African Leader 2022

WWW.BMFONLINE.CO.ZA

ISSUE 56 | MARCH 2022

A BLACK MANAGEMENT FORUM PUBLICATION

ECONOMIC RECOVERY POST-COVID-19

45 years THE NEXT

Esethu Mancothwa

REDEFINING SOUTH AFRICA IN OUR OWN IMAGE

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Norsad Capital Supports The Growth Of Bridge Taxi Finance With A ZAR 150 Million Term Facility

Norsad Capital, an impact investor offering tailor-made debt solutions to mid-market growth companies in SubSaharan Africa, has provided a ZAR 150 million long-term debt facility to Bridge Taxi Finance to support the growth of new, affordable, and safe minibus taxi vehicles in South Africa. Bridge Taxi Finance is one of the leading nonbanking lenders to the South African minibus taxi industry.

Transportation is a key element towards soft & social infrastructure. In South Africa, minibus taxis are the principal form of transport and one of the leading economic levers, accounting for over 15 million trips per day nationwide resulting in over 70% of public transport passengers using this mode of transport. Majority of commuters are typically unable to afford vehicles and live in distant or remote areas inaccessible by trunk-route public transport, for these commuters’ minibus taxis are the primary source of transport and an essential need for their livelihoods.

Bridge Taxi Finance is a wholly owned subsidiary of Mokoro Holdings. Mokoro Holdings consists of vertically integrated companies focused on the exclusive importation of minibus vehicles, impact vehicle finance, day-to-day tracking with client management, vehicle repairs and services centre.

Whilst growing the overall public transport fleet in the country, the new vehicles financed by Bridge Taxi Finance will replace older, fragile, and more polluting vehicles, inline with South Africa’s taxi recapitalisation programme.

Bridge Taxi Finance plays a vital role in supporting public transport and increasing access for disadvantaged groups to grow their contribution in the economy. Furthermore, this funding will empower new entrepreneurs to create true personal growth by allowing these clients to acquire and run their own vehicles.

Zubair Suliman, Investment Director at Norsad Capital and transaction lead said: “We are excited to partner with Bridge Taxi Finance in supporting the growth of one of the main pillars of the South African economy. Norsad Capital’s impact funding is earmarked towards further growth of

Botswana First Floor, Peelo Place Western Commecial Road, CBD, Gaborone, Botswana T • + 267 (0) 316 0860 F • + 267 (0) 316 0782 E

• norsad@norsadcapital.com

South Africa No. 4, Upper Ground Floor Katherine & West, 114 West Street, Sandton, Johannesburg, South Africa T • + 27 (0) 87 092 6534 E

• norsad@norsadcapital.com

the new taxi vehicle fleet resulting in modern, safer, and dependable transport for the millions of commuters daily.

We can calculate this funding will impact a minimum 215,000 lives directly bringing us closer to both Norsad’s objective to impact 100 million lives in Africa and our purpose of building a better Africa.”

Thomas Cutten, Executive: Debt Capital Markets at Bridge Taxi said: “Norsad has been a pleasure to work with, showing incredible dynamism and responsiveness. Partnering with Norsad we will be able to further service this dynamic and systemically important aspect of the African economy that is not only an industry in and of itself, but facilitates industry, commerce, and education. We look forward to working with Norsad as we continue to grow and facilitate the provision of reliable, safe, environmentally responsible and costeffective transport to the South African commuting public” About Norsad Capital Norsad Capital is an impact investor providing tailormade debt solutions to mid-market growth companies in SubSaharan Africa. With a track record spanning over 32 years, Norsad Capital has invested in 150+ companies across the continent. For more information: www.norsadcapital.com About Bridge Taxi Finance Bridge Taxi commenced its operations in 2013 and has evolved to become one of the dominant financiers of minibus taxi vehicles in South Africa. It is one of the leading minibus taxi financiers deploying an integrated approach by covering vehicle importation, trading, financing, servicing, and repairs. For more information visit: www.bridgetaxifinance.co.za

CONTENTS

AFRICAN LEADER ISSUE 56 | MARCH 2022 | WWW.BMFONLINE.CO.ZA

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EDITORIAL COMMENT

18 THE NEXT 45 YEARS

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MD’S NOTE

20 POST-COVID-19 RECOVERY

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The country needs to correct its course and plot a new direction towards economic development.

The BMF is embarking on the next phase of its development.

PRESIDENT’S NOTE

Redirecting the course of transformation through better leaders, better opportunities, and better lives.

10 THE BMF’S NEW DEPUTY PRESIDENT

Esethu Mancothwa is championing women empowerment and advancement at all levels.

12 BMF EVENTS

BMF Corporate Update Dinner; Annual General Meeting and Gala Dinner; the 3rd Annual George Negota Lecture; and the 8th Annual Lot Ndlovu Lecture.

Monde Ndlovu reflects on the BMF’s role in changing the South African landscape.

Social cohesion needs to be increased for the country to chart a new economic path.

24 ECONOMIC RECOVERY

Government must ensure that 2022 is the year of delivery.

26 NEOLIBERALISM MUST GO

South Africa needs an interventionist state that is bent on the reconfiguration of social and economic power.

29 BUDGET ANALYSIS

What the 2022 budget means for GDP growth, unemployment and government spending.

32 LOCAL GOVERNANCE

Professor Mcebisi Ndletyana analyses the results of the last local elections in light of the national general elections in 2024.

36 LEADERSHIP

Adopting an Ubuntu-driven leadership style can effect meaningful change.

41 ECONOMIC OUTLOOK

South Africa’s growth prospects remain constrained in the face of a rather hostile global environment.

42 THE BASIC INCOME GRANT

Economists have been arguing fiercely about the feasibility of the Basic Income Grant.

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EDITORIAL COMMENT

IT’S TIME TO

CHANGE COURSE

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fter 28 years of democracy, South Africa is an unviable society with unemployment rates of 77.4 per cent for youths, 51.5 per cent for Africans, 55.6 per cent for African females and 54.5 per cent in the Eastern Cape and Limpopo provinces.

There are now 12.5 million unemployed people. The unemployment rate for people of all races is 46.6 per cent. South Africa’s unemployment crisis is a national disgrace, the most heartbreaking betrayal of the dreams and promises of our liberation.

In April and May 2021, 10 million people and 3 million children went hungry. And women were more likely to shield children from hunger, according to a recent survey. Between 1994 and 2020, South Africa’s gross domestic product (GDP) per capita increased by only 16.1 per cent.

By comparison, Malaysia’s GDP per capita increased by 654.1 per cent in local currency over the same period. If such statistics do not provide evidence of the mismanagement of the economy since 1994, consider that the International Monetary Fund has forecast GDP growth of 1.5 per cent a year between 2022 and 2026.

On this trajectory, the unemployment rate will increase to more than 50 per cent. Poverty and inequality will continue to increase. South Africa is facing a dystopian future until 2030.

Repeat episodes of political and social unrest and instability could turn the country into an economic wasteland. The time has come to change direction and chart a new course towards economic development until 2030 and beyond.

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South Africa needs a new macroeconomic policy framework, which has an annual six per cent GDP growth target that is binding on National Treasury and the Reserve Bank. There must be a national discussion about how to achieve this target and start reversing the crises of unemployment, poverty and inequality.

IN THIS ISSUE

This relaunched edition of African Leader includes three contributions on what should be done to get the economy growing at this rate. Asghar Adelzadeh and Pali Lehohla outline three scenarios for the economy until 2030. The nayi le walk scenario takes the country to six per cent GDP growth.

Busi Mavuso, the CEO of Business Leadership South Africa, writes that the priorities should be to achieve a stable supply of energy and roll out a R1-trillion infrastructure programme. Feminist economist Busi Sibeko says the most important issue is to ditch the neoliberal economic policies of the past 28 years, which are to blame for the country’s slow growth. I call for a Basic Income Grant to address the immediate humanitarian crisis and provide a first stimulus to the economy.

Mcebisi Ndletyana pens an analysis of the local government elections, and Monde Ndlovu analyses the challenges facing the Black Management Forum over the next 45 years.

Duma Gqubule Editor

BMF president: Andile Nomlala Deputy president: Esethu Mancothwa BMF editorial team: Acting managing director: Philippe Bakahoukoutela Head of communications, marketing and events: Khulukazi Mtebele Head of advocacy and thought leadership: Monde Ndlovu Address: The Eric Mafuna House, 12 Summer Street, Rivonia, Sandton, Gauteng, 2196 www.bmfonline.co.za

PUBLISHED BY

Picasso Headline, a proud division of Arena Holdings (Pty) Ltd Hill on Empire, 16 Empire Road (cnr Hillside Road), Parktown, Johannesburg, 2193 Postal Address: PO Box 12500, Mill Street, Cape Town, 8010 www.businessmediamags.co.za EDITORIAL Editor: Duma Gqubule Content Manager: Raina Julies rainaj@picasso.co.za Contributors: Dr Asghar Adelzadeh, Cuma Velile Dube, Ryland Fisher, Dr Pali Lehohla, Busisiwe Mavuso, Prof Mcebisi Ndletyana, Busi Sibeko, Thuletho Zwane Copy Editor: Brenda Bryden Content Co-ordinator: Vanessa Payne Digital Editor: Stacey Visser vissers@businessmediamags.co.za DESIGN Head of Design: Jayne Macé-Ferguson Advert Designer: Bulelwa Sotashe Cover Image: Supplied SALES Project Manager: Jerome van der Merwe jeromem@picasso.co.za Tel: +27 21 469 2484 | 082 668 1496 Sales: Frank Simons PRODUCTION Production Editor: Shamiela Brenner Subscriptions and Distribution: Fatima Dramat | fatimad@picasso.co.za Printer: CTP Printers, Cape Town MANAGEMENT Management Accountant: Deidre Musha Business Manager: Lodewyk van der Walt General Manager, Magazines: Jocelyne Bayer

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African Leader is published by Picasso Headline. The opinions expressed are not necessarily those of Picasso Headline. All advertisements/advertorials have been paid for and therefore do not carry any endorsement by the publisher.

AFRICAN LEADER ISSUE 56 | MARCH 2022

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Keeping you safe in the sky

SACAA working together with the aviation industry to realise aviation transformation The South African Civil Aviation Authority (SACAA), an agency of the Department of Transport, is a Schedule 3A public entity charged with regulating and enforcing civil aviation safety and security and promoting a sustainable civil aviation environment. This is done by regulating and overseeing the functioning and development of the industry in an efficient, cost-effective manner according to international standards.

Aviation plays a critical role in providing connectivity, locally and globally but also through the socio-economic benefits that a thriving aviation industry provides to the country. However, the transformation of the industry to reflect the demographics of the country has been a slow process. As at 31 December 2021, the statistics of aviation personnel with licences issued by the SACAA reflected that 85% of South African pilot’s licence holders are white and with regard to the combined categories of aircraft maintenance engineers, cabin crew and air traffic services, 73% of the licence holders are white. These statistics make it abundantly clear that much still needs to be done to achieve transformation in the aviation industry.

For over a decades, the SACAA, together with aviation stakeholders, has endeavoured to bring about meaningful change in this regard, by implementing career awareness programmes that aim to demystify aviation to learners, especially in previously disadvantaged communities.

School visits, air shows, aviation youth shows and airport shows have served the purpose of sharing information about careers in aviation, which is vital in assisting learners to make informed decisions about their future. In the current financial year, the SACAA visited about 160 schools and reached over 25 000 high school learners.

As the pandemic-related lockdowns limited physical interactions, over the past two years, the SACAA embarked on a nationwide community

www.caa.co.za

@SACAA

@OfficialSACAA

radio campaign. This campaign focused on aviation career awareness and transformation, and thus far, 53 interviews on 41 radio stations and one television programme were conducted in the last financial year.

The SACAA also introduced a bursary programme, which has sponsored 70 beneficiaries so far, including once-off sponsored students, of which many have qualified, and some have been offered positions in their specific fields. The bursaries cover various streams of study, such as Aeronautical Engineering, Maintenance Engineering, Piloting, etc. To ensure effectiveness, students are offered financial assistance from the beginning through to the end of their particular choice of study.

The SACAA also hosted interns for a period of between 12 and 24 months with the purpose of providing them with exposure and experience in the various fields of aviation fields. In addition, the SACAA has also introduced a Trainee Programme which focusses mainly on areas where there are critical and scaresscarce skills in the industry.

Internally, the racial profile of the SACAA indicates its commitment to equity, in that 89% of the employees are Black and this is made up of the African, Indian, and Coloured race groups. The gender statistics reflect the staff numbers as being 51% females and 49% males.

The SACAA makes a call to all aviation stakeholders to play their part in helping the transformation of the aviation industry, whether by assisting with mentoring, with bursaries or finances, or by enabling those cadets who have qualified with the opportunity to build up their flying hours to gain experience. Together, we can transform the aviation industry to build the pipeline of aviation experts that we will need in the future, for the benefit of our society.

OfficialSACAA

South African Civil Aviation Authority – SACAA

MD’S NOTE

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he African Leader publication has been our voice of reason for many years. This edition comes at a time when the country is greatly challenged by a lack of clear views on how to transform the economy. We are excited to see the return of African Leader after a brief absence and the BMF has chosen to focus this edition on a post-COVID-19 society and what it should look like.

The publication also focuses on BMF-related opportunities and how the BMF can move its agenda forward.

We have also solicited views on the local government sphere and the critical role it plays in delivering services to our people.

The BMF has a demonstrable track record in advocating for change and development in the country. A post-COVID-19 society will need a BMF that will not only articulate clearly what needs to be done, but also lobbies for views consistently.

WHAT’S

NEXT?

