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4. Building the Economy

4.1 PROBLEM STATEMENT

4.1.1The South African economy is in a deep-seated structural
crisis and as such requires fundamental reconstruction. For
decades forces within the white minority have used their
exclusive access to political and economic power to promote
their own sectional interests at the expense of black people.
Black people have been systematically exploited and
oppressed economically and South Africa now has one of the
world's most unequal patterns of distribution of income and
wealth. A disproportionate share of the burden of poverty and
inequality has fallen on black women who have been subject to
systematic gender oppression. Economic deprivation has
created a fertile base for the violence and instability now
engulfing our country. The ever-changing and destabilising
global economy has also adversely affected the local
economy.

4.1.2Marked regional disparities exist within the economy as a result
of policies designed to ensure a migratory labour supply to the
mines and of the ethnic division of South Africa under the
apartheid system. Enforced segregation and industrial
decentralisation have located whole communities in areas
where their economic viability is threatened. A few
metropolitan regions account for the bulk of national
production, while some provinces are affected by a crisis of
unemployment, and can barely afford to provide basic
services. Almost half the black population was compelled to
live in so-called 'homelands' where per capita incomes are less
than a quarter of the national average.

4.1.3Successive minority governments and business have tried to
promote growth by encouraging local production of
manufactured goods which were previously imported. This
policy led to the emergence of a significant manufacturing
sector in our country. However, the disparity between the low
income levels of the majority of consumers and factors leading
to rising price levels ensured that the manufacturing sector
served the wealthy and excluded the poor. The sector is in
general characterised by poor productivity and an undue
dependence upon low wages. It makes little contribution to
foreign exchange earnings, but depends to a very great extent
on imported machinery and equipment paid for out of foreign
exchange earned by mineral exports.

4.1.4Over the past decade and more, growth stagnated, investment
dropped precipitously and average real incomes declined. The
economy remains dependent on mineral exports, and the
manufacturing sector cannot create jobs, meet the basic
needs of the majority or compete on world markets. The
decline in investment within the public and private sectors, and
capital flight, have contributed to an ageing capital stock and
contraction in the manufacturing sector. Capacity utilisation of
manufacturing plant and equipment remains at very low levels.
Speculative investment has replaced productive investment,
with a consequent decline in job creation and overall
employment levels.

4.1.5The South African economy is also characterised by
excessive concentration of economic power in the hands of a tiny
minority of the population. Through the pyramid system and the
resultant control over a vast network of subsidiary companies, a
small number of very large conglomerates now dominate the
production, distribution and financial sectors. In addition there
is a high degree of monopolisation and blatant anti-competitive
tendencies such as predatory pricing and interlocking directorships
in certain industries. With regard to land, white ownership and
often corporate ownership are overwhelming. Not only does this
create racial and social tension, but it is to be seriously doubted
that such high levels of concentration can be economically
beneficial.

4.1.6A particular weakness of the economy, aggravated by
racist and sexist policies, is the inability to maintain a dynamic
small-scale and micro enterprise sector. Smaller firms, especially
if owned by black people, can rarely develop productive linkages
with the large-scale sector. Most people in the informal sector
lack productive and managerial skills plus access to business
sites, capital and markets. They face an array of repressive
regulations originally designed to undermine black business and
farming.

4.1.7A critical cause of inefficiency and inequality lies
in the position of labour. Economic growth depended on the
centrality of the cheap labour system. Rigid hierarchies and
oppressive labour relations ignored the skills latent in our
experienced industrial workforce. Apartheid laws denied workers
their basic rights. High levels of unemployment and oppressive
legislation made it difficult even for organised workers to
maintain a living wage. The lack of skills forms a major obstacle
to the development of a modern economy able to support a decent
living standard for all our people. The apartheid state also
systematically excluded workers from collective bargaining and
policy-making at national and shop-floor levels. While the
struggles of organised workers have reversed this to some extent,
the right to strike continues to be limited, farm and domestic
workers do not have basic rights, the majority of workers earn low
wages, and there are enormous wage differentials.

4.1.8Only a quarter as many women as men hold jobs in the formal
sector. High unemployment, the migrant labour system and the
difficulties facing the informal sector hit women particularly
hard. Within formal employment, women are discriminated
against in many areas such as wages, job security, specific
needs of women workers, and employment opportunities. The
migrant labour system continues to disempower both workers
and their families.

4.1.9The agricultural sector and rural economy are also in crisis.
Many white-owned farms are deeply indebted and vast tracts
of land designated for occupation by whites are inefficiently
cultivated. Many thousands of black rural households are,
meanwhile, crammed into tiny plots unable to produce or buy
affordable food. Government decentralisation policies have
failed to channel resources to the rural areas which remain the
most deprived parts of the country.

4.1.10The apartheid state's economic agencies have been
contradictory and secretive, and were subordinate to
apartheid's logic and the siege-economy mentality. Parastatals
such as the Industrial Development Corporation (IDC),
Development Bank of Southern Africa (DBSA) and the Small
Business Development Corporation (SBDC) could be
immensely important in driving industrial, socio-economic and
infrastructural development. But in recent years, under the
cloak of secrecy, the apartheid state privatised or
commercialised many agencies in the public sector (such as
Transnet, Eskom, Telkom, Iscor, Foskor, SAA, the Post
Office, Forestry and others). Often this policy, unilaterally
imposed for ideological reasons, harmed basic services to the
poor or reduced the ability of the state to mobilise resources
for development.

4.1.11The consequences of such undemocratic state policies in a
structurally unbalanced economy include a serious fiscal crisis,
with high personal tax rates accompanying a large budget
deficit. In addition, the country's balance of payments
problems, exacerbated by capital flight, have made it difficult to
service the foreign debt incurred during the apartheid era. The
need to maintain tight controls over economic policy as a
result, has had a devastating effect on economic growth and
employment.

4.1.12In past years, South Africa's relations with its Southern African
neighbours were hostile, and apartheid destabilisation
destroyed much of their economic base. Within the South
African Customs Union (SACU) there has been no
consideration of the differing needs of the participating
countries and no common developmental policies.

4.2 VISION AND OBJECTIVES

4.2.1The fundamental principles of our economic policy are
democracy, participation and development. We are convinced
that neither a commandist central planning system nor an
unfettered free market system can provide adequate solutions
to the problems confronting us. Reconstruction and
development will be achieved through the leading and enabling
role of the state, a thriving private sector, and active
involvement by all sectors of civil society which in combination
will lead to sustainable growth.

4.2.2Our central goal for reconstruction and development is to
create a strong, dynamic and balanced economy which will:

4.2.2.1eliminate the poverty, low wages and extreme
inequalities in wages and wealth generated by the
apartheid system, meet basic needs, and thus ensure
that every South African has a decent living standard
and economic security;

4.2.2.2address economic imbalances and structural problems
in industry, trade, commerce, mining, agriculture,
finance and labour markets;

4.2.2.3address economic imbalances and uneven
development within and between South Africa's
regions;

4.2.2.4ensure that no one suffers discrimination in hiring,
promotion or training on the basis of race or gender;

4.2.2.5develop the human resource capacity of all South
Africans so the economy achieves high skills and
wages;

4.2.2.6democratise the economy and empower the
historically oppressed, particularly the workers and
women and their organisations, by encouraging
broader participation in decisions about the economy
in both the private and public sectors;

4.2.2.7create productive employment opportunities at a living
wage for all South Africans;

4.2.2.8develop a prosperous and balanced regional economy
in Southern Africa based on the principles of equity
and mutual benefit, and

4.2.2.9integrate into the world economy in a manner that
sustains a viable and efficient domestic manufacturing
capacity and increases our potential to export
manufactured products.

