Public-private partnerships can be effective – but we need men and women of substance as much in the private sector as we do in the government.
The new broad-based black economic empowerment (B-BBEE) codes – which require companies to improve their transformational efforts in the ownership, skills development, employment equity, procurement and enterprise development areas – have met with resistance in several quarters. Some assert the new codes have good intentions, but cannot hope to succeed until we “clean up corruption in government”.
I’m not denying that there is much to be done in that regard – it’s clear there are problems that have to be solved in the government. But corruption goes both ways – whenever any state official succumbs to bribery, someone in the private sector is doing the bribing. Does our outrage apply to both parties equally? It appears it does not.
There is also the issue of corruption in the private sector. Two recent scandals were the price-fixing in the bread industry, and the collusion among major construction firms in the tendering to build World Cup stadiums. Yet somehow, we are not as vocal when condemning these crimes as we are when assessing government’s record. These crimes are all equally reprehensible.
To emerge from the mire that we’re in so that private sector transformation and government spending is set free to benefit the whole country, we need brave leaders, in business and politics, who reject corruption as a moral fault; a stain on one’s character. But they have to be equally hard on government and private-sector transgressions, and demand the same penalties. We can’t have some incidents of corruption excused with the mentality, “Well, you know, in business you do cut corners if it improves the bottom line,” any more than we can sweep others under the carpet because, “In politics the end justifies the means.” Wrong is wrong; as much as we need incorruptible public servants, we also need business leaders who focus on their public duty as much as they do on their profitability.
This is important because it is the source of the deep mistrust that still exists between the government and the private sector – and that mistrust is what we have to overcome if we are going to create effective public-private partnerships (PPPs).
When our democratic government was first elected, many members saw little reason to trust corporate South Africa – as far as they were concerned, business had collaborated enthusiastically with colonial and apartheid regimes in pursuit of profit. And many business leaders saw the new government as people they had never met but who were in favour of widespread nationalisation. Of course both sides felt mistrust. In 1994, after the state put the brakes on the privatisation of important public-sector utilities – previously favoured by the apartheid government – it did not adopt the PPP model enthusiastically. Although in theory PPPs were possible, the degree of state control and ted tape did not make the process attractive to the private sector.
Instead, the government decided to rely on its own capabilities, inspired by China’s collective developmental-state approach, the “command and control” economy. Unfortunately, that approach is not sustainable in South Africa for two reasons: first, the state did not have the funds to fix all the infrastructure challenges in 1994. We inherited a functionally bankrupt state; it took Trevor Manuel 10 years of careful budgeting, planning and legislation to coax the country into solvency and to become creditworthy enough to embark on major upgrades in infrastructure.
Second, the public sector has been unable to attract skills of the right quality or quantity to sustain a dominant state role in the economy. The loss of white skills through affirmative action policies and the government’s inability to provide adequate skills development for incoming black employees has contributed to this.
To make things worse, black employees in the public sector who do upgrade their skills become attractive to the private sector, which can offer better remuneration; the result is that the state constantly trains new talent, but cannot retain it.
If the state is going to create the capability and capacity required in a transformed public sector, it needs the private sector – for a start, the latter has massive capacity for funding many of the initiatives that government has to drive. It also has a lot of skills that the public sector need. If you look at the demands of the National Development Plan– in transport, energy, public health, education, water, housing, etc – there is no way the state can fulfil those requirements alone; active collaboration in PPPs is imperative.
What is encouraging is that, despite the difficulties involved in creating PPPs in the past, there are some that do exist and are thriving. Despite the red tape, despite the mistrust, there are examples of the government and business working together.
One example is the Thuthuka Bursary Fund (TBF) and Thuthuka Educational Upliftment Fund (TEUF). These are donor-funded initiatives by the SA Institute of Chartered Accountants (Saica), which through the TEUF promotes the study of science and core mathematics at disadvantaged high schools. The TBF identifies black and coloured high school pupils with an aptitude for maths, then mentors, finances and supports them through their studies and articles to become chartered accountants.
The TBF understands that success at university, especially for disadvantaged students, is about more than just tuition fees, board and lodging – that money isn’t the only bar to success for them. The programme involves close mentorship and a number of support services, to help those students adapt to the very different challenges they face in their new environment.
Thuthuka has been hugely successful; its students have higher pass rates on average than their more privileged peers. So far, the programme has produced almost 100 new chartered accountants, with more than 1 000 more in the educational pipeline.
The government has recognised that success, and come on board – Blade Nzimande’s Department of Higher Education and Training matches the funds donated by Saica members rand-for-rand. He also partners with Saica to make sure further education colleges have qualified chartered accountants as financial officers, providing the oversight needed to deliver on the education front. In Kwazulu-Natal, the provincial treasury is partnering with Thuthuka to produce 100 new chartered accountants – at least one from every municipality, so they can return to their home municipalities when they qualify and improve their financial governance.
We need men and women of integrity to emerge in both public and private sectors; who can talk truth to power. That doesn’t mean only speaking frankly to the government. When you talk that kind of truth, people see you’re prepared to challenge the private sector – so that when you change the message and talk truth to political power, your voice has credibility. We need people who transcend this divide, with the credibility to become a moral conscience. Challenge the ANC, but also challenge big business. Challenge and praise where it’s appropriate – that creates a much more fertile environment for trust and worthwhile PPPs.
If other professions were to follow Thuthuka’s example, we could create real working solutions to economic inequality – PPPs like these are the only way to make a dent in the 50 percent unemployment rate among South Africa’s under-30s. It’s going to require trust, co-operation and an inculcation of the pay it forward philosophy.
Pay it forward is also the cornerstone of another successful education trust, the Imvula Education Empowerment Fund. Students “pay” for their free education by managing the administration of their campus, and working part-time for Invincible Outsourcing, Imvula’s call centre and data-capture firm. They gain three years of work experience, the payment for which goes to funding their education and the right to nominate a sibling, relative, or other community member – the funding from corporate donors is being recycled. By donating that funding, donors are also fulfilling B-BBEE obligations under the new codes – here is an opportunity for companies to use compliance with the codes to achieve direct, profitable transformation of the country’s business environment.
* Sandile Zungu is the executive chairman of Zungu Investments Company.