I am delighted to be here with you on this glorious Cape Town evening. The President of the Club, Mr Colin Eglin, and I have been friends for many decades. Mr Eglin and I worked together since the 1960s with our dear friend Helen Suzman, when you, Mr President, and Mrs Suzman were members of the only true parliamentary opposition, the predecessor of today's Democratic Alliance. We have been friends ever since and shared the same thrust.

There may have been differences on some issues over the years, but we have always shared the same beliefs in the basic tenets of the liberal tradition. Much of what we fought for in the 1970s is as pertinent in today's South Africa as it was then. Much, of course, has changed for the better.

I have been asked to say a few words on the political economy, so I will restrict my remarks to this subject. In time, at least, I will therefore be economical with my words

Mr President, you may recall that the ANC once described me as Margaret Thatcher's' "lap dog" because, like you, I promoted the free market economy and opposed sanctions and disinvestment. Lady Thatcher and I enjoyed a hearty laugh about this just the other day. We always understood that economic liberalisation was the key to the liberation to all our people.

Well, let me ask this evening: whose "lap dog" is the ANC now that they have conceptually, at least, accepted the wisdom of fundamental aspects of the free market economy? Before you answer, this is a rhetorical question!

I wish to recall that when the ruling-party announced its macro-economic strategy in Parliament a few years ago, it sounded too good to be true to me. I remember that when I rose to speak that I compared their conversion from socialism to free enterprise as being similar to Paul's Damascus experience! There were pearls of laughter in the Assembly.

I congratulated them for returning to sanity, in as far as the economic system that they were introducing to our country through their administration was concerned.

I must confess that as a young black politician, I was myself attracted to what I called 'African communalism', which I think was the same thing as socialism. I remember that as young politicians, we all worshipped Mwalimu Julius Nyerere, when he introduced his own form of socialism, which was called Ujamaa.

I, myself, went to Dar Es Salaam to sit, as it were, at the feet of the master in the early 1970s. (I was very impressed by President Nyerere's honesty during that visit. He gave me a copy of his book entitled: 'Ten years after Arusha' in which he admitted some of his mistakes as far as Ujamaa was concerned.

He also told the officials, who were escorting us, that they must not only show me what they called successful Ujamaa villages, but also some of those which were not so successful. I do not wish to dwell long on this visit, but I do wish to pay tribute to President Nyerere's honesty.

On that occasion, as we chatted, he confessed to me that he felt conscience stricken about his previous views on the Cahora Bassa Dam. He asked me if I remembered the idea of the Seven Wonders of the World. I said I did. He then asked me if I had seen the Cahora Bassa Dam, to which I replied that I had not. He said that he felt ashamed that he, Nyerere (even banging his breast with his hand) had at one time supported the idea of destroying the Cahora Bassa Dam.

He felt that the Cahora Bassa Dam qualified to be in the same category as the Seven Wonders of the World! But that was not the only thing which, in my view, qualifies him as a great man. At the inauguration of President Mugabe in 1980, President Nyerere, in a reference to the economy of Zimbabwe in 1980, said to President Mugabe: "you have inherited a jewel, (referring to the economy of Zimbabwe). Don't do what I did in Tanzania. Don't destroy it!"

My excitement at the introduction of our government's introduction of their Growth, Employment and Redistribution strategy (known by its acronym GEAR), was not to last for long.

This was when the alliance partners of the ruling-party, COSATU and the SACP, started attacking GEAR. You can all recall how we watched them on television chanting "We do not want GEAR! Asiyifuni i-GEAR!"

The problem, as I see it, Mr President, is that the alliance partners of the ANC have shown scant consideration of the essential features of capitalism, let alone the moral and social values which underpin it. This is a dangerous disjuncture which has led to multiple contradictions in a government apparently committed to what President Thabo Mbeki called "the broad family of ideas that might be called Left."

Let me give you an example. The Finance Minister, whom I rate as one of the best in the world, rightly said in his mini-budget last year that people should not become dependent on social grants and that they should seek work. Yet, paradoxically, it is the crippling rigidity of the labour market legislation that the government enacted which makes it onerous for work seekers to gain access to the labour market.

And when I was in Cabinet, the ruling-party and all of us in government, wanted to address the rigid labour laws. As you may recall, the election allies of the ANC, COSATU and the SACP opposed this and threatened rolling mass action.

This heart and head split in government thinking is again expressed in its reluctance to develop standard anti-trust and a pro-competition legislation to break the grip of our private and public cartels and monopolies on our economy.

Our bank charges, for example, are amongst the highest in the world. What incentive is there for poor people to place their money into bank accounts? Yet without banking facilities, people do not have access to loans to purchase property or start their own small businesses. These are the prerequisites of a functioning market economy, from Chile to New Zealand, and from New Zealand to Estonia. The latter has one of the lowest rates of taxation in the world.