It is only by addressing the above that our economy
will be capable of sustained growth.

4.2.3To carry out programmes to meet these objectives, as
well as those outlined in previous chapters, the democratic
government must play a leading and enabling role in guiding the
economy and the market toward reconstruction and development.
Legislative and institutional reform will be effected to enable the
implementation of the RDP. We aim to achieve a dynamic balance
between government intervention, the private sector and the
participation of civil society.

4.2.4There must be a significant role for public sector
investment to complement the role of the private sector and
community participation in stimulating reconstruction and
development. The primary question in this regard is not the legal
form that government involvement in economic activity might take at
any point, but whether such actions must strengthen the ability of
the economy to respond to the massive inequalities in the country,
relieve the material hardship of the majority of the people, and
stimulate economic growth and competitiveness.

4.2.5In restructuring the public sector to carry out
national goals, the balance of evidence will guide the decision for
or against various economic policy measures. The democratic
government must therefore consider:

4.2.5.1increasing the public sector in strategic areas
through, for example, nationalisation, purchasing a shareholding in
companies, establishing new public corporations or joint ventures
with the private sector, and

4.2.5.2reducing the public sector in certain areas in ways that
enhance efficiency, advance affirmative action and
empower the historically disadvantaged, while ensuring
the protection of both consumers and the rights and
employment of workers.

4.2.6The RDP will foster a new and constructive relationship
between the people, their organisations in civil society, key
constituencies such as the trade unions and organised
business, the democratic government, and the workings of the
market.

4.2.7We can only achieve our economic objectives if we establish
transparent, participatory and accountable policy-making
procedures in both the public and private sectors. The
democratic government, the trade union movement, business
associations and the relevant organisations of civil society must
cooperate in formulating economic policy. The democratic
government must review the inherited economic departments
and agencies to streamline policy-making and implementation
and to define appropriate relationships with forums and the
various tiers of government.

4.2.8Economic growth is critical for sustainable
improvements in services and incomes. We must shape the expansion
of the social and economic infrastructure to stimulate industry and
agriculture. These policies must be coordinated with the
development, on a cooperative basis, of the Southern African region
as a whole. On this foundation, we must establish a dynamic,
integrated economy able to provide higher incomes, reduce excessive
dependence on imports and compete on foreign markets.

4.2.9All of our policies must aim to alleviate inequalities
in incomes and wealth and expand productive opportunities. Critical
programmes in this area include urban and rural development,
industrial strategy, support for small and micro enterprise
(including small-scale farming), job creation, land reform and
other programmes discussed in earlier chapters. The democratic
government must also create laws and institutions to end
discrimination in hiring, promotion and training.

4.2.10Our economic policies require human resource
development on a massive scale. Improved training and education are
fundamental to higher employment, the introduction of more advanced
technologies, and reduced inequalities. Higher labour productivity
will be the result of new attitudes towards work in the context of
overall economic reconstruction and development.

4.2.11Basic to the consultative and interactive approach to economic
policy is the protection of worker rights, labour standards and
proactive labour market policies. The RDP makes a decisive
break with the exploitative cheap-labour policies of apartheid
and moves toward education, training, skills, a living wage, and
collective bargaining as the basis for enhanced productivity in
the economy.

4.3 INTEGRATING RECONSTRUCTION AND DEVELOPMENT

4.3.1One of the basic principles outlined in Chapter One was that of
linking reconstruction and development. This is in contrast to
the argument that growth is needed before development is
possible, an approach which would leave intact the severe
regional, racial and gender and structural imbalances that
characterise the present economy. To prevent this from
happening, reconstruction and development must be an
integrated process. Such integration must be basic to all
economic policy. This is where the public sector must play a
major enabling role, since it cannot be expected that the
market will make such a structural transformation on its own.
Yet without such a transformation democracy will not survive,
because socio-economic stability will not be achieved.

4.3.2The RDP's principles recognise the mutually
reinforcing nature of urban and rural development strategies
through, for example, the benefits of improved agriculture to the
urban economy. Strategies for urban and rural development must be
integrated within the RDP to ensure that the needs of all our
people are met in a balanced and equitable manner. An integrated
strategy is essential for the process of unifying our economy and
linking reconstruction and development.

4.3.3In general, the RDP recognises the need to break down
apartheid geography through land reform, more compact
cities, decent public transport, and the development of
industries and services that use local resources and/or meet
local needs. In this context, the RDP must seek to help people
generate economic wealth in their chosen communities.

4.3.4Macro-economic policies must take into consideration their
effect upon the geographic distribution of economic activity.
Additional strategies must address the excessive growth of the
largest urban centres, the skewed distribution of population
within rural areas, the role of small and medium-sized towns,
and the future of declining towns and regions, and the
apartheid dumping grounds.

4.3.5In order to foster the growth of local economies,
broadly representative institutions must be established to address
local economic development needs. Their purpose would be to
formulate strategies to address job creation and community
development (for example, leveraging private sector funds for
community development, investment strategies, training, small
business and agricultural development, etc.). If necessary, the
democratic government must provide some subsidies as a catalyst for
job creation programmes controlled by communities and/or workers,
and target appropriate job creation and development programmes in
the most neglected and impoverished areas of our country.
Ultimately, all such projects should sustain themselves.

4.3.6The incentives for decentralisation introduced under
apartheid frequently proved excessively discretionary and open to
misuse. Still, in many areas simply eliminating them would cause
severe job losses. For this reason, the democratic government must
establish clear-cut guidelines and procedures for reviewing
decentralisation incentives. Where communities and workers can
certify that the subsidies are being utilised in a sustainable,
non-exploitative manner, the democratic government must maintain
the incentives. Otherwise, it must redirect subsidies to ventures
that promote linkages within the local economy.

4.3.7The Interim Constitution will have a significant
impact on economic growth. Setting up new provinces will affect
investment flows, regional assets and fiscal transfers as well as
the institutions that make and implement policies. Every province
must develop a programme for regional reconstruction and
development in the context of the national RDP.

4.3.8Rural development. The RDP aims to improve the
quality of rural life. This must entail a dramatic land reform
programme to transfer land from the inefficient, debt-ridden,
ecologically-damaging and white-dominated large farm sector to all
those who wish to produce incomes through farming in a more
sustainable agricultural system. It also entails access to
affordable services, and the promotion of non-agricultural
activities. In the 'homelands', where most rural people live,
social services and infrastructure remain poorly developed, and
this must be remedied.

4.3.9Development efforts must address the special position of
women, as they make up the majority of small-scale farmers,
and bear the brunt of poverty, overcrowding and hunger in rural
areas. They take responsibility for all aspects of their families'
lives, including the need to obtain food, fuel and water, often
over long distances, but are excluded from decision-making
structures. They are the bulk of the seasonal labour force in
agriculture, but receive the lowest wages. Their priorities
include accessible water, sewage disposal, infrastructure, land
rights, housing, training, local development committees, a
disaster relief fund, markets for their production, and good
representation in local government.

4.3.10To correct the history of underfunding, misuse of
resources and corruption, substantial transfers of funds from the
central government to the rural areas will be required, targeted to
meet the needs of the rural poor. The democratic government must
institute a land reform process that allows people in the rural
areas access to land for production and residence. It must support
part-time activities, including small-scale farming, which can
increase productivity, incomes and household food security. It must
end the inequitable and inefficient subsidisation of the large farm
sector.

