Today I would like to act as a chief executive officer for an important account: Where is South Africa at the present moment? Is it moving or standing still? Is it going up, or is it going down? What is the state of play in South Africa? I want to talk to you about the four pillars upon which the new South Africa stands.

The first one is our election of April 27, 1994, which was a consequence of people going into a room like this until they found a solution. Then the elections gave the public of South Africa, all of us, the opportunity to decide what form of government we wanted. That was a very important pillar, and we are very proud of that achievement.

When we remark on that, as is proper, we are not neglectful to talk about the contribution of many countries, particularly the United States of America, to get us into the room. If it had not been for your efforts, we would not have gone into that room to solve our problems. For that pillar, for that achievement we remain greatly indebted to the United States of America. You did this at great sacrifice, and we will always remain conscious of that.

The second and very important pillar is, having conducted the election and having set up a new government, our function is now to devise a Constitution that is democratic and represents the best form of all societies that are truly democratic, including the United States. At the end of the day, we could say we are a state that exists under the Constitution, and this Constitution is, in the words of Abraham Lincoln, "of the people, by the people, and for the people." This Constitution has just been finalized.

There was an interim Constitution that was negotiated, and that interim Constitution contained thirty-four principles, and then the Constitution was drafted and presented to the constitutional court for certification. The constitutional court found that in nine instances the Constitution was not in conformity with the thirty-four principles guiding the new South Africa.

The constitutional assembly met again and these matters were thrashed out, and now the Constitution is going to be certified and will then operate fully as the guiding and principle document under which everybody who serves the government will operate, including the president, the courts, and the government. Let me just say one thing about that Constitution. One of the principles we have instituted is called "the Protected General," or the "Public Protector." (Because we are gender sensitive we don't use the term ombudsmen but instead the word "Public Protector.")

There was concern that the public protector was not protected sufficiently by the Constitution. That problem has now been corrected. He is totally independent, and he has the right to require accountability of the president and any officer of the government. Secondly, there is the position of the Auditor General. He must be totally independent and protected by the Constitution. He can scrutinize the management functions of all those who operate in the public sector under any and all circumstances. I think these were very important safeguards, very important statements.

The third very important pillar is what to do with the past in order to ensure a good present and good future. Since we have now achieved this milepost we will not forget the past. A great effort was involved, including risk, pain, and courage to create the Truth and Reconciliation Commission. This Truth and Reconciliation Committee is sitting under the chairmanship of Archbishop Tutu. Their function is to deal with the past and give people an opportunity to come forward and say, "I have committed these atrocities in the name of apartheid, and I am sorry about that. I want it to be known what I have done. I want to be a part of the building of the new South Africa."

This went with the amnesties that were given out and there was also a very complicated process of determining when an act was a political act and when the act was a common crime. This process is still in progress in South Africa. It has a finite time period. By law, it was determined that it should only be in existence for eighteen months. Now there is a final extension of six months, and after that there is a cut of time. After that, we would like to believe that we have dealt with the past.

Everybody knows what happened. Those who have committed crimes beyond political crimes have been prosecuted, and action has been taken against them. Those that the Commission found in their power to forgive them would have been forgiven, and we can now get on with the business of the future in the knowledge that we cannot build the future without adequately dealing with the past. That is the third pillar.

The fourth and final pillar is what to do with the most important element of the reconstruction program in South Africa, the economy. We deliberately left this for last because to deliberately reconstructan economic policy is not something one can do overnight. It is not something one would like to conflict with the process of Constitution building. Constitution building should occur on its own; that is the foundation stone of the society and once that has been completed, we needed to look at what kind of economic system would inform the Constitution so that we could be a truly free nation - free politically, socially, and economically. For that reason, the Constitution acts as a reference point to ensure that the design of the economic policy keeps in mind the fundamental principles of the Bill of Rights and the tenets of our nonracial, democratic Constitution.

It took about two years for the government to design in concert with all groups concerned the "Macroeconomic Framework." This framework forms the foundation stone of the economic policy of the new government. This is a very, very important document. The document is now intended to safeguard freedom in the marketplace. As you know, the irony in South Africa has always been that, although the previous regime was seen as a bulwark against communism, few government systems were economically more centralized and more manipulated to serve the interests of the government and those that supported the government to the exclusion of the rest than the South African economy. We had to grapple with this concept in the reconstruction of the economy, which included the privatization of state-held assets.

