white, who want to work hard to build their country.
7. Mobilise to fix the energy challenge the country is facing. We need more action and not empty words to ensure that South Africa moves out of the current crisis. Imagine a day when thousands of activists move door-to-door handing over pamphlets to our people educating them about the benefits of saving electricity.
8. Mobilise to address the looming water shortage crises so that we do not wait for 2025 when the problem will be much more intense. Let us through our people hold the mine bosses who have been allowed after making billions to abandon their now empty mines and pollute our water. Let us defend our environment and keep our country beautiful and natural whilst also developing.
9. Mobilise the working class and educate them to appreciate that no matter how bad living conditions are, there can be no excuse for blaming fellow-Africans and other foreign nationals for the country's and continent's economic failures. Let us do everything possible to prevent a new outbreak of xenophobic attacks in some of our poorest communities. They are not the cause but the fellow victims of our unjust and unequal economic system. Workers and the poor must stand united against the common enemies of capitalist greed and corruption.
10. Lastly and most importantly, address the massive challenges of underdevelopment in the continent. Africa cannot succeed in developing its economies and transforming the lives of our people while it is still ravaged by poverty. Let us defeat the tyrants in Swaziland, Zimbabwe, Sudan and elsewhere whose refusal to vacate their positions and allow democracy means that can be no hope of Africa ever rising to ensure a coordinated effort to defeat under development. Let us mobilise to free our people in Western Sahara from their colonial masters!
These are just some of the many challenges we face. I look forward to hearing the outcome of the commissions and hope that we shall emerge from this conference tomorrow united and determined to build a South Africa run by and for the working class and the poor. I wish you a very successful conference.
Issued by COSATU, October 27 2010
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
How can we build on the World Cup success and mobilise our society to build a more egalitarian nation
Comrade COSATU President, Sidumo Dlamini
Comrade TAC Chairperson, Nonkosi Khumalo
Representatives of COSATU, NACTU, FEDUSA and CONSAWU
Representatives of civil society formations
Comrades and friends
Inspired by the African proverb that says ‘If you want to go quickly, go alone. If you want to go far, go together', we gather here - as the progressive trade unions, social movements, NGOs, progressive academics, small business and street vendor associations, taxi associations, religious bodies, youth organisations, environmental groups, indigenous peoples' groups and other progressive formations - to say to ourselves that we have the capacity to make a decisive contribution in changing our current situation for the better.
Internationally, globalisation and neoliberal have launched assaults on the working class, which include, but are not limited to: informalisation, flexibilisation, regionalisation of states, deregulation, marketisation, financialisation, and securitisation. The global governance, commercial and trade system is supported by political and ideological institutions, rules and enforcement mechanisms that only broad civil society coalitions have historically been able to challenge successfully.
In South Africa, the GEAR strategy epitomised the dominance of the neoliberal ideology within the leading sections of the government. The neoliberal logic still continues to be dominant, in spite of some talk about a developmental state. Increasingly though it has taken a more crude political expression and there are some emerging elements that tend to perceive the working class and active elements of civil society as merely being a nuisance that must be crushed with the might of the state apparatus.
Today, as we gather here, there is panic in the ranks of the predatory elite, which is a new coalition of the tenderpreneurs. Paranoia elsewhere is deepening with the political elite, convincing itself that any gathering of independent civil society formations to confront our challenges is a threat to them.
Let us right from onset state that we are not an anti-ANC and anti-government coalition. We are not here to begin a process to form any political party, nor to advance the interest of any individual. We have only one enemy - neoliberalism, that has condemned our people to poverty and unemployment. We want to roll back neoliberal advances and struggle for the adoption and implementation of alternatives. Our struggles have to be both defensive and offensive.
We are friends to all genuinely anti-neoliberal and pro-poor and working class political parties that have an undisputable record of struggle to advance our interests as the marginalised societies.
We gather here to say another South Africa is possible! Another world is possible!
On 11 July, just four months ago, all South Africans were basking in the reflected glory of our successful hosting of the best-ever FIFA world Cup. The whole world saw our country at its best - united, efficient, friendly and enthusiastic.
The question we were all asking was - if we can organise such a brilliant event so well, how can we use the qualities that contributed to that World Cup triumph to create jobs, build houses, provide education for our children, launch a free national health service and solve all the other major problems we face.
So we urged the government and every union, civil society formation, political party, business and faith organisation to sign a new declaration in support of a programme to rebuild our country and build a lasting legacy of the 2010 World Cup.
Today's historic conference takes this decision forward. It brings together the people who are best able to meet this challenge - South African civil society and trade unions. The forces we represent here today can - and indeed must - have a decisive say in the future of our country. Our goal must be to forge a strong, united movement for change.
A similar united social movement - of COSATU, the UDF, civic movements and progressive NGOs - played a critical role - alongside the unbanned ANC and SACP - in bringing the racist dictatorship to its knees in those decisive years leading up to our democratic breakthrough in 1994.
The challenges we face today are different but nevertheless very major and require a similar mobilisation of the democratic forces as we saw in those years.
Comrades and friends
In our 16 years of democracy we have achieved major advances. We have a democratic Constitution and many laws, which have given South Africans basic rights, on paper at least, to freedom, dignity and equality.
There have been significant important improvements in the lives of millions of our people. As examples: In 1996, only 3 million people had access to social grants; today the figure is 14 million. In 1996, 58% of the population had access to electricity; today the figure is 80%. In 1996, 62% of the population had access to running water; today the figure is 88%. We have built 3.1 million subsidised houses, giving shelter to over 15 million people.
Despite our historic victories on the political battlefield, however, in the economic arena, many of the problems we faced in 1994 are still very much with us in 2010.
The central challenge is that our economic structure, in particular the distribution of wealth and income, remains largely unchanged, and in one crucial respect - inequality - has worsened, to become the widest in the world, and it also still reflects the racial and gender features of apartheid, with wealth and financial power still predominantly in the hands of white males.
The top 20 paid directors in JSE listed companies earned on average 1 728 times the average income of a South African worker while state-owned enterprises paid CEOs 194 times an average worker's income.
Typical of everything that is wrong with our society today, is this week's announcement that Standard Bank, whose CEO Jacko Maree received a massive R18, 2m in 2009 alone, intends to retrench over 2000 staff, making workers pay the price for their bosses' extravagance and incompetence.
In the 21 months from January 2009 to September 2010, we have lost 1 145 000 jobs, which, as we keep saying means that because each wage earner supports on average five dependents, more than 5.7 million people were thrown into poverty. The latest figures released yesterday reveal that the official rate of unemployment is still rising, even if more slowly, to 25.3%; a further 45 000 jobs were lost in the third
quarter of 2010.
In education - although we have made progress in many areas, such as the improved access to education, in particular for girl children, reduction of the teacher to pupil ratio, the introduction of more no-fee schools, etc. - black working class students are still at the receiving end of an unequal system. We have not transformed the education system in either quality or quantity.
The drop-out rate for children who started school in 1998 was 64%. Our matric pass rate last year was 60.6%. A staggering 70% of (matric) exam passes are accounted for by just 11% of schools, where the mainly white rich can buy their children top-quality education. The culture of learning and teaching has collapsed and many of our schools, in particular in the former blacks only residential areas are dysfunctional. Many of our schools have no libraries and no laboratories.
It is the same story in our healthcare service. The apartheid fault lines persist. While the mainly white wealthy can buy world-class healthcare in the private sector, 86% of mainly black poor have to struggle to get any service at all in an under-funded, understaffed public sector where in some parts patients are told to bring their own bedding and with only Panado available, in filthy hospitals where rights of patients are hung on the wall but not their living reality.
Although we rank 79th globally in terms of GDP per capita, we rank 178th in terms of life expectancy, 130th in terms of infant mortality, and 119th in terms of doctors per 1000 people.
The HIV and AIDS epidemic has worsened our situation, with life expectancy dropping from 62 years in 1992, to 50 years in 2006. Yet we know that in terms of South African Institute of Race Relations survey in 2009, the life expectancy of a white South African now stands at 71 years and that of a black South African at 48.
Comrades and friends
The high levels of poverty and inequality aggravate many other anti-social phenomena which we see increasingly - violent community protests, xenophobia crime, corruption and the collapse of social and moral values. We face not just personal and family disasters but a national catastrophe, a ticking bomb, which has already begun to explode in our poorest communities.
This was our reasoning behind calling this summit. We can't stand there making speeches without developing a programme that will mobilise our society to stop this ticking bomb from exploding. "The ultimate measure of a man is not where he stands in moments of comfort, but where he stands at times of challenge and controversy." Martin Luther King, Jr.
Corruption in particular is a matter of life and death for our democracy. Day after day we see allegations of trusted public representatives being accused of using their position to enrich themselves and their families. Some allegations may be groundless; most public officials are honest servants of the people. But only full investigations into every allegation will clear the innocent and lead to the conviction and punishment of those who steal from the poor who put them in power. We should give our full support to the government's efforts to bring offenders to justice.
The source of the problem has always been the capitalist system, which is run on the principle of ‘me-first'. Whilst workers' universal slogan is "an injury to one is an injury to all" the capitalist mentality daily practises: "an injury to one is an opportunity to another".
For every official who receives a bribe there is a businessperson who gives the bribe to ‘persuade' the official to use his or her political power to advance private commercial interests. This is the biggest threat to our efforts to establish a transparent and corruption-free government.
It is even worse when the public representatives themselves, or family members, are getting rich from government tenders. The mere fact that they are in business to make money creates an inevitable conflict of interest when they are legislating in parliament, a provincial legislature or municipal council.
The danger always exists that in formulating policy, they will be guided by the impact this will have on their businesses rather than the broader public interest. We have called on our public representatives and union leaders to choose between being people's representatives or being in business.
It is greed that is inspired by the conspicuous consumption of the new elite - the BEE types who blow up to R700 000 on one-night in parties that makes the public representatives not want to live within the means provided by their salaries and rather hefty perks.
The corrupting morality our public representatives is seen in these parties. where I am told in one party sushi was served from bodies of half naked ladies. It is the sight of these parties where the elite display their wealth often secured in questionable methods that turn my stomach. It is this spitting on the face of the poor and insulting their integrity that makes me sick. Next year this elite will not go out door-to-door to get our people to vote. But soon thereafter they will host victory parties to scavenge on the carcass of our people like the typical hyenas that they are.
Our belief is that if we were to confiscate all the medical aids, that most of us here have; if our cabinet Ministers and MPs were forced to take their children to the public hospitals and be subjected to the same conditions as the poor; if we were to burn their private clinics and hospitals and private schools; if the children of the bosses were to be loaded into unsafe open bakkies to the dysfunctional township schools; if the high walls and electronic wired fences were to be removed; if all were forced to live on R322 a month, as 48% of the population has to do, and if their kids were to die without access to antiretrovirals, we would have long ago seen more decisive action on many of these fronts.
Our society in many ways is a very sick society. In addition to allowing these massive inequalities and for apartheid to continue in the economy, we are now sitting indifferent when the new elite is on rampage, humiliating the very motive force of our liberation struggle.
A few kilometres from where we are today hundreds of workers have not been paid for 10 months by their black empowerment bosses in the company called Aurora. Young people in their 20s and 30s have become overnight multimillionaires. A message is being sent out to our students that says:
‘Why work so hard when few correct political-sounding speeches and demagoguery can make you a multimillionaire'.
It says to the genuine entrepreneurs:
‘Why sweat when political connections and greasing the hand of those in political office can make you an instant billionaire?'
We are rewarding laziness, greed and corruption and discouraging hard work, honesty and integrity.
In the process we making our political organisations new battlegrounds where we have replaced the apartheid regime in killing and poisoning those identified as a threat to the march to gain these not-worked-for riches. Look at what is happening in COPE, IFP? Now even Lucas Mangophe is not safe. Look at what is happening in the ANC in some provinces. Look at the number of splits in every political party.Genuineness is fast becoming a rare commodity!
But as the poor and the black people in general, we can't afford to sit on our laurels and do nothing about these conditions. Our dream is that of a mobilised poor that takes its destiny into its own hands.
Why must we allow our schools not to function when we have numbers to flood the school governing bodies, and insist that teachers must be at school all the time, must prepare for classes and must teach for 7 and half hours for five days a week?
Why are we not mobilising to deal with the ill-discipline of our own kids? Why are we not mobilising to change the culture of mainly working class parents and taking an active interest in the education our children? Why have we not mobilised to change the work ethics of our members in the public sector so that they give the first-class treatment to the poor who have no money to go and get better services in the private sector?
Why have we allowed criminals to take our freedom away and return to our townships after 1994, only to rape and murder us daily, one by one, when we have the power of the numbers to drive them out? Why are today allowing a new class of tenderpreneurs to threaten our freedom and impose stinking morality of greed?
Yes we are angry! Yes COSATU is angry! Yes our tolerance levels are running thin! We can no longer just fold our arms and do nothing. Today we are here to say we want our freedom back from the elite and all these rogue elements of our society. Their party must come to an end. We demand a more egalitarian society today and moving forward!
Comrades and friends
The roots of nearly all these problems lie in the failed economic policies adopted in 1996, centred around the misnamed Growth, Employment and Redistribution (GEAR) strategy. It led to growth at a snail's pace, higher unemployment and only redistributed wealth from the poor to the rich! It was a policy based on the misguided free-market, neoliberal policies of the ‘Washington consensus', which led directly to the devastating worldwide economic crisis of 2008 and 2009.
The government yesterday announced its new growth path, which aims to create 5 million jobs by 2020, bringing the unemployment rate down to 15%. While we obviously welcome and support such a target, we shall have to study in detail how the government's new growth plan will achieve this.
COSATU has accepted the challenge to produce its alternative strategy. In "A Growth path Towards Full Employment", we set out a path which will transform our economy into one based on the expansion of manufacturing industry and the creation of decent and sustainable jobs. Let us hope we have persuaded government to base their new growth path strategy on the same principles.
But most important is that the strategy must be turned from words into deeds. It will be a tragedy if we miss this historic opportunity to build a developmental state and turn the economy around.
It would be a disaster if the government were to believe that we can continue with the status quo. It would mean condemning another generation of living with no jobs, no money and no hope.
So I appeal to every organisation represented here today to sign the post-World Cup Declaration, which will commit us all to:
1. Remain united behind Bafana Bafana and do everything possible to promote soccer, which remains the biggest and most popular sport, yet is seriously under-developed. We need to develop academies to hone the skills of unknown South African Peles, Drogbas and Ronaldos, who have no opportunity for their skills to be recognised.
2. Bring down the astronomical levels of unemployment, poverty and inequality, which blight our land. Even as we prepare to host the World Cup, jobs continued to disappear, inequalities continued to grow and poverty remain widespread after the World Cup. We need a new economic growth path that will help address these challenges with necessary urgency and speed.
3. Address the challenges of our education system. The 1-Goal Campaign and the Nelson Mandela Day celebrations offer an opportunity to take our international icon's dream to new heights. We call on government to prioritise building and refurbishing schools and to ensure that all schools receive adequate support from the education departments at all levels. We must move beyond the call for all to donate books and build school libraries on Nelson Mandela Day and run for 12 months until every school functions and is a centre of empowerment to build a new generation that can take our dreams to a new height.