4.3.11Rural communities need practical access to health,
education, support for entrepreneurship (including agriculture),
financial services, welfare, and police and the courts. The
objective of rural development policy must be to coordinate the
activities of the relevant democratic government agents, and to
pass much of the control of democratic government-funded services
to the rural people for whom they are intended, within the
framework of national and provincial policy in each sector. This
will require fundamental changes to institutions and processes.

4.3.12We must establish democratic structures to control the
finances for local development activities. Elected councillors
must replace the non-representative Regional Service Councils
and Joint Service Boards at the district and local level.

4.3.13Generally, the democratic government must support
capacity-building in the District Councils, Local Councils, and
voluntary community structures such as local development forums. To
advise communities of their options, it must train a cadre of
Community Development Officers. Their training must include
sensitivity to gender issues. The Community Development Officers
must work for the District Councils. Wherever possible, they must
come from the areas they serve.

4.3.14Educational opportunities in the rural areas lag far
behind those in the cities. Human resource development forms a key
component in building the rural economy. It must include the
opening up and reorganisation of agricultural schools to meet the
needs of the majority. Training and retraining of new and existing
extension workers, community development officers and officials
dealing with land reform are critical to the success of our rural
development and land reform programme. These training and
retraining programmes must be designed within the first 18 months
of the RDP.

4.3.15The democratic government must include a central Ministry of
Rural Development and Land Reform. The Ministry must
include a unit for rural data collection and an early warning
system for food and water security.

4.3.16Urban development. The importance of urban development
strategies within the RDP is based on a recognition that the
urban areas account for over 80 per cent of the country's gross
domestic product (GDP), and accommodate approximately 60
per cent of South Africa's population. Continuing demographic
shifts may increase urbanisation to over 70 per cent of the
population by 2000. The three major metropolitan areas (the
PWV, Greater Cape Town and Durban) account for 37.7 per
cent of the total population and 67.7 per cent of the country's
total manufacturing output. The PWV region alone accounts
for 40 per cent of the country's total economic output.

4.3.17Even with a strong rural development effort, economic
activities will remain concentrated in the cities. Ensuring the
quality of life, sustainability and efficiency in the urban areas
will thus prove critical for renewing growth and promoting
equity. The design of a comprehensive national urban strategy
will help serve the cities' rapidly growing populations and
address the inequities and structural imbalances caused by the
apartheid system. The urban development strategy must also
be aimed at fostering the long-term development and
sustainability of urban areas while alleviating poverty and
encouraging economic expansion.

4.3.18The urban programme must therefore have several
dimensions. It must create a functionally integrated, efficient
and equitable urban economy, as well as effective and
democratic structures of urban governance and management;
enhance the position of women in the cities, and initiate a
social environment which contributes to a better quality of life.

4.3.19Sustainable economic expansion must redress the imbalances
in infrastructure, transportation and basic services in our cities.
Housing, transport, electrification and other infrastructure and
service programmes should promote access to employment
opportunities and urban resources, and the consequent
densification and unification of the urban fabric. In particular,
sites for industries and services that will not harm the
environment should be located near existing townships. New
low-income housing should be situated near employment
opportunities wherever possible.

4.3.20The environmental impact of urban reconstruction and
development must form an integral part of an urban
development strategy. This includes the encroachment of
urban development on viable agricultural land, air pollution,
water pollution and waste management.

4.4 INDUSTRY, TRADE AND COMMERCE

4.4.1Our economy requires coordinated and effective policies that
combine private sector initiatives and government support to
address its structural weaknesses. Coherent strategies are
required in industry, trade and commerce to meet the
challenges of a changing world economy, while at the same
time meeting the needs of the majority. We also require
broadly accepted, well-designed programmes which minimise
the costs of restructuring and change. A five per cent growth
rate and the creation of 300,000 to 500,000 non-agricultural
jobs per annum can be achieved within five years.

4.4.2Objectives of industry, trade and commerce
policy.

4.4.2.1The key goals of our industrial strategy are a
substantial increase in net national investment,
especially in manufacturing, job creation and the
meeting of basic needs. Through the prudent
implementation of macro-economic policies such as
monetary policies, and in particular such instruments
as interest rates and an increase in public sector
investment, gross investment in industry will increase.
In general, our objective is to enhance our
technological capacity to ensure that as part of the
restructuring of industry, South Africa emerges as a
significant exporter of manufactured goods. The
industrialisation strategy aims at the promotion of a
more balanced pattern of industrial development,
capable of overcoming the acute over-concentration of
industrial activities in certain metropolitan centres of
the country.

4.4.2.2Trade and industrial policy must respond to the
demands of reconstruction and development. In
particular, industrial expansion should follow from the
extension of infrastructure to urban, peri-urban and
rural constituencies. Some of this new demand will be
met by utilising the considerable excess capacity that
exists within industry. That should lower unit costs,
raise productivity and foster innovation, providing a
new impetus for international competitiveness.

4.4.2.3While trade policy must introduce instruments to
promote exports of manufactured goods in general, industrial policy
must support and strengthen those internationally competitive
industries that emerge on the basis of stronger internal linkages,
meeting the needs of reconstruction and raising capacity
utilisation.

4.4.2.4Specific policies aim to expand the competitive
advantage already enjoyed by the mining and capital and
energy-intensive mineral processing and chemical industries that
lie at the core of the economy and which provide the bulk of the
country's foreign exchange as outlined in the section on mining and
minerals below.

4.4.2.5Policy must address the constraints on those
segments of manufacturing that fall outside of bulk
steel, metals and chemical production. The recent
GATT agreement has necessitated painful adjustment
in certain quarters, and policy should aim to reduce
and share out the impact of that adjustment while at
the same time promoting efficiency. Substantial
institutional development on a national and sectoral
level is necessary for this process, as discussed in the
'Institutional reform' section below.

4.4.2.6The RDP must strengthen and broaden upstream and
downstream linkages between the burgeoning mineral-based industries
and other sub-sectors of industry. A broad range of instruments
will be deployed, including closer scrutiny of pricing policies for
intermediate inputs. Where conglomerate control impedes the
objectives, anti-trust policies will be invoked.

4.4.2.7Policies must aim to reduce the gap between
conglomerate control of a wide range of activities within the
financial, mining and manufacturing sectors and sub-sectors, on the
one hand, and the difficulties faced by small and micro enterprises
in entering those sectors on the other. As outlined in the section
on small and micro enterprise, instruments may include regulatory
reform, supportive measures in terms of markets, credit and
training, plus measures to prevent the abuse of market power.

4.4.3Trade policy.

4.4.3.1Given the foreign-exchange constraints on growth in
South Africa, trade policies assume enormous
importance. The agreements that a democratic South
Africa enters into with her major trading partners will
play a crucial role in future development.

4.4.3.2A democratic South Africa must rapidly restructure the
relationships with neighbouring African countries, who
import about 20 per cent of our exports. More
balanced and less exploitative trade patterns will result
in more mutually beneficial outcomes. That will
strengthen the Southern African region in its relations
with emerging global trading blocs, as discussed in the
section on Southern African regional policy below.

4.4.3.3Tariff reductions on imports, which are a GATT
requirement, also represent a strategic instrument for
trade policy. Presently, they are subject to negotiation
within the National Economic Forum. The government
must develop democratic and consistent procedures
for revising tariffs and export incentives. It must
simplify the tariff structure and begin a process of
reducing protection in ways that minimise disruption to
employment and to sensitive socio-economic areas.
National agencies concerned with international trade
and tariffs must be sensitive to the interests of the
Southern African region as a whole.