The BMF has made considerable progress over the past 45 years, and is now, writes acting MD Philippe Bakahoukoutela, embarking on the next phase of its development

LEADERSHIP COMPETENCY IN THE SPOTLIGHT

In imagining a more transformed society post-COVID-19, developing the right kind of competencies for leaders is critical. The BMF is focused on broadening the quality and quantity of programmes for our members. This developing agenda of broadening programmes has led to many more insights, which the BMF needs to consider. We still maintain our current programmes – Young Professionals Development Programme (YPDP), Duke Woman Empowerment Programme, MLAP, GIBS and Wits MBA programmes. Our goal of establishing a BMF Academy remains one of the key priorities moving into the future, and we have

Philippe Bakahoukoutela

recently made great strides with our SAQA designations. The BMF will now be able to award professionals with three designations: transformation professional, transformation manager and transformation director. I must thank the team that has been working

Our goal of establishing a BMF Academy remains one of the key priorities moving into the future, and we have recently made great strides with our SAQA designations.

on this for a couple of years; now the organisation has an added layer of influencing leadership in society. The broader academy vision, where we will begin to see more programmes being developed by BMF for its members, remains a work in progress; we are currently engaging with one of our stakeholders about bringing onboard more programmes for our members.

The Employment Equity Commission Report has annually painted a grim picture of the lack of black leaders ascending into positions of influence. In top management, black Africans hold only 15.8 per cent of positions, but even more dire is the 4.6 per cent of African women in the private sector. These numbers should make us rethink the kind of leadership future we will have if the status quo remains. The agenda of African women taking a leading role in business cannot be overemphasised.

This is part of a post-COVID-19 era, where we must see black women take the central stage in transforming our country and occupying top leadership positions in the country.

Policy input has also been an ongoing objective, but in a post-COVID-19 era, the BMF will need to focus on specific laws that have not fulfilled their original objective to restructure society for the better. There is also an opportunity for the BMF to champion laws, predating the enactment of the Constitution, that might be hindering progress in certain areas of society.

I would like to thank our corporate members for continuing their commitment to the BMF. These partnerships will yield even more fruit in a post-COVID-19 era, where we all realise that our collective future is dependent on deeper collaborations.

In the words of our founding father Eric Mafuna, “all we have done in the past 45 years is to take the first step.” Indeed, with all the progress the organisation has made in the last 45 years, we are still building it for a better future. We are now in the “second step” of building Eric Mafuna’s BMF cathedral.

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PRESIDENT’S NOTE

REDIRECTING THE COURSE OF

TRANSFORMATION

Our people deserve better leaders, better opportunities, and better lives, writes Andile Nomlala, BMF president

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The private sector continues to move at a slow pace in transforming the economy.

The role of economic power cannot be overemphasised, especially considering the Zondo Commission Reports. The World Economic Forum names five threats to our economy: prolonged economic stagnation, employment and livelihood crisis, state collapse, failure of public infrastructure, and proliferation of illicit economic activity.

These threats have the potential to collapse the country in a short space of time, especially if the state collapses first.

The state needs capable leaders who place the country’s interests first. One way to assist the state to function optimally is for organisations like the BMF to champion a Professionals Panel. We have called for the establishment of this panel for a few years, but the concept has been in the BMF circles for more than 15 years. This panel can safeguard governance in the political system by channelling talented leaders into the right positions across the state. In the private sector, this same panel can play a

Andile Nomlala

similar role as a watchdog for board and executive appointments, and it can be the go-to source to help businesses find the best leadership talent.

PROBLEM-SOLVERS

The BMF is no longer looking at a narrow agenda of transformation in corporate South Africa alone; it now has a greater responsibility – looking at transformation in the broader South African context.

We must move forward with a critical mass of capable, skilled, well-equipped, well-grounded, and ethical leaders, rather than drown in politically driven cadre deployment. The BMF’s bigger vision is to become the problem-solvers, and it is critical for us to forge partnerships with like-minded organisations and institutions.

Black people must be at the forefront of the economic rejuvenation. And, our government needs to implement decisive policies and create the regulatory and legislative framework that will ensure that the rebirth of our economy is in the hands of enterprising black entrepreneurs. The economy needs to grow, and an enabling environment for business to thrive must be harnessed.

The BMF’s next 45 years must focus on driving more meaningful transformation, and ensuring a critical mass of black presence in all respects and spheres of economic power. The BMF must be committed to making transformation a system within the country, not merely a project.

For many decades, transformation has been poorly positioned, and now we have the great task of repositioning it in a post-COVID-19 society. The BMF voice lives and will continue to reverberate far into the future.

IMAGE: SUPPLIED

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he Black Management Forum (BMF) has stood the test of time and has surpassed 45 years of existence. Today marks the stepping in of a new era, one where the organisation seeks to redirect the course of transformation in South Africa.

The BMF has recently come out of its triennial elective AGM in Durban and the members have given us the privilege of, once again, leading the organisation to greater heights. We are proud of the work we have achieved to date in raising pertinent issues that affect black professionals, society and the economy.

The new board, under our leadership, will seek to strengthen our advocacy efforts and ensure that our organisation meets our members’ needs.

The BMF remains relevant today because the cause of our forefathers has not been achieved as yet. This publication stands as our voice to the public, in our own way, for our own.

African Leader is the pulse of the BMF, without which the role of holding our thoughts in check will be relegated.

This edition comes at a time when the country needs not only ideas, but also better, stronger and dedicated leadership.

We believe the BMF has the intellectual arsenal and capabilities to lead South Africa beyond a post-COVID-19 society.

One of our major challenges is the ongoing endemic corruption and questionable governance in our political system. The work of the Zondo Commission has revealed the gross mismanagement of our country and the lack of respect for the citizenry. Our people deserve better leaders, better opportunities, and better lives.

AFRICAN LEADER ISSUE 56 | MARCH 2022

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Even the most compelling and visionary ideas remain dormant without leaders to give them life.

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Applications for 2023 opens May 2022.

ADVANCING THE

CASE FOR WOMEN The BMF’s new deputy president Esethu Mancothwa is championing women empowerment and advancement at all levels.

By Ryland Fisher

E

sethu Mancotywa, who was elected as deputy president of the Black Management Forum (BMF) in November, a month after she began working as the chief financial officer of construction giant Grinaker LTA, believes she has a responsibility to promote women’s issues in both the BMF and her workplace.

On her role in the BMF, she says: “Being a female deputy president provides a powerful platform to persistently pursue the advancement of women within the BMF and in society as a whole. I realise, however, that I lead the entire organisation not only women, and I want BMF men to show society how men can become advocates and allies of women empowerment, rather than its gatekeepers.

I want the male members of the BMF to denounce the

Esethu Mancotywa

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patriarchal mindsets and conscious and unconscious biases of the South African society, which perpetuates and reproduces the dominance of males in leadership positions.

“We need to sensitise not just corporates, but also all organisations, to some of the nuances that women face in balancing career and family responsibilities. In so doing, there will be a shift in corporate culture to become more sensitive to these nuances. It is not sufficient to promote a certain number of women into leadership ranks and yet keep corporate structures, cultures and practices fundamentally masculine.

Corporates and organisations need to go beyond this and create an environment in which these women feel that they are able to thrive in a gender-neutral working environment without making unduly heavy sacrifices when it comes to their children and families. In our country, we should never face the scenario where a young, black woman with high leadership potential has to

FAST FACT The Nordic countries, the Faroe Islands, Greenland and Åland seek to ensure that women and men have equal access to and opportunities to influence and participate in decision-making processes and in the design of the Nordic welfare societies. The region is one of the most gender equal in the world.

Source: www.norden.org/en/ gender-equality-and-lgbti

choose between raising a family and holding an executive position.

“Societies will only thrive, and economies will only grow if we harness the full potential and talent of the entire population. To fully harness the potential of women, society needs to make gender equality a top strategic priority.”

GENDER INCLUSIVITY POLICIES

FAST FACT Esethu Mancotywa is a chartered accountant, but spent much of her career as a dealmaker in a bank. She completed her MBA at GIBS in 2018/19.

Mancotywa says that the Nordic countries have led a great example in investing very intentionally in gender equality, which has yielded greater societal wellbeing and empirical economic growth in these countries.

We can learn a lot from their four-pillar strategy, which entails:

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DEPUTY PRESIDENT PROFILE

• Shared parental leave and parenthood • Quality and affordable childcare and early childhood education • Flexible working time arrangements • Leadership and organisational practices enabling gender equality In the same way that gender parity on boards has become part of the JSE listing requirements, this needs to be carried further to include gender-inclusive workplace policies and practices that need to be documented and monitored. Similar to the BMF-developed Basotho Hat model, which measures transformation, the BMF can develop a measurement framework that seeks to reward companies for gender-inclusive work practices and call out those that fail to transform.

LOOK WITHIN While the BMF prides itself on the nurturing and development of many of South Africa’s most eminent female leaders today, the BMF also needs to look critically at its own internal female leadership track record, says Mancotywa.

“We seem to have developed our own glass ceiling where women tend to rise to the deputy presidency level, but never to the presidency. This needs to be interrogated. We are not proud of the fact that we have had only one female president in the BMF’s 45-year history, former president Nolitha Fakude who held the position from 2003 to 2006.”

SUCCESSION PLANNING “We must become more intentional about ensuring black women are prioritised whenever leadership and growth opportunities become available and the BMF needs to continue to develop a strong succession of black female leaders who are ready to take up these positions.

“We need to be obsessed with the idea of a procession of female presidents who will lead the BMF into the next 45 years. It cannot only be one female, followed shortly thereafter by a return to male leadership after just one term,” she says. “As such, we need to prioritise how we implement our own policies, practices and organisational culture to ensure that we have a pipeline of female presidents who will lead the BMF for the foreseeable future. A structured female leadership succession plan needs to be developed and implemented where we shift our activities, initiatives and advocacy campaigns towards the gender agenda.”

Mancotywa says she has the BMF to thank for her latest corporate position. “The BMF provides incredible opportunities for both leadership and professional development.

These development opportunities ultimately prepare and position you to be ready when corporate leadership opportunities come along. We call it becoming “a BMF-type leader”. That is what the BMF did for me. It was then up to me to make sure that I worked hard to prove that I was the right candidate for the job.”

“Societies will only thrive, and economies will only grow if we harness the full potential and talent of the entire population.”

image: supplied

DID YOU KNOW? While women have made important inroads into political office across the world, their representation in national parliaments at 23.7 per cent is still far from parity.

In 46 countries, women now hold more than 30 per cent of seats in national parliament in at least one chamber. https://www.un.org/sustainabledevelopment/gender-equality/

“The BMF needs to continue to develop a strong succession of black female leaders who are ready to take up these (leadership) positions.”

Of the economy, Mancotywa says that economic growth is sacrosanct, and all efforts should be directed towards projects, programmes, initiatives that yield economic growth and thus create jobs. Our people need to earn their living and become agents of their own lives. It is not sustainable for our people to be perpetually beholden to government grants for their livelihoods.

This robs people of their dignity and their ability to direct their own lives.

Let’s get the basics right.

STRUCTURAL REFORMS OUR COUNTRY NEEDS For our economy to recover, Mancotywa says that government needs to keep focusing on structural reforms – the pillars and bedrock of our economy, as well as the five economic priorities as outlined in the Economic Reconstruction and Recovery plan. We do not need to keep changing strategies, but must rather stay the course and focus doggedly on implementation until we see results.

The five economic priority areas are: 1. Overcome the COVID-19 pandemic 2. A massive infrastructure roll out 3. Substantial increase in local production 4. Employment stimulus to create jobs and support livelihoods 5. Rapid expansion of energy generation capacity.

ISSUE 56 | MARCH 2022 AFRICAN LEADER

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THE 8TH ANNUAL LOT NDLOVU LECTURE An edited version of the address delivered by former president Kgalema Motlanthe during a virtual conference on 6 August 2021.

M

aduke Lot Ndlovu, whom we remember, celebrate, and draw lessons from, was a universal man and a free thinker, skilled in various disciplines. His was a spirit that referred to human beings collectively, a compassionate and humane totality that brought about fundamental solutions to the problems of the day.

Entrepreneur, executive, mentor, manager par excellence, humanitarian, and former president of the Black Management Forum, Lot Ndlovu’s devotion to lifelong learning and his understanding of purpose-driven productivity, critical thinking, and introspection, were pathways for his innovative approach to problem-solving. His valuable and outstanding contributions to the organisation brought about a focused confidence and determination to achieve broad and meaningful change.

Understanding the influence of the private sector in effecting societal change is a notion that Lot Ndlovu succinctly captured as being at once an individual and collective responsibility.

As we remember Lot Ndlovu, we recognise that his contributions open a window to the history and accomplishments of economic transformation in South Africa. This window offers us a viewpoint to commemorate and appreciate the lineage of black citizens and the freedom fighters who struggled for and contributed to the development of economic empowerment within our democracy. We now all enjoy universal suffrage and are building a united, democratic, nonracial, nonsexist and prosperous South Africa that promotes social cohesion, democracy and

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Former South African president Kgalema Motlanthe

human rights, and aims to advance the economic transformation and participation of the people. However, it remains important for us to reflect on the perspective of equal economic participation over the past three decades. And, by assessing our past and its reflection on our present, we also examine our conscience and the efforts we have made or have not made as leaders to foster equitable and inclusive growth in the lives of all people.

Shirley Machaba

OBSTACLES, CRISES AND INJUSTICE Collectively we need to identify the obstacles that continue to restrict the effective and sustainable implementation of inclusive growth and equitable distribution of wealth. The Mapungubwe Institute for Strategic Reflection’s recent summit on the Indlulamithi scenarios and economic modelling offers some scientific insight into the lived experience of South Africans to help us

Bongiwe Zwane

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EVENTS

understand what needs to be done to save South Africa’s people from injustices.

