Mindworx comment: National Treasury’s discussion document on economic transformation, inclusive growth and competitiveness

By Jonah Naidoo, CEO Mindworx Consulting

Just as intended, there’s been much discussion about Finance Minister Mboweni’s document on Economic Transformation, Inclusive Growth and Competitiveness. Excellent! Now, let’s get to work.

South Africa was ranked 67th on the Global Competitiveness scale in 2018, having fallen 23 places since 2007. When we think about transforming our economy, we’d do well to look East for inspiration, not West. Within the next ten years, China and India are set to rank as the world’s largest economies, in that order. Not so long ago, unseating the USA was unthinkable. How are they doing it?

India is a lesson in inclusive growth. The Indian government mandates that 30% of businesses must be locally owned and 30% of the content of manufactured products must derive from local sources. As for China, competitiveness is the cornerstone of the simple and coherent 100-year plan they follow, regardless of changes within the country’s leadership. They act collectively for the greater good and the impact of putting the country first is evident.

There is overwhelming evidence that inclusive economic growth is the most powerful mechanism for South Africa’s three priorities: decreasing poverty, addressing inequality and increasing competitiveness. Inclusive growth is about creating continuous virtuous circles of opportunity that will improve the prosperity and quality of life for all.

Let’s be brave enough to publicly acknowledge what is right, rather than what is popular. The role of the state is pivotal in creating certainty and providing strategic direction, but we need to guard against vague and disjointed policies. Cultivating a sense of real urgency will serve us well. Every day we see the evidence that our citizens are frustrated and impatient for transformation.

Once Minister Mboweni’s document is finalised and approved by cabinet – and that can’t be soon enough – our initial steps should be to:

  1. Set a realistic implementation plan that enables monitoring and evaluation of proposed reforms, including current baselines from which we can set measurable and achievable targets. Capable, accountable people are needed to drive implementation and pace is important: some quick wins will build support and show results.
  2. Devise a strong coordination mechanism to be driven from a central point within the Department of Planning, Monitoring and Evaluation (DPME). The department must be empowered to ensure that we’re all singing from the same hymn sheet and keeping the plan focused on outcomes.
  3. Appoint a strategic forum to oversee 1 and 2 above, with the authority and agility to cut through the complexity of managing many stakeholders and keeping the plan on track: setting targets, creating critical paths, identifying transversal issues, monitoring progress, expediting through bottlenecks, identifying handoffs between stakeholders, amending plans where necessary, ensuring accountability, etc. With the strategy in place, the tactics need to be pinned down.

In South Africa, and putting malfeasance aside for now, we recognise that unemployment is at the heart of our economic crisis, a cause rather than a symptom. It stands to reason then that we need to make it the heart of our economic reform plan. Creating more jobs and greater job certainty is the quickest – and most intelligent – way to move the needle on our economic odometer.

Rebuilding South Africa is not limited to fixing state-owned entities; we need to prepare for the future and our role on the global stage. This will need collaboration between the private sector, NGOs and the public sector to co-create imaginative and dynamic alternatives.

That said, one of the most important things government does to improve employment is skills development. It’s essential that skills are aligned with our national priorities. Using the range of grants, subsidies and other incentives that government makes available ensures that we contribute skills that are affordable and sustainable in a constrained market. These incentives include SARS grants for learnerships, SETA funding, Youth Employment Scheme benefits to BEE scorecards and the SARS employment tax incentive.

The private sector leads the way in understanding that the 4th industrial revolution is likely to create more jobs than it dissipates. Digitisation is the gift that is going to keep on giving – but only if we train sufficient people so that we can harness it to our advantage and compete globally.

We need more organisations teaching young South Africans skills such as data analytics and coding. These are in demand in every segment of the economy – even agriculture. Here’s the thing about these skills: they don’t only enable employment and so contribute to economic growth in their own right, they also form the basis of a much broader offering to the business process outsourcing sector.

We need to grow service-sector opportunities beyond call centres (which are susceptible to automation) if we want to develop an export-oriented economy. We’re building a reputation in the international market for competitive and excellent service in this field.

There can be no resting on our laurels. We need to keep up with rapid changes in technology and continually upskill to remain relevant and competitive. Robotics and artificial intelligence also present great opportunities for capable young minds – they have a natural affinity with anything digital.

We have real-life, relevant case studies within our academy that demonstrate how successful partnerships with corporates can prepare high-potential young people for digital roles. We start candidates off in a classroom environment with a blend of online and classroom learning and give them access to short courses in small and relevant modules, just in time to be used in the workplace.

Crucially, we nurture them through the transition into the workplace so that they are immediately productive. This is particularly important for SME employers who provide almost half the employment opportunities in this country. Of necessity, they look for quick returns from new people.

We have repeatedly proven that potential and attitude are better indicators of success than background and educational institution. To transform employment in this country, employers need to:

  1. Stop employing according to inherent biases, such as favouring graduates from a few selected universities.
  2. Stop perpetuating inherited socio-economic disadvantages through traditional recruitment practices that hark back to South Africa’s dark past.

We know that the interventions envisaged in the discussion document are difficult and will take time to implement; this is why we need to get capable resources into positions now so that they can start to catalyse growth initiatives.


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