4. Unite behind a goal of transforming our health system and implementing the National Health Insurance Scheme. We have to fix our public hospitals and defeat the scourge of HIV/AIDS to build a healthy nation and improve our country's life expectancy.
5. Address underdevelopment and poverty in rural areas. This campaign should address food insecurity and empower our people to use land that currently lies unused, so that people can produce the food they need and escape from their deep levels of unemployment and poverty.
6. Lead a campaign against crime and corruption. We can build on the successes of the World Cup by sending out an unequivocal message that crime does not pay. Corruption is stealing from the poor to feed into narrow elites' selfish accumulation interests. Corruption kills the spirits of the majority, black and white, who want to work hard to build their country.
7. Mobilise to fix the energy challenge the country is facing. We need more action and not empty words to ensure that South Africa moves out of the current crisis. Imagine a day when thousands of activists move door-to-door handing over pamphlets to our people educating them about the benefits of saving electricity.
8. Mobilise to address the looming water shortage crises so that we do not wait for 2025 when the problem will be much more intense. Let us through our people hold the mine bosses who have been allowed after making billions to abandon their now empty mines and pollute our water. Let us defend our environment and keep our country beautiful and natural whilst also developing.
9. Mobilise the working class and educate them to appreciate that no matter how bad living conditions are, there can be no excuse for blaming fellow-Africans and other foreign nationals for the country's and continent's economic failures. Let us do everything possible to prevent a new outbreak of xenophobic attacks in some of our poorest communities. They are not the cause but the fellow victims of our unjust and unequal economic system. Workers and the poor must stand united against the common enemies of capitalist greed and corruption.
10. Lastly and most importantly, address the massive challenges of underdevelopment in the continent. Africa cannot succeed in developing its economies and transforming the lives of our people while it is still ravaged by poverty. Let us defeat the tyrants in Swaziland, Zimbabwe, Sudan and elsewhere whose refusal to vacate their positions and allow democracy means that can be no hope of Africa ever rising to ensure a coordinated effort to defeat under development. Let us mobilise to free our people in Western Sahara from their colonial masters!
These are just some of the many challenges we face. I look forward to hearing the outcome of the commissions and hope that we shall emerge from this conference tomorrow united and determined to build a South Africa run by and for the working class and the poor. I wish you a very successful conference.
Issued by COSATU, October 27 2010
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Sunday, November 7, 2010
US - India Transactions
As part of the National Export Initiative, President Obama noted that India-with its tremendous economic growth and its large and growing middle class -is a key market for U.S. exports.
Those exports are generating jobs in every corner of the United States and across every major sector. These involve some of our country's largest companies, but also an increasing number of small and medium-sized enterprises.
On the margins of the President's trip, trade transactions were announced or showcased, exceeding $14.9 billion in total value with $9.5 billion in U.S. export content, supporting an estimated 53,670 U.S. jobs.
These cross-border collaborations, both public and private, underpin the expanding U.S.-India strategic partnership, contributing to economic growth and development in both countries.
The following list of deals and details has been quoted verbatim from the official White House statement:
Heavy Transport Aircraft: The Boeing Company and the Indian Air Force have reached preliminary agreement on the purchase of 10 C-17 Globemaster III military transport aircraft, and are now in the process of finalizing the details of the sale. Once all have been delivered, the Indian Air Force will be the owner and operator of the largest fleet of C-17s outside of the United States. Boeing, headquartered in Chicago, Illinois, is the aircraft manufacturer. Boeing reports that each C-17 supports 650 suppliers across 44 U.S. states and that this order will support Boeing’s C-17 production facility in Long Beach, California, for an entire year. This transaction is valued at approximately $4.1 billion, all of which is U.S. export content, supporting an estimated 22,160 jobs.
Engine Sale for the Light Combat Aircraft: On October 1, the General Electric Company, headquartered in Fairfield, Connecticut, was declared the lowest bidder and selected to negotiate a contract to provide the Indian Aeronautical Development Agency with 107 F414 engines to be installed on the Tejas light combat aircraft. Upon finalizing the contract, General Electric’s facility in Lynn, Massachusetts, and other sites across the United States will be positioned to export almost one billion dollars in high technology aerospace products. This transaction is tentatively valued at approximately $822 million, all of which is U.S. export content, supporting an estimated 4,440 jobs.
Commercial Aircraft Sale: Boeing Company, headquartered in Chicago, Illinois, and SpiceJet, a leading private airline in India, concluded a definitive agreement for the sale of 30 B737-800 commercial aircraft. SpiceJet currently operates 22 Boeing aircraft and has several 737 deliveries remaining from previous agreements. This new agreement will enable SpiceJet to offer more domestic routes and to begin offering international flights to neighboring countries. This transaction is valued at approximately $2.7 billion, based on catalogue prices, with an estimated $2.4 billion in U.S. export content, supporting an estimated 12,970 jobs.
Gas and Steam Turbine Sale: The General Electric Company, headquartered in Fairfield, Connecticut, was selected to supply six advanced class 9FA gas turbines and three steam turbines for the 2,500-megawatt Samalkot power plant expansion to be constructed by Reliance Power Ltd., a division of the Reliance Anil Dhirubhai Ambani Group, one of the largest conglomerates in India. General Electric purchases equipment from 240 suppliers across the United States—an estimated 14 percent of which are small- and medium-sized enterprises—for every 9FA gas-fired turbine, which are assembled in Greenville, South Carolina. The combined equipment and maintenance contracts are valued at approximately $750 million, with an estimated $491 million in U.S. export content, supporting an estimated 2,650 jobs.
Reliance Power and U.S. Ex-Im Bank Agreement: Reliance Power Ltd., the flagship company of the Reliance Anil Dhirubhai Ambani Group, and the Export – Import Bank of the United States announced a Memorandum of Understanding (MOU). This MOU will indicate Ex-Im Bank’s willingness to provide up to $5 billion in financial support to Reliance Power for the purchase of U.S. goods and services to be used in the development of up to 8,000 megawatts of gas-fired electricity generating units and up to 900 megawatts of renewable (solar and wind) energy facilities.
Diesel Locomotive Manufacturing Venture: The United States has worldwide leaders in diesel locomotive manufacturing, and the Indian Ministry of Railways announced the prequalification of the sole two bidders—GE Transportation (Erie, Pennsylvania) and Electro-Motive Diesel (LaGrange, Illinois)—for a venture to manufacture and supply of 1,000 diesel locomotives over 10 years. The estimated U.S. content of this contract is expected to exceed $1B.
Motorcycle Assembly Plant: Harley-Davidson Motor Company, headquartered in Milwaukee, Wisconsin, announced that preparations are underway to open a new plant in India for the assembly of Harley-Davidson motorcycles from U.S.-built “complete knock-down” kits. This investment by the company entails job creation in both the United States and India, and it will allow the company to reduce the tariff burden on its motorcycles for sale in the Indian market, driving sales growth by making its motorcycles more accessible to Indian consumers.
Sale of U.S. Mining Equipment and Related Support Equipment: On October 21, the Export – Import Bank of the United States announced the approval of more than $900 million in export finance guarantees to Sasan Power Ltd., a subsidiary of Reliance Power Ltd., supporting the sale of U.S. mining equipment and services from Bucyrus International of South Milwaukee, Wisconsin, and other U.S. vendors, in association with the 3,960-megawatt coal-fired Sasan power plant in Madhya Pradesh, India. This financial commitment supports $641 million in U.S. export content, supporting an estimated 3,460 jobs.
Tunneling Equipment for Underground Water Channel: On July 22, Robbins Company, headquartered in Solon, Ohio, announced an agreement with UNITY-IVRCL, a large infrastructure engineering and construction conglomerate, to provide tunnel-boring machines, conveyer equipment, and associated technical services for the construction of tunnels to convey water for the city of Mumbai. Separately, through a contract signed in 2008 with Jaiprakash Associates, a large infrastructure conglomerate, the Robbins Company is already supplying high technology tunnel-boring machines and technical assistance to bore some of the longest underground tunnels in the world underneath a protected tiger sanctuary in Andhra Pradesh, which will increase irrigation for the production of cotton and other agricultural products. The Mumbai contract alone is valued at $10 million, with $7 million in U.S. export content, supporting an estimated 35 jobs.
Maharashtra Homeland Security Pilot Projects: Palantir Technologies, a small Silicon Valley software development firm, announced a strategic partnership agreement with the Maharashtra State Police, a law enforcement agency in India, to conduct a pilot program, whereby Palantir’s end-to-end analytical software platform will be used on a trial basis to identify and alert authorities to security threats in order to help keep the citizens of Mumbai and Maharashtra safe.
Medanta Duke Research Institute (MDRI): Duke Medicine, located in Durham, North Carolina, one of the leading academic health systems in the United States, and Medanta Medicity, located in Gurgaon, Haryana, a hospital and medical research complex, are announcing a joint venture agreement to launch the MDRI, a proof-of-concept clinical research facility within Medanta’s hospital. Duke Medicine will provide scientific and operational leadership, while Medanta will contribute financial resources and clinical and operational services. Duke Medicine also will be partnering with Jubilant Life Sciences, headquartered in Uttar Pradesh, to conduct research studies and co-develop promising discoveries, with significant funding and in-kind support provided by Jubilant. Subsequent commercialization is expected to result in licensing revenue for Duke Medicine.
Long-range Antenna System for Rural Telecommunications: SPX Communication Technology, a division of SPX Corporation operating out of Raymond, Maine, is in the final phase of the pilot deployment of its long-range antenna system with two leading Indian mobile operators. This innovative technology has been shown to offer a significantly greater coverage area. Once implemented, it is expected to create significant economies of scale, thereby improving the economic viability of rural wireless networks and making wireless communications available for people who either could not afford service or who live in areas that lack coverage. The value of the initial trial equipment is expected to generate approximately $1 million, with 100 percent U.S. export content, supporting an estimated 5 jobs.
Production Equipment for the Manufacture of Pre-fabricated Housing: Spancrete Machinery Corporation, a family-owned business in Waukesha, Wisconsin, announced the sale of six sets of its hollow core, precast production equipment, including installation, training, and after-sales support, to Hindustan Prefab Limited, a state-owned company within the Indian Ministry of Housing and Poverty Alleviation. The production equipment will be used to manufacture inexpensive, prefabricated housing on a mass scale in India. Spancrete also is working with Somat Engineering, Inc., from Detroit, Michigan, and their affiliate, SP Infrastructure India Ltd., in New Delhi. This transaction is valued at approximately $35 million, all of which is U.S. export content. Based on the company’s estimates, the transaction will support 30 jobs.
Cell Phone Rollout for Small Indian Businesses: Intuit, a company headquartered in Mountain View, California, which serves millions of small businesses worldwide, will launch a new mobile and web-based marketing service in partnership with Nokia, called “Intuit GoConnect”. This innovative technology will help Indian micro and small businesses grow and thrive by bringing customer management tools to the entrepreneur, improving the way they communicate with their customers in an increasingly mobile world.
The Unique Identification Project: L-1 Identity Solutions, headquartered in Stamford, Connecticut, and another U.S.-headquartered company, lead two of the three vendor consortia, which have been prequalified by the Unique Identity Authority of India for the first phase of an effort to register Indian residents with a 12-digit unique number using biometric identifiers. Unprecedented in scale, seeking to register 1.2 billion Indian residents, the Unique Identification program aims to enhance delivery of government services in India.
Sale of Precision Measurement Instruments for Fuel Cell Research: Advanced Materials Corporation (AMC), a small, six-person firm in Pittsburgh, Pennsylvania, received an order to supply a specially-designed Pressure-Composition Isotherm Measurement Instrument to the Banaras Hindu University (BHU) in Varanasi, India. BHU will utilize AMC’s instrument to test fuel cell applications, as part of an Indian central government research program.
Trace Explosive Detection Equipment: Implant Sciences, a small company based in Wilmington, Massachusetts, signed a contract with the Ministry of Defence in January to supply its Quantum Sniffer H-150, trace detection devices to be used by the Indian Army to detect the presence of explosive, bomb-making materials that could be used in a terrorist attack. The company announced that the equipment will be ready for pre-dispatch inspection and delivery in November. The transaction is valued at approximately $6 million, all of which is U.S. export content, supporting an estimated 30 jobs.
VIP Helicopter Sale: On August 25, Bell Helicopter, based in Hurst, Texas, signed a purchase agreement with Span Air, a private air charter company, for the sale of its first Bell Model 429 corporate VIP helicopter in India. Span Air has a second order slated for delivery in mid-2011. Bell Helicopter recently sold its 100th helicopter in India.
Sales of Pre-owned Refurbished Healthcare Equipment: Skelley Medical, a rural New Hampshire-based company, sells refurbished medical equipment to Indian hospitals in second and third tier cities through partnerships with various distributors in India. Skelley announced plans to open an after-sales service facility in Mumbai as part of a new venture with Triage Systems, a Mumbai-based Indian medical equipment distributor. This facility will service medical equipment purchased by their Indian hospital customers.
Monitoring Equipment for Greening Buildings: Noveda Technologies, a small start-up company in Branchburg, New Jersey, is finalizing a new venture with Chennai-based Wysine Technology to jointly develop and market a new solution for web-based, real-time energy monitoring for “greening” buildings.
Dredges for Maharashtra Maritime Board: Ellicott Dredges, a small company based in Baltimore, Maryland, announced the sale of two cutter suction dredges to the Maharashtra Maritime Board, a Maharashtra government entity. The equipment will be utilized to dredge a fisherman’s port and various tributaries in the state of Maharashtra
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Those exports are generating jobs in every corner of the United States and across every major sector. These involve some of our country's largest companies, but also an increasing number of small and medium-sized enterprises.
On the margins of the President's trip, trade transactions were announced or showcased, exceeding $14.9 billion in total value with $9.5 billion in U.S. export content, supporting an estimated 53,670 U.S. jobs.
These cross-border collaborations, both public and private, underpin the expanding U.S.-India strategic partnership, contributing to economic growth and development in both countries.
The following list of deals and details has been quoted verbatim from the official White House statement:
Heavy Transport Aircraft: The Boeing Company and the Indian Air Force have reached preliminary agreement on the purchase of 10 C-17 Globemaster III military transport aircraft, and are now in the process of finalizing the details of the sale. Once all have been delivered, the Indian Air Force will be the owner and operator of the largest fleet of C-17s outside of the United States. Boeing, headquartered in Chicago, Illinois, is the aircraft manufacturer. Boeing reports that each C-17 supports 650 suppliers across 44 U.S. states and that this order will support Boeing’s C-17 production facility in Long Beach, California, for an entire year. This transaction is valued at approximately $4.1 billion, all of which is U.S. export content, supporting an estimated 22,160 jobs.
Engine Sale for the Light Combat Aircraft: On October 1, the General Electric Company, headquartered in Fairfield, Connecticut, was declared the lowest bidder and selected to negotiate a contract to provide the Indian Aeronautical Development Agency with 107 F414 engines to be installed on the Tejas light combat aircraft. Upon finalizing the contract, General Electric’s facility in Lynn, Massachusetts, and other sites across the United States will be positioned to export almost one billion dollars in high technology aerospace products. This transaction is tentatively valued at approximately $822 million, all of which is U.S. export content, supporting an estimated 4,440 jobs.