The scenarios paint a picture of a pre-COVID-19 South Africa that was already in precarious circumstances; this, accompanied by job losses and the anticipation of further economic decline, was entrenched in the psyche of the nation. While the current global focus is on recovering from COVID-19, the studies show that South Africa has neglected some of its existing threats and solutions. The compound effect of multiple crises and harsh historic weaknesses places the promise of nation-building and inclusive economic growth somewhat out of reach. South Africans continue to be inflicted by injustice and poverty, which are exacerbated by rampant corruption, seemingly with no consequences for the culprits.

Tackling the widespread concern about the scale and consequences of inequality and addressing the failure of economic growth at a grassroots level are the touchpoints to engage.

When considering the milestones on this complicated path, it must be recognised that to achieve anything of significance people should come first.

This is a principle that Lot Ndlovu championed: people should not be left out, marginalised or unheard. People do not only have concerns, complaints and requests, but they also have suggestions – they need to be heard and considered, especially women.

WOMEN HAVE A ROLE TO PLAY IN EFFECTING CHANGE Gender discrimination deepens the roots of impoverishment, which imposes a disproportionate burden on women. While both men and women suffer in poverty, gender discrimination means that women have far fewer resources for coping, are likely the last to eat, and are the least likely to access education, healthcare, equal pay, and the respect they deserve.

Wiseman Nkuhlu

WATCH THE LECTURE HERE

What must be highlighted, amplified, and placed at the centre of discussions at the Black Management Forum and across society, is the fact that having more women in leadership positions could set South Africa, and indeed the world, on a more sustainable path.

Women have proven to be leading the way towards more equitable and sustainable solutions to climate change; women tend to share more information about community wellbeing; are more willing to adapt to environmental changes as their family lives are impacted; and often take the first step in recognising the power they have to effect change through their roles not only in business, but also in their homes, communities, government and environment.

Contextual leadership is very much the domain of women. Bringing gender equality to business management positions grows the country’s economy and creates new vistas of opportunities through equal pay and safe spaces for women in the workplace. This boosts the private sector and advances the potential for prosperity.

Sensitive to the time we are in and the kind of leadership the country needs, Lot Ndlovu’s conviction would echo the need for women to lead from the front.

Using one’s privilege as a leader and in business is a lesson to be learnt on moderating our egos and conceit, undermining our weaknesses, and reinforcing our strengths. It is of our peers and mentors that we must ask the most difficult questions. What Lot Ndlovu taught us is that he was never a man who asked of others what he was not prepared to undertake himself. And so, it is in his spirit and that of the BMF that we should all ask ourselves: What are we prepared to do to achieve good for all people, and how do we close the gap between our social values, our actions and beyond?

The BMF’s ongoing work reminds us all that positive action, no matter the size, can have a catalytic impact on the balance of our collective vision.

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BMF CORPORATE UPDATE DINNER

A hybrid event sponsored by Bidvest, and held on the 4th of June 2021.

Bheki Sibiya

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resident Cyril Ramaphosa delivered the keynote address at the 2021 BMF Corporate Update Dinner and reminded guests that the story of South Africa’s path to democracy can not be complete without a chapter on the formative role played by the BMF. Through its activism and advocacy, its organisation and mobilisation, its campaigning and its lobbying, the BMF has been a key transformative force, he said.

The president went on to urge and encourage black business to turn the tide of ownership and control of the economy, emphasising that “we want to emerge (from our current crises) with an economy that is fundamentally different from what we had before, that is more inclusive, that creates more jobs, and that provides more opportunities for new entrants”.

The president added: “Now, 23 years since the passage of the Employment Equity Act, and 18 years since the Broad-Based Black Economic Empowerment Act came into operation, the BMF continues to be at the forefront of advocacy for the transformation of our economy.”

From left: President Cyril Ramaphosa, Tasneem Fredericks and Andile Nomlala.

WATCH PRESIDENT RAMAPHOSA’S SPEECH AT THE BMF CUD

Cyril Ramaphosa

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Eric Mafuna

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EVENTS

BMF president Andile Nomala, Tasneem Fredericks, President Cyril Ramaphosa and Esethu Mancotywa.

From left: Nolitha Fakude and Mpumi Madisa the group CEO of Bidvest.

Siya Kolisi

Mzwanele Manyi

Bonang Mohale

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BMF ANNUAL GALA DINNER, 2021

A hybrid webinar was held to celebrate the BMF’s 45th anniversary.

BMF members celebrating at the Annual Gala Dinner.

From left: Papama Mnqandi, newly elected national chairperson of the BMF Young Professionals (YP) with outgoing national YP chair, Classi Kgopa.

President Andile Nomalla

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he BMF elected the new national leadership at its triennial 45th Annual General Meeting in Durban, 2021.

The newly elected office bearers are: 1. President: Andile Nomlala, who will now serve a second term in office 2. Deputy president: Esethu Mancotywa 3. Young Professionals chairperson: Papama Mnqandi 4. Young Professionals deputy chairperson: Ayanga Madolo The organisation stands for the development of management capacity and the advancement of socioeconomic transformation. The organisation’s ethos is underpinned by justice, equity, and fairness. The newly elected leadership will be focused on deepening the BMF ethos within the organisation and across the leadership landscape of the country.

The annual gala dinner, held after the AGM, was hosted under the theme “Celebrating 45 years of driving ethical leadership and meaningful transformation in South Africa”.

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Outgoing deputy president Tasneem Fredericks

From left: BMF acting MD Philippe Bakahoukoutela and Ramsey Mosethedi, GM: stakeholder relations at MTN South Africa.

WATCH THE ANNUAL GALA DINNER

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T Bheki Sibiya

THE 3RD ANNUAL GEORGE NEGOTA LECTURE Old Mutual sponsored a hybrid webinar on 2 December 2021.

EVENTS

he 3rd Annual George Negota Lecture was presented by Bheki Sibiya, chairman of BMF Investment, and held in memoriam of George Negota, who served as a president of the BMF from 1984–1986.

Sibiya’s address focused on why George Negota was his role model, and why South Africa needs servant leadership.

He identified servant leadership as: 1. A deep and unfailing love and respect for the people: he explained that when local service delivery fails its citizens are these citizens loved, respected?

2. A sense of being called to serve with honour, integrity, and dignity.

3. Self-confidence.

Sibiya asked the question: “Are we free?” He highlighted the challenges our citizens face around high unemployment rates, dire poverty levels, high crime rates, femicide and suicide, and stressed that these issues place our freedom at risk.

He ended his address by sharing his personal goals for 2022.

1. What does it mean to be a man?

2. Double the number of men and women I coach.

3. Double my individual one-on-one engagement with other business leaders.

4. Sponsor 10 new BMF members (men and women) in each province.

WATCH THE 3 RD ANNUAL GEORGE NEGOTA LECTURE

IMAGES: SUPPLIED

From left: Mpho Motsei, Remani Mulangaphuma, Thulamsindo Rapotu, Bukuta Negota, and Esethu Mancotywa.

From left: Monde Ndlovu and the BMF’s acting MD Philippe Bakahoukoutela.

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REDEFINING SOUTH AFRICA IN OUR OWN IMAGE Monde Ndlovu, head of advocacy and thought leadership, reflects on the BMF’s role in changing the South African landscape

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he BMF is a thought leadership organisation that has played a crucial role in the development of laws to transform the economy, including the Employment Equity and Broad-Based Black Economic Empowerment acts. The BMF was prompted to move into a thought leadership model because the country was on the brink of impending change and needed thinkers who would influence the levers of power. With the ongoing struggle for political change, the BMF stood in the gap advocating for economic transformation.

The work of thought leadership has not changed, but continues to evolve with the leaders of each passing generation. The phrase “redefining South Africa into our image” came from Dr Reuel Khoza, who delivered the address at the BMF strategy session in January. I have since decided to borrow the phrase as I look at the role of the BMF over the next 45 years as it seeks to redefine South Africa.

Redefining South African society into an image suggests that the image is firstly what will be good for the society.

Secondly, the image becomes the standard of ultimate reflection and emulation.

Thirdly, the image is what we all aspire to become and commit to shaping our lives in that direction.

Therefore, an image is Dr Reuel Khoza

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Monde Ndlovu

a complete representation of an idea, place, imagination and thought. In the words of Lot Ndlovu, “we have a hope as we sit here, that black people will act differently to white people, and the white people who join us today will act like us”. The image Lot Ndlovu is talking about is the idea of the BMF and how the organisation shapes all people. The BMF image is what South Africa needs today and in the future.

VALUES-DRIVEN IMAGE

Unpacking the layers of society using the iceberg model reveals that the tip is what people see and engage with. The tip is the noticeable behaviour and actions of others, but it does not communicate effectively what lies beneath those behaviours and actions. Some leaders in our country enjoy articulating views that sound correct, yet they move at variance with what they profess, raising a question about values.

Naturally, human beings seek to build self-confidence by watching the behaviour

of their leaders and drawing strength from their words and even their inspiring actions.

However, this approach to building confidence in society is being challenged daily by the double standards that leaders unashamedly display. Beneath the iceberg is where the real discourse of values and assumptions lies. The BMF has, over the years, emphasised the role of values in shaping organisations and society in general. Values are actively built by progressive leaders who remain rooted in their context. Transformation must begin at a personal level to be internally aligned to the correct values that will build the social fabric of society. The BMF has upheld ubuntu, effectiveness, integrity, creativity, and respect as its organisational values.

These values belong to the future yet live in the present.

The BMF’s values remain timeless and above reproach in all respects. Members of the BMF are immediately challenged by the values of the organisation and how they fit into the value system. Over the years, the

DID YOU KNOW? The BMF achieved a significant milestone in 2018 with the introduction of transformation as one of the main requirements for listing on the Johannesburg Stock Exchange.

The BMF has, over the years, emphasised the role of values in shaping organisations and society in general. Values are actively built by progressive leaders who remain rooted in their context.

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THE NEXT 45 YEARS

BMF has seen some members behave outside of this “image”, yet their illicit behaviour does not change the organisation. The organisation has an internal mechanism – its values – that separates genuine leaders from the chaff, and will keep society intact. As Mteto Nyati puts it, “values are the heart of society and any organisation.”

IMAGES: SUPPLIED

IDEAS-DRIVEN IMAGE

FAST FACT The BMF launched Business Unity South Africa (BUSA) as a united force for black and white businesses in 2003.

BUSA’s first two CEOs were drawn from the ranks of the BMF.

The BMF has been the midwife of the organisation stands for the “creation key legislations that have shaped the of managerial structures and processes transformation trajectory of the country. which reflect the demographics and values The organisation has encouraged the of the wider society”. The BMF’s creativity culture of shaping ideas intended to drive value links to the creation of management the economic transformation agenda. The structures and processes in all industries, importance of generating ideas and sharing including new industries. The Basotho them is so that those ideas can be owned Hat Model plays the role of creating and championed by the collective. Outside management structures in the economy, of the collective, these ideas will not live or grow, but within the organisation they can be while the reflection of the values of the absorbed. This image of ideas is critical today wider society calls for the development of another model. This model, dubbed the because the country does not suffer from Indigenous Management Model, is still a lack of ideas, but suffers from a collective being developed by the BMF, but will movement that champions ideas. The BMF enhance the values of the wider society has been the organisation that encourages within business. ideas to be debated and adopted.

In continuing with the image of ideas, The Basotho Hat model, used to drive the BMF needs to start by creating a Dr affirmative action, is still useful today. The Reuel Khoza library. The purpose is to model is a timeless approach to changing house thought leadership concepts, host the management profile of business and reading clubs and fine-tune ideas the embedding transformation. Currently, organisation can champion. As the first we are seeing a concerning picture in recipient of the BMF Thought Leadership management, where organisations still Award in the mid-1990s, Dr Khoza struggle to define how their management structures will be transformed. Organisations deserves the library-naming honour.

The BMF has been a home for black today cannot fully explain who is the sole professionals since its inception. The custodian of transformation within their notion of home is profound because organisations. Some organisations are it is a place where one feels accepted considering creating a transformation and appreciated. The meeting of division and moving transformation minds and the emotional and out of human resources. intellectual connections that The verification companies havetaken place in the BMF that exist because of are special. the B-BBEE Act lack Beyond the need to transformation themselves gather ideas on how to – many are white-owned. drive transformation is Therefore, the Basotho Hat the need to belong to a Model is still relevant today group of like-minded in redefining management people who share structures in all industries in Mteto Nyati common struggles the country. Part of the BMF’s and aspirations. mission statement states that

The cause of the black people keeps the BMF dignified. Without the full participation of black people in the economy, the country remains at risk.

DEVELOPMENTAL IMAGE

The BMF has also focused on developing managers and leaders who must have a presence throughout the country. The concept of the critical mass both at management and ownership level remains a just cause.

Developing managers and leaders in all respects must be embraced. This task is the most important, it goes beyond partisan lines and other power considerations. For the country to get on a firmer developmental path, more competent, credible and patriotic managers and leaders are needed. The BMF continues to develop these leaders, but this task needs to be taken to higher grounds by the broader South African political economy.

The BMF image, briefly unpacked above, will live on. It is contextual, dynamic and progressive. This image should make us tremble each time we lead because the cause of transformation is beyond all of us, yet about us.

IN ACTION The George Negota Litigation Fund, launched in 2019, provides funding for litigation and dispute resolution.

The BMF seeks to reinforce its monitoring capacity through this fund, which will serve as a tool to enforce transformation to achieve justice, fairness and equity.

If you wish to assist in furthering the work of the BMF, donate to the George Negota Litigation Fund by direct or online deposit.