4.4.3.4We must develop more cost-effective incentives
schemes, designed to improve performance and not
just the volume of exports. Trade policy strategies to
promote exports must consider ways to reduce the
bias against small and medium-sized exporters. They
should facilitate the provision of short-term export
finance to small business. Any duplication between the
trade-promotion arms of the Department of Trade and
Industry and the private-sector South African Foreign
Trade Organisation should be eliminated.

4.4.4Institutional reform.

4.4.4.1There should be a review of the functions of
government departments, particularly those of
importance to the RDP, and of the mandates of the
various parastatals and development institutions. As
they are key structures for the successful
implementation of the RDP, such a review must be
given priority. The evaluation should identify whether
the body is appropriate and should continue more or
less in its present form, or whether it should be
significantly altered or merged or closed down. For
instance, it should be considered whether there is an
advantage in maintaining the science councils or
whether some or all of them should be merged.

4.4.4.2In order to promote greater accountability in
parastatals, lines of funding and reporting must be
restructured to ensure that each parastatal is directly
accountable to a particular ministry. This means that
funding and reporting lines must be the same.

4.4.4.3The processes of commercialisation and privatisation
of parastatals must be reviewed, to the extent that
such processes are not in the public interest. This will
require the elaboration of more appropriate business
plans, and publication of those plans for open debate.
The democratic government will reverse privatisation
programmes that are contrary to the public interest.

4.4.5Negotiating forums.

4.4.5.1The RDP must work with existing forums, such as the
NEF, the National Electricity Forum and the National
Housing Forum, and must develop a more coherent
and representative system on a regional and sectoral
basis. These forums must continue to build consensus
around industrial and trade policy. In particular, they
must: address the needs of industrial sectors forced to
adjust and the question of how to share the costs of
adjustment; identify new economic sites of competitive
advantage; develop aspects of industrial and trade
policy, and deal with problems of extending
infrastructure and meeting basic needs.

4.4.5.2The democratic government must work together with
organised labour and business in the NEF to ensure
coordination between macro-economic policies and
trade, industrial and technology strategy. If necessary,
it must restructure the NEF to ensure appropriate
participation and powers.

4.4.5.3Coordination of issues around energy may be
facilitated by a National Energy Policy Council, as an
advisory body, to oversee financing in the energy
sector and to set out national policies on all aspects of
energy, including liquid fuels, coal, gas, electricity,
nuclear power, and other forms of energy for rural and
urban consumers.

4.4.6The corporate sector.

4.4.6.1Business can profit hugely from the new opportunities
offered by economic and social changes, especially
the increased engagement with regional and
international trade and the development of social and
economic infrastructure. To help bring about a more
dynamic business environment, the democratic state
must develop measures to encourage increased
productive investment, greater investment in research
and development, cooperation with small and micro
enterprise, workplace democratisation, and more open
and flexible management styles.

4.4.6.2The RDP will introduce strict anti-trust legislation
to create a more competitive and dynamic business environment. The
central objectives of such legislation are to systematically
discourage the system of pyramids where they lead to
over-concentration of economic power and interlocking
directorships, to abolish numerous anti-competitive practices such
as market domination and abuse, and to prevent the exploitation of
consumers. Existing state institutions and regulations concerned
with competition policy must be reviewed in accordance with the new
anti-trust policy. The democratic government should establish a
commission to review the structure of control and competition in
the economy and develop efficient and democratic solutions. It must
review existing policy and institutions with the aim of creating
more widely spread control and more effective competition. To that
end, it must consider changes in regulation or management in
addition to anti-trust measures.

4.4.6.3The domination of business activities by white
business and the exclusion of black people and women from the
mainstream of economic activity are causes for great concern for
the reconstruction and development process. A central objective of
the RDP is to deracialise business ownership and control
completely, through focused policies of black economic empowerment.
These policies must aim to make it easier for black people to gain
access to capital for business development. The democratic
government must ensure that no discrimination occurs in financial
institutions. State and parastatal institutions will also provide
capital for the attainment of black economic empowerment
objectives. The democratic government must also introduce
tendering-out procedures which facilitate black economic
empowerment. Special emphasis must also be placed on training,
upgrading and real participation in ownership.

4.4.6.4Stable, consistent and predictable policies as well as
a dynamic economy should create a climate conducive to foreign
investment. The democratic government must ensure treatment of
foreign investors equivalent to treatment of national investors.
They should abide by our laws and standards (especially with
respect to labour), and obtain the advantages available to all
investors. The democratic government must develop policies to
ensure that foreign investment creates as much employment,
technological capacity and real knowledge transfer as possible,
allowing greater participation by workers in decision-making.

4.4.7Micro, small and medium-sized enterprise.

4.4.7.1Small businesses, particularly those owned and
operated by black entrepreneurs, must form an
integral part of the national economy and economic
policy. Micro producers should develop from a set of
marginalised survival strategies into dynamic small
enterprises that can provide a decent living for both
employees and entrepreneurs. Policies to that end
must focus on women, who are represented
disproportionately in this sector, especially in the rural
areas.

4.4.7.2Government agencies must provide infrastructure and
skills to raise incomes and create healthier working conditions in
small businesses. They must protect the rights of workers, both
family members and others, and provide training in productive and
managerial skills.

4.4.7.3Experience shows that four major constraints face
small and micro enterprise: the lack of access to credit, markets,
skills and supportive institutional arrangements. In collaboration
with small-scale entrepreneurs themselves, the democratic state
must develop an integrated approach to all four problems.

4.4.7.4In the context of a supportive industrial strategy,
all levels of the democratic government - central, regional and
local - must where possible foster new, dynamic relationships
between large, small and micro enterprises in ways that do not harm
the interests of labour. As discussed in the chapter, 'Implementing
the RDP', the government must require financial institutions to
lend a rising share of their assets to black-owned enterprise. All
levels of the state should also, as far as possible, support joint
marketing strategies and technological development within the
small-scale sector.

4.4.7.5The democratic government must rationalise and
restructure existing parastatals to support small enterprise as far
as their underlying purposes allow. It should reorganise the SBDC
and reform the lending criteria of other agencies such as the IDC
and the development corporations so that they incorporate small and
micro enterprise in their plans as far as this is feasible, and end
corruption and nepotism in their lending programmes.

4.4.7.6Local governments must review zoning and licensing
regulations to end discrimination against micro and small
enterprise.

4.4.7.7All levels of the democratic government must review
their procurement policies to ensure that, where costs permit, they
support small-scale enterprise. In particular, we must explore new
policies on the procurement of furniture and school uniforms, which
micro producers might supply. Procurement regulations must,
however, require appropriate labour standards for suppliers.

4.4.7.8A specific programme must be established to ensure
government support for women entrepreneurs. It must be easily
accessible and include skills training and access to credit.

4.4.7.9In addition to policies to support small-scale
producers in general, the micro enterprise sector requires special
attention. It will benefit from measures ranging from welfare
support to activities that directly enhance competitiveness. Since
the majority of informal sector workers are women, all agencies set
up to support the informal sector should address their needs.

4.4.7.10The development of social and economic
infrastructure, including pre-schools, water supplies, roads and
electrification, will go a long way to improving productivity.
Infrastructural programmes must therefore take the implications for
micro enterprise into account.

4.4.7.11To better serve micro enterprise, the democratic
government must double the existing number of local service centres
and satellites. These satellites must enable the democratic
government to provide for rural women involved in small, micro and
medium-sized enterprises. All training programmes for micro
enterprise must provide appropriate child care.