Commercial Aircraft Sale: Boeing Company, headquartered in Chicago, Illinois, and SpiceJet, a leading private airline in India, concluded a definitive agreement for the sale of 30 B737-800 commercial aircraft. SpiceJet currently operates 22 Boeing aircraft and has several 737 deliveries remaining from previous agreements. This new agreement will enable SpiceJet to offer more domestic routes and to begin offering international flights to neighboring countries. This transaction is valued at approximately $2.7 billion, based on catalogue prices, with an estimated $2.4 billion in U.S. export content, supporting an estimated 12,970 jobs.
Gas and Steam Turbine Sale: The General Electric Company, headquartered in Fairfield, Connecticut, was selected to supply six advanced class 9FA gas turbines and three steam turbines for the 2,500-megawatt Samalkot power plant expansion to be constructed by Reliance Power Ltd., a division of the Reliance Anil Dhirubhai Ambani Group, one of the largest conglomerates in India. General Electric purchases equipment from 240 suppliers across the United States—an estimated 14 percent of which are small- and medium-sized enterprises—for every 9FA gas-fired turbine, which are assembled in Greenville, South Carolina. The combined equipment and maintenance contracts are valued at approximately $750 million, with an estimated $491 million in U.S. export content, supporting an estimated 2,650 jobs.
Reliance Power and U.S. Ex-Im Bank Agreement: Reliance Power Ltd., the flagship company of the Reliance Anil Dhirubhai Ambani Group, and the Export – Import Bank of the United States announced a Memorandum of Understanding (MOU). This MOU will indicate Ex-Im Bank’s willingness to provide up to $5 billion in financial support to Reliance Power for the purchase of U.S. goods and services to be used in the development of up to 8,000 megawatts of gas-fired electricity generating units and up to 900 megawatts of renewable (solar and wind) energy facilities.
Diesel Locomotive Manufacturing Venture: The United States has worldwide leaders in diesel locomotive manufacturing, and the Indian Ministry of Railways announced the prequalification of the sole two bidders—GE Transportation (Erie, Pennsylvania) and Electro-Motive Diesel (LaGrange, Illinois)—for a venture to manufacture and supply of 1,000 diesel locomotives over 10 years. The estimated U.S. content of this contract is expected to exceed $1B.
Motorcycle Assembly Plant: Harley-Davidson Motor Company, headquartered in Milwaukee, Wisconsin, announced that preparations are underway to open a new plant in India for the assembly of Harley-Davidson motorcycles from U.S.-built “complete knock-down” kits. This investment by the company entails job creation in both the United States and India, and it will allow the company to reduce the tariff burden on its motorcycles for sale in the Indian market, driving sales growth by making its motorcycles more accessible to Indian consumers.
Sale of U.S. Mining Equipment and Related Support Equipment: On October 21, the Export – Import Bank of the United States announced the approval of more than $900 million in export finance guarantees to Sasan Power Ltd., a subsidiary of Reliance Power Ltd., supporting the sale of U.S. mining equipment and services from Bucyrus International of South Milwaukee, Wisconsin, and other U.S. vendors, in association with the 3,960-megawatt coal-fired Sasan power plant in Madhya Pradesh, India. This financial commitment supports $641 million in U.S. export content, supporting an estimated 3,460 jobs.
Tunneling Equipment for Underground Water Channel: On July 22, Robbins Company, headquartered in Solon, Ohio, announced an agreement with UNITY-IVRCL, a large infrastructure engineering and construction conglomerate, to provide tunnel-boring machines, conveyer equipment, and associated technical services for the construction of tunnels to convey water for the city of Mumbai. Separately, through a contract signed in 2008 with Jaiprakash Associates, a large infrastructure conglomerate, the Robbins Company is already supplying high technology tunnel-boring machines and technical assistance to bore some of the longest underground tunnels in the world underneath a protected tiger sanctuary in Andhra Pradesh, which will increase irrigation for the production of cotton and other agricultural products. The Mumbai contract alone is valued at $10 million, with $7 million in U.S. export content, supporting an estimated 35 jobs.
Maharashtra Homeland Security Pilot Projects: Palantir Technologies, a small Silicon Valley software development firm, announced a strategic partnership agreement with the Maharashtra State Police, a law enforcement agency in India, to conduct a pilot program, whereby Palantir’s end-to-end analytical software platform will be used on a trial basis to identify and alert authorities to security threats in order to help keep the citizens of Mumbai and Maharashtra safe.
Medanta Duke Research Institute (MDRI): Duke Medicine, located in Durham, North Carolina, one of the leading academic health systems in the United States, and Medanta Medicity, located in Gurgaon, Haryana, a hospital and medical research complex, are announcing a joint venture agreement to launch the MDRI, a proof-of-concept clinical research facility within Medanta’s hospital. Duke Medicine will provide scientific and operational leadership, while Medanta will contribute financial resources and clinical and operational services. Duke Medicine also will be partnering with Jubilant Life Sciences, headquartered in Uttar Pradesh, to conduct research studies and co-develop promising discoveries, with significant funding and in-kind support provided by Jubilant. Subsequent commercialization is expected to result in licensing revenue for Duke Medicine.
Long-range Antenna System for Rural Telecommunications: SPX Communication Technology, a division of SPX Corporation operating out of Raymond, Maine, is in the final phase of the pilot deployment of its long-range antenna system with two leading Indian mobile operators. This innovative technology has been shown to offer a significantly greater coverage area. Once implemented, it is expected to create significant economies of scale, thereby improving the economic viability of rural wireless networks and making wireless communications available for people who either could not afford service or who live in areas that lack coverage. The value of the initial trial equipment is expected to generate approximately $1 million, with 100 percent U.S. export content, supporting an estimated 5 jobs.
Production Equipment for the Manufacture of Pre-fabricated Housing: Spancrete Machinery Corporation, a family-owned business in Waukesha, Wisconsin, announced the sale of six sets of its hollow core, precast production equipment, including installation, training, and after-sales support, to Hindustan Prefab Limited, a state-owned company within the Indian Ministry of Housing and Poverty Alleviation. The production equipment will be used to manufacture inexpensive, prefabricated housing on a mass scale in India. Spancrete also is working with Somat Engineering, Inc., from Detroit, Michigan, and their affiliate, SP Infrastructure India Ltd., in New Delhi. This transaction is valued at approximately $35 million, all of which is U.S. export content. Based on the company’s estimates, the transaction will support 30 jobs.
Cell Phone Rollout for Small Indian Businesses: Intuit, a company headquartered in Mountain View, California, which serves millions of small businesses worldwide, will launch a new mobile and web-based marketing service in partnership with Nokia, called “Intuit GoConnect”. This innovative technology will help Indian micro and small businesses grow and thrive by bringing customer management tools to the entrepreneur, improving the way they communicate with their customers in an increasingly mobile world.
The Unique Identification Project: L-1 Identity Solutions, headquartered in Stamford, Connecticut, and another U.S.-headquartered company, lead two of the three vendor consortia, which have been prequalified by the Unique Identity Authority of India for the first phase of an effort to register Indian residents with a 12-digit unique number using biometric identifiers. Unprecedented in scale, seeking to register 1.2 billion Indian residents, the Unique Identification program aims to enhance delivery of government services in India.
Sale of Precision Measurement Instruments for Fuel Cell Research: Advanced Materials Corporation (AMC), a small, six-person firm in Pittsburgh, Pennsylvania, received an order to supply a specially-designed Pressure-Composition Isotherm Measurement Instrument to the Banaras Hindu University (BHU) in Varanasi, India. BHU will utilize AMC’s instrument to test fuel cell applications, as part of an Indian central government research program.
Trace Explosive Detection Equipment: Implant Sciences, a small company based in Wilmington, Massachusetts, signed a contract with the Ministry of Defence in January to supply its Quantum Sniffer H-150, trace detection devices to be used by the Indian Army to detect the presence of explosive, bomb-making materials that could be used in a terrorist attack. The company announced that the equipment will be ready for pre-dispatch inspection and delivery in November. The transaction is valued at approximately $6 million, all of which is U.S. export content, supporting an estimated 30 jobs.
VIP Helicopter Sale: On August 25, Bell Helicopter, based in Hurst, Texas, signed a purchase agreement with Span Air, a private air charter company, for the sale of its first Bell Model 429 corporate VIP helicopter in India. Span Air has a second order slated for delivery in mid-2011. Bell Helicopter recently sold its 100th helicopter in India.
Sales of Pre-owned Refurbished Healthcare Equipment: Skelley Medical, a rural New Hampshire-based company, sells refurbished medical equipment to Indian hospitals in second and third tier cities through partnerships with various distributors in India. Skelley announced plans to open an after-sales service facility in Mumbai as part of a new venture with Triage Systems, a Mumbai-based Indian medical equipment distributor. This facility will service medical equipment purchased by their Indian hospital customers.
Monitoring Equipment for Greening Buildings: Noveda Technologies, a small start-up company in Branchburg, New Jersey, is finalizing a new venture with Chennai-based Wysine Technology to jointly develop and market a new solution for web-based, real-time energy monitoring for “greening” buildings.
Dredges for Maharashtra Maritime Board: Ellicott Dredges, a small company based in Baltimore, Maryland, announced the sale of two cutter suction dredges to the Maharashtra Maritime Board, a Maharashtra government entity. The equipment will be utilized to dredge a fisherman’s port and various tributaries in the state of Maharashtra
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Wednesday, November 3, 2010
President Obama will underscore the importance of India as a growing market for US exports
President Obama will underscore the importance of India as a growing market for US exports - and announce some big commercial deals - when he travels to Mumbai and New Delhi next month, White House officials said yesterday.
Trade will be at the top of the agenda on the first day of the President's trip, when he meets with US and Indian business officials. Mr. Obama will deliver a major address on the commercial relationship that same day - November 6 - before the US-India Business Council.
Growing trade with India is crucial to the President's goal of doubling US exports in five years, the officials told reporters yesterday. “We believe that India has a hugely dynamic and growing market and we want to discuss opportunities for how we can deepen our economic relationship,” Deputy National Security Advisor for Strategic Communications Ben Rhodes said.
The officials declined to discuss details of the commercial agreements the President hopes to announce.
Although President Obama has lately spoken out against the “outsourcing” of US jobs overseas to countries like India, Deputy National Security Advisor for International Economic Affairs Mike Froman said the President sees tremendous potential in India for US exports.
Indian Investment
US exports have quadrupled over the last seven years to about $17 billion, while service exports have tripled to about $10 billion a year. Mr. Froman noted that Indian companies are the second-fastest-growing investors in the United States, currently supporting about 57,000 US jobs.
India would like to see a restart of negotiations on a Bilateral Investment Treaty, which remain on hold while the Administration crafts a new model BIT.
New Delhi is hoping that President Obama will use his first state visit to announce that Washington will ease export controls restricting some sales of high-technology dual-use products. The Administration officials declined to say whether an announcement is likely, saying that talks are still ongoing. But Undersecretary of State for Political Affairs William Burns noted that the Administration is in the process of updating its export controls and wants to make sure “India is treated as a partner and not as a target.”
The White House officials praised India for signing yesterday the Convention on Supplemental Compensation, which will pave the way for US companies to participate in Indian civil nuclear development under the bilateral agreement. The convention will help ensure that international standards apply and that US companies have a level playing field on which to compete, Mr. Burns said.
Washington Trade Daily
October 28, 2010
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Trade will be at the top of the agenda on the first day of the President's trip, when he meets with US and Indian business officials. Mr. Obama will deliver a major address on the commercial relationship that same day - November 6 - before the US-India Business Council.
Growing trade with India is crucial to the President's goal of doubling US exports in five years, the officials told reporters yesterday. “We believe that India has a hugely dynamic and growing market and we want to discuss opportunities for how we can deepen our economic relationship,” Deputy National Security Advisor for Strategic Communications Ben Rhodes said.
The officials declined to discuss details of the commercial agreements the President hopes to announce.
Although President Obama has lately spoken out against the “outsourcing” of US jobs overseas to countries like India, Deputy National Security Advisor for International Economic Affairs Mike Froman said the President sees tremendous potential in India for US exports.
Indian Investment
US exports have quadrupled over the last seven years to about $17 billion, while service exports have tripled to about $10 billion a year. Mr. Froman noted that Indian companies are the second-fastest-growing investors in the United States, currently supporting about 57,000 US jobs.
India would like to see a restart of negotiations on a Bilateral Investment Treaty, which remain on hold while the Administration crafts a new model BIT.
New Delhi is hoping that President Obama will use his first state visit to announce that Washington will ease export controls restricting some sales of high-technology dual-use products. The Administration officials declined to say whether an announcement is likely, saying that talks are still ongoing. But Undersecretary of State for Political Affairs William Burns noted that the Administration is in the process of updating its export controls and wants to make sure “India is treated as a partner and not as a target.”
The White House officials praised India for signing yesterday the Convention on Supplemental Compensation, which will pave the way for US companies to participate in Indian civil nuclear development under the bilateral agreement. The convention will help ensure that international standards apply and that US companies have a level playing field on which to compete, Mr. Burns said.
Washington Trade Daily
October 28, 2010
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
Wednesday, October 27, 2010
Medium Term Budget Policy Statement 2010 Speech Pravin Gordhan Minister of Finance 27 October 2010
Medium Term Budget Policy Statement
2010
Speech
Pravin Gordhan
Minister of Finance
South Africa
27 October 2010
http://www.timeslive.co.za/multimedia/archive/01214/GordhanSpeech_1214848a.pdf
Honourable Speaker
Former President Mandela once said: “After climbing a great hill, one only
finds that there are many more hills to climb!”
As a youthful nation, we have had our fair share of hills to climb. Our
successful hosting of the World Cup earlier this year is surely proof that no hill
is too steep. As we move out of the depth of the greatest recession since the
1930s, we find yet another hill facing us – the highest, perhaps, we have yet
had to climb. This is the creation of jobs and the reduction of poverty.
Honourable Members, today is the birthday anniversary of Oliver Tambo, who
dedicated his life to these goals.
In taking this struggle forward, Cabinet has this week released details of a
new growth path that sets out a vision and outlines key areas where jobs can
be created. This is an agenda for collective action by the state, business,
organised labour and civil society – in fact all South Africans have an interest
in energising and activating the growth path.
Members of the House will know that the details of the new growth path have
been under intensive discussion since this time last year. A more inclusive
approach to development and creating jobs has been at the forefront of the
work of Parliament and many of its committees this year, and it was the
central theme of NEDLAC’s Annual Summit last month. Our central goal is
unequivocal: we have to accelerate growth in the South African economy, and
we have to do so in ways that rapidly reduce poverty, unemployment and
inequality.
In February this year, we spoke of our shared humanity, our generosity, our
resilience and our capacity to deal honestly with each other. We said these
attributes were our most precious national asset, an asset that gives us
formidable capacity to fight adversity, to find common ground and to move
forward.
