In the last few years the management team has gained insights into the intricacies and challenges of launching a new venture. Like many businesses they battle to find the right skills for the specialist industry that they operate in, getting Visa’s for international skilled professionals is a nightmare that can drag on for longer than a year. It’s common knowledge that South Africa’s poor education system is a noose around our competitive advantage and skills capacity, but the solution for fixing it is stuck knee deep in political wrangling and confusion. Lane’s suggestion for a robust national programme that effectively provides support to small businesses that are developing new skills would be valuable to a new player like Veneka as graduate training is a costly investment, but often the only way to up skill and employ students without the correct training.
As the continent’s biggest economy South Africa is proudly positioned as the gateway into Africa. So, it was a steep learning curve for the business when they could not easilyget banking facilities such as overdrafts on foreign earnings and contracts. They also came across many hurdles trying to pay foreign suppliers. Musodza commented that, “It’s highly frustrating to have to deal with red tape when making straight forward operational payments that aren’t large sums of money by the general industry standard.” Such frustrating experiences of doing business in South Africa are one of the reasons that some international companies prefer to base their business in Mauritius, touted as one of Africa’s friendliest business destinations. Musodza and Lane’s challenges may be unique to their business and circumstance, but their experiences reflect a broader macro issue. One of the economic debates is about broadening the economy through entrepreneurship with vocal calls for a more conducive regulatory environment, with much less red tape!
South African commentator and economic scenario planner Clem Sunter, has often spoken about the hurdles facing local businesses and has outlined some of the key risks to South Africa’s fledgling democracy. One of these is a lack of an entrepreneurial culture that could fundamentally transform the country’s growth prospects. In assessing the local economy he pointed out that there are about nine million small businesses in this country and many of them fear the rigid labour laws, are shy, and even afraid to hire people. Another issue that needs to be seriously interrogated is the idea of “decent work”. South Africa’s labour market needs a new model that will employ more people, encourage skills development and built capacity. It’s against this framework that Clem Sunter has proposed the idea of a desperate need for an ‘economic CODESA’* so that the economic challenges can be treated with the same sense of urgency as the political crises of the late 1980s and early 1990s.
Four years ago, two local entrepreneurs, Evans Musodza and Robert Lane began an intrepid journey and launched a payment technology company, Veneka, based in South Africa.
South Africa’s economic honeymoon is over. Business, Government, Labour and Civil Society are experiencing the sobering reality of a nation that has failed to transform and build an exclusive economy, where the gap between rich and poor is turning into violent social unrest and traditional labour unions have lost the confidence of their members. Problems in the Western World, particularly the Eurozone, have resulted in a toxic cocktail of economic headaches.
In the last 18 years, the ANC has successfully gained political power but has failed to create an inclusive economy, that isn’t still tightly controlled a by minority group. The impact of this development has been detrimental to socioeconomic transformation. The political elite have paid little attention to implementing long term economic transformation plans. In the past decade, most actions were and are still tied up in rhetoric while the political elite build their success on easy access to State revenues. South Africa has slid in the Transparency International gauge of perceived public sector corruption from 38th in the World in 2001 to 64th in 2011 out of 183 countries and regions. As South Africans we can’t afford to take a general, accommodating view of emerging market corruption. Only a tough stance on social and economic development and transformation will propel the country forward. The task is too big to be treated with complacency and there are strong foundations and opportunities that can be harnessed.
The split between the groups that control the economy versus the state has also created a level of animosity and distrust. Without strong economic resources, the ANC’s efforts have been hampered, since 1994. The reality facing South Africa is that distrust between Business Labour and Government is not sustainable for either of the parties long term growth objectives. Most recently, the deadly chaotic strikes in the mining industry are indicative of the deep flaws in South Africa’s teenage democracy, and a lack of clear leadership and accountability.
The desperate call for leadership is getting louder, with bold voices such as Nedbank’s Chairman, Reuel Khoza, openly criticizing the ANC government and raising warnings about the possibility of a rogue state. His sentiments have been echoed by other leading business figures such as Bonang Mohale, the new head of the Black Management Forum (BMF) and Chairman of Shell South Africa. It’s an encouraging sign that Mohale has stated that one of his goals is to educate his members to think differently, make informed decisions and challenge the country’s leadership. Unfortunately the majority of black South African’s don’t belong to professional organizations. They form part of the working class population, some reliant on social grants, the ANC’s ‘gift’ to stay in power.
The ANC faced a rough task to transform the deep structural flaws of the South African economy. In Oliver Tambo’s biography, Beyond the Engeli Mountains, Luli Callinicos provides interesting insights into how South Africa’s mining industry was built on the destruction of peasant agriculture and turning farmers into migrant workers. The impacts of this strategy are still a thorn in our current society.
In his February 2012 State of the Nation address, President Jacob Zuma focused on the mining industry as one of the job drivers in the New Growth Path and its critical role in the socio-economic development of the country. Nothing was said about the social ills in the industry. Six months later, the Marikana mining massacre was a telling account that South Africa needs to work much, much harder to steer the economy and society in a different direction. Forget the Mining Charter, Scorecards and Conventions. The mining industry, like other sectors, needs deep introspection into labour and employment practices.
In fact, South Africa has been brilliant at formulating policies and plans. Internationally, we have been hailed for building strong institutions, with a strong Constitution. In response to the socioeconomic difficulties, the ANC established the National Planning Commission in 2009 and then the New Growth Path framework in 2010. In the current context, Finance Minister, Pravin Gordhan, is correct in saying we are not in a terminal crisis, but if Government departments don’t co-ordinate their efforts and social groups can’t implement the plans, we will certainly keep moving backwards and the destination will be a crisis. Pravin Gordhan has also criticized international ratings agencies for downgrading South Africa’s debt, but without strong household savings and a growing tax base, the country’s growth is reliant on foreign perceptions for foreign direct investment.
On the one hand, Government Business and Labour have a sobering job to tackle economic transformation, create a more inclusive and equal society and steer the country onto a growth path and wide social prosperity. If a nation is a collective of its people, then individuals in all spheres of society have a responsibility to shaping the future. In South Africa’s current context the key building blocks, need to be built on individual excellence, skills training, volunteerism to create opportunities, even for just one person and for more South Africans to join the debate and dialogue. Globally many countries that have succeeded have entrenched excellence and a strong work ethic in the social psyche. Alternatively they have implemented a tightly centralized framework. South Africans are far too dynamic, diverse and innovative to expect the solutions to come from the centre, but we need the right agenda to get it right.
*The Convention for a Democratic South Africa (CODESA) was a tough negotiation to end the apartheid system in South Africa. It took place between 1990 and 1993 and brought together the National Party, the African National Congress and numerous other political organizations.