South Africa’s role in the global business world
While listening to the radio last week where reports showed basic education minister Angie Motshekga once again making headlines following gross incompetence, I was reminded of the recent Insiders event that I attended where Chief Investment Officer of Ca
While the comment generated a few gasps from the audience, I couldn’t help but sit back and process what was said. And then sad reality hit home once you realised that this is true.
Although there are many aspects of South Africa which we could discuss and debate (which would take up many newsletters and cost me my sanity and optimism), we will focus on one key aspect which needs to be resolved if this country is going to take its true place as one of the fastest developing countries in the world. South Africa needs to foster a culture of fast paced economic growth.
Legacy issues and current challenges
The issue of South Africa’s place in the global economic world is easy to answer but difficult to realize. Yes, South Africa can become a major player in world economics, provided that it resolves the current challenges which plague the country.
Saville painted a realistic picture when he said that if one looks at South Africa’s modest 3% growth against the backdrop of where the country was 20 years ago, the country has achieved a lot. However, if one looks at the future position of the country, there are mixed views.
Despite South Africa being regarded as the economic powerhouse of Africa, the country still suffers from massive levels of unemployment and poverty. And it was pointed out by Saville that this is a direct result of the education policies which was a legacy of Apartheid. “The business leaders of today were the children who were denied access to maths and science during Apartheid. And it is not surprising that the children of these individuals also struggle with maths and science. It is a vicious cycle which has no end in sight,” said Saville.
No one is denying this. But what has government done in the 19 years of democracy to resolve this? And what is being done going forward?
Yes it is the duty of every South African to do their part in resolving the country’s challenges. But you cannot expect the common man to resolve the education system. That falls at the door of government. And perhaps a step away from the current mind set of rewarding mediocrity will go a long way in resolving these challenges. The country cannot forget the Limpopo text book saga. And do you expect the country to now turn a blind eye to the fact that an investigation team which was set up by Motshekga seven months ago to review the 2012 matric exam results has not even begun their investigations? And yet she keeps her job while government ministers who have performed their tasks quite admirably lose theirs.
Winding path to 6% growth
Since South Africa became a democratic state in 1994, the country has seen a rather modest annual growth rate of 3%. And while this was seen as an amazing achievement 19 years ago (which it was), where have we honestly gone from then?
Government has set an ambitious growth target of 6% and have done a lot to create a free market system where it doesn’t have wholesale control over business processes. Although it could be argued by some that government hasn’t done enough, they have encouraged foreign direct investment and have created an economy which both protects the consumer and encourages competition.
However, challenges persist. “If you want economic growth, don’t turn to government. The responsibility to turn the economy around is the responsibility of every economic player in South Africa. You need to find a need as an individual which will enable you to contribute towards changing the country you live in,” said Elias Masilela who is the CEO of the Public Investment Corporation (PIC).
This is all very well, and true. But what needs to be done to realize this? Saville says that the answer lies in small business development.
“Certain sectors of the South African economy are dominated by a few role players who are large corporations. This creates very few employment opportunities in the industry. We need to encourage small business development in the industry in order to create these employment opportunities,” he said.
There is no doubt that South Africa needs economic growth. And the proposals that Saville and Masilela put forward are admirable and innovative ways in which to achieve growth. However, the reality of the situation is that most businesses in South Africa have a problem with access to capital.
This is where the role of the PIC and the Industrial Development Corporation becomes important in the economy. Although these are government backed institutions, they act independently in the market and look for ways in which to encourage business development. A hybrid model of independent business development which is backed by government support in certain cases is the key to realizing the country’s 6% growth target.
Editor’s Thoughts:
Saville rightly pointed out that when one looks at the current state of the South African economy, one must look at it against the backdrop of the state that South Africa was in in the not so distant past. Similarly, if we are to set future growth targets, we much look at it against the current backdrop of the South African social and political landscape.
We have a growing population with ailing infrastructure to support it. How do we achieve a 6% growth target if we can’t deliver Medupi on time? What type of a society are we leaving the next generation of business leaders? Government and the public need to stop playing the blame game and start asking serious questions about what they can do to make South Africa a major player in the international business world. Please leave your comments below, interact with us on Twitter at @fanews_online or email me your thoughtsjonathan@fanews.co.za.
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