4.4.7.12A variety of other measures should lower the
barriers to micro enterprise. Laws should be improved to allow
people in this sector to collect debts. Market sites must be
established and access to existing sites facilitated. Land reform
initiatives must reduce the land hunger which drives more and more
people into the informal sector. Finally, as a basis for sound
policy-making in future, the statistical system must incorporate
micro enterprises.

4.4.8Science and technology policy.

4.4.8.1Technology policy is a key component in both industrial
strategy and high-quality social and economic
infrastructure. It is critical for raising productivity in both
small- and large-scale enterprise.

4.4.8.2Science and technology policy should pursue the
broad objectives of developing a supportive
environment for innovation; reversing the decline in
resources for formal science and technology efforts in
both the private and public sectors; enabling
appropriate sectors of the economy to compete
internationally; ensuring that scientific advances
translate more effectively into technological
applications, including in the small and micro sector
and in rural development, and humanising technology
to minimise the effect on working conditions and
employment.

4.4.8.3Technology policy must support inter-firm linkages that
facilitate innovation. In research and development, the
democratic government should support precompetitive
collaboration between local firms and public-domain
efforts combining enterprises and scientific institutes.

4.4.8.4Incentives should support expansion in technological
capacity in both existing firms and new start-ups. A
greater share of government initiatives which facilitate
technological development, knowledge acquisition and
training must directly benefit small and micro
enterprise.

4.4.8.5Girls and women should be encouraged to obtain
technical and scientific skills. The Ministry of Education
must establish targets in the study of science and
technology in educational institutions it subsidises.
Research in the science and technology arena by the
democratic government, parastatals and educational
institutions must cater equally to the needs of women
in this area.

4.4.8.6New legislation must ensure that agreements to import
foreign technology include a commitment to educate
and train local labour to use, maintain and extend
technology. Appropriate technology for small and
medium-sized enterprises must be purchased where
necessary and applicable from other developing
countries. The democratic government must limit
excessive payment of royalties and licence fees.

4.4.8.7The democratic government must develop
programmes to make university-based science more
responsive to the needs of the majority of our people
for basic infrastructure, goods and service. Scientific
research should link up with technological advance in
industry, commerce and services and in small and
micro production. In particular, there must be research
into appropriate and sustainable technologies for the
rural areas.

4.4.8.8The democratic government must redirect
military/strategic production to civilian production.
Policies should encourage former employees to
develop spin-offs.

4.4.8.9The democratic government must develop extensive
institutional support and enhance government
capacities to ensure successful research foresight.
Because science and technology play a crucial role in
the RDP, a strong coordinating agency in government
must maintain on-going consultation with key
stakeholders.

4.4.9Commerce and distribution.

4.4.9.1Distribution patterns have been severely distorted by
apartheid and, in the last two decades, by particular
investment patterns. Problems have emerged,
including the biased location of distribution outlets, a
distorted relationship between property investment and
shopping malls, and excessive concentration of
ownership, particularly in the link with the large
conglomerates and in racial composition.

4.4.9.2These issues must be addressed in order to achieve
more geographically balanced and accessible
distribution, lowered costs of distribution, modernised
linkages between production and distribution, and
greater participation by black people in the distribution
chain.

4.5 RESOURCE-BASED INDUSTRIES

4.5.1Mining and minerals.

4.5.1.1South Africa is one of the world's richest countries in terms of
minerals. Up to now, however, this enormous wealth has only been
used for the benefit of the tiny white minority.

4.5.1.2The minerals in the ground belong to all South
Africans, including future generations. Moreover, the
current system of mineral rights prevents the optimal
development of mining and the appropriate use of
urban land. We must seek the return of private mineral
rights to the democratic government, in line with the
rest of the world. This must be done in full consultation
with all stakeholders.

4.5.1.3Our principal objective is to transform mining and
mineral-processing industries to serve all of our people. We can
achieve this goal through a variety of government interventions,
incentives and disincentives. Estimates suggest that the
establishment of a government minerals marketing auditors' office
and the national marketing of certain minerals would enable South
Africa to realise greater foreign-exchange earnings. The management
and marketing of our mineral exports must be examined together with
employers, unions and the government to ensure maximum benefits for
our country.

4.5.1.4Minerals and mineral products are our most important
source of foreign exchange and the success of our
RDP will in part depend on the ability of this sector to
expand exports to avoid balance of payments
constraints in the short to medium term.

4.5.1.5Mining and minerals products contribute three-quarters
of our exports and the industry employs three-quarters
of a million workers, but this could be much higher if
our raw materials were processed into intermediate
and finished products before export. Our RDP must
attempt to increase the level of mineral beneficiation
through appropriate incentives and disincentives in
order to increase employment and add more value to
our natural resources before export. Moreover, this
policy should provide more appropriate inputs for
manufacturing in South Africa.

4.5.1.6Minerals are a vital input for numerous
mineral-based industries. These industries, however, have
difficulty in becoming internationally competitive due to the fact
that the refining companies usually set higher prices for the
domestic market than their export prices, a practice known as
import parity pricing. A democratic government must consider
mechanisms to encourage companies to sell to local industries at
prices that will enhance their international competitiveness.

4.5.1.7Existing tripartite structures such as the Mining
Summit must be strengthened in order to facilitate national
development strategies for the mining and mineral-processing
industry.

4.5.1.8Democratisation of the mining sector must involve
new laws to build workplace democracy for miners by requiring
employers to negotiate the organisation of work with their
employees and their unions. Programmes must be established to allow
financial participation by workers in mining companies in a
meaningful way (including measures to influence the policies of
financial institutions, especially insurance companies and pension
funds, which hold significant stakes in the mining sector and in
which our people have substantial investments). And anti-trust
legislation and other measures must be implemented to permit the
monitoring and appropriate control of mining, mineral processing
and marketing.

4.5.1.9International demand and supply patterns for metals
and minerals have undergone fundamental changes in recent years
that necessitate the restructuring of this major industry. In the
medium term, this probably means a continued decline in the number
of people employed in the mines. Up to now, the heaviest burdens
associated with down-scaling have been borne by miners, one third
of whom have been retrenched. The RDP must put into place
mechanisms to ensure orderly down-scaling of our mines so as to
minimise the suffering of workers and their families. Measures
should include the reskilling and training of workers for other
forms of employment.

4.5.1.10Mining is a hard and dangerous job, and mineworkers
labour under stressful conditions, often deep under the
earth. The RDP envisages a new set of minimum
standards for the mining industry that ensure fair
wages and employment conditions for all workers and
a health and safety system that recognises the special
hazards related to mining.

4.5.1.11Most mineworkers are forced to live in single-sex
hostels and remit part of their salaries. In future all
workers must have the right to live at or near their
place of work in decent accommodation and shall
have full control over their after-tax salaries. In
addition, the mining companies must take some
responsibility for the education, training and social
needs of miners and their families as an integral part
of labour policy on the mines.

4.5.1.12Mining can be extremely destructive of our natural
environment. Our policy is to make the companies that
reap the profits from mining responsible for all
environmental damage. Existing legislation must be
strengthened to ensure that our environment is
protected. Before a new mine can be established
there must be a comprehensive environmental impact
study.

4.5.1.13The Southern African region also has enormous
mineral resources that have not been mined, due in
part to the destabilisation policies pursued by the
apartheid state in the last twenty years. In the spirit of
mutual cooperation, the RDP should extend across our
borders by using our considerable expertise in mineral
exploration and exploitation to rehabilitate and develop
the mineral potential of our neighbours. In this regard a
special facility should be created to promote
investment in the sub-continent.