The first principle we had to agree to and write into our plan was to ensure that we find the resources to meet the expectations of our people. The normal tendency of emerging Third World countries has been that when they require money in order to fund development, the country would go to the International Financial Market, the World Bank, the IMF and other financial institutions and borrow money. South Africa, in terms of it's macroeconomic plan, decided that we would only do that in targeted cases, and only if and when it is entirely necessary for particular projects.

Although we are one of the under borrowed emerging countries, South Africa's borrowing is 13 percent of GDP, compared to Australia's 48 percent, and Brazil's 36 percent. Naturally, because we are under borrowed, 30 percent of GDP is the benchmark. The banks, the financial institutions, are keen for South Africa to take up more money in the market.

We have decided we will not do that. We will try first to generate the funds internally from the budget itself and from the people. How do we intend to do that in our plan? By a carefully designed process of fiscal and monetary discipline. Fiscal discipline from the point of view that the large and burgeoning civil service be downsized. Departments within the government will cut their budgets to the bone to ensure that money is made available for development purposes. Also, there are other belt tightening measures.

We found when we came to power that revenue collection in South Africa was in a very poor state. The government then appointed a senior partner of a leading firm of public auditors to serve with a committee and with bodyguards within the Department of Finance. Their function is to ensure that effective revenue collection occurs.

The next principle is that if all that fails, there are targeted programs for borrowing under the most careful supervision of the Treasury. Money may be borrowed from the international institutions for specific projects. As far as monetary policies are concerned, we are fortunate also in terms of the Constitution that our Central Bank is entirely independent. The governor of the Central Bank acts independently of the Minister of Finance, and his function is to supervise monetary policy. His main purpose is to bring down inflation. Inflation, just before the demise of apartheid, in the area of food prices ran at about 30 percent. Overall, inflation was in high double figures. Today, the Central Bank, through each action, has brought inflation down to something like 7 percent, single digit figures. There was a time when inflation was lower. Inflation increased because of the devaluation of the rand, or as we believe, the correction of the Rand

Other principles within this macroeconomic plan, this labor market flexibility. You will remember that the South African economy was an economy under siege. It was a very protected economy. On of the measures with which to protect the economy was tariff walls and tariff barriers that safeguarded industry and created an hot house effect in industrial development in South Africa. Industries actually thrived under hot house conditions in South Africa. A policy has been instituted to reduce tariffs in a gradual way on an annual basis. Companies in South Africa now have to compete with the international community, and by that, decide which of the industries can survive in the face of international competition so that we can comply with the GATT requirements.

For example, the textile and clothing industry is beginning to realize that making tee-shirts and cheap clothing is out. They cannot compete with Taiwan and the southeastern countries where the labor is very cheap. But we can concentrate on something that South Africa has always been very good at and that is the up-market apparel. For example, men's suits are being made in greater numbers and exported. These suits are very competitive in the world, both in terms of quality and also in terms of price.

We have a very important diversification which focuses and targets particular industries because of the new enlightened tariff reduction program. We also have committed ourselves to a new phase of the removal of exchange controls. This has always been a problem that people like David Fisher constantly nagged us about: "Look you are so over-protective of your economy with exchange controls and you give the impression to the world that you yourself do not have confidence in your economy; you must remove exchange controls. Exchange controls were instituted to safeguard the outflow of investment during the harsh days of apartheid. Within the macroeconomic framework there is a definite plan, and the plan has already started to phase out in an organized and orderly manner, exchange controls. Now we have a 10 percent investment of South African capital that can be invested outside South Africa for targeted projects. We are monitoring this.

I must emphasize that there never has been a case where foreign capital investment profits cannot be repatriated. Mobil Oil, IBM could take all their money out except taxes, infrastructure, and salaries. The rest went to the stockholders in the United States, Japan, or elsewhere. South African capital was restricted from moving. That we are also dealing with.

There is a very important generator of revenue to pay for development, which is the restructuring of the economy that includes the privatization of state assets. The first point that we had to look at was that our government had to get a value assessment of state assets. Nobody knew in dollar terms how much the state assets were worth. The Shanghai Hong Kong Bank was appointed in order to do such an evaluation. They bank is in the process of doing so. While they are doing so, we have already begun to establish presidential lead projects to sell off part of the state held assets to public companies in the outside world.