Now is the time to demonstrate it. The challenges before us demand it. We
have done well, but it is not good enough. We know our challenges. It is time
to be impatient with ourselves. The time for talking about our challenges is
over. The challenges that we know so well – poverty, unemployment,
deteriorating infrastructure, delays in services – demand our urgent
responses. Our communities have been very patient. They want this economy
to create jobs; they want faster and better delivery of public services. South
Africans, all South Africans, those who are poor and those who are privileged,
want economic growth. But not just any growth.
We want economic growth that creates opportunities for meaningful participation, not only for ourselves, but for our neighbours, not only for ourselves, but for our sons and daughters.
It is my privilege to introduce the Medium Term Budget Policy Statement on
behalf of the President and the Cabinet, Honourable Speaker, and to
encourage the House and its committees to engage fully with its proposals as
part of the more wide-ranging discussion of the central economic, social,
financial and developmental challenges of our time.
I need to stress, Honourable Members, that the design of a growth strategy is
the first step. Our next challenge is its implementation – aligning our policy
and programmes, managing infrastructure project contracts, supporting
accelerated business investment; actually delivering on the outputs and
activities that are now documented in outcome statements, delivery
agreements and strategic plans for every government department, every
public entity, every state-owned enterprise, every municipality.
All of us, every minister is committed to this.
And we know that we can deliver on a plan, on time and on budget. We know
that we can mobilise all South Africans behind a major project. In the midst of
a global recession, we brought a special brand of South African magic to the
television screens of the whole world. Billions of people around the world
watched South Africa perform at its best, and we hosted 350 000 enthusiastic
visitors. And so we know what it feels like to work together as a nation, to
share a collective pride in saying “Ke Nako! It’s Our Time! We Can Do It!”
Of course, we also know that economic development is not an event, it is a
process which requires sustained effort and continuous engagement,
unfolding over many years.
2010 Medium Term Budget Policy Statement – key themes
Honourable Speaker, the 2010 Medium Term Budget Policy Statement begins
with a reminder that development is not about numbers, it is about people and
improving the quality of their lives.
Our third progress report on the Millennium Development Goals has recently
been published, as a collaborative effort between Statistics South Africa and a
range of civil society organisations. It is a timely reminder that while we can
report steady progress on several fronts, we are lagging well behind the
targets in others. We are likely to achieve the 2015 MDG targets for reducing
extreme poverty, for access to water and sanitation and in providing school
opportunities and achieving gender equity in education. But on critical health
indicators, such as maternal and child mortality, and HIV and TB prevalence,
we are not on track to achieve the targets. The quality of many of our schools
falls short of acceptable standards. On the broader economic indicators, we
still have a very unequal distribution of income, and too few South Africans
have jobs.
So we have to place health care and the creation of national health insurance,
education, employment and the requirements of the growth path at the centre
of our policy framework for the period ahead. This is in part about expenditure
allocations, and it is also about how we manage public service delivery. It is
about taking forward the work of Minister Chabane’s performance monitoring
and evaluation department, and various interdepartmental teams who have
developed the specific outputs and targets that are now embedded in twelve
sets of delivery agreements covering national, provincial and local
government responsibilities.
These commitments and priorities have already influenced departmental
planning and budgeting. Examples of existing spending programmes that
relate to each outcome area are provided in the MTBPS, and will be
elaborated in more detail in February next year. We are making our policy
priorities and service delivery goals more measurable and more exact. We
are strengthening our capacity to root out corruption and waste. We are
making it possible for members of this House and ordinary citizens to see the
links between the activities and projects of government departments and
service delivery in our communities.
Our budget policy framework is also informed by the requirements of a new
growth path, in which six key sectors and activities have been identified for
unlocking employment potential:
Infrastructure, through the expansion of transport, energy, water,
communications and housing
Agriculture and the agro-processing sector
Mining and mineral beneficiation
The green economy and associated manufacturing and services
Manufacturing sectors identified in the industrial policy action plan, and
Tourism and selected services sectors.
Government’s new growth path provides the basis for coordinated policies
and programmes across the state, and reinvigorated dialogue and
cooperation among social partners.
This is what accountability means. Honourable Speaker, South Africa was
recently ranked first amongst 94 countries in the International Budget
Partnership’s Open Budget Survey, which assesses the degree to which
governments provide sufficient budget documentation to allow for public
participation, understanding and oversight in national budget decision-making.
The challenge before this House, and indeed all South Africans, is to
strengthen our capacity to use this information to improve oversight, to
improve accountability, to improve service delivery and thus to improve the
pace and quality of our social and economic progress.
From recession to rebalancing – uncertain global prospects
Before returning to these development challenges, Honourable Speaker, allow
me to comment briefly on developments in the global economy.
International trade and output have started to grow again after the severe
recession brought on by the financial sector crisis in developed countries.
Fiscal and monetary policies remain broadly expansionary, but growth
remains fragile, especially in major developed economies where employment
has yet to recover and debt levels continue to rise. After declining by
0.6 per cent in 2009, the world economy is expected to grow by 4.8 per cent
this year, which is considerably stronger than was expected at the beginning
of the year. China remains the primary engine of world growth as its economy
continues to be driven by rapid industrial expansion, urbanisation, and
modernisation. India and Germany are also contributing significantly to global
growth.
There are signs that this recovery has slowed since mid-year. In the US, the
Federal Reserve Bank has indicated that additional stimulus measures may
be needed to prevent deflation. China has taken steps to tighten policy to
prevent its economy from overheating. Last weekend’s meeting in South
Korea of G20 finance ministers and central bankers drew attention to the risk
of increased protectionism and disjointed actions by countries seeking to gain
trading advantages by weakening their currencies.
At the same time,countries with high fiscal deficits are obliged to reduce their deficits and stabilise debt levels through fiscal consolidation plans, phased in over time frames that are specific to the conditions of each country. The G20 proposes
stronger multilateral cooperation, focused on structural reforms to sustain
global demand, foster job creation and increase growth potential, while
completing financial repair and regulatory reforms without delay.
It is uncertain how these international cooperation efforts will work out, and so
many countries share the same policy challenge – finding the right balance
between measures taken jointly with other nations, and steps aimed at
protecting national interests.
It is clear that the rebalancing of global trade, consumption and investment
patterns, increases in spending in surplus countries and decreases in deficit
economies, in ways that are consistent with current account and fiscal
sustainability norms, will take many years, and indeed rapid rebalancing
would be highly disruptive.
To understand the complexity of this restructuring, Honourable Members, we
need to appreciate that the decreases or increases in consumption or
investment that may be required in specific countries, have implications for
production in other countries, which will in turn impact on investment
elsewhere, leading to further shifts in trade patterns. These inter-connected
changes in economic activity bring real opportunities for growth and a
redistribution of global income and welfare, but they are not correlated in
predictable ways with exchange rate movements. The current global
coordination efforts are therefore focused also on new sources of growth,
longer term trade development and a more stable financial system.
In early November, President Zuma will join other G20 heads of state in
seeking a common framework for re-shaping the global economy, and
addressing the challenge of aligning divergent national interests within a
multilateral cooperative vision and a plan of action. South Africa’s view is that
shared long-term goals and well-sequenced reforms are more likely to
succeed than unilateral or protectionist steps.
Africa’s improving prospects
In this context it is important to note that Sub-Saharan Africa is well positioned
to benefit from the improvement in global demand. Africa has largely escaped
the negative overhang of high household debt and weakened banking
systems that has been felt in many other regions. However, slow growth in
developed countries has reduced the flow of remittances to low-income
countries and rising debt in core markets could impact negatively on
development assistance. Nevertheless, low global interest rates, high
commodity prices and strong Chinese demand for Africa’s exports provide
positive economic boosts, particularly in countries that have undertaken
structural and budgetary reforms.
Growth in Sub-Saharan Africa is expected to accelerate from 2.6 per cent in
2009 to 5 per cent in 2010 and 5.5 per cent in 2011 as commodity prices
remain high, exports recover and domestic demand accelerates. This strong
expansion of regional economic activity is supported by institutional reforms
that provide a positive environment for the expansion of private investment.
These include a greater commitment to democracy, political stability and the
strengthening of institutions of governance; the opening up of African markets
to local and foreign competition through reduced trade and investment
barriers; and increased investment in national infrastructure to reduce costs
and facilitate trade.
The prioritisation of spending on health and education in national budgets will also support rising productivity. It is notable that in 2009, real spending on education and health increased in 20 out of 29 low-income regional economies. However, greater economic integration is necessary to harness the full potential of intra-regional trade, and expansion of regional infrastructure networks is required to facilitate faster movement of goods and service between countries at lower cost.
Domestic economic outlook
Honourable Speaker, we experienced a decline in gross domestic product of
1.8 per cent in 2009, and a loss of employment estimated at close to a million
jobs. This was a severe deterioration, despite a continued expansion in
government infrastructure spending and the countercyclical monetary and
fiscal policy response.
Higher commodity prices have contributed to a somewhat more buoyant
recovery this year than was anticipated at the time of the February budget.
Households have started to spend again as interest rates declined together
with lower inflation.
Economic activity and GDP growth
Trends in the productive sectors of the economy confirm that output has
responded promptly to the recovery in trade and consumer confidence.
In the first six months of 2010, manufacturing value added grew by
5.8 per cent compared with the previous year, driven by increased production
of motor vehicles, petrochemicals, and basic iron and steel. However, the
momentum of growth in manufacturing appears to have slowed in the second
half of the year.
Output in mining increased by 2.2 per cent during the first half of 2010, and
appears to have expanded further in the third quarter. Measures to address
regulatory uncertainty in the mining sector are underway, which will in due
course contribute to improved investment, taking into account the favourable
outlook for commodity prices.
Agricultural output declined by 3.2 per cent in 2009, but quarterly growth
accelerated in the first half of 2010 due to a bumper maize crop.
The construction sector continued to grow during the first six months of 2010,
though at a slower pace than in 2009. Public infrastructure projects in
progress will in due course lead to further private investment, and a more
efficient business environment. The Gautrain project provides a clear example
of this, with new business investment seeking to take advantage of the
opportunities that come with being located alongside a new public transport
system. Similar benefits will flow from road improvements and public transport
projects in all our cities and metropolitan areas. As Minister Ndebele and
Deputy Minister Cronin will confirm, investments that make it easier for people
to get to work are good for both the economy and household living conditions.
Retail sales have recovered well since their substantial decline last year,
though the pace has slowed since the end of the World Cup. We project a
moderate recovery in household consumption expenditure, from 2.6 per cent
growth this year to about 4 per cent a year over the period ahead, which will
lead to some growth and job creation in the retail sector.
At this stage, we expect overall growth of 3 per cent in 2010 rising to
3.5 per cent in 2011 and 4.4 per cent by 2013. Employment and private
investment are expected to rise gradually as growth accelerates. Growth in
real gross fixed capital formation is expected to rise from an estimated
0.8 per cent in 2010 to 5.6 per cent in 2011 and 5.9 per cent by 2013.
Balance of payments and inflation
The slowdown in our economy since 2008 has contributed to a narrowing of
the balance of payments current account deficit from over 7 per cent of GDP
to an estimated 4.2 per cent this year, which has been comfortably financed
by capital inflows.
Infrastructure spending combined with a recovery in domestic demand will
result in faster growth in imports than exports over the next three years.
Capital inflows and a recovery in corporate profits will also lead to higher
income payments to global bond and equity investors. The current account
deficit is forecast to widen to 5.8 per cent by 2013.
Headline CPI inflation has declined to 3.5 per cent for the year to August this
year, and is expected to remain below 6 per cent over the next three years,
supported by a moderation in food price trends and a relatively buoyant
exchange rate.
This year has seen two further declines in the Reserve Bank’s repurchase
rate to 6 per cent in August – its lowest level since the rate was introduced in
1998. Supply and demand for credit has begun to improve in recent months,
as consumer confidence has improved, and over the period ahead lending to
businesses for investment and inventory restocking is likely to accelerate.
The monetary policy stance will continue to target low and stable inflation to
support a more competitive exchange rate and reduced investment costs
through lower real interest rates. This will be accompanied by measures to
contain inflationary pressures and build competitiveness.
Reinforcing infrastructure investment growth
Public-sector investment remains the cornerstone of government's strategy to
support higher sustainable economic growth, because it reduces bottlenecks
in the economy and draws in private-sector investment. Higher levels of public
and private investment are necessary over the medium term to raise the
economy’s growth potential and create employment, and also contribute
significantly to the countercyclical macroeconomic stance.
Private business investment makes up about 60 per cent of gross fixed capital
formation, and contributed over half of overall investment growth in 2006 and
2007. Since then, investment has been dominated by public corporations,
while private investment and capital spending by government departments
have declined. Investment by state-owned enterprises has risen from 1.9 per
cent of GDP in 2005 to 5.6 per cent of GDP this year. Private sector
companies cut back sharply on expansion plans during the recession,
reducing their capital spending by 7 per cent in 2009 and an estimated
2.5 per cent in 2010. Over the period ahead, a more balanced expansion in
investment is projected, though state-owned enterprises will continue to play a
leading role.
To remove bottlenecks and reduce the cost of doing business, the core
investment plans of state-owned enterprises remain focused on capacity
expansion in electricity, rail, ports and roads with the bulk of spending carried
out by Eskom, Transnet and SANRAL.
In the energy sector, the integrated resource plan under the oversight of
Minister Peters will provide clarity on committed generation projects and the
future direction of power generation technology, such as nuclear and
renewable energy. The planned increase in generation capacity from the
Medupi and Kusile coal-fired stations will be supplemented by independent
power producers, initially through direct sales to Eskom, but ultimately through
an independent buyer of power.
Total infrastructure spending of R811 billion is projected over the MTEF period
ahead, of which 40 per cent will be in energy, 26 per cent in transport and
11 per cent in water supply. State-owned enterprises will add over
R320 billion to public sector debt over the next three years. Reliable
electricity supply, clean water and better transport services have to be paid for
over time, and so we will see further rises in tariffs and user charges over the
period ahead. These are necessary adjustments, though the fiscus will
continue to ensure that basic services are accessible and affordable to all.
Employment and development priorities
South Africa’s present economic growth trajectory cannot meet the country’s
employment needs. Faster growth is required over an extended period of time
to significantly increase labour absorption, reduce high unemployment and
achieve a more equitable distribution of income. To achieve 5 million jobs over
ten years, we need to seek growth of over 6 per cent a year, together with
measures aimed at broadening participation and inclusive development. This
is what government’s new growth path proposes, in order to bring about the
marked reduction in poverty and inequality that we all seek.
To achieve our developmental aims, South Africa needs to promote more
rapid job creation through a broad range of policy initiatives.
Labour-market institutions must be strengthened, including expanded
further education and training and specific interventions are needed to
increase both public and private sector demand for labour, especially for
young work seekers.
We want to see greater participation of our development finance
institutions in co-financing infrastructure projects, enterprise development,
housing and farming support.
Our industrial policy action plan has to be implemented, together with
increased support for small enterprises and local economic development.
Greater investment and competition are needed in the electricity, transport
and communications sectors.
