Investment and insurance holding company PSG Financial Services is looking for South Africans to become involved and put forward discussion documents on how to tackle economic challenges menacing the country.
As SA looks ahead to the national elections in May, the country continues to face huge unemployment, rolling blackouts, logistical issues at Transnet and economic stagnation.
This is as the government struggles to come up with policies that could drive growth, create employment and reduce inequality — a situation that may cost it an outright win in the election.
In response, PSG, in partnership with Economic Research Southern Africa (ERSA), on Wednesday made calls for “big-picture thinkers” to submit discussion documents on medium-term and long-term initiatives that will push the country forward and help tackle the deeply intertwined challenges that seem to limit its growth potential.
Speaking during a Think Big SA dialogue on why there is a need for policy reconfiguration and why the government’s transformation policy has proved ineffective, Mamokete Lijane, the chair of ERSA and a strategist in global markets at Standard Bank CIB, said there was not one universally accepted truth, especially when it came to BEE.
The way BEE was implemented seemed to be about creating a new elite instead of being about real transformation in society and how the economy worked, Lijane said.
“With BEE, we created a new mix of extractors but the underlying dysfunction remains. There were a lot of things we did not address — for example, we still have very unequal labour markets; things like spatial planning; things like education provision and basic inequality.
“And the poor still remain poor and no-one really cares about them. But you have a new class. So for me, BEE as designed at the moment is a tax on corporate activity because you have people that have not contributed to the generation of wealth taking a big share of it.”
Unemployment
The call for policy submissions comes as SA celebrates 30 years of democracy while facing one of the highest unemployment rates in the world at 32.1% and with quarter-on-quarter GDP growth of 0.1%.
University of Free State economics professor Philippe Burger said economic growth will require a much bigger role for private investment in what were typically considered government projects and infrastructure. Burger said concessions and public-private partnerships were possible models for private sector participation and that the role the private sector can play could differ from sector to sector, ranging from financing, building and operating infrastructure.
Burger said informal sector enterprises can be much better integrated with formal sector enterprises, with informal enterprises providing services to their formal counterparts.
“For instance, instead of outsourcing cleaning services of offices to a large corporation, big companies could empower a small informal sector firm to provide cleaning services,” Burger said.
“We tend to think of the formalisation of informal enterprises as a big-bang event, one day they are informal, and the next day they are registered for tax, [have] opened a bank account and have all permits in place. A better approach might be to see formalisation as a process, with steps taking place as and when appropriate for the success of the informal enterprise.”
On the sidelines of the event, Michael Sachs, adjunct professor at the Southern Centre for Inequality Studies at Wits and the former head of the Treasury’s budget office, said policymakers in SA had over the past 30 years decried the issue of strong policy but poor implementation.
“I think we need to go beyond that and ask what needs to be changed in our policy structure, in our constitution structure, in our economic structure,” Sachs said.
‘Reform’
The word was “reform”, he told Business Day. “We have to reform our systems, systems of government, as well as corporate systems.
“You know I was reading this morning that the CEO of Standard Bank earns R80m. We live in a country that is kind of still two countries and we need to find a way of building a common society. So unless economic reform takes us closer to that goal, I don’t think we will succeed,” he said.
Sachs said the issue with SA was not policies or the lack of blueprints but that good policies were not supported by resources.
“For example, the white paper on post-school education and training, which was adopted by cabinet in about 2015. Wonderful policy, wonderful vision of the higher education sector, but says nothing about where are the resources going to come from in order to implement this policy,” he said.
ERSA executive director Fouche Venter said they were looking for long-term initiatives that could move the country forward. This can include the legislative agenda required to foster inclusive economic growth.
Venter said a focus on medium-term wins — which would help the country achieve notable gains by helping to restore the faith of the public and the international community in SA’s ability to deliver — would also be considered. “You may want to touch on economic policy, technological advancement or the role of public/private partnerships,” he said.
PSG said that because it believed the submissions could have a significant impact on rethinking growth strategies in SA, it was offering prizes for the top three articles at R300,000 for first place and R100,000 and R50,000 for second and third place, respectively.
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