Friday, 14 March 2025, 10am
Honourable Chairperson
Members of Parliament
Fellow South African
The African National Congress welcomes the debate as proposed by Hon. Chance of the Democratic Alliance (DA). Perhaps the debate must start with giving a brief historical overview of why South Africa is in the state, why poverty coexist side by side with the rich.
Colin Bundy, a South Africa historian paraphrasing Karl Marx advised that understanding the path we need to travel requires of us to draw lessons from our past. He said “people make their own history, but not in circumstances of their own choice; they act in an arena shaped by the past. Accordingly to understand the present conjuncture in South Africa, it is essential to have a sense of its history to reflect on constraints and the possibilities created by that history.” If one is to properly characterise contemporary South Africa and the challenges we face. In South Africa, will depend more on how the past is remembered than how the future is plotted.
Unequal power structure played a central role in the colonial period from 1652 to 1910. This trend continued during the period of segregation and apartheid from 1910 to 1994, when power was entirely monopolised by whites had a devastating consequences for blacks. Unequal socio-economic outcomes have remained a defining characteristic of the post apartheid period. Despite our transition to an inclusive democracy, old forms of inequality have been perpetuated and some entrenched more deeply than ever before.
It is a fact that colonial and apartheid state promoted development in Agriculture and Mineral Energy Complex (MEC) sectors and that represented an important step towards the full scale industrialisation during period. The State Owned Enterprises (SOE) in South Africa date back to the 19th century, when Paul Kruger’s Zuid Afrikaansche Republiek tried to promote local industries to starve off British control.
Kruger’s administration opted for high tariffs against imports of many consumer goods as well as industrial goods used by the mining industry. At the same time it handed out monopoly concessions for local manufacturers, the most notable were the railway service and electricity generation for the mines. By the 1920s, the expanding railway enterprise – the South African Railways and Harbours, now Transnet needed more and cheaper electricity, and steel for rails.
In 1923, the government under General Smuts established the Electricity Supply Commission (now Eskom) in part to serve the railways and also the growing mining industry. In 1928, Prime Minister Hertzog established the ISCOR now (Arcelor Mittal) to produce cheap steel rails for the South African Railways and Harbour and to create some independence from the profit-seeking European steel makers.
Furthermore, the first Post Office was established by John Rhenius in 1791 at the Castle in Cape Town to facilitate the communications amongst others and later, Telkom was established. All these entities were state-led SOE’s and were funded as such, so the debate that seeks to suggest privatisation of key network industries has no basis on facts.
Without aggressive redistribution intervention by the state on behalf of the poorest, half of the population will remain trapped in the situation of extreme poverty and under development.
The essence of the DA’s attitude towards rolling back the state and having the private sector take centre stage to drive is steeped in racism. Race is a huge factor in the power structure, to deprive the poor of opportunities to escape poverty. In our context, racism has many facets: social, psychological, cultural and economic. It is about the continuation of colonial and apartheid power relations.
The debate that suggests any notion of transformation devoid of the state, especially from the DA who benefitted from both colonial and apartheid South Africa is disingenuous and at worse, a hate crime, Hon. Chance. You are hellbent at promoting economic exclusion of indigenous majority who were systematically sidelined from the main stream economy and this cannot be allowed by a democratic state.
The argument that economic transformation should be led by inclusive growth and private enterprise, rather than government-run initiatives, ignores the historical reality of how South Africa’s economy was shaped.
The colonial and apartheid governments used state intervention extensively to empower white people, particularly Afrikaners, at the expense of the black majority. This precedent demonstrates that economic transformation requires active government involvement to correct past injustices and create a more equitable society.
Under both colonial and apartheid rule, the South African state played a central role in empowering white citizens, particularly Afrikaners, through deliberate government policies, subsidies, and legal frameworks.
The Mines and Works Act of 1911 (commonly referred to as the “Colour Bar Act”) legally excluded black workers from many mining and industrial jobs, ensuring that high-income positions remain in the hands of white South Africans.
Additionally, the government established the Civilised Labour Policy in the 1920s, which prioritised white workers in industries like the railways and public service, providing stable employment, while pushing black workers into lower-paying, unskilled labor.
These SOEs provided employment and business opportunities mainly for white South Africans, demonstrating how the state played an interventionist role in shaping economic power structures.
The 1913 Land Acts reserved the vast majority of South African land for white ownership, leaving black South Africans with only 7% (later increased to 13%) of the land despite forming the majority of the population. White farmers were further supported through:
• Low-interest loans from the Land Bank
• Direct subsidies from the state
• Marketing boards that controlled agricultural prices, ensuring white farmers received favourable conditions while black farmers were excluded from the formal agricultural economy.
Honourable Members, countries developed their network utilities through state-owned enterprises (SOEs), mainly because it was considered to be an efficient way to centrally plan and manage these developments and to ensure that the goods and services are delivered to the public.
These utilities also consisted of certain characteristics that made it presumably unavoidable for the state to intervene, e.g. natural monopoly elements, requirement for huge investments and the universal service issue.
These network industries usually exhibit two characteristics. Firstly, they provide a distribution, transmission, or transport service through a network of cables, pipes or other facilities which tend to enjoy such large scale economies as to become natural monopolies. Secondly, since the service they provide is often regarded as an essential input to other industries, the efficiency of utilities has a widespread impact on the efficiency of other firms.