We need to see improved economic cooperation between countries in
Southern Africa, including financial and trade institutions, transport,
communications, energy and water networks.
Finally, and underlying all of the above, we know that improvements in
public service delivery will depend on better financial management, good
governance and disciplined pursuit of agreed service delivery outputs and
targets.
Minister Davies and colleagues in the economic cluster will also be looking at
other measures to support exporters and manufacturers, through our trade
facilitation agencies, investment in technology and industrial development
zones, and institutions such as the Industrial Development Corporation.
Capital flows and the exchange rate
We recognise, furthermore, that the value of the rand is a critical challenge in
our growth strategy. As in many emerging economies, South African
producers are currently under pressure because the strength of the real
exchange rate reduces the competitiveness of manufactured exports and
lowers the cost of imports. We appreciate that sustained exchange rate
overvaluation creates difficulties for many businesses and threatens jobs in
some sectors. It can lead to unbalanced growth, widening of the current
account deficit and increasing vulnerability to economic shocks.
Capital flows to emerging markets have increased steadily over the past
decade, supported by favourable growth dynamics, improved credit ratings,
greater openness and the development of domestic financial markets. Net
private capital flows to emerging economies could reach US$825 billion in
2010, up from US$581 billion in 2009. Fixed income investments will reach a
record of US$70-75 billion in 2010.
Net capital inflows to South Africa have risen strongly over the past two years,
reaching 5.5 per cent of GDP in the first half of 2010 compared with
4.7 per cent in 2009 as a whole.
These flows are both structural and cyclical. They derive in part from a need
for developed economy pension funds to recoup losses by finding sound longterm
and high yielding investments. At the same time, low interest rates in
advanced economies are supporting “carry trades” in which investors borrow
money at low interest rates and invest in assets that pay higher interest rates.
Such short-term investments are inherently volatile. The policy challenge is
how to continue to attract the long-term inflows that we need, while minimising
the risks of volatile capital movements.
The rand has appreciated by 6.6 per cent against the US dollar since
December 2009, and by 5.5 per cent against the currencies of our major
trading partners. Taking into account that South Africa has higher inflation
than its major trading partners, the real effective rand exchange rate, which
reflects losses or gains in competitiveness, is now about 12 per cent above its
average level for the past decade. This appreciation has occurred despite
sustained accumulation of reserves by the Reserve Bank. Since the
beginning of 2010, foreign exchange purchases and swap interventions by the
National Treasury and the Reserve Bank have amounted to R43 billion. The
value of gross foreign exchange reserves stood at US$44.1 billion in
September 2010.
Emerging market currencies of other commodity producers, such as the
Chilean peso, have experienced similar appreciation pressures, while the
Brazilian real is even more overvalued.
We believe that international cooperation is needed to achieve a more stable
international financial environment, as proposed in the recent G20
communiqué. In keeping with this framework, several adjustments to our
financial and foreign exchange regulatory arrangements are proposed, while
recognising that in some instances measures may need to be strengthened or
reversed as circumstances change.
The National Treasury and the Reserve Bank will continue to purchase
foreign exchange reserves. These will be funded by revenue overruns in
2010/11 and the issuance of government bonds and debentures.
The Reserve Bank will sterilise inflows associated with foreign direct
investment inflows using foreign exchange swaps.
Exchange control and offshore investment limits on individuals will be
amended to encourage diversification of portfolios and remove
unnecessary limitations. Restrictions on the “blocked” assets of emigrants
will be lifted.
To make South Africa attractive as a corporate investment destination and
to encourage investment in the rest of the African continent, qualifying
international headquarter companies will be allowed to raise and deploy
capital offshore without exchange control approval with effect from 1
January 2011.
Exchange controls on domestic companies will be reformed to remove
barriers to their international expansion from a domestic base.
The prudential framework for foreign investment by private and public
pension funds, including the Government Employees Pension Fund, will be
reviewed to support portfolio realignment and offshore diversification,
especially within Africa and into other emerging markets. A second draft of
regulation 28 of the Pensions Fund Act will be published shortly and will
take effect next year.
The Reserve Bank will publish details of the proposed exchange control
reforms. These measures form part of ongoing efforts to reform South
Africa’s prudential framework covering offshore investment by domestic
individuals and companies. An increase in foreign assets will reduce South
Africa’s external vulnerability through income inflows and by supporting twoway
demand for the rand. Reserve accumulation serves as protection of the
economy against future shocks, though it cannot directly determine the
exchange value of the rand.
In several countries, tax measures have been introduced to counter currency
appreciation. The effectiveness of these measures is being carefully
monitored. Further steps to moderate the impact of capital flows on the South
African economy will be considered, drawing on both international experience
and assessment of the likely local impact.
Financial regulation
It is important to stress that the above reforms form part of a broader process
to improve and strengthen the financial regulatory system, informed by
international coordination efforts led by the G20 and the multilateral Financial
Stability Board.
Several reforms are required by new international regulatory standards. The
Basel Committee on Banking Supervision recently proposed a new framework
(known as “Basel III”) for banking supervision. Implementation of the new
framework will be led by the Registrar of Banks. Similarly, the Financial
Services Board is in the process of strengthening the prudential regime for
insurers.
Other reforms are drawn from the lessons of the financial crisis, but adapted
to our circumstances. In moving towards a “macro-prudential” approach to
supervision of financial institutions, the focus falls on assessing and
monitoring the strengths and vulnerabilities of the financial system as a whole,
in addition to the supervision of individual institutions.
In order to achieve this, several institutional changes are proposed.
As announced at the time of the budget, a Council of Financial Regulators
will be formed, comprising all our financial regulators, to promote effective
coordination and information-sharing and to give effect to macro-prudential
supervision.
The South African Reserve Bank now has a revised mandate that includes
particular responsibility for financial stability.
Proposals will be tabled to strengthen the regulation of market conduct,
including retail banking and insurance, and aimed at both client protection
and broadening access to financial services to all.
The scope of financial regulation will be extended to cover private pools of
capital, over-the-counter markets and credit rating agencies.
Detailed proposals on financial sector regulatory reforms are contained in a
discussion document entitled Strengthening the Financial Sector to Better
Serve South Africa, which National Treasury will release shortly.
Fiscal policy and the budget framework
Honourable Speaker, as the world economy recovers from the global crisis,
there is considerable debate about how quickly governments should be
closing their budget deficits. Some argue that the recovery will be held back if
governments cut expenditure too quickly, while others point to the potentially
devastating effects of fiscal default. Many European countries are making
sharp budget cuts to maintain sustainability, sometimes resulting in severe
social unrest.
In South Africa’s circumstances, a careful balance needs to be found between
continued real growth in expenditure, while reducing the future interest cost
burden on the fiscus, so that expenditure growth can be sustained. Where we
have to borrow, we will do so mainly to invest in infrastructure that contributes
to building productive capacity. Improved delivery of services also requires
that we use resources more efficiently, reduce waste and combat corruption.
Our approach is explicitly countercyclical, which means that fiscal
consolidation will be phased in without curtailment of core public services and
in support of sustainable growth. This is what the G20 refers to as “growth
friendly” consolidation. Careful management of the fiscus over the past 16
years has meant that we had room for a budget deficit of 6.7 per cent last year
and 5.3 per cent this year, which has brought forward the economic recovery.
The proposed budget framework anticipates a narrowing of the deficit to
around 3 per cent of GDP by 2013/14, and stabilisation of government debt at
about 40 per cent of GDP in 2015/16. Expenditure will continue to grow,
though moderately, and revenue is expected to recover relative to GDP.
It is nonetheless important to note key lessons from the painful adjustments
that the United States and many European countries are undergoing. Fiscal
over-commitments can lie buried for decades in pension and social insurance
accounts, housing finance arrangements, or unsustainable economic
subsidies. When there is continuous growth, the difficulties are deferred and
all too easily ignored. But when things go wrong, they can do so with
devastating speed. A sound understanding of the long-run trends in revenue,
expenditure and public-sector financing is therefore critical, and careful
planning of future reforms.
The Medium Term Budget Policy Statement notes that real non-interest
government expenditure per person has doubled over the past eight years.
This was made possible by buoyant growth and revenue, and the declining
share of debt service costs in GDP. Government spending on infrastructure
and social assistance continued to expand strongly during the economic
downturn in 2008 and 2009. Expenditure growth will be slower over the
period ahead, averaging real growth of about 3 per cent a year.
However, the overall public-sector borrowing requirement is considerably
larger than the budget deficit. Mainly because Eskom and Transnet need to
borrow to finance large infrastructure expansion plans, overall public sector
borrowing will be about 10 per cent of GDP this year, declining to 6 per cent of
GDP over the next three years.
Honourable Speaker, our fiscal policy framework is fundamentally about
ensuring that our wellbeing is not unfairly purchased at the expense of future
generations. Where we introduce programmes that raise the level of
government spending, we need to be clear about how the required revenue
will be raised, and at what cost to the productive sectors of our economy. To
assist in our understanding of the underlying principles, I have asked the
National Treasury to prepare a paper on fiscal guidelines for wider discussion
early next year.
Medium-term expenditure framework
Adjustments to the 2009/10 appropriations
Honourable Speaker, I am very mindful that the new legislative arrangements
for money bills has brought additional responsibilities to Parliament’s portfolio
committees, and the Appropriations Committees in particular. We welcome
the first Budget Review and Recommendation Reports, which have been
tabled over the past week.
Several concerns raised by portfolio committees will need to be explored
further – underspending on climate change initiatives, noted by the Committee
on Water and the Environment, for example, and the need to improve
oversight of the expanded public works programme, recommended by the
Public Works Committee. I have taken special note of this Committee’s
observation that the department cannot be expected to budget for state
funerals, as these cannot be accurately predicted. I am sure that Minister
Doidge and I can find a way of dealing with this.
I am pleased to be able to table a comprehensive Adjusted Estimates of
National Expenditure to accompany the Adjustments Appropriation Bill and –
for the first time – a Division of Revenue Amendment Bill, for the
consideration of the House. I cannot deal with all the adjustments in detail,
but let me highlight the main points.
In total, the adjusted expenditure level is R2.5 billion lower than the February
budget estimate, which included an unallocated contingency reserve of
R6 billion. Contributing to this decrease is a lower provision for state debt
costs due to the current strength of the rand and the decrease in interest
rates, and savings declared by departments amounting to almost R2 billion.
The main additional allocations in the Adjustments Appropriation are as
follows:
R1.8 billion in roll-overs arising from commitments related to unspent
balances in 2009/10;
R6.2 billion to cover higher remuneration costs;
R396 million for various self-funding department-specific activities;
R2.2 billion in unforeseeable and unavoidable expenditure adjustments
recommended by the Treasury Committee this year, including
Medium Term Budget Policy Speech – 2010
21
o R769 million to cover property rates due to municipalities on
behalf of provinces, funded through the devolution of property
rate funds grant,
o R320 million for occupation-specific dispensation salary
adjustments in the Department of Justice and Constitutional
Development, the National Prosecuting Authority and Legal Aid
South Africa,
o R350 million for occupation-specific dispensation salary
adjustments in the health sector, conditional on an agreement
being reached in the bargaining council,
o R363 million is for expenditure associated with natural disasters
and the outbreak of disease,
o R200 million for the South African National Defence Force for
support activities during the 2010 FIFA World Cup, and
o R100 million to scale up HIV and Aids prevention services.
2011 Budget: expenditure priorities
Chapter 4 of the Medium Term Budget Policy Statement summarises the
spending framework for the period ahead, informed by government’s 12
agreed outcomes, with priority given to education, health, infrastructure
development and job creation.
Several areas of reform are proposed to contribute to identifying savings and
opportunities for more effective organisation of public services:
There are too many departments where administrative capacity is
excessive or inefficient, relative to frontline services. This will come under
rigorous scrutiny in the budget process.
Effective training programmes need to be strengthened across the public
service.
A new approach to budgeting and management of capital projects will be
introduced, together with technical assistance to departments and
municipalities in which there is under-spending on infrastructure
maintenance.
Non-departmental agencies and entities are under review, with special
focus on governance, remuneration and mandates.
Strengthened capacity is in place to deal with wrongdoing in government
procurement, and improved rules will enhance transparency in the supply
chain process.
Information technology systems and management of consulting services
will come under specialised scrutiny within the supply chain regulatory
framework.
Preparation of the 2011 Budget is now well underway. Cabinet has agreed to
a preliminary framework for the MTEF period ahead that makes available
R67 billion more than the baseline tabled in February this year, of which
R40 billion goes to provinces, R24 billion to national departments and
R3 billion to municipalities.
A further R22 billion remains unallocated to departments at this stage, and is
set aside for key education, health, infrastructure and job creation
commitments. Proposals for expanding youth employment opportunities will
enjoy special priority.
And in reflecting on opportunities for our youth, let me congratulate the
students of Belgravia High School who are with us in the gallery, and who
were the winners in three consecutive regional quiz competitions. We should
also take this opportunity to wish all matric students well in the examinations
which will shortly begin.
The Medium Term Budget Policy Statement sets out broad policy
considerations underlying the expenditure proposals, including government’s
economic and industrial policy framework, the need to strengthen
infrastructure maintenance, land and agrarian reform goals, pressing needs in
education and health service delivery and the challenges of improving police
services and the administration of justice.
Several critical long-term public expenditure pressures need to be addressed
systematically over the period ahead.
First, we have to complete the reform of social security arrangements that
has been under discussion for since the 2002 Taylor Committee Report. A
key aim is improved preservation of savings for retirement among working
South Africans. Consolidation of the fragmented existing administrative
arrangements for social security is also a priority.
Second, we have to implement a National Health Insurance system. The
first phase will involve improved primary health services in rural areas and
under-served communities, and an expanded programme of hospital
construction and revitalisation. An inter-Ministerial committee has met to
consider the fiscal and financial implications of further health financing
reforms, and will develop practical transition proposals.
Third, we have to improve the maintenance of our transport infrastructure
and networks, and invest in modern public transport systems.
Fourth, we have to provide for the fiscal contribution to new growth
initiatives, industrial development and job creation.
These are major social and economic reform projects, which will require
substantial fiscal and financial reforms, phased in over many years. If we are
to make rapid progress in these transformation programmes, it is imperative
that equally rapid progress is made in reducing wastage and inefficiency
elsewhere, and in improving financial management and governance.
Revenue estimates and tax measures
Honourable Speaker, our spending programmes have to be paid for.
It is therefore reassuring to be able to note that the improved economic
performance has contributed to a projected increase of R31 billion in tax
revenue for the current year, by comparison with the February budget
estimate.
Total tax revenue is expected to amount to R679 billion in 2010/11, or
25.3 per cent of GDP. A strong increase in VAT proceeds has been recorded,
partly attributable to buoyant consumer demand, but also because of lower
capital investment and the associated reduction in VAT refunds. Customs duty
collections have improved, mainly as a result of higher vehicle and component
imports.
For the period ahead, tax revenue is expected to average about 26 per cent of
GDP – still somewhat below the levels recorded before the recession.
Consolidated government revenue, including social security funds and public
entity revenue, will recover to about 29 per cent of GDP.