The first project that has been identified is the telecommunications industry. Thirty percent has been demarcated to be sold off to a foreign company. It is going to be sold off in an orderly way. For that purpose, a strategic equity partner is being considered at the present moment. There is a short list of six, of which Southwestern Bell Company in the United States is one very prominent competitor. If it is afforded to Southwestern Bell Company, or whomever, they will buy 30 percent of South Africa's telecommunications service. That capital which comes in will then be used to fund development and to overcome the gaps between the "haves and have nots" in South Africa. That will also make it unnecessary for us to borrow money at the rate that will make us an over-borrowed country in order to fund development in South Africa.

Once that has succeeded, we will look at other state held assets like the South African Airways, the transportation system, and the electrification system. An array of companies that are controlled by the government at the present moment will be sold off, and we will share the South African economy with enlightened international companies. You should see the competition for the telecommunications company. People want to buy into South Africa.

On these four carefully designed policies, the South African government is busy building a nonracial, democratic, free market society, and in the main is doing so in an organized and disciplined way and is absolutely committed to try and pay for the development ourselves and not borrow money from the outside. That is not to say that we don't want to borrow, but we will borrow for targeted projects.

What is important, finally, about the economic plan is that the economic plan must be non-negotiable. You saw in the newspapers that when the government declared the non-negotiability of the macroeconomic plan, the trade unions went up in an uproar. We went back to the table with the trade unions and not so long ago you read in the newspapers that the trade union movement endorsed the macroeconomic plan. Understand, that while in terms of the macroeconomic plan, jobs will be lost on the one hand, the plan will give the capacity to the South African economy to grow and create better and more jobs in the future.What is our overall goal? Our overall goal in the macroeconomic plan is that by the year 2000, we want an economic growth of 6 percent GDP. We want to provide 100,000 new jobs on an annual basis. You may say that is impossible. During the last year of apartheid, South Africa's growth was at 0.1 percent. We had a negative growth rate. Today, two years after the election, we already have 3.5 percent growth rate, despite the agricultural disaster resulting from the very big drought from El Nino. It is raining in South Africa; it is going well with agriculture. If you quantify 3.5 percent, it is quite feasible to foresee a 6 percent growth by the end of the century.

We consider the development of housing as the trigger for the reemergence of jobs and the economy. All this was the function of establishing financial institutions that will make it possible for people to access housing. We are not going to make the mistake that the apartheid regime made and that is to provide homes for people and create an idea that the government is there to provide. What we want to do is create the capacity for our people to build and buy their own homes so they can feel for the first time the pride of ownership in a country that is theirs. Thereby, they will feel that freedom under the Constitution means freedom to vote, freedom to express yourself, freedom of the press, but also the freedom to build and own your own property, which in the end gives you pride.

That is the plan of the South African government. We have made progress. Last time I spoke in California, I spoke of intentions. This morning I am a very good position to speak of active progress, and based on the progress so far, I can make the assertion that if we continue on this trajectory, we will achieve our goal of establishing a nonracial, democratic South Africa in a free market situation, which offers opportunity, as well as freedom for all our people. In so doing, South Africa can make a very important final contribution and turn a problem continent into a winning continent.

Now you may say you are biting off too much. The southern African region has thirteen countries. South Africa, a leader, is one of those thirteen countries. Her economy is four times the size of the rest of those economies put together. The influence of Mandela, the South African economy, and government is so strong that out of those thirteen countries, eleven countries are full democracies; all of them have positive growth rates, except one. All of them are committed to growth and development.

I have lived long enough to have seen pictures of boat people in the southeastern Asia area where people felt that those decrepit conditions had become a big problem of disease, overcrowding, and poverty for the world. Those countries have turned into winning nations and offered opportunities to the United States to maintain its standard of living. We are at the point where we are presenting the southern region those same opportunities to enlighten United States' investors.

Nothing pleases me more than when I sat at the table, and I heard one of the leaders of a major company in the United States, Mr. David Fisher of the Capital Group, tell me that 100 of his people will be visiting South Africa to hold a conference over a long period of time to participate in what I have been telling you about. I think I have told you a very good story, and your heart feels as warm as mine does, and I want to invite you to assist us and to encourage investors in South Africa. I want you to tell investors that you have heard the ambassador saying not, "Please come and help us." That is not what I said. I said, "Please come to South Africa and in your own interests invest in South Africa."

If we are not in a position to defend and protect your interest which is your bottom line, then that is the test of the pudding. Then you should call us and tell us that our invitation was not such a welcome one. But I promise you that just as much as such appeals were made to you twenty years ago by southeast Asian countries, the new, burgeoning opportunity area is the southern African region.