As Minister of Home Affairs, I was in a position to really grasp the inherent contradictions in public policy, as I was responsible for immigration legislation. What a saga! As Business Day so succinctly put it last Wednesday, the Immigration Act is "the most contested piece of legislation in the ten years of democracy in South Africa, involving two broad ideological positions".

I crafted an immigration policy, which was based on best international practice, and paved the way for an influx of qualified immigrants who would add value to our economy, irrespective of where they came from. I hoped this would relieve South Africa's crippling skills shortage and reverse one of the lowest rates of foreign direct investment amongst emerging economies. Foreign direct investment, Mr President, plunged by 31% between 2001 and 2002.

Alas, it was not to be. Whilst opening the door wide to its favourite countries, like, for instance Cuba and Libya, the government made it onerous for companies by imposing quotas and excessive fees and working permits. The problem, in essence, is the government's persistence in re-racialising our public policy discourse. It looks almost like apartheid in reverse.

We can most clearly see this tendency in the emergence of a black oligarchy. Consider the black economic empowerment equity deals that are taking place in the so-called 'commanding heights' of the economy. Diverse commentators ranging from the economist Moeletsi Mbeki to Archbishop Desmond Tutu to COSATU and the Secretary-General of the ANC, Mr Kgalema Motlante have noted that BEE might enrich a few politically well-connected individuals, but it does little or nothing to alleviate the plight of the large number of people who are employed and living in poverty.

When Mr Nicky Oppenheimer and his son, Jonathan, launched the Brenthurst Initiative on BEE in August 2003, anybody that was anybody in business was there. All the fat cats of South Africa were present, of all sizes, big and small! President Mbeki and a few of us in his cabinet were also invited to attend.

During the question and answer time, I raised a question. After mentioning that I had lived amongst the poor all my life, I asked if what the BEE initiative achieved would trickle down to the poorest of the poor. I did not get an answer to my question from anyone. I recall that, during the tea break, Dr Van Zyl Slabbert wagged a finger in my face and jocularly said to me: "you are mischievous!"

The stark fact is that of the 42 billion rands worth of BEE deals, 25 billion rands, that is 60 percent, went to two oligarchs in the ANC.

Yet despite the bad press, we do need BEE for the reason that the majority of South Africans only hold political, but not yet economic power. I believe that the absence of broad-based black ownership might result in political alienation, economic insecurity and, possibly, even political instability. It is how this government goes about empowering blacks that is wrong.

BEE, in my view, must be achieved within the constraints of maintaining market integrity and attracting foreign direct investment. The government should give opportunities to companies that comply with social transformation requirements and on their ability to add commercial value to the business. Potential conflicts of interests must be avoided and BEE transactions must be weighed against the long-term objective of broadening ownership of the South African economy. On any other terms, BEE will not succeed.

This ever present disjuncture in government thinking is borne out by the uncomfortable fact that people who are not part of the mainly urban modern sector of society are more disadvantaged now then they were under apartheid. When I had the temerity to point this uncomfortable truth out in Parliament in 2004, I was accused by a senior ANC leader, Dr Pallo Jordan, of wanting us to go back to slavery in Egypt. I don't want to go back anywhere, but I do want a sensible public debate.

The view I expressed on rural poverty was distorted and Dr Jordan's interpretation was repeated on television, even at the end of last year by the SABC, for his abuse of me, as suggesting a return to slavery, struck a chord with the anti-Buthelezi lobby in the SABC.

A sensible public debate is particularly crucial when we touch upon the biggest challenge of our time, that of HIV/Aids. In terms of the political economy, to date, over a million South Africans have unnecessarily lost their lives to the pandemic. Many more are infected and affected by the disease. I have lost two children and countless friends and colleagues to HIV/Aids. Recently President Mandela lost his son to the pandemic.

My biggest fear, one which haunts me in the early hours of the morning, is that South Africans are not psychologically prepared for the impact of this disease when it reaches its climax about ten years from now. It is difficult to quantify the impact of this disease upon our economy. All I know is that it will leave a deep scar across our nation, and is bound to adversely affect our economy.

I have said repeatedly that we have overcome great challenges before and together we can beat this pandemic. I urge our President, Mr Mbeki, to take the lead in the measure that he has given to other matters across the African continent.

I am encouraged in making this appeal by the example of President Yoweri Museveni. His hands on approach in tackling the HIV/Aids pandemic in Uganda, led the Ugandan people to lowering the infection rate in Uganda from 30 percent to 5 percent. It can and must be done here. I was the guest of President Museveni in December last year at the wedding of the former President of Uganda, Mr Godfrey Binaisa QC. I was greatly inspired by their example.

So I am an optimist, Mr President. I believe that solutions can be found to some of the issues that I have raised this evening. Time has meant that I can only touch upon them briefly tonight. Ah, time. As for me, I would like to share the last verse from Robert Frost's poem, 'Stopping by Woods on a Snowy evening'.

"The woods are lovely, dark and deep,
But I have promises to keep,
And miles to go before I sleep,
And miles to go before I sleep."