4.5.1.14The government must consider ways and means to
encourage small-scale mining and enhance
opportunities for participation by our people through
support, including financial and technical aid and
access to mineral rights. However, standards in
respect of the environment, health and safety and
other working conditions must be maintained.

4.5.2Agriculture.

4.5.2.1A vibrant and expanded agricultural sector is a critical
component of a rural development and land reform
programme. Agriculture contributes five per cent of
GDP and over 10 per cent of employment. Sixty-six
per cent of its output is in the form of intermediates
and its forward and backward linkages are high. The
industry is characterised by a high degree of
concentration in the hands of 60,000 white farmers
who own over 87 per cent of the land and produce
more than 90 per cent of its product. Agriculture in the
bantustans is starved of resources.

4.5.2.2For every additional unit of capital invested, agriculture
ultimately yields a larger number of job opportunities
than all other sectors, with the exception of
construction. The RDP aims to create a restructured
agricultural sector that spreads the ownership base,
encourages small-scale agriculture, further develops
the commercial sector and increases production and
employment. Agriculture should be oriented towards
the provision of affordable food to meet the basic
needs of the population and towards household food
security. The pursuit of national food self-sufficiency
proves too expensive and will not meet these aims.
Moreover, it could undermine trade with neighbouring
countries better able to produce foodstuffs.

4.5.2.3The present commercial agricultural sector will remain
an important provider of food and fibre, jobs and
foreign exchange. The RDP must provide a framework
for improving its performance by removing
unnecessary controls and levies as well as
unsustainable subsidies.

4.5.2.4Support services provided by the democratic
government, including marketing, finance and access
to cooperatives, must concentrate on small and
resource-poor farmers, especially women. This
requires a shift from the current pattern of expensive
and inefficient support for commercial farmers, as well
as reform of the marketing boards and agricultural
cooperatives.

4.5.2.5Comprehensive measures should be introduced to
improve the living and working conditions of farm
workers. All labour legislation must be extended to
farm workers, with specific provisions relating to their
circumstances.

4.5.2.6Efficient, labour-intensive and sustainable methods of
farming must be researched and promoted. To this
end, extension workers should be trained and retrained
and the agricultural education and research institutions
restructured. The RDP must support effective drought
management by providing agro-meteorological advice
to farmers rather than subsidising losses, which in the
past encouraged environmentally destructive farming
methods.

4.5.2.7Increased attention must be paid to additional
processing and value-adding activities derived from
agriculture. This is linked to modernising marketing and
exporting activities, and to the considerable potential
for supplying a growing tourist industry.

4.5.3Fisheries and forestry.

4.5.3.1The marine resources along the South African
coastline form the basis of a fishing industry which
employs some 26,000 persons. The industry, however,
is concentrated in the hands of a few major companies
which own not only the harvesting rights, but also the
processing and marketing concerns. In general wages
are low, work is very often seasonal and provides little
security, and it is dangerous. In addition, some fish
stocks have been overexploited.

4.5.3.2The primary objective of fisheries policy is the
upliftment of impoverished coastal communities
through improved access to marine resources and the
sustainable management of those resources through
appropriate strategies.

4.5.3.3The administration of fisheries should be transferred
from the Department of Environmental Affairs to a
Department of Agriculture, Forestry and Fisheries. The
Sea Fisheries Advisory Committee and the Quota
Board should be retained, but their membership and
functions should be revised. For inshore fisheries and
monitoring of catches, there should be greater
community involvement in enforcement. For offshore
resources, consideration must be given to establishing
a regional 'Coastguard' involving the Southern African
Development Community countries.

4.5.3.4Policies must also enhance the potential for inland
fisheries to improve the livelihood of rural communities
through fish farming.

4.5.3.5The RDP recognises the vast potential of the
wood-based industries in South Africa. Given that the state owns
almost a third of South Africa's commercial forests, the democratic
government has a special responsibility to manage the development
of this sector. Forests use important tracts of land, they limit
the water supply in some areas, and there are potential
environmental hazards in single-crop plantations such as commercial
forests. The current usage of timber resources is wasteful, and we
are opposed to the massive and growing export of raw wood-chips.

4.5.3.6For these reasons the RDP promotes the tightening of
regulations governing land use in sensitive areas.
There is enormous scope to add value to our raw
timber materials prior to export. The local pulp and
paper industry can meet the growing need for paper,
especially as education expands. But the price of
paper products must be lowered to the benefit of local
consumers as well as to enable more effective
competition in international markets for value-added
paper products. To achieve this, we must improve
efficiency and make substantial investments. The trade
unions have a significant contribution to make in
restructuring this industry and enhancing its
performance.

4.5.4Tourism.

4.5.4.1Tourism in South Africa has been geared essentially to
the local white and overseas markets, and has been
adversely affected by apartheid and the resultant
sanctions. All aspects of tourism were provided on a
racial basis, including infrastructure, lodgings, and
even national parks, game reserves and recreational
areas. Natural resources are part of our national
patrimony and we must develop a culture of
appreciation.

4.5.4.2A process of reconstruction and development must
take place within tourism in view of the distortions
created by apartheid. In the process of restructuring, a
vast potential could be realised, both in terms of the
local mass market, and in terms of increased foreign
exchange. This would also result in the creation of
large numbers of sustainable jobs in tourism and allied
industries, and would take advantage of South Africa's
extraordinary human and natural resources.

4.5.4.3To achieve the desirable results, sound planning is
needed, which should be predicated on thorough
research and consultation. With respect to the local
mass market, education, access to facilities and the
support of black entrepreneurship are critical. In
addition, promotion of ecotourism and enhancement of
South Africa's unique cultural and political heritage
must be prioritised. These afford opportunities for
integrating traditional knowledge into tourism.

4.5.4.4Community involvement in tourism projects must be
encouraged, stressing partnerships with other
agencies and initiation and ownership of enterprises.
Communities must be given access to finance,
management skills, upgrading of tourist service skills,
language proficiency and connections with marketing
infrastructure. Training institutions should be located in
areas accessible to local communities to prevent
leakage of skills from the area. This could be
combined with other extension services and
development training programmes at regional and
local level.

4.5.4.5The Southern African dimension offers enormous
tourist potential. A coordinated, mutually-beneficial
policy within the region could offer some of the world's
greatest natural and recreational tourist attractions.

4.5.4.6Tourism is potentially a major source of employment
and foreign exchange, and could ease balance of
payments constraints in a short period of time,
provided that resources required for the tourism
industry are locally sourced. This requires tourism to
be carefully integrated into provincial and local-level
development programmes.

4.5.4.7Without effective support from the democratic
government, communities and hospitality industry
workers, however, there is a danger that tourism will
have potentially damaging effects on our rich and
diverse cultures and natural resources. Full and
transparent environmental impact assessments should
be conducted for all major tourism projects. The
tourism industry could be a major industry, and thus
should receive greater priority at national and provincial
levels.

4.6 UPGRADING INFRASTRUCTURE

4.6.1The link between meeting basic needs through an
infrastructural programme and reviving economic growth in
manufacturing and other sectors is the essence of the link
between reconstruction and development. However, it is more
than just providing electricity, water and telecommunications. It
is a programme that integrates and upgrades infrastructure at
the same time.

4.6.2The infrastructural programme must ensure an integrated
approach to the provision of various services so that we
upgrade our infrastructure in a manner that both meets basic
needs and enhances new and effective economic activity. This
is particularly true in areas of information technology.
Upgrading in these areas can facilitate an upgrading of
education, health care, recreation and other services, by
improving the quality of information available and providing
communities throughout the country with access to expertise
and usable data.

