Hon Chair, Cope agrees that this is a big question that has to be interrogated soberly by all South Africans. Within this context, Cope notes that our country in the post-apartheid period, in spite of progress made, still has vast pockets of unemployment, poverty, skills deficits and inequalities. Even though the world has opened up to a democratic South Africa, we have not developed our people adequately and we have not developed sufficiently as an export-driven economy.
We are still too reliant on our mineral resources. How will our economy survive if demand for gold, platinum, steel and coal were to decline sharply? This is not idle speculation. Even as I speak, the demand for manganese, ferrotungsten, ferroalloys and ferrochrome has been severely depressed for many months now. Our challenge, clearly, is not to be solely and entirely dependent on mining for our export income. This would be a huge mistake. We need to invest in manufacturing.
It is alarming to note that it is the domestic demand that is driving two thirds of the real growth of our domestic production. We in South Africa have not learnt lessons from the Asians who fostered domestic savings to fund their industrial growth. We in South Africa have negligible savings, and this stifles credit creation and investment in new projects.
In our country, growth is more dependent on consumption than it is on investment. According to the World Bank, investments cannot contribute only 25% to the growth of GDP, believe it or not. This is alarming as it is unsustainable. We urge that government address this glaring failure urgently. We urge that government take steps to support vigorously the creation of a culture of savings on the part of our citizens. The previous Minister of Finance was persistent in urging people to save. We most certainly need some extraordinary measures in this regard. Despite all the above challenges, we have to save as South Africans. We have to save.
While we are on the topic of the Asian tigers, as espoused by the hon Fubbs, we also need to make the point that our trade needs to focus on Bric countries for expansion and growth - that is Brazil, Russia, India and China. This would be in line with what Doreen Massey terms "Power Geometry". Yes, we need to reconfigure our trading patterns.
Another enormous challenge is that of price-fixing. Cartels continue to operate in our country, keeping prices artificially high through collusion. Cartels have operated in the food industry, in bakeries, in energy, in the construction industry, with regard to plastic pipes and in many other areas. As a result of cartels, price-fixing is endemic. Price-fixing is a major challenge to our economy and a major inhibitor of economic growth.
This is a challenge that has to be met head-on, and the government has actually failed us in this regard. It has to be met on every front. It must be defeated because it locks out or marginalises smaller businesses. Producers of steel in South Africa, for example, have been charging import parity prices to South African companies for the last seven years. This is so utterly wrong. Iron ore is locally mined and our country is a net exporter of steel. Yet, manufacturing is constrained through such collusion. As a result, we import stainless pots from Korea and elsewhere rather than making them here. In essence, we are exporting jobs. This is what we are doing, and we cannot tolerate this. We have to change it. The South African government has to uproot this practice.
The next challenge to our economy and our government is that of labour productivity. We don't fare very well internationally in this regard. Lack of skills, long journeys to and from work for workers, inadequate nutrition and limitations in education and training have all taken their toll on productivity. If we were internationally competitive in this regard, our GDP, according to the World Bank, could have grown by at least 3%. That would be a staggering growth increase.
Another very obvious challenge comes from the cost of capital. An industrialist in the UK or in the USA could probably borrow money for investment at four times less the price than what it is in our country. In this regard, we suggest that government make available approximately R10 billion to the banking sector at approximately 2% for lending to investors and farmers at half the market rate. Stringent conditions will apply to ensure that funds are used for purposes of new investment and nothing else. It is better to use taxpayer money to help out than to bail out companies. Viable companies and small, medium and micro enterprises - SMMEs - should have the propensity to borrow, and banks should have the propensity to lend. By ring-fencing a special pool of investment capital at half the market cost, investments will be stimulated. Economic analysis has shown that borrowing for investment purposes is sensitive to real interest rates. We are therefore proposing a two-tiered lending approach.
Finally, we need to meet the great challenge of our political and economic role in Africa. We face what is called the "hegemon's dilemma": small though we are in the world, we are very big on the continent. We must seek integration and multilateral co-operation and not domination on the continent. What we need is the fostering of a national consensus through partnerships and solidarity. We need a new way and a new agenda for change. I thank you. [Time expired.] [Applause.]