I need to remind Members of the House that today marks the start of the final
month of Tax Season 2010 for non-provisional taxpayers whose returns are
due by 26 November. I urge all taxpayers who have not yet filed to do so
within the next 30 days and to join the 2.6 million taxpayers who have to date
submitted their returns. This is an 18 per cent increase in compliance and
early filing compared with last year.
This growth in compliance comes despite the difficult economic conditions in
which all South Africans find themselves and reflects the strong foundation of
tax morality which has been laid and continues to take root and grow within
our country. Let me therefore applaud the many millions of our country’s
taxpayers who respect their side of the social contract which has allowed us to
continue our vital social and infrastructural investment without over-burdening
ourselves and future generations with unmanageable levels of debt.
Our capacity to pursue those who seek to evade tax obligations continues to
be reinforced. Tax authorities the world over are co-operating more than ever
before to throw open the veil of tax manipulation. South Africa has double
taxation agreements with 70 jurisdictions which provide for extensive
exchange of information between tax authorities. In addition, tax information
exchange agreements have been agreed at officials’ level with six financial
centres and a further sixteen agreements are being explored. A joint audit
made possible through these agreements has already yielded R3 billion in
additional revenue. Combined with the growing availability and accuracy of
third party data from financial institutions, employers and other sources, there
are very few places for the non-compliant to hide.
We are, however, offering another opportunity for taxpayers to come clean
and join the ranks of full participation in our democracy. The Voluntary
Disclosure Programme, which allows for the waiving of penalties of up to
200 per cent for those who make a full, honest and voluntarily disclosure of
prior evasion, will begin next month.
Enhanced supply chain management
Clean administration is also the central principle in our approach to supply
chain management and ensuring value for money in government procurement
of goods and services.
The National Treasury has been working closely with other departments and
agencies to combat fraud and corruption, under the leadership of the Inter-
Ministerial Committee on Anti-Corruption chaired by Minister Chabane. This
has already yielded several positive outcomes, but more has to be done.
Procurement and tender fraud to the value of nearly R25 billion is currently
under investigation.
Our approach comprises the following five initiatives, which will include
legislative and regulatory reforms.
We will be increasing the monitoring capability of government, aimed at
early detection of fraud. Departments and government agencies will be
required to provide specific information to the Treasuries on their
procurement practices. Where necessary, the cash disbursements process
of government agencies will be temporarily assumed by Treasuries thereby
ensuring that only valid contracts are honoured and government is charged
a fair price.
In line with international best practice, transparent public disclosure will be
required at each stage of the supply process, in all spheres of government,
including reasons for award decisions.
Government will look holistically at identifying procurement requirements
that could be better managed centrally, such as the use of transversal
contracts for the acquisition of high value and complex goods and services.
Stiff penalties are proposed, of up to double the contract value, for service
providers who obtain government contracts fraudulently. Public officials
who assist in tender fraud will also be liable for resultant losses incurred by
government. Measures are required to ensure that officials who have
breached the buying rules should not remain under suspension, drawing
full benefits, while investigations drag on for years.
Tax compliance measures associated with government procurement will
be strengthened. The introduction of a withholding tax on payments made
to businesses in respect of government tenders is under consideration.
Itis also proposed that the procedures for issue of tax clearance certificates
should be revised, to provide for direct checking by SARS of the tax
compliance of winning bidders rather than pre-clearance of all bidders.
Members of the House will have heard through the media about the arrest of
prominent business people, senior government officials including former
heads of departments. Members will also be pleased to know that the
government was awarded preservation orders worth about R200 million which
included a lear jet, a golf course, a holiday home and a hotel. This is the result
of cooperation and coordination of efforts between several investigative
agencies.
As a result of these efforts, Honourable Speaker, we are beginning to see a
change of attitude on the part of service providers. In a recent case, a firm
which was paid R10 million by a department for work that they had not done,
voluntarily returned the money to the fiscus. Honourable Speaker, we will turn
the tide on corruption and fraud: We will ensure that tax funds and
government monies are spent wisely and managed with integrity. We owe
this to our honest citizens and responsible taxpayers.
The time is now
Allow me to conclude, Honourable Speaker, by saying again that the time for
action is now! Now is the time –
To improve the quality of basic education
To improve health and life expectancy
To ensure that all South Africans are protected and feel safe
To expand employment through inclusive economic growth
To invest in a skilled and capable workforce
To accelerate construction of economic infrastructure
To promote sustainable rural communities and food security for all
To invest in human settlements and improved quality of household life
To build a responsive, accountable, effective and efficient local
government system
To protect our environmental assets and natural resources
To build a better and safer Africa and a better world, and
To promote a development-oriented public service and inclusive
citizenship.
In elaborating the policies and programmes needed to give effect to these
outcomes, we have a special opportunity to forge a broad-based social
compact – a shared social and economic vision – aimed at effective
partnerships between government, business, labour, communities and civil
society, in pursuit of common goals. Cabinet has agreed on a growth path
that sets a target of creating five million jobs in the next ten years, through
efforts that require commitment and cooperation between all spheres of
government, business, organised labour and community partners.
To borrow President Barack Obama’s words, let us ‘put good ideas ahead of
the old ideological battles; a sense of common purpose above the same
narrow partisanship; and insist that the first question each of us asks isn’t,
“What’s good for me?” but “What’s good for the country my children will
inherit?”’
Honourable Speaker, allow me to express my appreciation to President Zuma
for his sound leadership, and to Deputy President Motlanthe for valued
guidance. I am grateful for the support of the Ministers Committee on the
Budget, members of the Treasury Committee, Cabinet colleagues, Premiers
and provincial finance MECs, during a year of considerable financial strain,
and a budget process that still has some way to go.
The Auditor-General, Terence Nombembe, and his staff, bring a professional
spotlight to bear on all of our work, and I know that the House will join me in
expressing our admiration and thanks.
I would also like to commend Mr Thaba Mufamadi, Mr Mshiyeni Sogoni, and
Mr Charel de Beer and Mr Teboho Chaane, who chair the standing
committees on finance and appropriations, and the select committee on
finance, who have more onerous duties now that new Parliamentary budget
procedures are being introduced.
The Governor of the South African Reserve Bank, Ms Gill Marcus, has
brought astute leadership in difficult times.
Mr Oupa Magashula and the staff of South African Revenue Service continue
to bring innovation and energy to the collection of taxes on our behalf.
I would like to thank Deputy Minister Nhlanhla Nene for his tireless support
and insight. Director-General Lesetja Kganyago and the National Treasury
team have once again delivered a set of budget statements on time, though
not perhaps within an affordable and efficient word count.
Honourable Speaker, I hereby submit the 2010 Medium Term Budget Policy
Statement, and I table the Adjustments Appropriation Bill, the Division of
Revenue Amendment Bill and the Adjusted Estimates of National
Expenditure, for consideration by Parliament.
End
2010
Speech
Pravin Gordhan
Minister of Finance
South Africa
27 October 2010
http://www.timeslive.co.za/multimedia/archive/01214/GordhanSpeech_1214848a.pdf
Honourable Speaker
Former President Mandela once said: “After climbing a great hill, one only
finds that there are many more hills to climb!”
As a youthful nation, we have had our fair share of hills to climb. Our
successful hosting of the World Cup earlier this year is surely proof that no hill
is too steep. As we move out of the depth of the greatest recession since the
1930s, we find yet another hill facing us – the highest, perhaps, we have yet
had to climb. This is the creation of jobs and the reduction of poverty.
Honourable Members, today is the birthday anniversary of Oliver Tambo, who
dedicated his life to these goals.
In taking this struggle forward, Cabinet has this week released details of a
new growth path that sets out a vision and outlines key areas where jobs can
be created. This is an agenda for collective action by the state, business,
organised labour and civil society – in fact all South Africans have an interest
in energising and activating the growth path.
Members of the House will know that the details of the new growth path have
been under intensive discussion since this time last year. A more inclusive
approach to development and creating jobs has been at the forefront of the
work of Parliament and many of its committees this year, and it was the
central theme of NEDLAC’s Annual Summit last month. Our central goal is
unequivocal: we have to accelerate growth in the South African economy, and
we have to do so in ways that rapidly reduce poverty, unemployment and
inequality.
In February this year, we spoke of our shared humanity, our generosity, our
resilience and our capacity to deal honestly with each other. We said these
attributes were our most precious national asset, an asset that gives us
formidable capacity to fight adversity, to find common ground and to move
forward.
Now is the time to demonstrate it. The challenges before us demand it. We
have done well, but it is not good enough. We know our challenges. It is time
to be impatient with ourselves. The time for talking about our challenges is
over. The challenges that we know so well – poverty, unemployment,
deteriorating infrastructure, delays in services – demand our urgent
responses. Our communities have been very patient. They want this economy
to create jobs; they want faster and better delivery of public services. South
Africans, all South Africans, those who are poor and those who are privileged,
want economic growth. But not just any growth.
We want economic growth that creates opportunities for meaningful participation, not only for ourselves, but for our neighbours, not only for ourselves, but for our sons and daughters.
It is my privilege to introduce the Medium Term Budget Policy Statement on
behalf of the President and the Cabinet, Honourable Speaker, and to
encourage the House and its committees to engage fully with its proposals as
part of the more wide-ranging discussion of the central economic, social,
financial and developmental challenges of our time.
I need to stress, Honourable Members, that the design of a growth strategy is
the first step. Our next challenge is its implementation – aligning our policy
and programmes, managing infrastructure project contracts, supporting
accelerated business investment; actually delivering on the outputs and
activities that are now documented in outcome statements, delivery
agreements and strategic plans for every government department, every
public entity, every state-owned enterprise, every municipality.
All of us, every minister is committed to this.
And we know that we can deliver on a plan, on time and on budget. We know
that we can mobilise all South Africans behind a major project. In the midst of
a global recession, we brought a special brand of South African magic to the
television screens of the whole world. Billions of people around the world
watched South Africa perform at its best, and we hosted 350 000 enthusiastic
visitors. And so we know what it feels like to work together as a nation, to
share a collective pride in saying “Ke Nako! It’s Our Time! We Can Do It!”
Of course, we also know that economic development is not an event, it is a
process which requires sustained effort and continuous engagement,
unfolding over many years.
2010 Medium Term Budget Policy Statement – key themes
Honourable Speaker, the 2010 Medium Term Budget Policy Statement begins
with a reminder that development is not about numbers, it is about people and
improving the quality of their lives.
Our third progress report on the Millennium Development Goals has recently
been published, as a collaborative effort between Statistics South Africa and a
range of civil society organisations. It is a timely reminder that while we can
report steady progress on several fronts, we are lagging well behind the
targets in others. We are likely to achieve the 2015 MDG targets for reducing
extreme poverty, for access to water and sanitation and in providing school
opportunities and achieving gender equity in education. But on critical health
indicators, such as maternal and child mortality, and HIV and TB prevalence,
we are not on track to achieve the targets. The quality of many of our schools
falls short of acceptable standards. On the broader economic indicators, we
still have a very unequal distribution of income, and too few South Africans
have jobs.
So we have to place health care and the creation of national health insurance,
education, employment and the requirements of the growth path at the centre
of our policy framework for the period ahead. This is in part about expenditure
allocations, and it is also about how we manage public service delivery. It is
about taking forward the work of Minister Chabane’s performance monitoring
and evaluation department, and various interdepartmental teams who have
developed the specific outputs and targets that are now embedded in twelve
sets of delivery agreements covering national, provincial and local
government responsibilities.
These commitments and priorities have already influenced departmental
planning and budgeting. Examples of existing spending programmes that
relate to each outcome area are provided in the MTBPS, and will be
elaborated in more detail in February next year. We are making our policy
priorities and service delivery goals more measurable and more exact. We
are strengthening our capacity to root out corruption and waste. We are
making it possible for members of this House and ordinary citizens to see the
links between the activities and projects of government departments and
service delivery in our communities.
Our budget policy framework is also informed by the requirements of a new
growth path, in which six key sectors and activities have been identified for
unlocking employment potential:
Infrastructure, through the expansion of transport, energy, water,
communications and housing
Agriculture and the agro-processing sector
Mining and mineral beneficiation
The green economy and associated manufacturing and services
Manufacturing sectors identified in the industrial policy action plan, and
Tourism and selected services sectors.
Government’s new growth path provides the basis for coordinated policies
and programmes across the state, and reinvigorated dialogue and
cooperation among social partners.
This is what accountability means. Honourable Speaker, South Africa was
recently ranked first amongst 94 countries in the International Budget
Partnership’s Open Budget Survey, which assesses the degree to which
governments provide sufficient budget documentation to allow for public
participation, understanding and oversight in national budget decision-making.
The challenge before this House, and indeed all South Africans, is to
strengthen our capacity to use this information to improve oversight, to
improve accountability, to improve service delivery and thus to improve the
pace and quality of our social and economic progress.
From recession to rebalancing – uncertain global prospects
Before returning to these development challenges, Honourable Speaker, allow
me to comment briefly on developments in the global economy.
International trade and output have started to grow again after the severe
recession brought on by the financial sector crisis in developed countries.
Fiscal and monetary policies remain broadly expansionary, but growth
remains fragile, especially in major developed economies where employment
has yet to recover and debt levels continue to rise. After declining by
0.6 per cent in 2009, the world economy is expected to grow by 4.8 per cent
this year, which is considerably stronger than was expected at the beginning
of the year. China remains the primary engine of world growth as its economy
continues to be driven by rapid industrial expansion, urbanisation, and
modernisation. India and Germany are also contributing significantly to global
growth.
There are signs that this recovery has slowed since mid-year. In the US, the
Federal Reserve Bank has indicated that additional stimulus measures may
be needed to prevent deflation. China has taken steps to tighten policy to
prevent its economy from overheating. Last weekend’s meeting in South
Korea of G20 finance ministers and central bankers drew attention to the risk
of increased protectionism and disjointed actions by countries seeking to gain
trading advantages by weakening their currencies.
At the same time,countries with high fiscal deficits are obliged to reduce their deficits and stabilise debt levels through fiscal consolidation plans, phased in over time frames that are specific to the conditions of each country. The G20 proposes
stronger multilateral cooperation, focused on structural reforms to sustain
global demand, foster job creation and increase growth potential, while
completing financial repair and regulatory reforms without delay.
It is uncertain how these international cooperation efforts will work out, and so
many countries share the same policy challenge – finding the right balance
between measures taken jointly with other nations, and steps aimed at
protecting national interests.
It is clear that the rebalancing of global trade, consumption and investment
patterns, increases in spending in surplus countries and decreases in deficit
economies, in ways that are consistent with current account and fiscal
sustainability norms, will take many years, and indeed rapid rebalancing
would be highly disruptive.
To understand the complexity of this restructuring, Honourable Members, we
need to appreciate that the decreases or increases in consumption or
investment that may be required in specific countries, have implications for
production in other countries, which will in turn impact on investment
elsewhere, leading to further shifts in trade patterns. These inter-connected
changes in economic activity bring real opportunities for growth and a
redistribution of global income and welfare, but they are not correlated in
predictable ways with exchange rate movements. The current global
coordination efforts are therefore focused also on new sources of growth,
longer term trade development and a more stable financial system.