GEORGE NEGOTA LITIGATION FUND

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OUR ECONOMIC RECOVERY Dr Asghar Adelzadeh and Dr Pali Lehohla suggest that for the country to chart a new economic path and achieve gross domestic product growth, an increase in social cohesion, which will enable stable capital accumulation, is needed

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hile South Africa plans for a post-COVID-19 era, the most pressing question on everyone’s minds is: what will the economic recovery look like and mean for the 60.1 million people who live in the country?

During the early 1990s, the ANC developed the Reconstruction and Development Programme (RDP), which provided a broad consensus on reconstruction and redistribution as the way South Africa could achieve growth and development. After the 1994 election, the government distanced itself from the RDP and embraced a variant of free-market capitalism for the country’s post-apartheid economic system. In 1996, the Growth, Employment and Redistribution (Gear) policy framework postulated that the country could achieve transformation and development through economic growth that would result from the expansion of the free market economy through lower taxes, privatisation, deregulation, competition and an independent Reserve Bank.

These measures hoped to stimulate private sector investment, produce high economic growth, create employment and income, and lower poverty. In 1999, the Reserve Bank adopted inflation targeting as its monetary policy framework. This made inflation – rather than employment, growth domestic product (GDP) or a

Dr Pali Lehohla

combination of criteria – the primary goal of monetary policy. By the end of the 1990s, the ANC government had basically embraced free-market ideology to inform its post-apartheid economic policy framework. The results have been chronically low economic growth, high levels of unemployment and poverty, rising inequality and deindustrialisation.

Looking ahead, three scenarios are worth considering.

INDLULAMTHI ISBHUJWA SCENARIO

The first scenario asks: what if the country’s recovery plan continues with the post-1996 policy framework? This scenario captures the Indlulamthi iSbhujwa scenario, which creates an enclave bourgeois nation, a country torn by deepening social divides, daily protests and cynical self-interest. It epitomises a loose-limbed jumpy nation with a frenetic edge. Under this Business

The Gwara Gwara outlook for the future is captured by the model’s results that include an annual GDP growth rate of 1.8 per cent, and unemployment and poverty rates of 29 and 36.5 per cent respectively by 2030.

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as Usual (BAU) scenario, government spending on goods and services increases by 7.5 per cent a year and continues to weakly support industrial policies. Investment by the government and state-owned companies increases by six per cent a year.

The government continues with its current public works and social grant programmes.

The Reserve Bank continues with its inflation targeting policy and private sector credit extension grows by six per cent a year. The model’s simulation of this scenario shows that there will be an annual average GDP growth rate of 2.2 per cent a year, and by 2030, the unemployment and poverty rates will be 27 and 34 per cent respectively.

INDLULAMTHI GWARA GWARA SCENARIO

Over the past two years, Treasury and the Reserve Bank have proposed policy measures that are more consistent with an even more conservative policy framework. These include supply-side reforms, a more austere fiscal policy and a stricter inflation target. The second scenario, therefore, asks the question: what if the recovery plan implements even more conservative policies than those that were implemented after 1996? This “austerity policy scenario” captures the Gwara Gwara scenario – the ups and downs of a false dawn – that embodies a demoralised land or disorder and decay and creates a nation torn between immobility and restless energy.

Relative to the BAU scenario, and in addition to a wide range of supply-side measures, there will be cuts of 10 per cent in government final consumption spending, and investment by the government and state-owned companies will be cut by five per cent. The government will abandon its localisation policy and cut subsidies on products and production. The Reserve Bank

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POST COVID-19 RECOVERY

will tighten monetary policy by lowering the six per cent upper bound for inflation to four per cent. Under this scenario, the Gwara Gwara outlook for the future is captured by the model’s results that include an annual GDP growth rate of 1.8 per cent, and unemployment and poverty rates of 29 and 36.5 per cent respectively by 2030.

INDLULAMTHI NAYI LE WALK SCENARIO

The third scenario asks the question: what if the government reconsiders the post-1996 policy framework to put the economy on an inclusive path? The proposed six-pillar policy framework is designed to create a nation in step with itself, as in the Indlulamithi Nayi le Walk scenario, which choreographs a vision of South Africa where growing social cohesion, economic expansion and a renewed sense of constitutionalism get the country going. The six-pillar policy framework that creates this outcome requires reforms in macroeconomic,

Dr Asghar Adelzadeh

social, microeconomic, and trade policies, private sector international support and provincial growth and development plans.

Under this Nayi le Walk scenario, South Africa would achieve an annual average GDP growth rate of 6.2 per cent. The economy would create between 8.7 and 10 million jobs and the unemployment rate would decline to 12 per cent. The number

of people living in poverty will decline by 10 million and the national poverty rate will decline by almost 50 to 23 per cent. The Gini measure of income inequality will decline by 16 percentage points to 55 per cent. The six-pillar option would achieve a simultaneous expansion of the supply and demand sides of the economy.

GDP would almost double over the decade, and average profit rates would remain above 16 per cent.

Government revenue would grow in line with projected GDP growth, thereby generating the funds needed to pay for the scenario’s expected increase in government spending.

The larger size of the economy and lower real interest rates would result in a decline in the debt to GDP ratio to 40 per cent by 2030.

Significant improvements in the delivery of social services and economic and social infrastructure across the country would result in the improved living conditions of poor families, and social cohesion will improve enabling stable capital accumulation.

IMAGES: SUPPLIED

THE SIX-PILLAR POLICY FRAMEWORK In 2021, Dr Asghar Adelzadeh, Sambula Malumisa and Juane Benecke used the Applied Development Research Solutions (ADRS) Linked National-Provincial (SA-LNP) model of the South African economy to develop policy roadmaps for three countrywide Indlulamithi scenarios 2030.

Their six-pillar policy framework, which represents the Nayi le Walk scenario, shows how South Africa can break from its past – low economic growth and rising unemployment over the past 28 years – and chart a new development path that achieves six per cent gross domestic product (GDP) growth until the end of the decade.

The first pillar comprises macroeconomic policy reforms. Fiscal policy will include an increase in government current spending of 10.5 per cent a year over the next decade – three percentage points higher than the Business as Usual (BAU) scenario – to provide the necessary funding to expand the delivery of individual and collective social services. Investment by government and state-owned companies in social and

economic infrastructure will increase by 10 per cent a year – four percentage points higher than the BAU scenario.

A new monetary policy framework will upgrade the inflation targeting policy to a dual mandate that targets inflation and six per cent GDP growth. The Reserve Bank will adopt the necessary measures to raise the growth of annual credit extension to the private sector to 15 per cent – nine percentage points higher than under the BAU scenario.

The second pillar introduces three new policies. The government makes the public works the employer of last resort for the unskilled unemployed and increases the daily pay rate to R160. The government also introduces a R1 000 monthly grant for the skilled unemployed and those who lost their jobs due to COVID-19. There will be a caregiver grant of R500 a month for the family member who takes care of a child. Both grants will increase by six per cent a year. This proposal can be replaced with a Basic Income Grant scenario.

The third pillar of microeconomic reforms models the effect of government policy

interventions: lowered prices in the transport, storage and communications sector, improved competitiveness and labour productivity in certain sectors, and increased agricultural exports.

The fourth pillar refers to trade and industry policy measures that would increase total annual investment in the manufacturing sector to R10-billion in 2010 prices, stimulate total exports, reduce import dependency and raise the employment intensity of economic growth.

The fifth pillar mobilises private and international support. The public-private growth initiative would increase investment

by R500-billion over the next 10 years.

The Public Investment Corporation would increase investment in the manufacturing sector by R100-billion between 2021 and 2025. Foreign direct investment would increase from 1 to 2.5 per cent of GDP by 2030.

Finally, the sixth pillar considers the successful implementation of provincial growth and development plans.

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Join ABASA

2022 Membership is open 1 January 2022 - 31 December 2022

Apply and pay online Enquiries: communications@abasa.org.za

www.abasa.org.za

ADVERTORIAL: ABASA

DRIVING INCLUSIVE SOCIAL ACCOUNTABILITY

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After 36 years of leading transformation in the accounting profession, ABASA has appointed its fifth woman president to carry the leadership baton for the next three years

IMAGE: SUPPLIED

ince taking over the reins of the Association for the Advancement of Black Accountants of Southern Africa (ABASA) on 2 December 2021, President Linda Maqoma has hit the ground running, setting up the organisation for what promises to be a revival of the advocacy role that ABASA is known and respected for in the industry, the country and globally.

While the biggest crisis faced by the accounting profession is the various scandals casting doubt on the credibility of the CA(SA) designation, ABASA will have to walk the tightrope of advocating for the removal of barriers that keep black professionals from accessing careers that are to this day painfully untransformed.

In addition, ABSA strives to ensure that black excellence is maintained under the banner of ethics, which remains the cornerstone of the profession.

ABASA was established in 1985, under the leadership of its first president Jeff van Rooyen and founding stalwarts, to promote the professional interests of black persons engaged in the accounting profession. The association is committed

and dedicated to this pursuit and is driven by the need to ensure that every black accountant and aspiring accountant can realise their full potential and aspirations.

A CULTURE OF INCLUSION AND COLLABORATION

Ms Maqoma has, throughout her leadership journey to the top office, set an inclusive tone, ensuring that the organisation is known not only as a home for black chartered accountants, but also professionals from other accounting and regulatory bodies.

This continued commitment to inclusion will be cemented by the implementation of ABASA’s newly established national council, which will include representatives from SAICA, SAIPA, SAIGA, ACCA, CIMA, IIASA and others in accordance with the organisation’s Memorandum of Incorporation.

“It is important that ABASA drives collaboration within the transformation space, and aligning with organisations such as the Black Management Forum (BMF) is of national importance as we strive to move the needle on the slow pace of meaningful socioeconomic participation of black people in our country and increase the number of black professionals in top levels of management,” says Ms Maqoma.

The association’s “cradle to grave” membership structure ranges from student chapters, trainees, and general members to stalwarts of the organisation.

It also includes a business and corporate membership. At each stage of this value chain, ABASA, through its national strategic leadership structure and focused committees, assesses the needs of its constituency to better advocate its members’ interests. Creating strong leadership pipelines with

particular focus on ensuring women take up top decision-making positions is central to the transformation mandate of ABASA. As ABASA turns 37 this year it will host its fifth Annual Wiseman Nkuhlu Lecture in honour of the first black African chartered accountant in South Africa who is also a past president of the BMF and a patron of the ABASA Subvention Fund, which aims to provide a solution to the shortage of passionate black academics in historically disadvantaged universities. This fund was founded by Dr Futhi Mtoba during her tenure as the first woman president of ABASA from 2002–2004. This coincidentally overlapped the tenure of the BMF’s first woman president, Nolitha Fakude, between 2003 and 2006. These are just some of the links that serve as a reminder of the thread that binds our organisations together.

We look forward to working together with President Andile Nomlala and his leadership team to achieve socioeconomic transformation and develop ethical leaders who will be the solution to the ethical crisis in our country and restore the ethos of black excellence that both ABASA and the BMF strive for.

➔ Scan this QR code to go directly to the ABASA website.

For more information: communications@abasa.org www.abasa.org.za

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2022:

THE YEAR FOR DELIVERY Given the state of our economy, gross domestic growth of six per cent seems a far way off, but that target is no utopian dream, writes Busisiwe Mavuso, CEO of Business Leadership South Africa

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ramatic change of attitude from government – where it addresses all our critical issues as emergencies rather than with the tortuously slow pace that seems to be its default mode – would accelerate the time to reach a fast-growing economy.

We should demand from government that it ensures 2022 is the year of delivery.

The important reforms that have been agreed upon by Cabinet are all being implemented far too slowly, such as the roll out of the infrastructure drive. These are critical to kick-starting our economic recovery and blockages need to be removed to accelerate implementation.

Then, as recently as February this year, there was a breakthrough with the gazetting of the new critical skills list for skilled immigration. It’s important that the list matches the areas where we lack expertise. There’s still much to do in this area though, in particular, streamlining the visa application process, which takes two years, as well as making the critical skills list a more dynamic process that adapts faster to the changing needs of businesses.

SOME GREAT STRIDES HAVE BEEN MADE

What does make me optimistic is that we have made some fantastic strides so far. That’s sometimes easy to forget as frustrations escalate at the government’s overly lethargic approach. But we have come a long way, particularly in the energy sector and with the restructuring of our ports to create an independent national ports authority and allow private sector operations within docks. Successful and efficient implementation of the reforms just in those two sectors would certainly make a huge contribution to accelerating gross domestic product (GDP) growth in the short term, though it won’t get us to six per cent.

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Busisiwe Mavuso

The important reforms that have been agreed upon

by Cabinet are all being implemented far too slowly, such as the roll out of the infrastructure drive.

Of course, the most dramatic changes have come in the energy sector.

Raising the limit for private companies to generate their own electricity to 100MW was a truly momentous event in liberalising the sector and generated much optimism that the government was serious about getting the economy on a strong growth path.

There has been other progress in energy: Eskom’s restructuring, where it is being split into three entities – generation, transmission and distribution – and the fifth round of the Renewable Energy Independent Power Producers’ Programme (REIPPP) has been held and energy from the new plants will start feeding into the national grid in two to three years’ time.

GREATER URGENCY REQUIRED IN TRANSFORMING THE ENERGY SECTOR

Rather ironically though, energy is also the sector where the most frustrating delays are occurring. Given the importance of securing a stable electricity supply that meets demand so that we can finally end

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the load shedding that causes massive economic destruction, these delays need to be addressed urgently. Minerals and Energy Minister Gwede Mantashe promised in October last year that the sixth bid window would be announced by end-January this year, but we’ve heard no explanation about why this hasn’t happened. And the “emergency procurement round” for an extra 2 000MW has become bogged down, with the latest postponement to reach financial close being implemented with no adequate reason provided.

