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The fourth South African Investment Conference has come and gone

The fourth South African Investment Conference has come and gone. It had glitz and blitz and left us dribbled and dazzled with its whiz. File Image: IOL

The fourth South African Investment Conference has come and gone. It had glitz and blitz and left us dribbled and dazzled with its whiz. File Image: IOL

Published Apr 3, 2022

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The fourth South African Investment Conference has come and gone. It had glitz and blitz and left us dribbled and dazzled with its whiz.

In this column, I present four distinct assignments. First, I dissect the core economic elements of what any economic system should deliver and contextualise the investment conference and ask what it should have delivered.

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Second and as a corollary, I start with the language of science in order to understand what can be expected and conclude with what this language provides.

Third, I go into detail on a relational path of production and benefit realisation in order to shed light on what, at the very basic technical argumentation, should inform an investment conference and how work, as a physical science concept, should guide the output of the conference.

This provides not only production in action but serves as a device for the monitoring and evaluation of policy efforts and understanding its impact.

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Thus, it sets the platform for economic engagement by the public as regards benefits or otherwise of not only the conference but of the investment design of the nation.

Fourth and finally, I draw some conclusions about political economy, and this should point us away from the Mont Fleur Scenario of 1993, which set the tone for the settlement of 1994.

In the scientific language of physics, work is defined as force times distance. Work in this instance is output and could also be impact. The inputs of work are force and distance. The two are arranged in a particular arithmetic logic of multiplication.

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These inputs give you an output. What is important are the relational specificities of inputs in relation to each other and in relation to the output.

What is even more important is not only the formula specs but their practical display in quantitative terms, which is the political language of mobilisation for socio-economic development, and this leads me to set the context of the chain of Investment Conferences for South Africa.

Quantification in the science of government or statecraft is assigned to a statistics system that arranges the effect of government in specific terms of both the inputs and the outputs. The national accounts have a primary product termed as the total net value of economic activity in a country, and it is reflected as the gross domestic product (GDP).

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In specific terms, the GDP is broken down into components of economic activities called industries. These are primary, secondary and tertiary industries.

Primary activities are, for example, agriculture and mining. Secondary activities are, for example, manufacturing, gas and water. Tertiary activities are, for example, wholesale, retail, government and finance.

These activities are arranged in an organic fashion for the delivery of products. The national accountants garner this organic relational fashion of production through what is called supply and use tables (SUT).

They then produce a final matrix of the input-output table (IOT). To understand the benefit realisation amongst classes of society from economic activity, national accountants construct the social accounting matrix (SAM) to hold the government to account on whether they are making progress or otherwise towards meeting societal and environmental objectives, normally captured in a national development plan (NDP).

As an illustration, I picked on the interview of Dr George with Leanne Manas on Morning Live as this was very instructive. For an investment of R 1.5 billion, Dr George could only speak with definitive ease that the number of direct jobs will be 200. For the rest of the jobs to be created, he was clutching at straws.

And this is what characterised the absence of quantification across the conference.

It lacked the science of the state. Suppose we make a heroic assumption, call it Dr George’s principle. If R1.5bn produces 200 direct jobs, then R1.2 trillion would produce a pithy 160 000 direct jobs.

The evidence from the custodian of state science of measurement, Stats SA, shows that Gross Fixed Capital Formation (GFCF) and Government Expenditure (GE) over 24 quarters to date are a deplorable trend.

Fourteen quarters out of the twenty-four are negative and ten are positive. But the positive percentage is so low that it cannot move the needle anywhere.

Given this grim situation, one would have expected those seized with imagining and advising the president would pause and appreciate that this is not a matter of blitz and glitz, but it is a matter of drawing deep on what economic policy direction different from the Mont Fleur scenario of 1993 that paced us towards South Africa’s settlement of 1994 has to be pursued. After all, Madiba said it is in our hands now.

In this journey, physical science tells us that when there is zero distance traversed with all the verbal force we have exerted, that there is no work to show should not surprise us.

In fact, the World Bank has said the net effort of our 28 years is that of the most unequal society in the world. Ironically this is despite following their advice for overwhelmingly most of these 28 years.

Dr Pali Lehohla is a Professor of Practice at University of Johannesburg and former Statistician-General of South Africa. Meet him @Palilj01 and www.pie.org.za

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