At its Lekgotla in July, the Cabinet once more focused on the critically important issue of the struggle against poverty. In this context, it observed that our country is characterised by two parallel economies, the First and the Second. The First Economy is modern, produces the bulk of our country's wealth, and is integrated within the global economy.
The Second Economy (or the Marginalised Economy) is characterised by underdevelopment, contributes little to the GDP, contains a big percentage of our population, incorporates the poorest of our rural and urban poor, is structurally disconnected from both the First and the global economy, and is incapable of self-generated growth and development.
To respond to the challenge of this Second Economy, we have examined the system of "Structural Funds" instituted by the European Union (EU) in respect of its regional policy, which is based on financial solidarity of transferring a portion of the EU's budget to the less prosperous regions and social groups within the EU.
The EU programme is premised on the reality that "the market cannot be relied upon to meet the development needs of the 'less favoured regions' within the EU, guarantee the achievement of the centrally important objective of social cohesion, and provide the means for the implementation of 'strategies for catching up'".
In the same spirit, the Cabinet has resolved that the development of the Marginalised Economy requires the infusion of capital and other resources by the democratic state to ensure the integration of this economy within the developed sector.
The Cabinet's decisions will necessarily involve active partnership with provincial and local governments and other social partners. The key strategies to meet the growth and development challenges of the Second Economy, include:
The Cabinet made the determination that the advances we have made with regard to the First Economy, during our first nine years of our liberation, have put us in a position to meet the objective fundamental to our strategic outlook, to reduce the numbers of those dependant on social grants, by enabling them to pull themselves out of poverty by engaging in gainful economic activity and exercising their right to human dignity.
Despite our resources limitations, we are pleased to say that the government has delivered services to our people in a way that has turned the tide against many centuries of colonialism and apartheid characterised by the ever- increasing impoverishment of the majority.
The March 2003 Labour Force Survey of Statistics SA showed that two million new jobs were created in the previous seven and a half years, bringing the total of those employed to 11.6 million. This represents an employment growth rate of over 2.5 percent a year.
However, as indicated in the Ten Year Review, the numbers of those joining the labour market has grown at a faster rate. Demographic changes, such as more women entering the labour market, have also intensified the need for our economy and society to create more jobs.
I commend to the National Council, the government's Towards a Ten Year Review. The Review frankly assesses how far we have come since we attained our freedom in 1994. It provides important indicators of what we need to do as we strive during our Second Decade of Liberation to advance our goal of pushing back the frontiers of poverty and expanding access to a better life for all.
One of the clear conclusions of The Review is that each and every one of us in the provinces, local government and traditional authorities have to continue to work together with national government as partners in order to discharge our mandate to our people to create a prosperous, healthy and vibrant multicultural society.
In the State of the Nation address in February, I promised that we would launch an Expanded Public Works Programme (EPWP) to promote economic growth and create sustainable development.
I am pleased to report that the Department of Public Works together with other Departments, including the Departments of Environment Affairs and Tourism, Agriculture, Education, Health, Social Development and Trade and Industry, provincial and local governments and civil society formations have come up with a comprehensive business plan, approved by Cabinet on 4 November 2003, which will now be implemented in phases.
The EPWP is a nation-wide programme that will draw significant numbers of the unemployed into productive employment, so that workers gain skills while they are gainfully employed, and increase their capacity to earn an income once they leave the programme. The EPWP is targeting one million unemployed people in the first five years.
The centre-piece of the EPWP is a large-scale programme of using labour-intensive methods to upgrade rural and municipal roads, municipal pipelines, storm water drains and paving as well as fencing of roads, community water supply and sanitation, maintenance of government buildings, housing, schools and clinics, rail and port infrastructure, electrification infrastructure, improving the environment, improving service delivery, and so on.
The success of the EPWP will depend on how well all our spheres of government work together as partners to achieve practical results.
The youth of our country are significant stakeholders in our reconstruction and development plans. A lot of energy has gone into infusing a youth development approach in the public delivery system though the results are still uneven. Through the National Youth Commission and the Umsobomvu Youth Fund it has been possible to provide guidance to departments and interact with senior managers to ensure that youth development is supported internally.
Youth Development must become an integral part of what we do in the provinces and municipalities. Youth development and participation must form part of our development of Integrated Development Plans.
In the coming months, we must scale the National Youth Service (NYS) upwards, from pilot service projects administered through these three partners into a coherent national effort involving key national and provincial departments.
Our macro-economic policies and micro-economic interventions have helped to place our public finances and the First Economy on a radically better footing than they were in 1994. These improvements have helped to generate the resources we need to address the challenge of the Second Economy. This also means that we must persist in our work to ensure the further growth and development and modernisation of the First Economy, including its capacity to absorb larger numbers of work-seekers.
This also relates to the important issue of black economic empowerment, which remains one of the priorities of our government, both to end the racial disparities in our economy and society and to address the challenge of poverty and underdevelopment. Government has also made significant sums of money available for this empowerment. The state corporations are also important partners in this regard.
The successful Growth and Development Summit held last June, served as a positive signal of the ability of South Africans to work together to meet our economic goals.
The government is also paying the closest attention to the proper functioning of the Presidential Working Groups, further to consolidate the people's contract for a better future. The Presidential Working Groups create the possibility for an on-going dialogue between government and representatives of civil society formations, NGOs, business and trade unions.
Since April 2001, the Presidency has engaged with the masses of our people across South Africa in the form of the iimbizo. This year, we have gone to the provinces of the North West and the Western Cape. We still have to visit KwaZulu Natal, the Northern Cape and Mpumalanga.
The iimbizo have given all of us a unique and personal insight into the lives of the masses of our people who have elected us into office. Our top priority is to ascertain what the actual needs of our people are; how efficient the delivery of services at all levels of government is, and to address problems; and whether governments' policies have had a positive and regenerative impact on our communities.
The Second Decade of Liberation will be decisive for our country because it will determine whether we succeed to meet the challenges posed by the existence of the Second Economy in our country. I am certain that we will meet our goals in this regard.
But equally, I am certain that we will not achieve this historic victory unless we join hands in a truly meaningful manner, in a real people's contract that unites the majority of our people in action to eradicate the legacy of colonialism and apartheid.
We must move forward together in unity to push back the frontiers of poverty, to expand access to a better life for all, to extricate millions of our people from the Second Economy which condemns them to poverty, underdevelopment, marginalisation and loss of human dignity.
This Letter is an abridged version of the Address of the President to the National Council of Provinces (NCOP) on 11 November 2003.
