The fundamental challenges we face as a country in the next 10 or more years are our levels of poverty, unemployment and the inequality in our society.
Within this context the ANC Youth League’s suggestion of nationalisation as a solution to the country’s economic disparity has a large following and will continue to do so until the issue of mass unemployment is more effectively dealt with. While some may argue that nationalisation in itself won’t create jobs it does, however, aim to redistribute wealth and create a sense of broad-based ownership of the economy.
With an unemployment rate over 25%, according to figures from StatsSA, South African business needs to come up with an alternative to an economic model driven by nationalisation that will create both jobs and distribute wealth – a compelling solution that will be a productive alternative to nationalisation.
In addition, it is important to move the debate from nationalisation to issues of economic growth and competitiveness. Nationalisation is not the core answer to our challenges and has proven not to have been an effective solution in most countries where it has become policy.
A competitive private sector is what creates jobs.
To heal our very high levels of poverty and close the gap, South Africa needs 8% real GDP growth for 10 years. In order to achieve this our country needs leaders in government and in the private sector who can make tough decisions as to how the country can compete against agile economies.
We are living in an era of an intensely competitive global economy. South Africa is competing with countries that often work off a lower cost base and that are more technologically advanced than we are.
The rise of Asia, the internet and the coming of age of a new generation are going to be the key driving forces of global business in the future. In the next 20 years, up to 80% of global growth is going to come from previously peripheral countries, of which South Africa is a member.
Growth markets for the future include Brazil, Indonesia, Mexico, Egypt and Nigeria while the engine fuelling global growth for the foreseeable future will continue to be China and other countries in Asia. A major challenge facing South African business will be improving service delivery levels to match these competitors.
At present, South Africa is losing ground as the leading economy on the African continent, with our dominance being challenged by countries that are able to be more nimble and attract greater rates of investment. While Africa as a whole has not reached its full potential and there are a number of economies still in transition, South Africa hasn’t become the gateway into Africa for investment as was once hoped.
Earlier this year, South Africa’s ranking of global competitiveness from the IMD World Competitiveness Centre fell from 44th out of 58 emerging and industrialised countries in 2010 to 52nd out of 59 in 2011. Our poorest performance came in the area of infrastructure – basic, scientific and technological, as well as health, environment and education.
In order to gain a foothold in world markets, let alone compete against countries such as China and India, South Africa needs a change in work ethic and attitude.
It is also essential to attract and retain talent in order to become and remain competitive, as Africa's biggest export is not natural resources, but rather talent. 50% of professionals have left their countries of origin across Africa, while in a failed state like Zimbabwe the figure is as high as 70%.
Key to solving the problem of unemployment are entrepreneurs – people who can start businesses and create jobs so that we are able to move away from the presumption that government holds the key to solving the question of unemployment.
To create an environment that is conducive to entrepreneurs, government has an essential role to play in ensuring that South Africa is a competitive nation. While government remains the largest employer in South Africa, its role in a new global marketplace should be to facilitate an environment in which entrepreneurship can flourish.
This means building a strong education system from primary school level, creating and maintaining operational infrastructure to allow business to work, and creating a legislative environment conducive to job creation.
Education is indispensable for our success as a country. We need a disciplined, effective, technologically-savvy primary and secondary school system. Unless we have a public education system that functions competitively and produces employable high school graduates, we don’t face much of a future.
The South African education system also needs to place emphasis on the creation of entrepreneurs, as this is the only true path to real job creation for many. South Africa is exceptional in the number of successful entrepreneurs it has produced; we need to harness and encourage this tendency and make it a part of our national culture.
Infrastructure, such as roads, rail and accessible internet also need to be provided by the national government to allow the country to be competitive for business to flourish.
Without addressing infrastructural development and the essential questions of unemployment and job creation, South Africa risks losing its competitiveness among other emerging African economies and will render itself unable to compete in an increasingly global economy against the world’s high tech / low cost economies. We also risk a future of political instability against leaders who have simply ignored the problems of their people.
In the new highly competitive global marketplace, South Africa needs to look to the private sector and entrepreneurs to be the primary creators of jobs. However, it is simultaneously important that government provides the foundation in terms of education, functional infrastructure and a legislative environment conducive to job creation. The private sector in South Africa should give more thought to how it can contribute creatively to the main questions of the day, such as poverty and unemployment.
In these turbulent economic times, South Africa’s leaders must come up with better solutions to the issues of poverty and unemployment facing the country. Only when business and government act in concert will we harness the country’s true potential.