House Chair, I will speak on the economic situation in the Eurozone and its impact on South Africa, Africa and developing economies.
The ANC's 2007 strategy and tactics document was indeed correct and forward- looking when it stated:
South Africa's interests in a complex and unpredictable global environment necessitate the building of capacity for strategic as well as rapid responses to changes in our region.
It goes on to say: "Such responses should be anchored in the development of Africa and the developing world."
Out of this era of many contradictions and fluidity in the international environment, both Africa and the global South have greater opportunities to make further progress and to extricate themselves from the shackles of global apartheid, poverty and underdevelopment.
As we can see, when the crisis of capitalism is exposed to its inherent, internal, moral and ethical contradictions, placing the capitalist hegemony under threat as a result, trading blocks enter into battle with each other over the decisive and ongoing shifts taking place in the key centres of productivity and accumulation, which, indeed, are broadly shifting away from the historical economic powerhouses of North America, Japan and Europe to, as that hon member said, Southeast Asia. This is manifested in the escalating trade and investment and, to a lesser extent, the current currency wars within and among the major powers, who are seeking to retain their global dominance, privileges and access to natural resources - all this in the face of competition from new centres of dynamic production.
The ANC's foresight and vision to break with this trend was a conscious one, informed by an accurate assessment of the international balance of forces and resultant tectonic shifts in the economic and political spheres. This firmly places South Africa on an entirely new trade and economic investment trajectory. Our response to this global economic crisis has been to clearly articulate that we cannot be solely dependent on traditional trading partners in the North. Rather, we must intensify our efforts to increase economic development in Southern Africa, in particular, and recognise that our core economic partner for the future is indeed Africa and the expansion of our trade with Brics and other developing economies.
The South African economy is deeply interconnected and part of an integral system of global trade. We exist in a network. We are part of a network and since this network is out of balance in one place on the globe, it is out of balance everywhere. The chief executives of South Africa's four big banks, namely Absa, Standard Bank, First National Bank and Nedbank, admitted that they feared that they would also be affected by what they call the contagion effect in the Eurozone because South Africa's economy is inextricably entwined with that of Europe and the rest of the globe.
Eurozone contagion will not only affect equity markets but will hit the entire South African economy because the European Union, as a block, is our single biggest trading partner. European consumers acquire a great deal of South African goods and South Africa has a strong economic connection with major European economies, in particular Germany and France. As the Eurozone governments face the sovereign debt crisis, they implement austerity measures. They cut back on expenditure and, as a result, business conditions are continuously deteriorating globally. Consequently, this increases unemployment in trading partner countries like South Africa.
Our government's multibillion rand infrastructure spending over the past years, coupled with the Industrial Policy Action Plan 2, Ipap 2, have to an extent cushioned the South African economy during the worst of the crisis. Ipap 2 is meant to resuscitate industrialisation as a catalyst for economic growth. The ANC-led government is conscious and alert to the fact that the crisis can destabilise the welfare of the most vulnerable people in society.
However, we applaud the fact that the Framework for South Africa's Response to the International Economic Crisis has strong principles that seek to protect the poor, the vulnerable, the unemployed and the low-income workers; to strengthen capacity to grow decent work into the future; to maintain high levels of investment and to intervene in a timely, tailored and targeted manner. It has created room for broader participation of the private sector in investment and entrepreneurship and for the transformation and integration of the informal sector into the formal mainstream economy.
There is a legacy and consensus built around the fact that public investment in infrastructure can respond positively to lessen the effects of the economic downturn. Where possible, a labour-intensive approach must be used to ensure that the best possible social employment and economic benefits are accrued by the larger society.
Emerging markets are being affected by the slow market growth and stability, even though the policy-makers of emerging economies have more tools available to support their economies. Indeed, while trade links to Europe have slowed in recent years and emerging economies have started to trade more with each other, they have not decoupled completely from Europe and remain dependent on the developed market's global outlook. While further trade and exports to Europe remain significant, developing countries have started to focus more and more on other forms of investment.
Finally, the effect of the downturn on the African agenda is and indeed should remain a matter of preoccupation. Economic growth is a prerequisite for the prevention of conflict on the continent. Already, interstate trade with the rest of Africa is insignificant, with a crisis bound to decrease trade with the North. Africa is at a disadvantage. To bear fruit, economic diplomacy into Africa must be met with stable markets and growing economies. Economic dependency that is being reinvented by the crisis is a sad reality and a challenge to Africa.
The presidential infrastructure project and the North-South corridor championed by President Zuma must be supported because this will facilitate and expand intra-Africa trade, deepen integration, resuscitate economic growth and the interconnectedness of Africa, marking a decisive moment in the African continent's own reconstruction and development and shifting the focus from traditional trade routes meant to serve the whims and whiffs of the continent's former colonial masters. [Applause.]