4.6.3The use of information technology provides a major challenge
in linking basic needs with information highways in innovative
ways that improve the capacity of industry to successfully
reintegrate into world markets. Southern Africa could lead the
way in providing this link so vital to the developing world.

4.6.4In addition to upgrading infrastructure in existing areas, its
extension to all parts of the sub-continent will both break down
apartheid and colonial geography, and open up new economic
potential in the areas of production and tourism.

4.6.5Electrification. In addition to meeting basic energy and
lighting needs for households, specific attention must be paid
to making electricity available to micro, small, medium-sized
and agricultural enterprises in both urban and rural areas. The
benefits of cheap electricity presently enjoyed by large
corporations must be extended to all parts of the economy.

4.6.6Telecommunications. Under apartheid,
telecommunications were not developed in a manner cognisant of the
possibilities for expanding the economy to the lives of all South
Africans. As a result, massive inefficiencies and missed
opportunities characterise the sector. Information is today
considered a commodity of great significance, and South Africa must
now catch-up in order to take advantage of the changing
technological and economic roles that telecommunications can
play.

4.6.7The development of an advanced information network should
play a crucial role in facilitating the provision of high-quality
services to all the people of South Africa. It must provide a
significant advantage to the business sector as it reduces costs
and increases productivity, and serves as an integral part of
financial services, the commodities market, trade and
manufacturing.

4.6.8The basic infrastructural network must remain within the public
sector. Certain value-added services could be licensed within
the framework of an overall telecommunications programme.
An integrated system of groundline, microwave, fibre-optic and
satellite communications must substantially enhance the
overall system.

4.6.9The RDP aims to bring telecommunications closer to all
potential users. A telecommunications regulatory authority
must be established, which should be separated from policy
and operating activities.

4.6.10The development of telecommunications must be
underpinned by a strong telecommunications manufacturing sector.
The democratic government must encourage this sector to work
closely with the network operators in developing suitable systems
for possible export to Africa and other developing areas.

4.6.11Transport. There is an urgent need to develop
an integrated and rapid transportation system that links the
domestic economy, Southern Africa, and world markets. This entails
the upgrading of road and rail networks and their extension to the
whole area, but also a rapid interface between road, rail, air and
sea.

4.6.12A review of the current situation within all transportation
systems must be undertaken in order to assess the capacity of
these systems and how they could enhance the development
of other sectors of the economy and contribute to the RDP.
The structure of the railway network and its operating system
was badly distorted by our colonial and apartheid history. A
comprehensive review of both the network and operating
system is needed to increase their contribution to the RDP. A
similar review is required in road freight with particular attention
being paid to ownership patterns and barriers to entry.
Particular attention must be paid to the regulatory structures of
the transportation systems.

4.6.13A Southern African transportation network enhanced by
information networks could play a major role in underpinning
the socio-economic reconstruction of the sub-continent.

4.7 REFORM OF THE FINANCIAL SECTOR

4.7.1The apartheid system severely distorted the South African
financial system. A handful of large financial institutions, all
linked closely to the dominant conglomerates, centralise most
of the country's financial assets. But they prove unable to serve
most of the black community, especially women. Nor do they
contribute significantly to the development of new sectors of
the economy. Small informal-sector institutions meet some of
the needs of the black community and micro enterprise. They
lack the resources, however, to bring about broad-scale
development.

4.7.2The regulatory framework. The democratic
government must modify regulations and support innovative financial
institutions and instruments which mobilise private domestic
savings to help fund the RDP, while not reducing incentives for
personal savings. The democratic government must enhance
accountability, access and transparency in the financial sector. In
cooperation with other stakeholders, it must review both
regulations and regulatory system to determine which aspects prove
an unnecessary impediment to the RDP, and more generally to greater
efficiency in the mobilisation and subsequent allocation of
savings. Government must encourage the private sector to cooperate
in extending financial services to those who presently do not have
access to these services. The establishment of a smoothly
functioning and inexpensive payments system, assuring safety of
consumer deposits, must be considered a high priority. To improve
flexibility in the legal environment, parliament should establish
an oversight committee for the financial sector.

4.7.3Prohibition against discrimination. The
democratic government must introduce measures to combat
discrimination on the grounds of race, gender, location and other
non-economic factors. The democratic government must, in
consultation with financial institutions, establish prudent
non-discriminatory lending criteria, especially in respect of
creditworthiness and collateral; reform the laws on women and
banking to ensure equality; forbid blanket bans on mortgage bonds
to specific communities ('redlining'); require banks to give their
reasons when turning down a loan application; establish community
liaison boards; develop simpler forms for contracts and
applications, and create an environment which reduces the risk
profile of lending to small black-owned enterprises and requires
banks to lend a rising share of their assets to small, black-owned
enterprise. The law must also require that financial institutions
disclose their loans by race and gender; their assets and
liabilities by subregion and sector; their staff by race and
gender; the location of their branches and defaults by
neighbourhood. To enforce laws against discrimination, the
democratic government must establish an ombuds for the financial
sector. At the local level, ombuds structures must include
community representatives. Where anti-discrimination measures do
not generate enough credit for housing, small enterprise and other
RDP programmes, the government must provide appropriate kinds of
financial support. The democratic government should consider
reapplying the Usury Act to small loans (in addition to loans above
R6,000, as presently applies), and should enforce the Act more
effectively.

4.7.4Housing bank and guarantee fund. The democratic
government must establish a Housing Bank to ensure access
to wholesale finance for housing projects and programmes. A
Guarantee Fund will protect private sector funds from undue
risk. Approximately half the Bank's funds will come from the
government in the form of recurrent housing subsidies, in order
to ensure affordable bonds.

4.7.5Community banking. Community banks of various
types have proven able to finance informal entrepreneurs,
especially women. The democratic government must encourage
community banking. It must reform regulations to foster the
development of community banks while protecting customers. Where
possible, government structures at all levels should conduct
business with these institutions. The government must encourage the
established banks and other financial institutions to help fund the
community banks.

4.7.6Pension and mutual funds. Pension and provident funds
should be made more accountable to their members, and
insurance companies to their contributors. The democratic
government must change the law to ensure adequate
representation for workers through the trade unions and
compulsory contributions by employers, and move towards
industry funds. It must also legislate a transformation of the
boards of the Mutual Funds to make them more socially
responsible. The RDP must embark on a review of financial
institution legislation, regulation and supervision to ensure the
protection of pension and provident funds and other forms of
savings and investment.

4.7.7The Reserve Bank. The Interim Constitution
contains several mechanisms which ensure that the Reserve Bank is
both insulated from partisan interference and accountable to the
broader goals of development and maintenance of the currency. In
addition, the law must change the Act governing the Reserve Bank to
ensure a board of directors that can better serve society as a
whole. The board must include representatives from the trade unions
and civil society. In future, a stronger board of governors should
emerge through the appointment of better-qualified individuals. The
new constitutional requirement that the board of governors record
its decisions, publicise them when feasible, and account to
parliament should help in developing a more professional and
credible executive, with greater ability to exercise its mandate
than the present board of governors.

4.7.8The democratic government should immediately increase the
resources available in the Reserve Bank and other appropriate
agencies for combating illegal capital flight. Furthermore, the
democratic government must enter into discussions with
holders of wealth in an effort to persuade them of the harmful
effects their actions are having on our economy.

