South Africa is being hobbled by paradigm paralysis
This old truism has variously been attributed to acclaimed genius Albert Einstein; Al-Anon, an organisation designed to help the families of alcoholics; and 19th century Zionist leader, physician, author, and social critic Max Nordau among others.
But while the author of the expression will most likely forever be mired in uncertainty, what is certain is that South Africa, and the way it behaves, epitomises this expression.
Poor education outcomes and poor education? Let’s tinker with schools that are producing results and force them to accept more learners, thereby lowering their quality of education.
Dire public healthcare? Let’s introduce another behemoth in the form of National Health Insurance, managed by government, which has proved unable to run public hospitals and struggles with state-owned enterprises.
What to do about the economy? Let’s convene an economic advisory council like the one that Thabo Mbeki instituted almost 20 years ago.
Added to this morass are the South African fallbacks for failure: lack of resources and the legacy of apartheid - which is undeniable.
South Africa, the common narrative goes, is a low to middle income country which cannot afford to roll out quality universal health care, provide quality public school education to all, deploy more policemen on the streets, provide sanitation to all its citizens - the list is endless.
These viewpoints - especially the lack of money - do not consider that South Africa’s spend as a percentage of GDP, on education and healthcare, is on par or greater than many European countries, but we do not have the same outcomes.
The harsh reality is that South Africa’s problem is not a lack of money but paradigm paralysis - that is, the inability to think differently and act differently about problems.
This, in turn, leads to an inability to come up with different solutions and approaches to solving problems.
The reality is that what South Africa requires to turn things around is not money, it is a complete rethink of the way we deal with challenges and a willingness to do it differently. Especially now that Moody’s has given Finance Minister Tito Mboweni three months to deliver credible plans to stabilise government debt.
There are - unfortunately - too many examples of paradigm paralysis, but for purposes of brevity, I will list only a few.
At a recent China Masterclass at GIBS, Kobus van der Watt, managing director at Beijing Axis, revealed that a businessman from China was looking to South Africa to supply macadamia nuts. He had the budget to buy nuts equal to the total South African production. South Africa was not able to meet his needs.
Opportunities exist, yet we appear to be unable to overcome the hurdles and harness them.
Beleaguered South Africans, who until 10 years ago never questioned whether the lights would come on or not, were once again recently reminded - not that they needed much reminding - of the parlous state of electricity generation and supply in the country.
What is not known to most South Africans, however, is that there are numerous corporates capable of generating hundreds of megawatts of electricity to add to the national grid to relieve supply constraints. But the law prevents them from doing so.
Unemployment in South Africa (and especially among the youth) is at an all-time high, but a Benoni-based manufacturer - and local employer - lost a bid to supply streetlights to a major metro to a company that imported the required products from China. Why? Because it did not comply with the BBBEE-ownership element of the scorecard. Certainly, placing an order with the company, with compliance conditions attached would have encouraged the owners to embrace the missing elements of the BBBEE scored, thus saving and creating more jobs and boosting the economy.
No reasonable and patriotic South African questions the need for redress policies, but should it come at the cost of South African manufacturing and South African jobs?
Finally, South Africa is not taking full advantage of the Africa Growth and Opportunity Act (Agoa) which aims to assist the economies of sub-Saharan Africa and improve economic relations between the US and Africa.
Minister of Trade, Industry and Commerce Ebrahim Patel recently bemoaned that sub-Saharan Africa is only utilising 13 percent of the bigger Generalised System of Preference listed in Agoa.
It is also not fully exploiting its economic partnership agreements with the European Union, where opportunities exist to export chicken breasts to Europe. We are currently exporting none.
Instead of another economic advisory council or bailouts for SOEs and municipalities, what South Africa needs to do is rethink the way it does business. Hard decisions must be taken regarding SOEs and ease of investment should be accelerated.
Additionally, South Africa needs to implement end-to-end, not piecemeal, solutions to all its value-chains to make sure they are profitable and scalable.
One approach which can accelerate economic activity, job creation and sustainable practices is Public Private Partnerships (PPPs), where closer co-operation can create the environment where business can bring its expertise to the table, to create scaled and profitable enterprises, with government support.
Government has already identified sectors for investment and development.
A project management office, mainly driven by private sector expertise, can ensure that government-funded projects not only operate effectively and efficiently, but deliver on skills transfer, training and community development.
Agriculture is a key area where job creation can deliver greater outcomes. However, scaling such projects can deliver greater results.
Consider KwaZulu-Natal, where sugar cane production and profitability is under threat.
Some farmers in the area are converting from sugar cane to macadamia trees.
Should an industry like this be viable on a large scale, would it not be beneficial to the community to arrange small scale farmers into a commercial unit, set up a processing plant to export nuts, thus creating employment along the value chain.
Private sector expertise will be responsible for the management of the project, while also involved in skills transfer, training and corporate governance.
The local community and workers become shareholders in the businesses to deliver on broad-based black economic empowerment.
The value chain economics should make sense to ensure the sustainability of the project. Beneficiation, where possible, is key to delivering value. These projects might take longer to generate profit but can deliver long term value and economic growth. This model can be applied to various industries.
Government, in turn, will assist to ease blockages along the way, whether it be assisting with permits, application forms or making use of the newly launched district development model (DDM) to fast-track the required service delivery.
Whatever the project, extensive commercial due diligence work must be undertaken to ensure the commercial viability of each project.
We can end the insanity and become the creators of our rebirth. All it will take is the willingness to stop what we have been doing and try something different.
Arshad Abba is managing director of Canback.