Special Hearings — Business Hearings — 1997-11-12

MR CASSIM: This is why today we have cities with a large number of informal sector operations in the cities.  The key question here is that it choked the development until 1986, 1985, the potential development of this - any potential development of the small business sector was deliberately choked.  So we have a situation, unfortunately where the informal sector was simply regarded as a blot on the urban landscape or as ill health to the economy.
 So, there are clear contradictions.  There are clear linkages.  Unfortunately the governor of the Reserve Bank has left, if you don't mind if I may just spend a moment or two on submission by the Reserve Bank.
 The Reserve Bank of South Africa and in saying this I want to quickly (indistinct) my remark by saying that no economist is for financial instability or monetary mismanagement, in fact monetary management and financial efficiency are very important, but the Reserve Bank of South Africa gives the impression that it performed purely an objective economic role.
 Now, the point I would like to raise concerns the 1970's where the Reserve Banks's submissions remains strangely silent about the implications of rising Government deficits.  The Reserve Banks who was tensibly independent became a prisoner of the Apartheid Government.  It allowed money supply to soar - in one that is - to soar by 140 percent.
 The national debt of the Government increased by 300 percent and between 1990 - this happened between 1990 and 1988, the great bulk of which was held by the pension funds of Government departments and parastatal corporations.
 In a similar event so that goes against prudent macro-economic policy or stable macro-economic policy.  In the similar event the commercial banks, it must be borne in minds that commercial banks have made rather substantial contribution on their own behalf to the financing of the Government expenditure and of capital expenditure.  
 About one fifth of the deficit between 1970 and 1978 was financed by the banks and this included defense bonds by Barclays which amounted to financing the South African defense budget.  So if we do probe for relations and linkages then they are there and if one looks at the Reserve Bank, if one looks at the financial system and I take the point, I accept the point that the financial system is central to any economy.  It has to function efficiently, it has to efficiently move between savings and investment and that's quite important.
 Let me turn my attention briefly to the second issue.  The second issue concerns the role of trade unions.  In the presentation by Prof Wiehahn I think there was a major omission.  The major omission, if one reads South African political economy and the rising development of South Africa's economy, one cannot omit the question of migrant labour.
 In fact, the entire bases of the economy is parallel with the rise of migrant labour and it was on bases of migrant labour that huge profits were accumulated to those who build empires and conglomerates which exist today.
 The majority of employers were more than compliant in preventing trade union development, more often than not attempts were made to find an alternative path, such as street heart unions.
 This is evidence by the fact that when attempts were being made to form trade unions in the 1970's, many employers refused to allow stop order payments for union membership, which had to be collected by hand.
 So, there is enough evidence to show that employers were reluctant to see the emergence of democratic trade unions.  Furthermore, the Apartheid Government attempted to drive a wedge between urban and migrant workers and indeed the act of granting trade union rights originally excluded migrant workers.
 So, the Government used a variety of measures to limit trade union activity to economic issues and this was a condition of registration.  However, with the formation of the congress of South African trade unions, COSATU in particular in 1986, and the May day stay at home campaign is an example where this approach had failed and where the Government had failed to isolate the independent trade union movement from the political struggle. 
 What this in a larger context also meant was that the cost of Apartheid were getting too high to sustain.  In fact Apartheid was becoming physically unsustainable and this is why - and this is the period in the '80's, particularly in the latter part of the '80's where you do get particularly the big corporations and big business playing a very different role and this was seen in the emergence of the central - of the CBM, the many missions overseas to meet with the ANC at the time.  
 So business certainly did become more vocal, but it responded at that time - at the time to particular pressures that it found itself in and those pressures were largely economic pressures.
 The other omission is that when we look at the period of the '80's and in the - in the submissions today is that in the 1980's were a period when certainly political resistance began to intensify and international began to make itself felt.  
 When the reform measures, even economic reform measures were based on - were based on the concept of the total strategy.  In other words the context of reform was set in the form of the total strategy.  The total strategy represented the increasing militarisation of society, of the Government and the society.
 This militarisation came to exercise a growing influence over political and economic policies.  This was largely because in financial terms it meant in - sorry, in financial terms this meant that the costs of defending Apartheid were increasing and this was coupled with an acute foreign debt situation which made Apartheid physically unsustainable.
 It was also a period of massive capital outflow.  Investment was declined.  So, it was a period where the business sector became more vocal, because and this - the tension or the stress within the business sector and the Government was evident.
 So, if one is looking at the history and the dynamic of economic development and the link between Apartheid and the economy, I think one has to look at that relationship as to how it evolved historically.
 Clearly, what hit the business sector was the state of the economy and I think there's a lot of room in that to begin to search for some answers.
 The other omission that I find and where there is some evidence is that a number of companies were actively involved in dealing - in business dealing with ARMSCOR.  Leading business people were willing and active participants in the national security management system.
 So, business was directly involved in that sphere of activity and it's a - there is plenty of evidence to show that. 
 I just want to conclude and say that the single most important lesson and experience that Apartheid brings to us, is that we should guard against political extremism.  Any form of political extremism in the future, either from the left or from the right, because it is this kind of political extremism which Apartheid has left us with that results in the extreme problems that we face today.
 To the extend that it has removed the capacity of the current Government, the ability to develop a more interventionalist strategy in so far as redistribution is concerned, because it does face the problems of paying past debt.
 In addition there are other constraints.  The business sector can play a very important role in the future and particularly as South Africa re-integrates rapidly into the emerging global economy and that re-integration poses new challenges and for Government, business and labour.
 In this new global economy that South Africa enters into, the role of these three agents, that is business, Government and labour becomes even more important in so far as we move forward to create a new society.
 What is needed is a vision for something different.  Something different from the past, something better and something worth working and living for.
 Thank you.