During the 1980’s the SOE model came under increasing pressure, because of inter alia globalisation and a view that there should be greater reliance on market forces, rather than state interventions. The view was that the state should focus on setting the policy framework, while the actual operation of the particular activity should be left to the private sector and market forces. Network utilities (water, electricity, gas, petroleum pipelines, telecommunications and transportation) are of crucial importance for economic growth and national competitiveness.
Having demonstrated above that the colonial and apartheid systems were fully anchored by state intervention, the question is, what is to be done by a democratic state? The ANC proposes the following Industrial Policy anchored by the state. South Africa’s Industrial Policy must be anchored by large state support to industrial firms for purposes of transformative growth.
Government should play a critical role in channeling resources, identifying strategic industries and creating the conducive conditions for big firms to thrive. A case in point is Accelor Mittal Steel, which was a major contributor to the development of the steel industry during the early years of our now thriving democracy, which was later sold to a private, foreign family. The damage to the steel industry is huge and we call on the democratic government to rescue, not the firm, but the steel industry for posterity of South Africa.
As a developmental state, South Africa should reshape its future. The government should be instrumental in developing and implementing export-oriented industrialisation policies, prioritising heavy industries, such as steel, mineral beneficiation, shipbuilding, high-tech manufacturing & localisation. This, in an effort to foster the rise of targeted industries in the Auto Sector; Mining Commodities & Beneficiation; Agriculture Modernisation & Agro-Processing as key pillars of our industrial policy.
The proposition we are making is this;
• Through the Development Financial Institution (DFI), government should support Network Industries such as energy, logistics (rail, port, pipelines), telecommunications and bulk water infrastructure that support Industrial Development;
• Invest more in human capital and pursue a resource-based industrialisation and diversification strategy that allows the continent to exploit its comparative advantage and build resilience, South Africa is no exception.
• Government must make strategic interventions including low-interest loans; subsidies and high tariffs; and trade protectionism.
• It should also include technological support, innovation support and infrastructure development into these sectors that enable economic growth and development.
• Recognise that the integration into global supply chains through large export-oriented industries, that are often exported only to be imported at highly exorbitant prices, is a prerequisite for our economic growth.
South Africa is endowed with natural resources that are critical for future development. As such, we recognise that our ports need to enhance their capabilities so that our country can export more processed products globally using the competitive advantages of our minerals.
The mining sector also holds significant potential and the state must built capacity and ensure proper support to private sector. Our minerals are strategic to develop hydrogen fuel cells, whilst positioning the country as a global leader in renewable energy space.
South Africa should use its competitive advantage to drive industrial growth by investing in downstream processing and manufacturing.
The historical role of the state in empowering white South Africans through interventionist policies contradicts the notion that private enterprise alone can drive inclusive economic transformation. If the apartheid government used the state to create a prosperous white middle class, then a democratic government has a responsibility to use similar tools to address inequality and create a more inclusive economy.
Black South Africans were systematically excluded from wealth creation, education, and high-paying jobs. Government-led initiatives such as Economic Empowerment, land reform, and skills development programs are necessary to correct these structural inequalities.
Just as the apartheid government used SOEs to uplift Afrikaners, today’s government should strengthen public institutions to drive transformation. Investments in infrastructure, energy, and industrial development to create jobs and provide opportunities for historically disadvantaged groups.
While private enterprise is crucial for economic growth, historical evidence shows that without government intervention, wealth will remain concentrated among those who historically benefited from state-backed economic privilege. A mixed approach—where the state plays an active role in fostering inclusive growth while supporting private enterprise—is the most effective way forward.
The country needs a strong, capable state with the political will to drive long-term development. However, currently, it faces a challenge in resisting multinational pressure for minimal regulation, tax breaks, and control over key industries without majority local ownership.
The country should not be afraid to protect its infant industries.
It should unapologetically promulgate policies that promote beneficiation, processing raw materials locally into high-value products would enable the formation of industrial base for the country.
This can be done by investing in high-productivity sectors, and building globally competitive firms, that way, the country can chart a path toward sustainable, inclusive growth.
In short, our Industrial Policy proposals should be anchored around steel and related industries, Auto Sector in particular the EV, Battery Cell and Hydrogen Technology, High Tech Manufacturing anchored by localisation, Mining and Benefitiation with strong quarters in favour of value addition and agriculture with sophisticated Agro-Processing as the basis.
South Africa is a significant player in the mineral energy complex, with huge well sought after deposits, which can play a role as we reimagine our industrial policy. We emphasised the clear desire of South Africa to move from sourcing raw critical minerals to higher value activities in domestic processing and refining.
The traditional “Pit-to-Port” strategy has not yielded any desired results, therefore remain unsustainable. The Industrial Policy of the country will be anchored on value addition and Beneficiation to significantly boost manufacturing capabilities.
Paul Krugman opined that “the austerity agenda, which looks a lot like a simple expression of upper class preferences, wrapped in a facade of academic riff-raff. What the top 1% percent wants to become what economic science says we must do”
Indeed, Paul Krugman was correct, your views represent those of the 1% privileged few who pray on oppression.
The argument against government-led transformation initiatives fails to acknowledge that South Africa’s current economic disparities are the result of deliberate state intervention in favor of white economic empowerment. Given this history, it is both necessary and justifiable for the democratic government to use similar tools to drive economic transformation. Private sector-led growth alone will not address historical injustices; only a combination of inclusive government policies and enterprise development can create a truly equitable economy.
In conclusion, Hon. Chance, your assertion is not founded in any logic. In fact, your views are counter-productive, at worse, naive about he role of the state in the economy.
I, thank you.