Hon House Chairperson, today, as part of this debate, we are remembering and commemorating the victims of the US Twin Towers, or 9/11 attacks. Tomorrow we are also commemorating the 35th anniversary of the assassination of Steve Bantu Biko and the 10th anniversary of the death of Siphiwe Zuma, a friend, comrade and former President of SA Student Congress, who died on 11 September 2002.
The global economic crisis hit financial markets in Wall Street in late 2007 into 2008. Due to the interconnectedness of the global economy and its financialisation, the European Union and the entire world suffered knocks to their economies, leading to a contraction, the introduction of austerity measures, a decline in demand as household incomes fell, thus affecting exports from developing countries such as ours, and a decline in foreign direct investment.
This has subsequently led to one economy after another in the Eurozone falling or getting deeper into crisis, with debt levels of countries such as Portugal, Ireland, Italy, Greece and Spain rising to more than 60% of their GDP. Many of the EU countries depended on several bailouts from stronger EU economies, such as Germany and France, to meet their debt commitments and repay some of the government bonds that were sold in order to raise money when the recession first hit in 2007 and 2008.
Countries such as Greece began to ask important questions about their financial sovereignty in relation to their commitment to the EU. As a massive number of jobs were lost, holders of mortgage bonds defaulted and had their houses and cars, financed through the banks, repossessed. They experienced massive defaults on their credit cards with the banks. The European Union Central Bank encouraged those in crisis to introduce austerity measures in order to restore credibility.
The same applied to our own economy, where we have seen more than R50 billion in credit. Despite reassurances from the Reserve Bank and the Minister of Finance that this debt of R50 billion will not put a major dent in our economy, we should also be concerned.
This has also had a severe impact on many of the Sub-Saharan economies due to their dependence on FDI, their dependency on export of raw materials to the EU zone, and the major costs that the financial market bust had on basic foodstuffs, that found their way into our economies.
According to the United Nations' Economic Commission for Africa's economic report on Africa, released in March 2012 at the meeting of Finance Ministers in Ethiopia: Africa may experience a decline in FDI from both the EU and other parts of the world in the short term because of the sovereign debt crisis and resultant slowdown in global growth.
The report further says:
Trade is expected to be the most prominent channel of the debt crisis' impact on Africa. In 2010, Africa's merchandise exports to the EU represented 10,3% of its GDP and 36,2% of its total exports.
Of our country, the United Nations Economic Commission for Africa report declares that South Africa, whose greater integration with the global markets makes it more vulnerable to external shocks, recovered rather slowly, growing by only 3,1% in 2011, up from 2,8% in 2010. Export levels in 2010 and 2011 declined from a huge 7% to the present 1,4% on the entire continent, while South Africa's exports to the EU, one of the largest, declined from 36% to 26%.
Our Minister - the leadership that hon Oriani-Ambrosini was talking about as being absent, but which we can feel at all times - is quoted in Business Live as saying:
... the EU crisis affected trade and the stability of the financial sector, currencies and capital markets of emerging-market economies. The effect on capital flows was a real area of concern and at this stage no global institution has come with an adequate answer on how the impact on volatile currencies and capital flows can be better managed.
We think that this illustrates the fact that if not for the stern leadership that has been shown by our government, we would not have survived this particular crisis. Of course, the effects have resulted in more than 1 million jobs being lost, which has had an effect on aggregate demand and productivity levels in our country. I must emphasise that the very same 1 million jobs that were lost were lost in the period when the crisis initially hit in 2007 and 2008.
In fact, even in the presence of this crisis, the leadership that was elected in 2009, with the ANC at the helm, received more than 60% of the electorate's support because of that leadership. This is in clear opposition to all the other political parties' claiming there is no leadership, yet they received less support, especially the party that hon Oriani-Ambrosini belongs to. [Interjections.]
Over and above this, our economy has been failing to produce the hugely needed jobs because the crisis had already created stagnant economic growth and job creation had therefore been affected.
In this year's state of the nation address, President Jacob Zuma announced measures that government would put in place to create the more than 5 million jobs needed through infrastructure development, which would lead to massive economic growth rates and further insulate our country from the crisis in the EU.
It is important, hon members, that we use the Africa, Caribbean and Pacific States - European Union, ACP-EU, as a platform to lobby European leaders to act urgently in dealing with the crisis.
The reason we must use that platform to deal with the crisis is precisely that it was not caused by the failure of leadership on the African continent or in South Africa, but by the failure of leadership in the European Union, where the economy became mainly a casino economy; where money was used to make money, as the capitalist economy dictates, instead of being used for production purposes. Alternatively, trade was prioritised over and above everything else, even production. Also, making money out of finance was prioritised. That's the kind of crisis that we are faced with; that we need to deal with; that has had consequences all over the world, but in Africa in particular. That is why our African economies have been affected by the low demand in the European Union for export goods from Africa. It is because of their dependence on official development aid, as some of my colleagues have indicated; their dependence on budgetary support; and their dependence on foreign direct investment, which is declining fast.
What this means is that the various packages, which have been introduced by government not only as a response to the crisis, but also as a means to stimulate our economy in order to create more jobs, need our collective support. They do not need us to be scoring political points, but they need the leadership of this Parliament and of this government to ensure that we realise job creation for all. [Applause.]