Apart from efficiently implementing these approved processes, we’d also like to see a greater sense of urgency in coming up with faster ways of getting new energy onto the grid.

Perhaps it is time to restructure the REIPPP programme so that it meets the entire renewable energy quota in the Integrated Resource Plan of 6GW of new solar PV capacity and 14.4GW of new wind power capacity, rather than holding successive bid windows indefinitely into the future.

There may be other, quicker methods of stabilising our energy supply, and this is where policymakers should focus. Load shedding is estimated to cost the national economy about R500-million per stage per day. In the first week of February alone, the power cuts would have wiped out R6-billion in value, a staggering amount given our strained fiscus. What’s more alarming is that this will happen repeatedly, until energy supply meets demand.

Achieving a stable supply of energy is the first priority because, without it, our economy simply will not be able to grow fast enough to create jobs.

Achieving a stable supply of energy is the first priority because, without it, our economy simply will not be able to grow fast enough to create jobs.

INFRASTRUCTURE DEVELOPMENT INTERVENTIONS NEEDED

The next priority in the short term is to roll out the infrastructure programme.

The long-term benefits will be felt through improved and more efficient state services, ranging from ports and roads to schools and health clinics, but the short-term stimulatory effect of injecting more than R1-trillion worth of construction activity will be massive, creating both short-term and long-term job opportunities.

To accelerate this process, Business Leadership South Africa has presented government with research findings highlighting that complicated bureaucratic procedures and lack of expertise are two elements that hold up infrastructure development. The government can make a big difference quickly by streamlining processes and ensuring qualified people are in key roles – at the top in the relevant government departments and through all levels of government, down to each municipality.

What is also needed is to simplify approval processes for public-private partnerships, which are subject to onerous bureaucracy. This is a central problem that should be addressed through new interventions to support public infrastructure procurement.

unemployment rate is at such critical levels that the country is now considering dramatic measures such as a basic income grant and excluding foreign nationals from certain jobs. But what is not even being considered is loosening regulations to make it easier to hire people, as well as focusing on labour laws that are constricting to small and medium enterprises.

Reforms in many other areas have been agreed up, from improving the ease of doing business, particularly for small businesses, to simplifying mining investment regulation. Some are being implemented, but a sense of urgency from government is needed to accelerate things.

The bottom line is that government needs to get on with things. I fear that, in some areas, there’s a lack of appreciation of the urgency of the situation. A dramatic change of attitude by the government is probably the one single factor that would transform our recovery attempts in the quickest possible time.

2022 BUDGET SPEECH

OTHER AREAS DEMANING URGENT ATTENTION

For business, the next priority area is one that is not yet even on the table: labour legislation reform. Our

Reforms in many other areas have been agreed up, from improving the ease of doing business, particularly for small businesses, to simplifying mining investment regulation.

BUSINESS LEADERSHIP SOUTH AFRICA RESEARCH REPORTS

INDEPENDENT POWER PRODUCER PROCUREMENT PROGRAMME

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NEOLIBERALISM

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outh Africa has been captured by orthodox economics, which has revealed time and time again not to work in our context.

Unfortunately, those in power remain intent on continuing in the same vein, thus reproducing the status quo. For the economy and society to transform, we must remember how we got here, and how Vision 2030 is unlikely to manifest.

At the dawn of democracy, South Africa’s economy was performing poorly after violent internal protests, international sanctions and post-cold war ideological changes. The ANC’s Department of Economic Planning (DEP), which would later become “Team Finance” in the National Treasury, drove the ideological underpinnings of the post-apartheid state’s fiscal institutions. The DEP’s employees were trained at Goldman Sachs in New York in 1992 in collaboration with the World Bank and the International Monetary Fund (IMF) – all considered the bulwarks of neoliberal economics. In 1996, in step with this, the National Treasury implemented the Growth, Employment and Redistribution (Gear) strategy, which was composed of neoliberal macroeconomic policies, the tenets of which can be summarised into four categories: stabilisation, liberalisation, privatisation, and rationalisation.

Busi Sibeko

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MUST GO

Now more than ever, we need an interventionist state that is bent on the reconfiguration of social and economic power, writes Busi Sibeko POLICY REFORMS, BUT LITTLE PROGRESS

Gear’s medium-term policies included “a relaxation of exchange controls, trade liberalisation, ‘regulated’ flexibility in labour markets, strict deficit reduction targets, and monetary policies aimed at stabilising the rand through market interest rates”.

This supply-side approach was aimed at the rapid expansion of the private sector and the eventual shrinking of the state’s role. Similar to the World Bank and IMF Washington Consensus strategies, the belief was that the liberalisation of the economy would lead to accelerated economic growth and a reducion in poverty and inequality.

At the same time, the labour constituency and others presented strong critiques of Gear. In the late 1990s and early 2000s, the dominant policy rhetoric became one of “microeconomic reforms” in an otherwise “stable” macroeconomic environment. Macroeconomic policy was to remain untouched – bar the formal introduction of inflation targeting in 2000 – and microeconomic interventions would resolve “blockages in the economy”. Certain progressive policy

changes were made, including moderately expansionary fiscal policies, recognition that government spending can “crowd in” (rather than “crowd out”) private sector investment, a rise in government social spending, and the recognition of the need for an active industrial policy. However, the macroeconomic policy framework remained largely unaltered, and different aspects of government economic policy became increasingly contradictory.

The Accelerated and Shared Growth Initiative for South Africa (AsgiSA) was launched in 2006 with the desire for shared growth and to achieve its target of halving unemployment and poverty between 2004 and 2014. This goal would only be achieved if GDP grew at an average of 4.5 per cent between 2007 and 2009, and by an average of 6 per cent between 2010 and 2014. Before the global financial crisis, the economy grew, but did not yield these desired targets. In 2010, the New Growth Path (NGP) framework was released. The NGP was aimed at enhancing growth, employment creation and equity.

The policy’s principal target was to create five million jobs over the next 10 years. The NGP combined with the Industrial Policy Action Plans (IPAP) would support the growth of industry, particularly manufacturing.

The NGP represented the most progressive and interventionist policy framework to date.

However, it also attempted to accommodate the conservative macroeconomic policy within a more developmental economic strategy. COSATU’s response to the NGP titled “Government’s New Growth Path Framework: One Step Forward, Two Steps Backward: A response from the Congress of South African Trade Unions” expressed

Building a new economy will take much more than the current proposals for structural reform. No matter how conducive the environment is for capital, we will not build a new economy with more of the same.

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POST COVID-19 RECOVERY

that the NGP did not represent a new breakthrough in economic thinking and reinstated Gear positions. As a result, labour unions insisted on its overhaul.

In 2011, the National Planning Commission drafted the National Development Plan (NDP). Gear, it was argued, had been successful at improving the country’s financial situation.

However, the impacts were mixed, and the socioeconomic situation remained dire. The NDP would have to cover Gear’s shortfalls. The NDP is reflective of the post-Washington Consensus, which had evolved, by the late 1990s, from a solely economic growth agenda to “the neoliberal, market-friendly approach [that] … places sustainable, egalitarian and democratic development at the heart of the agenda”.

Macroeconomic policy in the NDP is consistent with post-crisis policies, which do not challenge the structures of economies, but rather look to strengthen the neoliberal agenda. The recent Economic Recovery and Reconstruction Plan continues in a similar vein. It emphasises the importance of improving education – a desperately needed intervention, but problematically framed as though skills will, by themselves, create jobs. It calls for expanding the role of the private sector in “network industries” that provide essential public goods – electricity, communication, transport and water – and prioritises supply-side microeconomic interventions. These include the deregulation of product and labour markets. The recovery plan reaffirms the existing macroeconomic policy.

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BUILDING A NEW ECONOMY WILL REQUIRE MORE

What we have experienced over the past 27 years is orthodoxy with rays of progressive thinking. This approach has not yielded the developmental outcomes we desire for our economy. Recently, there has been a doubling down of neoliberalism, with austerity or fiscal consolidation as the tool of choice. Building a new economy will take much more than the current proposals for structural reform. No matter how conducive the environment is for capital, we will not build a new economy with

Macroeconomic policy in the NDP is consistent with post-crisis policies, which do not challenge the structures of economies, but rather look to strengthen the neoliberal agenda. more of the same. Macroeconomics is predicated on a set of distributive relations across different social groups, which entails distributive choices across various social groups, and within and across households.

In South Africa, we must understand how social reproduction – the production of goods and services and the production of life as part of one integrated process – was engineered through settler colonisation and how the systems of exploitation and oppression have shaped the current context during apartheid. We must ask ourselves how and if our current economic policies address the predicated issues?

Systematic oppression and exploitation of black labour played an early and deliberate role in shaping the asymmetrical power relations in the industrialisation and wealth accumulation processes, and more generally, the trajectory of capitalist accumulation.

This system included the cheap labour of black men and the unpaid and underpaid work of black and coloured women. It is no wonder that in 2015, 54 per cent of full-time workers earned below the “working poverty line” of R4 125. The apartheid state played an active role in enforcing spatial and socioeconomic separations between production and social reproduction. The labour migration system, established to supply cheap labour to the mining industry, marginalised the rural population’s land-based livelihoods, with few compensating employment opportunities. It demanded that those left behind in the former Bantustans undertook unpaid labour, for example, subsistence agriculture and rearing of children, to reproduce the labour force sent to the cities and the mines.

Former Bantustans remain underdeveloped. These structures set black men apart from their families, contributing to the long-term fragmentation of families

and men’s detachment from childcare. Black and coloured women carried the burden of social reproduction, while white women displaced their responsibilities onto black women, hiring them as domestic workers to take care of their homes and children.

Care was deliberately feminised. Black and coloured women have, historically, been excluded from waged work, and when they are in waged work, they are underpaid.

In the current context, black and coloured women remain over-represented in the lowest-paying occupations (such as domestic work) and under-represented in the highest-paying occupations (such as legislators, senior officials and managers).

The dispossession of land from the black majority has meant that the people have been deprived of natural resources, such as water. This has made social reproduction, in the absence of wages and adequate state support, even more difficult, for instance, in the fight against disease and securing adequate sustenance.

Macroeconomic policies in our country have not addressed how these processes have been reproduced. Thus, the social reproduction crisis is only deepening in our country. We must resist mainstream approaches that accommodate and naturalise power. Economies are a set of decisions about how we socially reproduce. These decisions, whether implicit or explicit, cannot be left to the spontaneous whims of the markets.

The pandemic has only exacerbated these pre-conditions.

Now more than ever, we need an interventionist state that is bent on the reconfiguration of social and economic power, is human-centred, and considers the regenerative interaction between public investment, labour productivity, socioeconomic development, rights, and equity. This begins with abandoning neoliberalism.

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2022 BUDGET ANALYSIS

IT’S A GDP GROWTH PROBLEM, NOT A DEBT PROBLEM The only way out of our economic crisis is for the government to start investing in its people and infrastructure again, writes Duma Gqubule

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fter more than a decade of no gross domestic product (GDP) growth and soaring unemployment – the number of unemployed people increased by 6.5 million to 12.5 million people between December 2008 and September 2021. Finance Minister Enoch Godongwana’s maiden budget has condemned South Africans to three more years of the government’s failed economic policies.

Delivered within the context of an unemployment rate of 46.6 per cent, the budget forecast a GDP growth rate of only 1.8 per cent a year for the next three years. By comparison, 153 emerging and developing economies will grow by 4.8 per cent and 4.7 per cent over the next two years, according to the International Monetary Fund’s (IMF) World Economic Outlook publication.

This means that the government does not believe that its own economic recovery plan and structural reforms will deliver a faster rate of GDP growth. The World Bank and the IMF agree. They have forecast GDP growth of only 1.5 per cent a year between 2022 and 2026. In another article in this publication, Asghar Adelzadeh and Pali Lehohla have forecast GDP growth of 1.8 per cent a year until 2030 based on the government’s current economic policies.

On this dangerous trajectory, assuming that the growth of the labour force and the relationship between GDP growth and job creation will be almost the same as they were before the pandemic, there will be 17 million

unemployed people by 2030. The unemployment rate will be 50.9 per cent.

Due to high commodity prices, there was a bumper R469.9-billion increase in estimated main budget revenues for the 2021 three-year medium term expenditure framework (MTEF) until 2023/2024 compared with the forecasts that were made in last year’s budget. For the 2021/2022 fiscal year, the main budget revenue overrun was R197.4-billion.

Noninterest expenditure was R63.1-billion higher than what was budgeted for in 2021, due to the reintroduction of the R350 a month social relief of distress grant after the July 2021 riots and the need to fund an increase in wages for public sector workers. The difference between the budget overrun and the increase in spending of R134.3-billion was used to repay debt.

This means that only 32 per cent of the revenue 2021/2022 overrun was invested in the economy. If National Treasury understood the scale of the economic crisis, it would have decided to prioritise the interests of the people of South Africa, rather than those of the financiers. As expected, the 2022 budget extended the R350 a month social relief of distress grant for one year at a cost of R44-billion and allocated R18.4-billion towards the presidential employment stimulus for two years.

There was no news about civil society calls for the government to introduce a Basic Income Grant, which would have been affordable, given the large tax windfall and the fact that many economists believe that the increase in

world commodity prices is set to continue over the next few years.

Over the next three years, main budget revenues will increase by 4.6 per cent a year to nearly R1.8-trillion in 2024/2025.

But noninterest spending will increase by only 2.1 per cent a year to R1.7-billion.

The difference will be used to achieve a primary surplus.

After inflation, there will be a real decline in noninterest spending of 6.6 per cent a year over the next three years. The quality of poor public services will continue to decline. Real health and education spending will decline by 11.8 per cent and 7.1 per cent a year respectively.