In early November, President Zuma will join other G20 heads of state in
seeking a common framework for re-shaping the global economy, and
addressing the challenge of aligning divergent national interests within a
multilateral cooperative vision and a plan of action. South Africa’s view is that
shared long-term goals and well-sequenced reforms are more likely to
succeed than unilateral or protectionist steps.
Africa’s improving prospects
In this context it is important to note that Sub-Saharan Africa is well positioned
to benefit from the improvement in global demand. Africa has largely escaped
the negative overhang of high household debt and weakened banking
systems that has been felt in many other regions. However, slow growth in
developed countries has reduced the flow of remittances to low-income
countries and rising debt in core markets could impact negatively on
development assistance. Nevertheless, low global interest rates, high
commodity prices and strong Chinese demand for Africa’s exports provide
positive economic boosts, particularly in countries that have undertaken
structural and budgetary reforms.
Growth in Sub-Saharan Africa is expected to accelerate from 2.6 per cent in
2009 to 5 per cent in 2010 and 5.5 per cent in 2011 as commodity prices
remain high, exports recover and domestic demand accelerates. This strong
expansion of regional economic activity is supported by institutional reforms
that provide a positive environment for the expansion of private investment.
These include a greater commitment to democracy, political stability and the
strengthening of institutions of governance; the opening up of African markets
to local and foreign competition through reduced trade and investment
barriers; and increased investment in national infrastructure to reduce costs
and facilitate trade.
The prioritisation of spending on health and education in national budgets will also support rising productivity. It is notable that in 2009, real spending on education and health increased in 20 out of 29 low-income regional economies. However, greater economic integration is necessary to harness the full potential of intra-regional trade, and expansion of regional infrastructure networks is required to facilitate faster movement of goods and service between countries at lower cost.
Domestic economic outlook
Honourable Speaker, we experienced a decline in gross domestic product of
1.8 per cent in 2009, and a loss of employment estimated at close to a million
jobs. This was a severe deterioration, despite a continued expansion in
government infrastructure spending and the countercyclical monetary and
fiscal policy response.
Higher commodity prices have contributed to a somewhat more buoyant
recovery this year than was anticipated at the time of the February budget.
Households have started to spend again as interest rates declined together
with lower inflation.
Economic activity and GDP growth
Trends in the productive sectors of the economy confirm that output has
responded promptly to the recovery in trade and consumer confidence.
In the first six months of 2010, manufacturing value added grew by
5.8 per cent compared with the previous year, driven by increased production
of motor vehicles, petrochemicals, and basic iron and steel. However, the
momentum of growth in manufacturing appears to have slowed in the second
half of the year.
Output in mining increased by 2.2 per cent during the first half of 2010, and
appears to have expanded further in the third quarter. Measures to address
regulatory uncertainty in the mining sector are underway, which will in due
course contribute to improved investment, taking into account the favourable
outlook for commodity prices.
Agricultural output declined by 3.2 per cent in 2009, but quarterly growth
accelerated in the first half of 2010 due to a bumper maize crop.
The construction sector continued to grow during the first six months of 2010,
though at a slower pace than in 2009. Public infrastructure projects in
progress will in due course lead to further private investment, and a more
efficient business environment. The Gautrain project provides a clear example
of this, with new business investment seeking to take advantage of the
opportunities that come with being located alongside a new public transport
system. Similar benefits will flow from road improvements and public transport
projects in all our cities and metropolitan areas. As Minister Ndebele and
Deputy Minister Cronin will confirm, investments that make it easier for people
to get to work are good for both the economy and household living conditions.
Retail sales have recovered well since their substantial decline last year,
though the pace has slowed since the end of the World Cup. We project a
moderate recovery in household consumption expenditure, from 2.6 per cent
growth this year to about 4 per cent a year over the period ahead, which will
lead to some growth and job creation in the retail sector.
At this stage, we expect overall growth of 3 per cent in 2010 rising to
3.5 per cent in 2011 and 4.4 per cent by 2013. Employment and private
investment are expected to rise gradually as growth accelerates. Growth in
real gross fixed capital formation is expected to rise from an estimated
0.8 per cent in 2010 to 5.6 per cent in 2011 and 5.9 per cent by 2013.
Balance of payments and inflation
The slowdown in our economy since 2008 has contributed to a narrowing of
the balance of payments current account deficit from over 7 per cent of GDP
to an estimated 4.2 per cent this year, which has been comfortably financed
by capital inflows.
Infrastructure spending combined with a recovery in domestic demand will
result in faster growth in imports than exports over the next three years.
Capital inflows and a recovery in corporate profits will also lead to higher
income payments to global bond and equity investors. The current account
deficit is forecast to widen to 5.8 per cent by 2013.
Headline CPI inflation has declined to 3.5 per cent for the year to August this
year, and is expected to remain below 6 per cent over the next three years,
supported by a moderation in food price trends and a relatively buoyant
exchange rate.
This year has seen two further declines in the Reserve Bank’s repurchase
rate to 6 per cent in August – its lowest level since the rate was introduced in
1998. Supply and demand for credit has begun to improve in recent months,
as consumer confidence has improved, and over the period ahead lending to
businesses for investment and inventory restocking is likely to accelerate.
The monetary policy stance will continue to target low and stable inflation to
support a more competitive exchange rate and reduced investment costs
through lower real interest rates. This will be accompanied by measures to
contain inflationary pressures and build competitiveness.
Reinforcing infrastructure investment growth
Public-sector investment remains the cornerstone of government's strategy to
support higher sustainable economic growth, because it reduces bottlenecks
in the economy and draws in private-sector investment. Higher levels of public
and private investment are necessary over the medium term to raise the
economy’s growth potential and create employment, and also contribute
significantly to the countercyclical macroeconomic stance.
Private business investment makes up about 60 per cent of gross fixed capital
formation, and contributed over half of overall investment growth in 2006 and
2007. Since then, investment has been dominated by public corporations,
while private investment and capital spending by government departments
have declined. Investment by state-owned enterprises has risen from 1.9 per
cent of GDP in 2005 to 5.6 per cent of GDP this year. Private sector
companies cut back sharply on expansion plans during the recession,
reducing their capital spending by 7 per cent in 2009 and an estimated
2.5 per cent in 2010. Over the period ahead, a more balanced expansion in
investment is projected, though state-owned enterprises will continue to play a
leading role.
To remove bottlenecks and reduce the cost of doing business, the core
investment plans of state-owned enterprises remain focused on capacity
expansion in electricity, rail, ports and roads with the bulk of spending carried
out by Eskom, Transnet and SANRAL.
In the energy sector, the integrated resource plan under the oversight of
Minister Peters will provide clarity on committed generation projects and the
future direction of power generation technology, such as nuclear and
renewable energy. The planned increase in generation capacity from the
Medupi and Kusile coal-fired stations will be supplemented by independent
power producers, initially through direct sales to Eskom, but ultimately through
an independent buyer of power.
Total infrastructure spending of R811 billion is projected over the MTEF period
ahead, of which 40 per cent will be in energy, 26 per cent in transport and
11 per cent in water supply. State-owned enterprises will add over
R320 billion to public sector debt over the next three years. Reliable
electricity supply, clean water and better transport services have to be paid for
over time, and so we will see further rises in tariffs and user charges over the
period ahead. These are necessary adjustments, though the fiscus will
continue to ensure that basic services are accessible and affordable to all.
Employment and development priorities
South Africa’s present economic growth trajectory cannot meet the country’s
employment needs. Faster growth is required over an extended period of time
to significantly increase labour absorption, reduce high unemployment and
achieve a more equitable distribution of income. To achieve 5 million jobs over
ten years, we need to seek growth of over 6 per cent a year, together with
measures aimed at broadening participation and inclusive development. This
is what government’s new growth path proposes, in order to bring about the
marked reduction in poverty and inequality that we all seek.
To achieve our developmental aims, South Africa needs to promote more
rapid job creation through a broad range of policy initiatives.
Labour-market institutions must be strengthened, including expanded
further education and training and specific interventions are needed to
increase both public and private sector demand for labour, especially for
young work seekers.
We want to see greater participation of our development finance
institutions in co-financing infrastructure projects, enterprise development,
housing and farming support.
Our industrial policy action plan has to be implemented, together with
increased support for small enterprises and local economic development.
Greater investment and competition are needed in the electricity, transport
and communications sectors.
We need to see improved economic cooperation between countries in
Southern Africa, including financial and trade institutions, transport,
communications, energy and water networks.
Finally, and underlying all of the above, we know that improvements in
public service delivery will depend on better financial management, good
governance and disciplined pursuit of agreed service delivery outputs and
targets.
Minister Davies and colleagues in the economic cluster will also be looking at
other measures to support exporters and manufacturers, through our trade
facilitation agencies, investment in technology and industrial development
zones, and institutions such as the Industrial Development Corporation.
Capital flows and the exchange rate
We recognise, furthermore, that the value of the rand is a critical challenge in
our growth strategy. As in many emerging economies, South African
producers are currently under pressure because the strength of the real
exchange rate reduces the competitiveness of manufactured exports and
lowers the cost of imports. We appreciate that sustained exchange rate
overvaluation creates difficulties for many businesses and threatens jobs in
some sectors. It can lead to unbalanced growth, widening of the current
account deficit and increasing vulnerability to economic shocks.
Capital flows to emerging markets have increased steadily over the past
decade, supported by favourable growth dynamics, improved credit ratings,
greater openness and the development of domestic financial markets. Net
private capital flows to emerging economies could reach US$825 billion in
2010, up from US$581 billion in 2009. Fixed income investments will reach a
record of US$70-75 billion in 2010.
Net capital inflows to South Africa have risen strongly over the past two years,
reaching 5.5 per cent of GDP in the first half of 2010 compared with
4.7 per cent in 2009 as a whole.
These flows are both structural and cyclical. They derive in part from a need
for developed economy pension funds to recoup losses by finding sound longterm
and high yielding investments. At the same time, low interest rates in
advanced economies are supporting “carry trades” in which investors borrow
money at low interest rates and invest in assets that pay higher interest rates.
Such short-term investments are inherently volatile. The policy challenge is
how to continue to attract the long-term inflows that we need, while minimising
the risks of volatile capital movements.
The rand has appreciated by 6.6 per cent against the US dollar since
December 2009, and by 5.5 per cent against the currencies of our major
trading partners. Taking into account that South Africa has higher inflation
than its major trading partners, the real effective rand exchange rate, which
reflects losses or gains in competitiveness, is now about 12 per cent above its
average level for the past decade. This appreciation has occurred despite
sustained accumulation of reserves by the Reserve Bank. Since the
beginning of 2010, foreign exchange purchases and swap interventions by the
National Treasury and the Reserve Bank have amounted to R43 billion. The
value of gross foreign exchange reserves stood at US$44.1 billion in
September 2010.
Emerging market currencies of other commodity producers, such as the
Chilean peso, have experienced similar appreciation pressures, while the
Brazilian real is even more overvalued.
We believe that international cooperation is needed to achieve a more stable
international financial environment, as proposed in the recent G20
communiqué. In keeping with this framework, several adjustments to our
financial and foreign exchange regulatory arrangements are proposed, while
recognising that in some instances measures may need to be strengthened or
reversed as circumstances change.
The National Treasury and the Reserve Bank will continue to purchase
foreign exchange reserves. These will be funded by revenue overruns in
2010/11 and the issuance of government bonds and debentures.
The Reserve Bank will sterilise inflows associated with foreign direct
investment inflows using foreign exchange swaps.
Exchange control and offshore investment limits on individuals will be
amended to encourage diversification of portfolios and remove
unnecessary limitations. Restrictions on the “blocked” assets of emigrants
will be lifted.
To make South Africa attractive as a corporate investment destination and
to encourage investment in the rest of the African continent, qualifying
international headquarter companies will be allowed to raise and deploy
capital offshore without exchange control approval with effect from 1
January 2011.
Exchange controls on domestic companies will be reformed to remove
barriers to their international expansion from a domestic base.
The prudential framework for foreign investment by private and public
pension funds, including the Government Employees Pension Fund, will be
reviewed to support portfolio realignment and offshore diversification,
especially within Africa and into other emerging markets. A second draft of
regulation 28 of the Pensions Fund Act will be published shortly and will
take effect next year.
The Reserve Bank will publish details of the proposed exchange control
reforms. These measures form part of ongoing efforts to reform South
Africa’s prudential framework covering offshore investment by domestic
individuals and companies. An increase in foreign assets will reduce South
Africa’s external vulnerability through income inflows and by supporting twoway
demand for the rand. Reserve accumulation serves as protection of the
economy against future shocks, though it cannot directly determine the
exchange value of the rand.
In several countries, tax measures have been introduced to counter currency
appreciation. The effectiveness of these measures is being carefully
monitored. Further steps to moderate the impact of capital flows on the South
African economy will be considered, drawing on both international experience
and assessment of the likely local impact.
Financial regulation
It is important to stress that the above reforms form part of a broader process
to improve and strengthen the financial regulatory system, informed by
international coordination efforts led by the G20 and the multilateral Financial
Stability Board.
Several reforms are required by new international regulatory standards. The
Basel Committee on Banking Supervision recently proposed a new framework
(known as “Basel III”) for banking supervision. Implementation of the new
framework will be led by the Registrar of Banks. Similarly, the Financial
Services Board is in the process of strengthening the prudential regime for
insurers.
Other reforms are drawn from the lessons of the financial crisis, but adapted
to our circumstances. In moving towards a “macro-prudential” approach to
supervision of financial institutions, the focus falls on assessing and
monitoring the strengths and vulnerabilities of the financial system as a whole,
in addition to the supervision of individual institutions.
In order to achieve this, several institutional changes are proposed.
As announced at the time of the budget, a Council of Financial Regulators
will be formed, comprising all our financial regulators, to promote effective
coordination and information-sharing and to give effect to macro-prudential
supervision.
The South African Reserve Bank now has a revised mandate that includes
particular responsibility for financial stability.
Proposals will be tabled to strengthen the regulation of market conduct,
including retail banking and insurance, and aimed at both client protection
and broadening access to financial services to all.
The scope of financial regulation will be extended to cover private pools of
capital, over-the-counter markets and credit rating agencies.
Detailed proposals on financial sector regulatory reforms are contained in a
discussion document entitled Strengthening the Financial Sector to Better
Serve South Africa, which National Treasury will release shortly.
Fiscal policy and the budget framework
Honourable Speaker, as the world economy recovers from the global crisis,
there is considerable debate about how quickly governments should be
closing their budget deficits. Some argue that the recovery will be held back if
governments cut expenditure too quickly, while others point to the potentially
devastating effects of fiscal default. Many European countries are making
sharp budget cuts to maintain sustainability, sometimes resulting in severe
social unrest.
In South Africa’s circumstances, a careful balance needs to be found between
continued real growth in expenditure, while reducing the future interest cost
burden on the fiscus, so that expenditure growth can be sustained. Where we
have to borrow, we will do so mainly to invest in infrastructure that contributes
to building productive capacity. Improved delivery of services also requires
that we use resources more efficiently, reduce waste and combat corruption.
