SA’s bank guarantee scheme is missing the opportunity to develop nascent entrepreneurs and industrialists
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SOME years ago, Nelson Mandela was bold to caution that South Africa needed a “Reconstruction and Development Programme (RDP) of the soul”. The “RDP of the soul” envisaged by Mandela was an opportunity for leaders to create thinking and self-sustaining communities emphasising material and social being, regrettably this RDP turned to social welfare.
With the same rationale was the establishment of the Black Economic Empowerment Commission (BEEC) an antecedent of Black Economic Empowerment (BEE) to unbundle the economy through “capital reforms” thus building a class of Black entrepreneurs and industrialists.
To make finance accessible to these nascent black entrepreneurs and industrialists, largely underwritten through “preferential procurement” by the state and its agencies to spread empowerment across the underprivileged sectors of the economy. Let alone the failure of SOEs and other instruments, BEE characterised itself as crony capitalism, fronting, enrichment with debt-burdened deals. Critical to account, the BEE policy engrossed in rent-seeking with no effort to invest in direct productive activities of the economy for inclusive growth.
Progressing the RDP of the soul made proclamations for the leadership to build societal edifices adhering to moral cultural norms for self-sustaining communities.
A tacit bargain was endorsed persuading businesses to liberalise the economy, discreditable was the omission of unequivocal apparatus to achieve redress and racial injustice characterised the economy – the ultimate period in history to establish the Sovereign Wealth Fund as impetus for the material aspect to realise the RDP of the soul.
Political and business leadership missed seeing what Mandela envisioned, thus social disparities that make South Africa the world’s most unequal country with measured Gini Coefficient of 0.63 the making of an absolute threat to instability.
Nowadays we witness atrocious characteristics of the recipe designed by political and business leaders, the recent uprising, the badly managed Covid-19, and the astronomical corruption perceive as wretched pandemic and encroached moral decay. The founders of Africa led by Kwame Nkrumah made bold like Mandela, envisaged an Africa evolving from liberation through development and to African Unity.
Development must be the totem endorsed as fundamental to eliminate indignity, Benjamin Mkapa underscores, the three fundamental indignities as poverty, ignorance, and disease.
Development ought to precede the contemplation of democratisation, development must not be conceived as an autonomous process, independent of politics, culture, and institutional framework, the most authentic way of alleviating poverty is to embark on the politics of development.
The recession before the pandemic, the lockdowns, and the uprising influenced by the unacceptable levels of inequality is a clarion call to rethink the current trajectory and the conduct of the political leadership.
The introduction of the guarantee scheme of R200 billion to effectively enable the banking sector to undertake large-scale lending to bridge finance companies through the crisis must dovetail with the Economic Reconstruction and Recovery plan (ERRP).
The minister of finance must be emphatic to the banking sector to derive an innovative mechanism that links the guarantee scheme with the objectives of the ERRP, while makes bold to his colleagues that the components identified under the ERRP must be unfolded.
South Africa has remnants of industrial capacity, an avalanche of calls is made by engineering associations volunteering to activate the ERRP. These are the commitments to delineate the self-sustenance the country desperately needs to escape the quagmire of social instability.
The ERRP and the guarantee scheme are noble initiatives to realise the development of entrepreneurs and industrialists for inclusive growth. In avoiding a South Africa signalling a failed Nanny State these two endeavours must be integrated into the lives of the population.
Reasons attributed to the success of the Marshall Plan in Western Europe include the communities possessing a long-standing entrepreneurial heritage, a base of business acumen, high levels of general education, and high levels of technological and engineering capabilities.
With the witnessed catastrophic developments the ERRP and the guarantee scheme must focus their orientations on social homogeneity. The engineering associations and academia already demonstrated their willingness to focus on excellence with a well-developed vision.
The ERRP and the guarantee scheme must in tandem with the dual logic economy, where big businesses and SMEs cooperate under the supervision of an uncompromising government to strong work ethics and governance, labour the endowed resources of South Africa. The government must promote the development of entrepreneurs through a unique body of knowledge advanced by research and development.
Considerably, South Africa possesses the attributes that made the Marshall Plan a success though deficiency is a leader advocating and advancing the hidden strength and strategies that maintain innovation to attain equitable social welfare.
South Africa can mobilise capital, and build the required social and commercial infrastructure required to kindle the economy.
With the variables available inclusive growth is attainable otherwise the RDP of the soul envisioned by Mandela is magnified with the perpetuation of ignorance, poverty, and diseases.
Bongani Mankewu is an associate of the Infrastructure Development and Engagement Unit at Nelson Mandela University.
* The views expressed here are not necessarily those of IOL or of title sites.
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