Treasury’s Budget Review publication said the budget cuts would result in fewer teachers and larger class sizes in some provinces. In health, compensation budgets would grow by only 1.1 per cent, which would limit the ability of provincial health departments to employ more frontline staff.

Over the past few years, the government has been talking about an infrastructure-led recovery. But a R100-billion infrastructure fund it established in 2019 has no money because National Treasury has cancelled previous allocations made to it.

South Africa’s debt is not high by international standards, even when it is benchmarked against similar upper middle-income countries. The only way out of the crisis is for the government to start investing in its people and infrastructure again. South Africa has a GDP growth problem, not a debt problem. If the economy grows again, the debt ratio will decline.

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ADVERTORIAL: NWU BUSINESS SCHOOL

NWU BUSINESS SCHOOL FIRST TO RECEIVE INTERNATIONAL ACCREDITATION FROM BGA

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The NWU Business School at North-West University is a driving force of business education in Africa

he international Association of MBAs (AMBA) recently renewed the business school’s MBA accreditation for five years, and the school has now received international accreditation from the Business Graduates Association (BGA).

Prof Jan van Romburgh, chief director of the NWU Business School, says: “Business education in general – and the role of MBAs in particular – is going through a fundamental transformation, both globally and domestically. In a fast-changing world and country, business schools must remain relevant by providing business education that critically unpacks their socioeconomic environment for successful business strategies.”

He says the accreditation is a huge vote of confidence from the BGA. “And, the AMBA accreditation denotes the highest standard of achievement in postgraduate business education. We are pleased to be among the two per cent of recognised business schools around the world to have AMBA accreditation.”

AMBA ACCREDITATION

IMAGE: SUPPLIED

Spearheading excellence and trailblazing innovation for more than 50 years, the AMBA has been the impartial authority on postgraduate management education. It established that vision in 1967 and, in a volatile, uncertain world, it is as relevant today as it was then.

The AMBA is committed to raising the profile and quality standards of business education internationally for the benefit of business schools, students

and alumni, employers, communities, and society.

It is the only professional membership association that connects MBA students and graduates, accredited business schools and MBA employers globally.

Accreditation certifies that an institution can fulfil a particular function within the quality assurance system. The AMBA with senior academics at top global educational institutions to continuously update accreditation policies and maintain their unique, in-depth and detailed approach.

Programmes receiving this accreditation reflect changing trends and innovation in the postgraduate education sector.

They foster innovation and challenges and encourage business schools to continuously perform at the highest level.

WHY IS THIS A BIG DEAL?

Students and graduates, business schools and employers all recognise the AMBA and BGA accreditation as a gold standard.

The rigorous accreditation criteria and assessment process ensure that only the best programmes achieve accreditation. The accreditation bodies look at programmes that demonstrate the highest standards in teaching, learning and curriculum design; career development and employability; and student, alumni and employer interaction.

“Employers looking to recruit game-changing managers and future business leaders know that graduates from accredited programmes have received the best quality, most relevant management education and are top talent,” van Romburgh explains.“This accreditation gives our business school

“THIS ACCREDITATION GIVES OUR BUSINESS SCHOOL WORLDWIDE RECOGNITION AND HONOUR.” – PROF JAN VAN ROMBURGH

worldwide recognition and honour. The AMBA accreditation identifies the best programmes from the thousands available.”

WHAT DOES IT MEAN FOR NWU BUSINESS SCHOOL MBA STUDENTS

Employers are increasingly asking for business graduates who possess a balance of hard and soft skills, innovative capabilities and a mindset geared towards social responsibility. “We can guarantee that our students who obtained an MBA or Postgraduate Diploma in Management will bring all these qualities and skills to the table at their workplace and make a viable contribution to their company.

“For our MBA graduates, accreditation offers the opportunity to connect with peers from the best global MBA programmes.

Membership of the AMBA means alumni can network internationally, knowing that they are connecting with individuals from equally impressive programmes,” explains van Romburgh.

“AMBA members can enjoy career advice and support, a job portal, events, access to the latest research and thought leadership, and selected offers. It opens doors and facilitates opportunities, and we are committed to ensuring that each student receives the best possible education to shape executive minds in Africa.”

➔ Scan this QR code to go directly to the NWU website.

For more information: Johan van Zyl 0845043544 johan@jakemedia.co.za www.nwu.ac.za NWUBusinessSchool

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ANALYSING THE LOCAL

GOVERNMENT

LEADERSHIP LANDSCAPE Is time running out for a slowly declining majority party?

Professor Mcebisi Ndletyana analyses the results of the last local elections in light of the national general elections in 2024

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hat the ANC’s recent electoral decline below 50 per cent tells of an impending loss in the 2024 national election has deservedly attracted extensive analysis.

Equally noteworthy though are new activities the organisation initiated as part of its nomination process. A newly established Electoral Commission, chaired by former deputy president of the party and the third president of the republic, Kgalema Motlanthe, steered the nomination process. Candidates for the mayoral positions were interviewed by a panel that included individuals familiar with the technical intricacies of running local government. While showing a party that is possibly changing, these new initiatives are also instructive of what it takes for a party to initiate change. However, it is doubtful whether these initiatives are sustainable for a considerable period into the future.

Motlanthe’s Electoral Commission represents a notable shift. Previously, the nomination process had not received dedicated and impartial attention. It was part of many functions undertaken within the secretary general office (SGO) and only received attention as and when elections approached. The SGO, in turn, relied on its provincial and regional counterparts to oversee processes at the local level. This operational format exposed nominations to bias and

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Professor Mcebisi Ndletyana

manipulation. Both provincial and regional leaders are not uninterested parties in the process, they tended to rig processes in favour of their candidates, some of whom were incumbents that had proven hopelessly incompetent during their tenure.

MANIPULATION AND RIGGING

Public participation was then introduced, just ahead of the 2011 local election, to neutralise internal party manipulation. Although the party was still allowed to run its selection process, the selected candidates were subjected to public examination in their respective wards. Since residents were most familiar

with the candidates, the idea was that they would choose the best candidate based either on previous performance or reputation and encounters in the community. Besides seeking to inject fairness into the selection process, involving residents was also a test of how each candidate resonated with the general electorate, who would ultimately decide who got elected.

Not much changed, however.

Rigging continued to happen.

Candidates, or their faction, made sure that attendance at public participation sessions favoured them or their candidates. Meetings started at a different time to the one communicated earlier. Some residents would be locked out, or the screening committee would simply forward a different name to the one endorsed by residents. The extraordinary level of fraud even triggered widespread protests in the various wards throughout the country.

This prompted the party to institute an investigation led by Nkosazana Dlamini-Zuma. The findings of the task team confirmed widespread rigging.

Competent candidates endorsed by residents were disqualified based on disability. Some were nominated for wards in which they were not resident – a clear violation of guidelines.

Others were disqualified purely based on rumours that they were ‘Cope-moles’ in the ANC.

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LOCAL GOVERNANCE

Dlamini-Zuma’s findings stressed the importance of an independent body to oversee the nomination process. That need had been realised a long time ago. In June 2005, the party’s National General Council was presented with the proposal to set up an independent body such as the Electoral Committee.

The proposal was rejected. Local party elites were intent on keeping national headquarters out of the nomination process. They even overturned Jacob Zuma’s decision, which the National Executive Committee had accepted, to take leave of his duties as deputy president of the party, following his corruption charge. Zuma’s predicament was iconic of what they considered profound pain – accounting for their conduct to the national office.

Sense prevailed, somewhat, at the 2007 national conference. The proposal to set up an Electoral Committee was adopted. Even then, it would take 14 more years for the resolution to see the light of day. In the end, it took 16 years from presenting the idea, adopting, and eventually implementing it. In the meantime, the state of local government was deteriorating with every passing year due to the poor selection of councillors.

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EDUCATIONAL QUALIFICATIONS VERSUS TECHNICAL COMPETENCE

One of the major weaknesses, in addition to the neglect of one’s duties, was lack of “papers” – educational qualifications – to meet the requirements of the position.

Councillors, for instance, exercise oversight over officials. This entails more than just “noting” reports presented by officials; it includes understanding the content and asking relevant questions. In 2021, for instance, roughly 70 per cent had not gone beyond matric, while others hadn’t even reached Grade 12. The conduct of most showed that they never cultivated the habit of reading.

It’s only in the 2016 elections that the party woke up to the importance of technical competence. Candidates were

required to present CVs. But, even that doesn’t seem to have improved the level of qualifications among their councillors.

The party hasn’t given up entirely on qualifications, albeit it’s applying the criterion unevenly. Now they’re focusing closely on mayoral candidates instead of the whole cohort of councillors. In this previous election, they set up a panel of experts to interview elected councillors.

Three candidates were forwarded for interviews. The process was not without the usual shenanigans. Some of the nominated candidates hardly had any matric or post-matric qualifications.

In some cases, this was deliberate: the intention was to have only one strong candidate because they wanted that strong candidate appointed. Not that there were no other candidates with comparable qualifications; regional leaders just did not want their favourite candidate to face competition.

For a party that has taken numerous study tours to China, the lacklustre attention to educational qualifications is telling, for example, they’re full of praise for the Communist Party’s prioritisation of technical competence as a prerequisite for public office. However, the ANC’s failure to emulate what it claims to adore shows a horrible lack of desire for innovation and disregard for the damaging impact on society. Leaders place a premium on being elected. This means getting support from whoever offers it. Those leaders, in turn, support the appointment of their “runners” regardless of competence.

LACK OF RESOURCES AND PROFESSIONALISM

The party’s president, Cyril Ramaphosa, continues to make promises of better performance, nonetheless. This will be achieved, he claims, through rigorous and constant monitoring of councillors to ensure they fulfil their duties. It’s hard to see that happening.

Technical competence remains a glaring problem. It is also doubtful that the organisation has the capacity for constant monitoring. Regional offices,

upon whom this responsibility will fall, suffer from poor administrative capacity. There’s insufficient staff, and some offices can’t even pay for municipal services, resulting in constant power disconnections. The problem of poorly run offices has been around for some time, long before Luthuli House’s nonpayment of staff made headlines.

Even the recently formed Electoral Commission suffered from a lack of administrative and logistical support.

Ultimately, the ANC suffers from a fundamental problem of lack of professionalism. The party hasn’t quite appreciated that it needs to professionalise its operations to function optimally. This explains inadequate staffing in the SGO, the office responsible for the administration of the entire organisation.

At some level though, what appears odd to some, may be intentional. The malfunction benefits some of their leaders. Their mischief goes without being noticed by higher structures.

When it does turn the corner, the party better hope that the electorate will not have found new suitors among the emerging community organisations and independents. Many had a good showing in this past election, which explains the record number of hung councils. And, the likely poor performance from the party’s councillors will trigger even more alternatives for voters. Time is running out!

Mcebisi Ndletyana is professor of political science at the University of Johannesburg and is the author of Anatomy of the ANC in Power: Insights from Port Elizabeth, 1990-2019

ANATOMY OF THE ANC IN POWER

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GAINING TRUST STARTS WITH OPENNESS While regulations govern how conflicts of interest between clients and financial services providers need to be managed, firms only have one choice: put the customer first or eventually fail, writes Ola Leepile, CEO of Novare Holdings

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Ola Leepile

he financial services industry is a hotbed of inherent self-interest that constantly pits clients’ needs against those of the business.

Effectively navigating the tensions between professional values and the economics of an organisation begins with a deliberate strategy to be fully transparent with customers right at the onset of the relationship.

A firm’s longevity depends on the success – and trust – of its clients.

A survey of American adults by global research firm Morning Consult found that investment and wealth management companies experienced the biggest loss of trust among financial services firms over the past year as markets and economies experienced unprecedented uncertainty and volatility because of the coronavirus pandemic.

The COVID-19 outbreak has also disrupted the traditional ways of

nurturing relationships through regular face-to-face interactions.

Investors seek to grow their wealth or the pension fund assets they help oversee at the highest possible rate and lowest cost. The advisers or fund managers hired to help them reach these financial goals have an added responsibility: they need to make money for themselves or the firms they represent through consulting charges, commissions on product sales, performance fees, or increasing funds under management.

Many financial services companies run an array of operations, all under the same umbrella. These could include asset managers, private equity or real estate funds, investment consulting businesses aimed at big institutional investors, tied financial advisers targeting individuals, life and short-term insurance, banking or even brokerages. While cross-selling opportunities abound, so do the risks of not doing what is suitable for customers.

While South African regulations recognise the industry’s intrinsic conflicts, failing to communicate and regularly emphasise these to clients could lead to significant reputational harm, misunderstandings, or withdrawals.

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ADVERTORIAL: NOVARE

TRANSPARENCY, DISCLOSURE AND ENGAGEMENT

While South African regulations recognise the industry’s intrinsic conflicts, failing to communicate and regularly emphasise these to clients could lead to significant reputational harm, misunderstandings, or withdrawals.

The General Code of Conduct for Authorised Financial Services Providers and their Representatives requires that any personal interest that could lead to a potential conflict must be avoided.

Providers must disclose if, for some or other reason, this isn’t possible. All reasonable steps need to be taken to mitigate the conflict of interest to treat the client fairly.

These disclosures don’t invalidate the role of a financial services provider; they are customary and generally accepted industry practices to ensure that investors or the board of trustees of a pension fund are comfortable with the position of conflict. Trustees must ensure that the situation doesn’t undermine their governance structures and decide whether to go ahead.

Agreements must be open to regular scrutiny with the ability to evolve to changing circumstances.

IMAGE: SUPPLIED

MANAGING CONFLICT OF INTEREST

Like most other financial services companies, Novare Holdings has adopted a conflict-of-interest management policy, which, as its guiding principle, clearly spells out that the welfare of our clients must always come before those of the business.

