Mr Major’s Speech to the South African Chamber of Business – 21 September 1994
Below is the text of Mr Major’s speech to the South African Chamber of Business in Johannesburg, held on Wednesday 21st September 1994.
PRIME MINISTER:
Mr President, Mr Premier, Ladies and Gentlemen. It was very kind of you, over the last few minutes, to have thanked me so graciously for the very warm welcome my country was privileged to give to the South African cricket team this summer. They certainly were very welcome guests indeed, everyone was pleased to see them – the public, the sports community, the government, and of course Mr Devon Malcolm, who was especially pleased that they turned up. He asked me to send them his very best wishes and to say how much he looks forward to meeting them again.
I have come this morning, Mr President, literally come hot-foot from the Alexandra Township. And I daresay many of you will not be over-surprised to hear that I spent much of the last two hours on a sports field. And if you may think that that is not normal every day behaviour for a Prime Minister on a working visit, let me say to you that I believe there is a real point to it If I am not very much mistaken, this morning I have been with some of the people who hold the key to this country’s future, youngsters with boundless energy, kids to whom life has done very few favours in the past, but with a great deal of hope, and from what I saw in the nets, no little guile and cunning.
And the cricketers amongst you perhaps will not be too impressed to hear that I was in some trouble in the nets, it was a touch like Question Time in the House of Commons, the only difference being there my own side get to bowl at me as well, which I think generally is helpful. But if it is not breach of professional ethics, I might reveal that Colin Cowdrey and Alec Stewart saw a thing or two this morning, and so did Bobby Charlton and Judy Simpson. And if Rob Andrew looks just that touch sharper when he comes here next year to take the Rugby World Cup with him, it could just be the fact of the tutelage he had in tackling this morning from those township boys in Alexandra.
These are the young men and women who are going to provide the entrepreneurs, the managers, the technology experts of the future, their future is South Africa’s future, and are they going to have the opportunities for educational advancement, are their hopes going to be turned from dreams today, into realities tomorrow? The answer must be ‘Yes’, the right answer and I believe the answer that will come about is ‘Yes’, and the future of South Africa will then be very bright indeed.
These are very early days in South Africa’s new age. But shining through all my discussions yesterday, with President Mandela, with the Deputy Presidents and with other Ministers, shining through every one of those discussions was their determination that the Government of National Unity would succeed. They feel that the system that they have set up is working, they take justifiably, I believe, pride in its success thus far. They clearly want to keep the country on its present course and I formed the judgment that they will go to very great lengths indeed to ensure that under their leadership the new South Africa binds a stable basis for the years ahead. And not least, they understand very clearly how vital this is for business confidence, for growth, for jobs, for the tax yield to fund social improvements that comes out of economic success. And of course in this they must surely be right.
To me, therefore, there could not be a better time to launch Britain’s new relationship with South Africa on its course. And also to encourage both our businessmen and those of South Africa.
I had yesterday the signal honour of addressing your Parliament, the first British Prime Minister since Harold Macmillan to do so. And I spoke yesterday about the new beginning that you have made in South Africa, and I described my hopes for a new fellowship in Britain’s relationship with South Africa.
So let me not reiterate those points specifically, but move on today and focus on a crucial part of that relationship – our business and commercial ties, for without doubt, economic renewal will be the key to South Africa’s future, and with it all is possible.
Mr President, your Director General, Raymond Parsons, has been travelling the world on behalf of South African business. And I was very much struck by a phrase he used in the United States just a week or so ago. He said this: “From the denial of opportunity, to the creation of opportunity”. My central message to you today is that Britain is eager to share in the creation of that opportunity.
Countless countries no doubt will give the same message, the difference is that we mean it and we propose to do something about it. I believe Britain has a head start on others because we begin with such a long history of shared endeavour and shared experience.
Let me touch on some matters of importance. Despite the appalling problems of apartheid, the business and commercial links between Britain and South Africa, though less than they otherwise would have been, are very strong indeed. The annual value of two-way trade between us exceeds 15 billion Rand. Britain is South Africa’s second largest supplier, and I exclude invisible services when I use that particular statistic. We are also your second largest export market. Our exports to you have increased by over 23 percent this year, and yours are growing very rapidly to us as well.
To underpin these efforts, I was able to tell your Parliament yesterday that over 1 billion sterling extra export credit cover is now available for British companies doing business here. South Africa is one of our Export Credit Guarantee Department’s top three markets worldwide for business, and I expect that cover will be taken up by British businesses in the months ahead.
We have also very healthy two-way investment. You are significant investors in Britain, and Britain is by far the largest overseas investor in South Africa. Our investments here are approaching 10 billion sterling and touch nearly every single part of your national life. Over the last three years, 68 British companies have made new investments in South Africa, more we believe than any other country.
