Private sector must assert itself

Among the World Bank’s various global indices is that which analyses global knowledge economies. This ranks 145 countries and has four sub-indices: economic incentive and institutional regime, innovation and technological adoption, education and training, and ICT infrastructure.

Can you guess where SA is placed, before I tell you? Six of the top seven countries all experience cold climates, lying further north than 50°, while New Zealand, the only one in the southern hemisphere, is at 41° south.

What is the reason, I wonder, for this phenomenon. The top seven, in order, are Sweden, Finland, Denmark, Netherlands, Norway, New Zealand and Canada. The best-placed African country (it makes it by association) is Mauritius at 62nd. We lie at 67th, quite far ahead of Tunisia (80th), which is the next African representative.

Since 2000, the date of the previous survey, SA has declined 15 places, and is among the 10 countries that have lost the most ground. While we have lost two places in the economic incentive sub-index, three in innovation and technological adoption, and five in education and training, we have lost 43 places in ICT infrastructure and in this category now lie 98th.

This decline has a relative context, of course, and shows that a host of other countries have made far bigger strides than ours in this important aspect of the “new economy” which, according to visiting guru Professor John Kasarda (“Father of the Aerotropolis”), we are not structured to embrace.

We are greatly excited about the government’s commitment to large infrastructure projects and the president’s announcement of these has promised the hope of economic growth in excess even of our expectations. However, the construction of new infrastructure alone does not produce economic growth.

It is facilitative at best, but requires smart investment and smarter use. Some of the infrastructure constructed for the soccer World Cup is testimony to this. It is also true that very ambitious projects have been announced in the knowledge that the state does not have the money to pay for them.

Taxpayers cannot be expected to be forthcoming in their contributions, especially since disposable income among the majority of people has been eroded in recent years. It is the private sector that holds the key, not only for investment into these projects, but in terms of the country achieving a decent growth rate which will help alleviate our acute unemployment crisis.

From all accounts, the SA private sector has been hoarding cash, and it is time, perhaps, for this to be committed in the national interest; not in the sense of altruistic donation, but smart investment into infrastructure without which the economy will not grow.

If we do not do this ourselves, with some support from global capital investment, the plans will either not be brought to fruition, or will be built by foreign capital and foreign workers without sufficient attention to the transfer of skills.

In my view, the private sector cannot allow itself to become alienated from the national interest. It is tempting to stand aloof from the increasing left-wing pressure for the state to be even more dominant in the economy. In fact, the pre-eminence of the state is already undermining private sector enterprise.

In failing to assert itself as the custodian of the economy and the engine of economic growth, business is impeding its own advancement. It is not words that are required, but action, and action of the type that advances the credibility of capitalism and the free market, instead of compromising it.

Careless indifference to the ever-increasing wage gap, price collusion and retrenchments, which in some cases have pre-empted the consideration of other alternatives, are regrettable examples of business shooting itself in the foot.

If SA is to accept the “new economy” and seek higher ranking when the World Bank next produces a knowledge economy index, these will not be achieved by the government. It lies in the hands of the private sector, with government support, to attain these goals.

* Andrew Layman is the CEO of the Durban Chamber of Commerce and Industry.