The group offers real estate funds with exposure to sub-Saharan Africa, impact investments, actively managed investments allocated to external money managers (typically hedge funds), and investment consulting across a range of asset classes.

Trust is the bedrock of the financial services industry, which plays a crucial role in an economy’s growth and development.

A governing body appraises all contracts upon inception and regularly afterwards to ensure that the company’s different businesses operate objectively toward our clients, free from bias.

There are many situations where potential conflicts can arise. An unscrupulous asset manager could decide to make a profit or avoid a loss for the firm at a client’s expense, desire an outcome or service that clashes with the customer’s needs, or even favour one client over another.

Clients can guard against some of these risks by engaging investment managers as long-term partners, where clear roles and responsibilities for all parties are outlined right from the start. Investors should regularly assess their managers against their mandates, peers, benchmarks, and the set targets and metrics. Compensation structures must align with the financial goals of both parties, be transparent and easily understood by all.

Avoid financial services providers that don’t have a conflict-of-interest management policy. Agreements must be open to regular scrutiny with the ability to evolve to changing circumstances.

Policies are meaningless if not implemented and demonstrated in each interaction with a client – clearly and boldly, not in the fine print.

If an adviser recommends a group product to a client or board of trustees, the reasoning must be justifiable, comparable, and backed up by data. On the flip side, if an investment adviser believes a client will be better off by withdrawing funds from the group and placing these with another fund or manager that person should feel empowered to do so without fear of backlash.

TRUST AND CONFIDENCE ARE ESSENTIAL

Trust is the bedrock of the financial services industry, which plays a crucial role in an economy’s growth and development. The pandemic has made most consumers poorer, posing risks to the savings industry as unemployment increases and consumers cut costs.

South African savings, as a percentage of gross domestic product, fell to 14.8 per cent last year – the lowest level since 1998 – compared with a global average of 22 per cent, according to data compiled by the World Bank.

A higher savings rate is crucial to accelerating economic growth, as this capital is put to productive use by financing investments, infrastructure developments, lending, or even corporate expansion strategies.

Confidence is the underlying force that binds all this together.

Financial services firms exist because of their clients. Doing good by them is the most credible way of building a thriving savings and investments culture and a prosperous, sustainable business.

➔ Scan this QR code to go directly to the NOVARE website.

For more information: +27 (0) 11 447 9605 info@novare.com www.novare.com

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UBUNTU-DRIVEN LEADERSHIP

FOR MEANINGFUL CHANGE In the aperture of a leadership crisis, Ubuntu principles are the light, writes Cuma Velile Dube

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e are undoubtedly in a leadership crisis, one that cuts across many spheres of our society. The leadership culture in our country is dramatically different to what we had intended it to be at the dawn of our democracy. While we may have very different views on what leadership is and which leadership practices are replicable, we can agree that a key outcome of good leadership is meaningful change.

Otherwise, what is the point? It therefore follows that, at a minimum, leadership must be both effective and responsible.

Effective so that change is realised. That change must be managed properly for it to matter in the lives of those being led. It must also be sustainable; if it is to be truly meaningful, it must stand the test of time.

In 2015, Baken Lefa, in a paper published in Studies in Philosophy and Education, had this to say of Ubuntu: “Ubuntu is a capacity in South African culture that expresses compassion, reciprocity, dignity, harmony and humanity in the interests of building and maintaining a community with justice and mutual caring.”

THE VALUES LEADERS NEED TO DISPLAY The leadership context of the Black Management Forum (BMF) is one that seeks to drive lasting and sustainable socioeconomic change toward a just and equitable society. It is for this reason that Ubuntu-driven leadership speaks to its objectives of developing leaders who lead with humility, respect, and dignity; leaders who are self-aware,

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develop Ubuntu-driven leadership, or a leadership culture with Ubuntu principles as its foundation. Perhaps, along the way, we have forgotten what those very principles are.

A MODEL FOR MEANINGFUL CHANGE LEADERSHIP

Cuma Velile Dube

self-critical, and satisfied in the work of the organisation in pursuing an objective greater than themselves. The BMF is not always successful in developing leaders with the above values. We see many examples of how our society has fallen short of these values and has failed in electing leaders who exhibit the appropriate leadership behaviours. There may be many reasons why we have not yet been successful in transforming the country’s leadership culture over the last decade or so. One of these may be that we are possibly not on the same page regarding what it means to have and

The theme for this year’s Black Excellence Awards in the Western Cape is perhaps an opportunity to discuss a leadership model that represents Ubuntu-driven leadership that can be understood within the organisational framework. This leadership model must be one that delivers meaningful change. In short, Ubuntu-driven leadership must be meaningful change leadership, leadership that is both effective and responsible in bringing about change. What becomes meaningful, and what needs to change may vary. Those who lead and those being led must agree on what that means for them.

Our intention here is simply to propose a leadership model that may transform our country’s leadership culture. Every institution, organisation, department, business, and community-based group has a role to play. The BMF’s role is to develop leaders who can deliver meaningful change that will lead to socioeconomic transformation. In simple terms, we seek to live in a country that has addressed the injustices of its past, particularly the economic injustices visited upon the black

The leadership context of the Black Management Forum is one that seeks to drive lasting and sustainable socioeconomic change toward a just and equitable society.

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LEADERSHIP

majority, and which offers an equality of opportunity for all its people.

Meaningful change leadership is outcomes-based and rooted in African servant leadership. It is our interpretation of what Ubuntu-driven leadership looks like in the 21st century. Its theoretical foundation is servant leadership because it promotes performance alongside the wellbeing of stakeholders. Ubuntu-driven leadership is not a novel idea, however, we have not spent enough time spelling out what this means in the organisational framework in terms of inputs, processes, and the intended outcomes. We hope this can be the first step in doing so.

What we need are leaders who, in service of others, are only interested in delivering meaningful change to those they serve. Exercising leadership in the service of others is the foundation for meaningful change leadership. In service of others, meaningful change leadership can be identified by the following leadership behaviours.

• A spirit of solidarity: leaders who are engaged and encourage collaboration.

• Compassion: leaders who are empathetic job resources, and engage members and society authentically.

• Innovation leaders: leaders who encourage co-creation and experimentation.

• Empowerment and responsibility: leaders who nurture proactivity, self-confidence, and accountability.

• Humility: where “success” is not personal, but something greater than any individual leader.

• Dignity and respect: leaders who appreciate everyone’s contribution.

• Accountability: leaders who nurture a culture of accountability and ethical behaviour.

From these leadership behaviours, we can build high-performance organisations.

Organisations that can learn and innovate with improved stakeholder and member engagement, organisations where the noise about things that do not matter can be crowded out. It is a leadership model that is people-centred and welcomes change through an innovative,

We seek to live in a country that has addressed the injustices of its past, particularly the economic injustices visited upon the black majority, and which offers an equality of opportunity for all its people. collaborative culture and meaningful conversations. We can learn to listen to understand, rather than to cancel. We can develop a leadership culture that seeks to serve socioeconomic change and growth, rather than just personal professional advancement or material gain.

Leaders are often in positions of great influence and power, which can be used for both good and evil. How leaders chose to exercise this power and influence can have exponential consequences for those they lead. South Africa’s young democracy has seen both sides of this coin. While we have seen many examples of leadership in our country that has brought about meaningful change, they have been too few and far between to become what drives our leadership culture.

THE PEOPLE MUST COME FIRST The BMF calls for a leadership that can guard against “misleadership”. Built on the principles of Ubuntu, meaningful change leadership can help us develop meaningful change agents – leaders who are effective and responsible, people-centred, ethical, accountable, and who empower others.

The meaningful change leadership model proposed here only seeks to translate what we mean by Ubuntu-driven leadership into leadership behaviours we expect to see and the outcomes we hope to achieve by adopting it. By focusing on people and the quality of their life, and how that can be transformed, we can deliver meaningful change.

It doesn’t matter how many symposiums or indabas we hold or attend, or even how much money we spend in trying to grow the economy and on social programmes if we are not bringing about meaningful change in the

lives of South Africans. The disconnect is often because our leaders focus more on the inputs rather than the outcomes. This often leads to an inefficient allocation of resources. While a lot is said to be done, there is very little to show for it. Leaders who are focused on achieving meaningful change, ask the right questions of where time, energy and money is being spent.

HOPE As we celebrate black excellence on 25 March, we hope to consider how we can transform our leadership culture as well. We hope we can engage in the leadership behaviours needed to respond to the current leadership crisis. We hope that what we have presented here is useful in defining a leadership model for South Africa that can bring about meaningful change for our people. We hope that this event and our discussion here can remind us of the Ubuntu principles that were part of our “who we were” for so long. We hope we recognise that these principles are still useful and can be applied to our leadership story.

No matter where that story is being told, be it in business, in public service, civil society or community groups, we all need to be more deliberate about bringing about change. It is our view that the leadership behaviours we have described here, built on the principles of Ubuntu, give us the best chance of achieving our objectives.

By focusing on people and the quality of their life, and how that can be transformed, we can deliver meaningful change.

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INNOVATIVE PHARMA IS HELPING TO FUTURE-PROOF THE ECONOMY The pharmaceutical industry is a key contributor to skills development, job creation and economic growth, says Bada Pharasi, CEO of the IPASA

S

Bada Pharasi

outh Africa remains trapped in a cycle of high inequality and slow job creation, says the Innovative Pharmaceutical Association South Africa (IPASA) in its recently released Footprint Study. With an above global average services sector, an estimated wage wedge between the higher-earning unionised public sector workers and their private sector nonunionised counterparts, and enrolment at tertiary level lagging significantly, the South African labour market suffers from skilled labour shortages, the study finds. These lead to a structural mismatch between education and the skills needed by private-sector companies. This, in turn, leads to growing unemployment, compounded by the subdued pace of reform and growth in South Africa.

IPASA and its member companies share a vested interest in the future prosperity of the country and seek to address some of these skills and employment challenges.

The direct positive impact of innovative multinational pharmaceutical companies (IMNPCs) on the lives of South Africans is highly significant, but the knock-on effects on the economy are often even greater.

Innovative multinational pharmaceutical companies are increasingly looking at South Africa as a regional hub for managing pan-African commercial operations and centralising functions across the region.

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Apart from researching and developing lifesaving medicines, South African innovative pharma industry offers the country many other benefits. Thousands of jobs are created, training and knowledge are shared, the economy is strengthened, and investment is secured, says IPASA’s Footprint Study.

CONTRIBUTIONS THAT STIMULATE THE ECONOMY

“The development of medical innovations is not the only contribution made by South Africa’s innovative pharmaceutical companies,” says Bada Pharasi. “The contribution that IMNPCs make extends beyond the realms of research and development of medical treatments, and includes contributions that stimulate the local economy through employment, taxes, skills development and technology transfer.”

The first major contribution is through direct and indirect employment, and a commitment to growing local capabilities. The study reveals that, in terms of human capital and knowledge building, the industry and supply chain develop and employ more than 14 000 people, with IMNPCs specifically accounting for over 4 700 direct jobs in the country, 70 per cent of which are highly specialised in the form of professionals such as physicians, pharmacists, biologists and veterinarians, and those in the fields of management, finance, sales, communication and HR, among others.

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ADVERTORIAL: IPASA

IMAGE: SUPPLIED

“The contribution that innovative pharmaceutical companies make extends beyond the realms of research and development of medical treatments, and includes contributions that stimulate the local economy.” – Bada Pharasi The industry also employs highly educated individuals who hold master’s and doctoral degrees. Employing these highly qualified individuals is an opportunity to retain national talent while addressing the issue of structural distortions (skills, sectors) in the South African labour market.

Through programmes that include core pharmaceutical knowledge and management content for executives, IMNPCs are maintaining investment levels in human capital, thus creating long-term impact on national capabilities.

Additionally, innovative multinational pharmaceutical companies significantly contribute to indirect job creation through manufacturing and distribution partners and other providers. The growth in sales, especially in the retail pharmaceutical market, is also a critical vector for the development of the national network of pharmacies and the employment that sustains that network.

The Footprint Study estimates that over 9 400 jobs have been indirectly created on account of participating innovative multinational pharmaceutical companies in 2019.

The study also shows that as much as R5.5-billion is spent in support of knowledge-sharing initiatives, comprising clinical research, healthcare programmes, training, and social responsibility initiatives. “The industry also invests significantly in developing its South African workforce with active talent management practices and formalised career pathways across a range of disciplines,” says Pharasi.

“A very high proportion of the workforce is receiving skills development, providing a long-term enhancement of the South African economy,” he continues.

A REGIONAL KNOWLEDGE HUB

Innovative multinational pharmaceutical companies are increasingly looking at South Africa as a “regional” hub for managing pan-African commercial operations and centralising functions across the region. And in fact, according to Footprint Study, South Africa leads the world in the number of health partnerships with IMNPCs and is increasingly seeing the benefits of being a regional knowledge hub.

“By encouraging this high value-adding sector to base their regional headquarters here, the socioeconomic benefits will be disproportionately greater than the local South African market value, with enhanced employment, knowledge transfer and investment value into the country,” says Pharasi.

A sizable portion of the regional revenues generated by IMNPCs is being led by senior and regional management from operations within South Africa; roles that would otherwise be based in other countries.

Many research-based pharmaceutical companies have used technology transfer to improve a country’s ability to use innovative medication through strengthening the expertise of the local scientific and medical communities and, where possible, working to improve the health infrastructure. The rewards to companies transferring pharmaceutical technology can be reputational or commercial, or both.

To date, investment in knowledge transfer projects by IPASA member respondents was estimated at R82-billion, according to the study.

ABOUT THE IPASA The Innovative Pharmaceutical Association of South Africa (IPASA) was formed out of the need for a credible, respected association to engage with stakeholders in both the private and public sectors. IPASA comprises numerous research-based pharmaceutical companies and focuses on building an environment for sustainable access to innovative healthcare to address unmet medical needs in the country.