Our approach is explicitly countercyclical, which means that fiscal
consolidation will be phased in without curtailment of core public services and
in support of sustainable growth. This is what the G20 refers to as “growth
friendly” consolidation. Careful management of the fiscus over the past 16
years has meant that we had room for a budget deficit of 6.7 per cent last year
and 5.3 per cent this year, which has brought forward the economic recovery.
The proposed budget framework anticipates a narrowing of the deficit to
around 3 per cent of GDP by 2013/14, and stabilisation of government debt at
about 40 per cent of GDP in 2015/16. Expenditure will continue to grow,
though moderately, and revenue is expected to recover relative to GDP.
It is nonetheless important to note key lessons from the painful adjustments
that the United States and many European countries are undergoing. Fiscal
over-commitments can lie buried for decades in pension and social insurance
accounts, housing finance arrangements, or unsustainable economic
subsidies. When there is continuous growth, the difficulties are deferred and
all too easily ignored. But when things go wrong, they can do so with
devastating speed. A sound understanding of the long-run trends in revenue,
expenditure and public-sector financing is therefore critical, and careful
planning of future reforms.
The Medium Term Budget Policy Statement notes that real non-interest
government expenditure per person has doubled over the past eight years.
This was made possible by buoyant growth and revenue, and the declining
share of debt service costs in GDP. Government spending on infrastructure
and social assistance continued to expand strongly during the economic
downturn in 2008 and 2009. Expenditure growth will be slower over the
period ahead, averaging real growth of about 3 per cent a year.
However, the overall public-sector borrowing requirement is considerably
larger than the budget deficit. Mainly because Eskom and Transnet need to
borrow to finance large infrastructure expansion plans, overall public sector
borrowing will be about 10 per cent of GDP this year, declining to 6 per cent of
GDP over the next three years.
Honourable Speaker, our fiscal policy framework is fundamentally about
ensuring that our wellbeing is not unfairly purchased at the expense of future
generations. Where we introduce programmes that raise the level of
government spending, we need to be clear about how the required revenue
will be raised, and at what cost to the productive sectors of our economy. To
assist in our understanding of the underlying principles, I have asked the
National Treasury to prepare a paper on fiscal guidelines for wider discussion
early next year.
Medium-term expenditure framework
Adjustments to the 2009/10 appropriations
Honourable Speaker, I am very mindful that the new legislative arrangements
for money bills has brought additional responsibilities to Parliament’s portfolio
committees, and the Appropriations Committees in particular. We welcome
the first Budget Review and Recommendation Reports, which have been
tabled over the past week.
Several concerns raised by portfolio committees will need to be explored
further – underspending on climate change initiatives, noted by the Committee
on Water and the Environment, for example, and the need to improve
oversight of the expanded public works programme, recommended by the
Public Works Committee. I have taken special note of this Committee’s
observation that the department cannot be expected to budget for state
funerals, as these cannot be accurately predicted. I am sure that Minister
Doidge and I can find a way of dealing with this.
I am pleased to be able to table a comprehensive Adjusted Estimates of
National Expenditure to accompany the Adjustments Appropriation Bill and –
for the first time – a Division of Revenue Amendment Bill, for the
consideration of the House. I cannot deal with all the adjustments in detail,
but let me highlight the main points.
In total, the adjusted expenditure level is R2.5 billion lower than the February
budget estimate, which included an unallocated contingency reserve of
R6 billion. Contributing to this decrease is a lower provision for state debt
costs due to the current strength of the rand and the decrease in interest
rates, and savings declared by departments amounting to almost R2 billion.
The main additional allocations in the Adjustments Appropriation are as
follows:
R1.8 billion in roll-overs arising from commitments related to unspent
balances in 2009/10;
R6.2 billion to cover higher remuneration costs;
R396 million for various self-funding department-specific activities;
R2.2 billion in unforeseeable and unavoidable expenditure adjustments
recommended by the Treasury Committee this year, including
Medium Term Budget Policy Speech – 2010
21
o R769 million to cover property rates due to municipalities on
behalf of provinces, funded through the devolution of property
rate funds grant,
o R320 million for occupation-specific dispensation salary
adjustments in the Department of Justice and Constitutional
Development, the National Prosecuting Authority and Legal Aid
South Africa,
o R350 million for occupation-specific dispensation salary
adjustments in the health sector, conditional on an agreement
being reached in the bargaining council,
o R363 million is for expenditure associated with natural disasters
and the outbreak of disease,
o R200 million for the South African National Defence Force for
support activities during the 2010 FIFA World Cup, and
o R100 million to scale up HIV and Aids prevention services.
2011 Budget: expenditure priorities
Chapter 4 of the Medium Term Budget Policy Statement summarises the
spending framework for the period ahead, informed by government’s 12
agreed outcomes, with priority given to education, health, infrastructure
development and job creation.
Several areas of reform are proposed to contribute to identifying savings and
opportunities for more effective organisation of public services:
There are too many departments where administrative capacity is
excessive or inefficient, relative to frontline services. This will come under
rigorous scrutiny in the budget process.
Effective training programmes need to be strengthened across the public
service.
A new approach to budgeting and management of capital projects will be
introduced, together with technical assistance to departments and
municipalities in which there is under-spending on infrastructure
maintenance.
Non-departmental agencies and entities are under review, with special
focus on governance, remuneration and mandates.
Strengthened capacity is in place to deal with wrongdoing in government
procurement, and improved rules will enhance transparency in the supply
chain process.
Information technology systems and management of consulting services
will come under specialised scrutiny within the supply chain regulatory
framework.
Preparation of the 2011 Budget is now well underway. Cabinet has agreed to
a preliminary framework for the MTEF period ahead that makes available
R67 billion more than the baseline tabled in February this year, of which
R40 billion goes to provinces, R24 billion to national departments and
R3 billion to municipalities.
A further R22 billion remains unallocated to departments at this stage, and is
set aside for key education, health, infrastructure and job creation
commitments. Proposals for expanding youth employment opportunities will
enjoy special priority.
And in reflecting on opportunities for our youth, let me congratulate the
students of Belgravia High School who are with us in the gallery, and who
were the winners in three consecutive regional quiz competitions. We should
also take this opportunity to wish all matric students well in the examinations
which will shortly begin.
The Medium Term Budget Policy Statement sets out broad policy
considerations underlying the expenditure proposals, including government’s
economic and industrial policy framework, the need to strengthen
infrastructure maintenance, land and agrarian reform goals, pressing needs in
education and health service delivery and the challenges of improving police
services and the administration of justice.
Several critical long-term public expenditure pressures need to be addressed
systematically over the period ahead.
First, we have to complete the reform of social security arrangements that
has been under discussion for since the 2002 Taylor Committee Report. A
key aim is improved preservation of savings for retirement among working
South Africans. Consolidation of the fragmented existing administrative
arrangements for social security is also a priority.
Second, we have to implement a National Health Insurance system. The
first phase will involve improved primary health services in rural areas and
under-served communities, and an expanded programme of hospital
construction and revitalisation. An inter-Ministerial committee has met to
consider the fiscal and financial implications of further health financing
reforms, and will develop practical transition proposals.
Third, we have to improve the maintenance of our transport infrastructure
and networks, and invest in modern public transport systems.
Fourth, we have to provide for the fiscal contribution to new growth
initiatives, industrial development and job creation.
These are major social and economic reform projects, which will require
substantial fiscal and financial reforms, phased in over many years. If we are
to make rapid progress in these transformation programmes, it is imperative
that equally rapid progress is made in reducing wastage and inefficiency
elsewhere, and in improving financial management and governance.
Revenue estimates and tax measures
Honourable Speaker, our spending programmes have to be paid for.
It is therefore reassuring to be able to note that the improved economic
performance has contributed to a projected increase of R31 billion in tax
revenue for the current year, by comparison with the February budget
estimate.
Total tax revenue is expected to amount to R679 billion in 2010/11, or
25.3 per cent of GDP. A strong increase in VAT proceeds has been recorded,
partly attributable to buoyant consumer demand, but also because of lower
capital investment and the associated reduction in VAT refunds. Customs duty
collections have improved, mainly as a result of higher vehicle and component
imports.
For the period ahead, tax revenue is expected to average about 26 per cent of
GDP – still somewhat below the levels recorded before the recession.
Consolidated government revenue, including social security funds and public
entity revenue, will recover to about 29 per cent of GDP.
I need to remind Members of the House that today marks the start of the final
month of Tax Season 2010 for non-provisional taxpayers whose returns are
due by 26 November. I urge all taxpayers who have not yet filed to do so
within the next 30 days and to join the 2.6 million taxpayers who have to date
submitted their returns. This is an 18 per cent increase in compliance and
early filing compared with last year.
This growth in compliance comes despite the difficult economic conditions in
which all South Africans find themselves and reflects the strong foundation of
tax morality which has been laid and continues to take root and grow within
our country. Let me therefore applaud the many millions of our country’s
taxpayers who respect their side of the social contract which has allowed us to
continue our vital social and infrastructural investment without over-burdening
ourselves and future generations with unmanageable levels of debt.
Our capacity to pursue those who seek to evade tax obligations continues to
be reinforced. Tax authorities the world over are co-operating more than ever
before to throw open the veil of tax manipulation. South Africa has double
taxation agreements with 70 jurisdictions which provide for extensive
exchange of information between tax authorities. In addition, tax information
exchange agreements have been agreed at officials’ level with six financial
centres and a further sixteen agreements are being explored. A joint audit
made possible through these agreements has already yielded R3 billion in
additional revenue. Combined with the growing availability and accuracy of
third party data from financial institutions, employers and other sources, there
are very few places for the non-compliant to hide.
We are, however, offering another opportunity for taxpayers to come clean
and join the ranks of full participation in our democracy. The Voluntary
Disclosure Programme, which allows for the waiving of penalties of up to
200 per cent for those who make a full, honest and voluntarily disclosure of
prior evasion, will begin next month.
Enhanced supply chain management
Clean administration is also the central principle in our approach to supply
chain management and ensuring value for money in government procurement
of goods and services.
The National Treasury has been working closely with other departments and
agencies to combat fraud and corruption, under the leadership of the Inter-
Ministerial Committee on Anti-Corruption chaired by Minister Chabane. This
has already yielded several positive outcomes, but more has to be done.
Procurement and tender fraud to the value of nearly R25 billion is currently
under investigation.
Our approach comprises the following five initiatives, which will include
legislative and regulatory reforms.
We will be increasing the monitoring capability of government, aimed at
early detection of fraud. Departments and government agencies will be
required to provide specific information to the Treasuries on their
procurement practices. Where necessary, the cash disbursements process
of government agencies will be temporarily assumed by Treasuries thereby
ensuring that only valid contracts are honoured and government is charged
a fair price.
In line with international best practice, transparent public disclosure will be
required at each stage of the supply process, in all spheres of government,
including reasons for award decisions.
Government will look holistically at identifying procurement requirements
that could be better managed centrally, such as the use of transversal
contracts for the acquisition of high value and complex goods and services.
Stiff penalties are proposed, of up to double the contract value, for service
providers who obtain government contracts fraudulently. Public officials
who assist in tender fraud will also be liable for resultant losses incurred by
government. Measures are required to ensure that officials who have
breached the buying rules should not remain under suspension, drawing
full benefits, while investigations drag on for years.
Tax compliance measures associated with government procurement will
be strengthened. The introduction of a withholding tax on payments made
to businesses in respect of government tenders is under consideration.
Itis also proposed that the procedures for issue of tax clearance certificates
should be revised, to provide for direct checking by SARS of the tax
compliance of winning bidders rather than pre-clearance of all bidders.
Members of the House will have heard through the media about the arrest of
prominent business people, senior government officials including former
heads of departments. Members will also be pleased to know that the
government was awarded preservation orders worth about R200 million which
included a lear jet, a golf course, a holiday home and a hotel. This is the result
of cooperation and coordination of efforts between several investigative
agencies.
As a result of these efforts, Honourable Speaker, we are beginning to see a
change of attitude on the part of service providers. In a recent case, a firm
which was paid R10 million by a department for work that they had not done,
voluntarily returned the money to the fiscus. Honourable Speaker, we will turn
the tide on corruption and fraud: We will ensure that tax funds and
government monies are spent wisely and managed with integrity. We owe
this to our honest citizens and responsible taxpayers.
The time is now
Allow me to conclude, Honourable Speaker, by saying again that the time for
action is now! Now is the time –
To improve the quality of basic education
To improve health and life expectancy
To ensure that all South Africans are protected and feel safe
To expand employment through inclusive economic growth
To invest in a skilled and capable workforce
To accelerate construction of economic infrastructure
To promote sustainable rural communities and food security for all
To invest in human settlements and improved quality of household life
To build a responsive, accountable, effective and efficient local
government system
To protect our environmental assets and natural resources
To build a better and safer Africa and a better world, and
To promote a development-oriented public service and inclusive
citizenship.
In elaborating the policies and programmes needed to give effect to these
outcomes, we have a special opportunity to forge a broad-based social
compact – a shared social and economic vision – aimed at effective
partnerships between government, business, labour, communities and civil
society, in pursuit of common goals. Cabinet has agreed on a growth path
that sets a target of creating five million jobs in the next ten years, through
efforts that require commitment and cooperation between all spheres of
government, business, organised labour and community partners.
To borrow President Barack Obama’s words, let us ‘put good ideas ahead of
the old ideological battles; a sense of common purpose above the same
narrow partisanship; and insist that the first question each of us asks isn’t,
“What’s good for me?” but “What’s good for the country my children will
inherit?”’
Honourable Speaker, allow me to express my appreciation to President Zuma
for his sound leadership, and to Deputy President Motlanthe for valued
guidance. I am grateful for the support of the Ministers Committee on the
Budget, members of the Treasury Committee, Cabinet colleagues, Premiers
and provincial finance MECs, during a year of considerable financial strain,
and a budget process that still has some way to go.
The Auditor-General, Terence Nombembe, and his staff, bring a professional
spotlight to bear on all of our work, and I know that the House will join me in
expressing our admiration and thanks.
I would also like to commend Mr Thaba Mufamadi, Mr Mshiyeni Sogoni, and
Mr Charel de Beer and Mr Teboho Chaane, who chair the standing
committees on finance and appropriations, and the select committee on
finance, who have more onerous duties now that new Parliamentary budget
procedures are being introduced.
The Governor of the South African Reserve Bank, Ms Gill Marcus, has
brought astute leadership in difficult times.
Mr Oupa Magashula and the staff of South African Revenue Service continue
to bring innovation and energy to the collection of taxes on our behalf.
I would like to thank Deputy Minister Nhlanhla Nene for his tireless support
and insight. Director-General Lesetja Kganyago and the National Treasury
team have once again delivered a set of budget statements on time, though
not perhaps within an affordable and efficient word count.
Honourable Speaker, I hereby submit the 2010 Medium Term Budget Policy
Statement, and I table the Adjustments Appropriation Bill, the Division of
Revenue Amendment Bill and the Adjusted Estimates of National
Expenditure, for consideration by Parliament.
End
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