4.8 LABOUR AND WORKER RIGHTS

4.8.1Over the years, workers have won many struggles and made
many gains in the workplace. The fundamental principle of the
RDP is to safeguard these rights and extend them. Organised
labour must be empowered to act as a strong force in the
reconstruction and development of our country.

4.8.2There must be equal rights for all workers, embodied in a
single set of labour statutes.

4.8.3Basic organising rights. The following rights of workers must
be in the Constitution:

4.8.3.1the right to organise and join trade unions;

4.8.3.2the right to strike and picket on all economic and social
matters, and

4.8.3.3the right to information from companies and the
government.

4.8.4The Constitution should not prohibit the conclusion of union
security agreements, including closed and agency shops. The
right to lock out should not be in the Constitution.

4.8.5Living wage. All workers should be entitled to
a living wage and humane conditions of employment in a healthy and
safe working environment. The interlocking elements of the RDP, in
particular the promotion of collective bargaining, minimum wage
regulation, affirmative action, education and training,
technological development, and provision of services and social
security, must all be combined to achieve a living wage for rural
and urban workers and reduce wage differentials. The required
levels of growth for the successful implementation of the RDP can
only be achieved on the basis of living wage policies agreed upon
by government, the labour movement and the private sector.

4.8.6Reconstructing and developing the economy require
far-reaching changes in employment patterns and labour market
policies. The democratic government must set up institutions and
mechanisms to facilitate this process in order to avoid unnecessary
hardships while utilising our human resources to their full
potential.

4.8.7Collective bargaining. Effective implementation of the RDP
requires a system of collective bargaining at national, industrial
and workplace level, giving workers a key say in industry
decision-making and ensuring that unions are fully involved in
designing and overseeing changes at workplace and industry
levels.

4.8.8Industrial bargaining forums or industrial councils must play an
important role in the implementation of the RDP. Agreements
negotiated in such forums should be extended through
legislation to all workplaces in that industry. There must be
enhanced jurisdiction for these forums to negotiate:

4.8.8.1industrial policy including the implementation of the
RDP at sectoral level;

4.8.8.2training and education programmes;

4.8.8.3job placement programmes in the industry, and

4.8.8.4job creation programmes.

4.8.9Workplace empowerment. Legislation must facilitate worker
participation and decision-making in the world of work. Such
legislation must include an obligation on employers to negotiate
substantial changes concerning production matters or
workplace organisation within a nationally negotiated
framework, facilities for organisation and communication with
workers on such matters, and the right of shop stewards to
attend union meetings and training without loss of pay as well
as to address workers.

4.8.10In addition to the reform of labour law, company and tax law
must be amended to ensure that the rights of workers are
protected and extended, for example in relation to workers'
access to company information.

4.8.11Instruments of policy such as subsidies, taxes, tariffs, tenders
etc. must all be utilised to encourage stakeholder participation
in the RDP and promote worker rights, human resource
development and job creation.

4.8.12Since human resource development is crucial to the successful
implementation of the RDP, the democratic government must
support programmes to upgrade skills on a broad basis in
terms of a national education and training policy negotiated
between unions, employers and government. Further details
are set out in Chapter Three.

4.8.13Affirmative action. Affirmative action
measures must be used to end discrimination on the grounds of race
and gender, and to address the disparity of power between workers
and management, and between urban and rural areas. Those measures
must:

4.8.13.1entail a massive programme of education, training,
retraining, adult basic education and recognition of
prior learning, to overcome the legacy of apartheid;

4.8.13.2empower not only individuals, but communities and
groups, under conditions which promote the collective
rights and capacity of workers and their
representatives to negotiate workplace issues;

4.8.13.3establish principles for the hiring and the promotion of
workers with similar skills/jobs which will prevent
discrimination against people previously disadvantaged
by apartheid or gender;

4.8.13.4accelerate, through collective bargaining programmes,
the eradication of discrimination in each and every
workplace;

4.8.13.5provide job security for pregnant women and promote
the provision of child care, as discussed in Chapter
Three, to further women's equality in employment;

4.8.13.6ensure that the development of special expertise
among South Africans takes priority over the import of
outside personnel (this policy should not, however,
prejudice foreign investment or cooperation in the
Southern African region), and

4.8.13.7establish legislation and a strong ombuds to monitor
and implement affirmative action measures.

4.8.14Legislation must prohibit sexual harassment, and
education programmes must be launched to make workers and employers
aware about the issue and about how to lodge complaints.

4.8.15International conventions. The international
labour conventions of the International Labour Organisation (ILO)
concerning freedom of association, collective bargaining, workplace
representation and other fundamental rights must be ratified by the
South African government.

4.8.16Restructuring of labour market institutions. The
Department of Manpower and labour market institutions related to
it, such as the Unemployment Insurance Board, and the Workmen's
Compensation Board, must be restructured in consultation with the
major stakeholders in the tripartite labour market forums such as
the National Manpower Commission.

4.8.17All of the above, coupled with a democratic political
dispensation, improvements in the living standards of workers
and a programme of human resource development will release
the resources of the nation's workers and significantly improve
productivity in the economy.

4.9 SOUTHERN AFRICAN REGIONAL POLICY

4.9.1In the long run, sustainable reconstruction and development in
South Africa requires sustainable reconstruction and
development in Southern Africa as a whole. Otherwise, the
region will face continued high unemployment and
underemployment, leading to labour migration and brain drain
to the more industrialised areas. The democratic government
must negotiate with neighbouring countries to forge an
equitable and mutually beneficial programme of increasing
cooperation, coordination and integration appropriate to the
conditions of the region. In this context, the RDP must support
the goals and ideals of African integration as laid out in the
Lagos Plan of Action and the Abuja Declaration.

4.9.2Whilst South Africa's trade with its neighbours in Southern
Africa constitutes a relatively small percentage of its total trade
with the world, this trade has been growing rapidly over the
past few years. In addition, a significant percentage of South
Africa's exports to African countries that are not members of
the Southern African Customs Union (SACU) consists of
manufactured goods. Various studies have shown that there is
a great complementarity between the types of goods imported
by Southern African Development Community (SADC) and
Preferential Trade Area (PTA) countries and the goods that
South Africa is exporting.

4.9.3However, the current trade pattern between South
Africa and the sub-continent is unbalanced, as regional imports
from South Africa exceed exports to South Africa by five to one. A
democratic government must develop policies in consultation with
our neighbours to ensure more balanced trade.

4.9.4Developing the capacity of our neighbours to export
manufactured goods to South African markets requires the
democratic government, in consultation with neighbouring
states, to encourage and promote industrial development
throughout the region. A democratic government must
contribute towards the development of regional and industrial
strategies for specific sub-sectors, such as mineral
beneficiation, auto components and textiles.

4.9.5A democratic government should also encourage the
development of joint, mutually-beneficial projects to develop
our regional water resources, electricity and energy supply,
transport and telecommunications, and agricultural and food
production.

4.9.6One element of regional policy, defended particularly
in the call for a Southern African Social Charter by trade unions,
is that minimum standards with regard to rights of workers to
organise be established across the region as a whole. This will
allow a process of greater integration to become one of levelling
up rights and conditions of workers, rather than of levelling them
down to the lowest prevailing standard.

4.9.7A democratic government should encourage technical and
scientific cooperation with our neighbours to enhance the
development of expertise in the region in areas such as
agricultural research and development, environmental
monitoring and protection, health and other research.

4.9.8A democratic South African government should apply for
membership in the SADC and possibly the PTA, and should
support reforms in the SACU to enhance democracy and
equity. Within these structures we must enhance our capacity
as a region to effectively interact with international financial and
trade institutions.