COMMITTED TO DEVELOPING CAPABILITIES AND EDUCATION

“In summary, it is important to reiterate that innovative multinational pharmaceutical companies contribute to direct and indirect employment, especially for a highly educated workforce, and are strongly committed to developing local capabilities in the services sector.

This further bolsters the economy and makes the country attractive to investors.

“Educating the broader public about the true nature of the pharmaceutical industry’s contributions to skills development and employment in South Africa is crucial to its future long-term success. Society must be made aware of the role the industry plays beyond simply providing health-promoting medicines.

The contribution of innovative pharma to South Africa is invaluable not only in terms of healthcare, but also in the upliftment of people and the advancement of the country as a whole,” Pharasi concludes.

➔ Scan this QR code to go directly to the IPASA website.

For more information: www.ipasa.co.za

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PUBLISHED IN SEPTEMBER 2022

To advertise in the upcoming issue of African Leader, please contact: Jerome van der Merwe Sales Project Manager JeromeM@picasso.co.za (021) 469 2400 | (021) 469 2485 082 668 1496 www.businessmediamags.co.za

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ECONOMIC OUTLOOK

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hile South Africa attempts to kick-start its economy, control government spending, improve state capacity and avoid credit rating downgrades, economic recovery remains slow. And, according to the experts, the country faces several weighty challenges that will continue to hamper economic growth.

In February, the International Monetary Fund downgraded South Africa’s growth forecast from 2.2 to 1.9 per cent in 2022. The South African Reserve Bank (SARB) also revised its growth forecasts downwards to 1.7 per cent in 2022, 1.8 per cent in 2023 and 2.0 per cent in 2024.

The SARB announced in its latest Monetary Policy Statement that it will continue with monetary policy tightening towards 2024, with another 50 basis points (bps) of tightening this year. It also hinted at additional hikes in 2022, 2023 and 2024.

Reserve Bank Governor Lesetja Kganyago cited higher oil prices, higher electricity and other administered prices, higher wage demands, stronger services inflation and potential further upside surprises in global producer and food prices as reasons for the rate hike. The risk of a faster than expected pace for global policy rate normalisation and quantitative tightening, leading to large capital outflows from emerging markets such as South Africa, were named as additional reasons.

Kganyago warned that the damage caused by the slow pace of vaccinations, the July unrest, cyberattacks on Transnet and countrywide strikes were also some of the factors that led to the SARB’s downward revision of the country’s growth forecast for 2021 – from the 5.2 per cent forecast in November to the 4.8 per cent announced in the MPC.

THERE’S BOTH GOOD AND BAD NEWS

However, Absa Corporate Investment Bank (CIB)’s South Africa

BIG

FISCAL RISKS South Africa is seemingly emerging from the COVID-19 pandemic, but the country’s growth prospects remain constrained in the face of a rather hostile global environment, writes Thuletho Zwane Macroeconomics Quarterly Perspectives released in February shows a more optimistic outlook for the current fiscal year “mainly due to a tax overshoot of R180-billion”, it reads.

Absa CIB chief economist Peter Worthington said the R180-billion will lead to a lower main budget deficit forecast of R344-billion or 5.5 per cent of gross domestic product (GDP).

“The near-term fiscal outlook has improved since then. By way of comparison, the MTBPS forecast for Financial Year 2021/2022 was R410-billion or 6.6 per cent of GDP. “This better-than-expected outcome is due mainly to a huge lift in corporate income tax (CIT) receipts from buoyant commodity prices, which have raised mining houses’ operating surpluses sharply,” said Worthington.

He added that December’s main budget data were particularly strong, especially “with CIT receipts in the second provisional tax payment month of the year coming in near their record highs registered in June”. In addition, personal income taxes have also been surprisingly robust against a backdrop of sharply lower employment levels.

However, Worthington said even with the slightly positive revenue outlook, against a backdrop of weak growth, South Africa still faces significant fiscal challenges.

Absa CIB senior economist Miyelani Maluleke said the country’s debt dynamics remain a challenge. He warned that the debt burden is likely to continue to rise over the next few years, even with fiscal stringency.

This is because South Africa runs a primary budget deficit, and the interest rate on government debt is bigger than the growth rate of the economy.

“The real interest rate on South Africa’s government debt exceeds the trend real GDP growth rate, meaning that South Africa’s debt-to-GDP ratio will continue to grind higher over the next few years,” he explained.

Analysts have also warned that big fiscal risks not only lie in the current financial year, but also in the consolidation targets for upcoming fiscal years, particularly given big upside spending risks. Among the spending risks highlighted are public sector wage settlements, enhanced income support for low-income South Africans and further bailout demands from financially challenged state-owned enterprises and municipalities.

Government’s current negotiations on a new wage deal with public sector unions and the Constitutional Court’s failure to rule on government’s refusal to implement the third year of the 2018 wage deal remain a significant fiscal threat since National Treasury’s expenditure framework remains predicated on an unlikely pay freeze for public sector workers.

“The country’s debt dynamics remain a challenge. The debt burden is likely to continue to rise over the next few years, even with fiscal stringency.” – Miyelani Maluleke ISSUE 56 | MARCH 2022 AFRICAN LEADER

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IS THE BASIC INCOME

GRANT FEASIBLE?

Duma Gqubule weighs in on the heated debate around the basic income grant’s viability

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wo decades after a seminal report on social security recommended that the government should implement a Basic Income Grant (BIG), there has been much debate around the issue, with economists trading intellectual blows in heated arguments about its feasibility.

In 2002, the Taylor Report stated: “The last vestiges of state racial discrimination have subsequently been removed, but a key underpinning principle of the old system remains in place – the assumption that those in the labour force can support themselves through work, and that unemployment is a temporary condition.

“In reality, those who cannot find work and who do not, or no longer, qualify for Unemployment Insurance Fund payments fall through a vast hole in the social safety net. Ideally, people should be able to earn a living through employment rather than rely on welfare payments. However, given the size of the unemployment problem and the extent of the growth challenge, full employment is not a feasible scenario in the short- to medium-term.”

In 2020, in the wake of the coronavirusinduced pandemic, countries decided to spend their way out of the crisis. World Bank economist Ugo Gentilini says 734 cash-based measures were implemented in 186 countries.

In South Africa, the government topped up social grant payments for six months until October 2020 and introduced a R350 a month social relief of distress (BIG) payment for almost 10 million people. The government has extended the grant until the end of March 2023. There has been a proliferation of reports, most of them from progressive think-tanks, that explain how

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Duma Gqubule

The BIG will stimulate the economy since the recipients will not hide it under their mattresses.

They will spend it in local economies in Soweto, Eldorada Park and Khayelitsha. a BIG can be implemented. Social justice activists say the grant must be a platform for the introduction of a BIG in April 2023.

Never before has National Treasury been under such pressure.

South Africa has a progressive Constitution that includes socioeconomic rights to housing, food, water, education, social security, healthcare, a healthy

environment, land, and redress for past discrimination, which can be judicially enforced. Excluding the right to basic education and children’s rights, which are immediately realisable, the Constitution says: “The state must take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of each of these rights.”

The Constitution also says: “Everyone has the right to … social security, including, if they are unable to support themselves and their dependents, appropriate social assistance.

The state must take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of each of these rights.”

LOCIAL SECURITY SPEND

In 1994, the first democratic government inherited a social security system that mostly provided social security for the elderly and the disabled and had about 2.9 million beneficiaries. The government spent 2.4 per cent of gross domestic product (GDP) on social security.

In April 1998, the government introduced a grant of R75 a month for children under eight years of age. Over the next 15 years until 2013, the government implemented a constitutional obligation to extend the grant to all children. During the 2019/2020 fiscal year, the government spent R175.2-billion (3.2 per cent of GDP) on social grants for 18 million beneficiaries.

Therefore, there has been a small increase (0.8 of a percentage point as a share of GDP) shared between 15 million more beneficiaries.

The next priority is to provide income support to the working-age population.

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ECONOMIC REALITY

DID YOU KNOW? Pandemic-related global stimulus packages were worth $16-trillion by 17 March 2021, equivalent to about 17.1 per cent of world GDP. Countries from the United States to South Korea and Burkina Faso dished out cash to their citizens.

Source: International Monetary Fund

South Africa is now an unviable society with 12.5 million unemployed people. The crisis is so severe that GDP growth alone will not be enough.

There is a relationship between GDP growth and employment. An employment multiplier measures the percentage increase in employment that is associated with a one percentage point increase in GDP growth.

Assuming an employment multiplier of 0.8 and a 2.5 per cent annual growth of the labour force, there will still be 11.7 million unemployed people by 2030. The unemployment rate will be 34.8 per cent (currently 46.6 per cent). With high rates of unemployment, it will still take decades to achieve full employment. We cannot ask the people to wait patiently and starve until we have reached full employment.

South Africa has three poverty lines – the food poverty line of R624 a month, the lower bound poverty line of R890 a month and the upper bound poverty line of R1 335 a month. Most studies evaluate the cost of implementing a BIG at these three objective measures of poverty. Providing a grant to 35.3 million people aged 18 to 59 would cost R264.3-billion at the food poverty line, R377-billion at the lower poverty line and R565.5-billion at the upper poverty line.

IMAGE: SUPPLIED

HOW SHOULD A BIG BE FUNDED?

Many of the progressive reports on how to finance a BIG provide a menu of taxes to pay for the grant. Some are fully funded or fiscally neutral. Others are partially funded.

Orthodox economists use static accounting analysis to say that the grant is unaffordable.

It would either result in a soaring debt ratio or large increases in taxes, which could have

The government topped up social grant payments for six months until October 2020 and introduced a R350 a month social relief of distress payment for almost 10 million people. The government has extended the grant until the end of March 2023. negative macroeconomic effects such as lower GDP growth. In some cases, the impression is created that all the tax increases will be implemented at the same. This is misleading because the taxes were provided as options for policymakers to make their selection.

However, an economy is dynamic and does not operate like a household or company budget or an income statement. The BIG will stimulate the economy since the recipients will not hide it under their mattresses. They will spend it in local economies in Soweto, Eldorado Park and Khayelitsha. The larger size of the economy will contain the public debt ratio and result in higher tax revenues than would have been collected without the grant. We must distinguish between gross and net costs and recognise that the take-up of the grant will be less than 100 per cent.

Employed people above the tax threshold would not receive the grant, others would elect not to receive it for various reasons.

After three years, the uptake of the child support grant was only 25 per cent. Therefore, about two-thirds of the outlay would eventually go back to government, taking into account VAT receipts, a clawback from seven million taxpayers and higher tax revenues due to the stimulus effect. The BIG has a self-financing element.

A research report by the Studies in Poverty and Inequality Institute considered two options from eight scenarios. Providing an unfunded BIG for adults (18–59) would cost an additional R216-billion over

the proposed three-year phased implementation period – R624 in year one, R890 in year two and R1 335 in year three – assuming a 60 per cent uptake and a clawback. But it would provide an inadequate direct stimulus of only 1.1 per cent of GDP over three years.

Therefore, the report proposed that the grant should also be extended to children who currently receive a child support grant (CSG) of R460 a month. Like the BIG for adults, the CSG would also increase to R1 335 over three years.

This would provide a stimulus to the economy of R360-billion. The report says: “This sounds like a lot of money. But in economic terms, it would be only 1.8 per cent of an estimated GDP of more than R20-trillion during the three-year implementation period. If a household discovered that it would only cost 1.8 per cent of its income to eliminate black tax, it would pay the money without batting an eyelid.” There would be an annual GDP growth rate of 4.5 per cent during the three years. The debt to GDP ratio would increase to 77 per cent after three years, the same as it would be without the BIG. The conclusion is that the grant can only be sustainable in the long term within the context of a new macroeconomic policy framework that has a six per cent GDP target that is binding on the Reserve Bank and National Treasury.

FAST FACT The country’s unemployment rates are 77.4 per cent for youths, 51.5 per cent for Africans, 55.6 per cent for African females and 54.5 per cent in the Eastern Cape and Limpopo provinces. The unemployment rate for people of all races is 46.6 per cent.

Source: Statistics South Africa

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The Digital Council Africa believes that the development and deployment of digital access will enhance the quality of life for citizens in South Africa and Africa as a whole, providing African countries with a digital footprint which will increase their effectiveness and competitiveness within the global marketplace.

Covid-19 lockdown has meant that more people are working from home.

This has led to a shift in lifestyle and priorities in South Africa and the world and one of the biggest trends to emerge is the semigration away from big cities to smaller towns in search of a more affordable lifestyle and a better work-life balance.

What are these semigrants looking for in their new location? The top consideration is a good telecommunications and internet connection. Since many of them will be working remotely it is imperative that they can still connect to meetings and stay productive.

Connectivity is the utmost booster for economic growth.

Several small and remote towns have seen waves of South Africans settling there permanently, sparking substantial economic developments in infrastructure, the establishment of good schools, new healthcare facilities and recreational options which makes the towns more suitable for permanent residence.

Position your municipality to be part of the Zoom-town movement. www.digitalcouncil.africa

JOIN THE BMF EQUIPPING YOU FOR EFFECTIVE MANAGERIAL LEADERSHIP ROLES As a leading managerial and thought-leadership organisation, the BMF is non-racial and non-discriminatory, welcoming individuals from all races and managerial disciplines who echo its values and principles.

Individual membership focuses on advising members on specific strategies and approaches to adopt in tackling the many workplace challenges, while offering the opportunity to attend various networking forums and programmes that focus on evoking thought-leadership, advancing managerial leadership development and socio-economic transformation.

CLICK TO JOIN THE BMF NOW