But that is happening already, this the present. Let us turn to the future. We wish to extend these trade and investment links much further, and when I say that I speak not only for the British government, but for British business as well, as the high powered team of businessmen with me amply demonstrate.
Britain is alive with interest in the new South Africa, alive with interest in the two-way opportunities that it offers. An ample testimony of this is the nature of the team of leading businessmen and financiers who have come with me on this visit, together with two of my Ministers, Tony Nelson, a senior Minister at the Treasury, and Lynda Chalker, the Minister for Africa and Overseas Development; and Howard Davies, the Director General of the CBI, is here to speak for British industry and then to report back to British industry as well. Over 50 other British businessmen have joined us here. Many of them came with Michael Heseltine on his memorable visit in July, and were keen to come back. I believe they will come back, and back, and back, and back again, for many years as our trade flows and investment flows increase.
But if numbers are anything to go by, their interest and enthusiasm is clearly more than matched by businessmen here in South Africa. I know there are here at this lunch today businessmen from long established and highly respected South African countries, and there are also representatives of some of your newer companies too who are beginning to share in the South African enterprise. Your presence here today demonstrates, in concrete terms, the potential for growth in South Africa.
My business team covers many of Britain’s finest industries, from heavy engineering and construction, to water services and health care. I deliberately brought a particularly strong group from our financial services sector since the City of London and South Africa have a long history of cooperation and mutual respect.
Here today are Christopher Benson, Chairman of Sun Alliance; Timothy Barker, Chairman of Kleinwert Bensen; Michael Dobson, Chief Executive of Morgan Grenfell; Michael Marks, Chief Executive of Smith Newcourt; Brian Pearce, formerly of Barclays and now, among other things, Chairman of British Invisibles; and Lord Cairns, Chief Executive of Warburgs, who have announced this week that Warburgs will open an office here in Johannesburg.
All of them, I know, are keen to add their expertise to that of South Africa’s own sophisticated financial services industry. And they are particularly well placed, well placed by experience, to advise on the opportunities for privatisation, having worked so closely with the British government on our own extensive privatisation programme.
Our team will be sitting down this afternoon with many of you present, sitting down to explore the prospects for new business in both our countries. They will report back both to the British, and to the South African, governments and we will then seek to act on their recommendations. Government and business both have a central role in building the future for South Africa.
And that is why the British government is backing to the hilt our businessmen’s confidence in the new South Africa. In July we launched our “Opportunity South Africa” campaign, a campaign which should redouble the interest of British exporters and investors in South Africa. In Cape Town next March the Royal Yacht will be here to host major British promotional events. There will be other British business events in Durban in June and a trade fair in Johannesburg in September. And that, of course, is in addition to our regular programme of missions and trade fairs, 13 this year and more to come in 1995. We are seeking a partnership in practice as part of Britain’s contribution to South Africa.
From afar we have perhaps a unique perspective on what is happening in this country and we have a unique concern for this country. You face, I believe, a twin challenge in South Africa, not just to accelerate economic growth, but also to transform your society, to strengthen local black enterprise, to transform investment both in human capital and in the physical infrastructure, to help your already capable economy move forward into the new era.
Yesterday, President Mandela and I signed a memorandum, a memorandum establishing the framework for development cooperation between Britain and South Africa. Britain has pledged to provide 100 million of development aid over the next 3 years, 60 million as a direct bilateral grant.
This is not just a question of aid, that on its own is helpful but not remotely sufficient. What it means is cooperation, cooperation in your new venture, your reconstruction and development programme, which will give new opportunities as well.
And our cooperation will be targeted on the growth of business in South Africa, providing business skills training in South Africa, helping small businesses, especially black businesses, to market their product, help with maths, science, with English teaching for the disadvantaged, and advice and assistance for new investors here in South Africa in the future.
Many British companies are already making a significant contribution to reconstruction. East Midlands Electricity has established a joint venture in the Kileacher [phon] Township in Cape Town which is now bringing electricity to half a million homes that previously had none. Many British companies are already doing a great deal in providing management skills and training for the workforce of South African companies.
There is, for example, a CBI scholarship scheme which provides placements for young South African engineers in the United Kingdom. Companies like Cable and Wireless, who recently won a major contract for the supply of mobile telephone networks, run active support programmes of this kind. And Smith and Nephew’s educational trust has already assisted some 75 doctors through medical school, and I am delighted to say that they propose to accelerate their programme.
We want to do more to unlock the great business potential that exists in the townships. Two months ago, a large group of senior British businessmen visited Soweto, they talked to the Soweto Chamber of Commerce, and they were so impressed by what they heard that they decided to offer help, practical help, practical help for men and women who were keen to set up their own business. That business culture exists here, as elsewhere, there is a vast demand for people who, given the chance, would wish to establish themselves and their own enterprise, to build their own security, on their own initiative, in their own future, in their own country, and we wish to try and help them do so.
