Addressing the collapse of the Rand

Jon Foster-Pedley, dean of Henley Business School Africa.

In an economy experiencing a collapsing currency, one of the ways to address the challenges is to have the necessary skills to create value.

South Africa, still regarded by developed economies as an emerging market, has the advantages of a developed infrastructure, stable banking and financial systems and a growing democracy.

International investors see South Africa’s strengths as its natural resources, developed financial services sector and the legal system’s protection of investors. But ratings agencies view SA’s shortage of skilled labour as a key weakness.

One ratings agency states that SA’s “lack of competitiveness is curbing export growth”. At a time when exports should be increasing in line with the weakening rand, exports are sluggish. What is causing this “lack of competitiveness”?

A lack of skills reduces competitiveness. According to the British Council ‘Going Global 2014’ study, higher education is booming in Sub-Saharan Africa. Between 2000 and 2010 enrolments more than doubled. Looking back over the last 40 years, the higher education system in the region has been expanding at almost twice the global rate (UNESCO Institute for Statistics (UIS), 2009, Global Education Digest: Comparing Education Statistics Across the World).

How can SA businesses help in contributing to developing a highly skilled workforce? An obvious answer is for companies to invest in their current employees by encouraging them to further their education and provide an environment that supports them in doing this.

Companies taking an interest in and sponsoring the higher education aspirations of their employees sends a message that they are valuable to the organisation. In addition, women are playing an increasing role in addressing the skills shortage. Henley’s latest intake was 71 percent black and 42 percent women.

It is our experience that South Africans have extraordinary intelligence. Henley MBA students in South Africa achieved between 95 and 98 percent pass rate in the last exams, beating the British and the Germans in assessment. Our examination and assessment is done offshore, so the Germans, French, Italians and Chinese are all examined blind by the same people.

It is therefore not intelligence that’s a problem, it is access to skills development; exposure to international methods; seasoning and maturity in business; and probably a lack of self-confidence that is holding us back.

Is it possibly that the lack of opportunity is the limiting factor? There is no shortcut for skills growth. Skills, especially higher-level business and executive skills require discipline, repetition, courage, support and practice. People don’t land fully formed into executive and management positions. It takes a lifetime of ever-increasing challenges, mentoring, stretch, excellent education both within business schools and in businesses to build capable and effective organisations that run well and provide value for consumers and society.

We need good competition around us to hone our skills and exposure to international best practice to lift our imagination and show us what is possible. At the same time, with proper focus and dedication to the mission of developing skills to run effective organisations – from top to bottom – it doesn’t need to take generations.

On the other hand there are ways that make the skills growth process longer and less efficient. Corruption, for example, cripples access to fair opportunity, places egregious taxes in procurement and on projects, sucks money out of the country into foreign bank accounts that should be spent on its people and distorts expenditure on critical-enabling sectors such as education and infrastructure. Outdated and out-of-touch ideologies, lack of courage and the disease of cynicism will add decades to the time in which our families and society live in poverty and need. Once it comes home to all of us how mutually interdependent we are, as soon as we make reality our friend and understand the marathon that has to be run in order to grow capability, once we truly believe that we can do it, we will then be able to develop extraordinary skills and capability in South Africa.