So I am delighted to announce today that some 30 British firms, including many of those who are your guests at this luncheon today, have now undertaken to take businessmen, initially from Soweto, into their own companies to gain experience in management, telecommunications, pharmaceuticals, electronics, water construction and information technology. They will take them into their companies, they will train them, they will teach them, they will give them opportunities perhaps that they did not have before, and then they will come back and apply their skills here in their own townships and their own country.
Mr President, to build on the Soweto initiative, we are establishing through the Commonwealth Development Corporation and Banks, a venture capital fund to finance small businesses and the aim is to allow these businesses to grow and to generate wealth which will benefit the whole community.
These are some, a selection, of the practical ways in which we believe we can contribute to South Africa’s future economic development and prosperity. But it is just a beginning. I want to share with you my conviction that the long-term political stability in South Africa will be rewarded with long-term growth and prosperity. South Africa has an enormously strong foundation on which to build, a foundation of world class companies. Their future is in her hands and I, for one, am confident as to what that future will be.
Let me turn finally to some wider economic issues. Let me say a word or two, if I may, about my own country to those businessmen who trade and invest in it, and have a trading relationship with it, who may be here today.
In Britain we now have the most favourable combination of economic circumstances that we have experienced for very many years. Let me explain why that is. Output is rising steadily, the economy as a whole is growing faster than the forecasters had predicted, inflation is at its lowest for a generation, investment .s p 6 percent on just a year ago, consumer demand is growing and unemployment is on a downward path, and importantly, trade is healthy and flourishing, the August figures for British trade with countries outside the European Union were announced only a few hours ago, and I am pleased to tell this audience that exports rose, yet again, to a new record level.
It is to achieve this sort of circumstance, this prospect upon which to build in the future, that we have worked unceasingly in Britain to reduce the burdens on business. I do not pretend remotely that we have reduced all those that we would wish to reduce, and I can say to you categorically that we have not yet remotely finished with this programme of reducing burdens. We seek to scrap unnecessary government regulations, make sure there are no exchange controls, reduce business taxes, eliminate subsidies, transfer old-fashioned state owned industries into dynamic private sector ownership, that is the path that we have been following for many years, and it has set out an opportunity for the future that would not otherwise have been there.
And in Europe, Britain was the driving force behind dismantling trade barriers and creating the Single Market. It is our determination that the European Union will maintain low trade barriers with the rest of the world, and we worked hard to obtain that vital GATT agreement just a few months ago.
I welcome, unreservedly, your South African government’s commitment to the private sector. South Africa is now back in the international community, it has to compete with other economies elsewhere in the world to attract new investment and to sell its products. And many of these countries, not just in Europe, but in South America, Asia and elsewhere, they are increasingly lifting financial controls, reducing tariffs and phasing out special subsidies. You know that to compete it will be essential to follow the same path.
Such changes are not always easy to make, and I understand that they cannot be made at a stroke, but over time they are essential if industry is to be self-reliant and competitive, essential if two-way trade is to expand freely and rapidly, essential to attract the vast array of overseas investment that I believe is waiting there and willing to come from overseas to invest here in South Africa.
we welcome South Africa’s membership of the Southern Africa Development Committee. As relations develop with your neighbours, trade and investment should begin to flow more freely. There is scope for cooperation over essential utilities, electricity, water. But the most effective form of regional cooperation at this stage, may well be to reduce trade barriers and to simplify order procedures, that process holds out the promise of wider regional markets for South African products.
Mr President, for my party and I this has been a memorable visit, memorable because we have waited a long time to be able to make it, memorable because of the generosity of the reception that we have received here in South Africa, memorable because of the two-way opportunities that we are convinced exists as a result of what we have seen and what we have heard on this visit. I have been struck by the tremendous hope for the future which so many expressed. In all the vast array of words in the English language, hope is the one that one most likes to hear. And there is hope here in South Africa, hope perhaps where there was none some time ago, opportunities where there were fewer, a chance for the future that once did not exist, but does now.
I have heard businessmen and financiers, both South African and British, speaking with optimism about South Africa’s economic prospects. I have discussed those prospects with President Mandela and with his senior political colleagues, I have seen for myself, yesterday in Cape Town, and today here in Johannesburg, how much South Africa has to offer. And I believe that your hope and your optimism is well founded. You can, I believe, be confident about your future. And we in Britain share that confidence.
Last April the elections in South Africa were seen in every part of the world when people watched, as they did, those remarkable elections taking place. Those elections in South Africa were seen as a political miracle, we want to help turn your political miracle into an economic miracle in the future.
The message is clear, South Africa is open for business. And let me say to you, Mr President, Britain’s message is clear too, we are here to do business and we look forward to it.