Not grasping the nettle

2012-02-16 00:00

MOST commentators have lauded the State of the Nation address. Mondli Makhanya of the Sunday Times said: “This was by far the best performance of his tenure ... but it failed to deal properly with the biggest catastrophe facing this nation, an education system that is still producing ill-equipped citizens.” I agree.

Lindiwe Mazibuko of the DA, more critical, said: “The government has extensive programmes, the nation faces many trials, and our people have boundless potential ... but what our country needed was an honest assessment and a plan of action to address it.” I agree.

But both Makhanya and Mazibuko themselves don’t grasp the nettle of the importance of South Africa’s challenge in improving its Global Competitiveness ranking out of 142 countries. Neither of them mentioned it.

We know that the president’s speech focused on infrastructure improvement and the reindustrialisation of South Africa to facilitate economic activity, skills development and job creation, but no mention was made by any commentator of the importance of improving our global competitiveness. Why not?

The rating agencies (Standard and Poor’s, Fitch and Moody’s) rely heavily on this data as part of their rating process. They look at the whole country, not just various components.

Our economy is the 30th largest in the world and yet South Africa is ranked 50th on the global competitiveness table of nations. Were it not for some very poor ratings in the area of health, education and labour relations we would be placed in the top 30. Were this the case the ratings agencies would move us out of BBB (moderately susceptible) into A (somewhat susceptible) or even AA (very strong). The impact on this move for investment is inestimable.

If the metaphor of SA’s progress post-94 is like a new car being assembled, it is akin to a post-apartheid model with which we have made rapid progress. We have a much better economic engine, we have a constitutionally designed steering wheel, we have an independently powered gearbox and suspension, we are spending on the chassis and the electronics, we have upholstery that is more accessible, but we still have two pre-94 wheels, that of education and labour relations. They both have a slow puncture that no one wants to repair. Somehow, we think these old pre-94 wheels will do for the meantime, that our post-94 car will go just fine, and compete with the other models out there. And just in case you didn’t notice, we still have the old pre-94 health spare wheel in the boot that is pap.

Given the ambitious infrastructure improvement plans it should be noted that in the Global Competitiveness Report we fare better than most would expect. For instance, out of 142 countries we come 17th for quality of air transport infrastructure, 43rd for quality of roads and 46th for quality of rail infrastructure.

Nevertheless an ambitious infrastructure development programme is something we need. It will be beneficial in many respects.

We also have 10 measures which rank in the top 10 in the world. As can be seen, most of these measures reflect on the competence of the private sector, and they show what we are capable of. Some of these are strength of auditing and reporting (1), regulation of securities exchange and budget transparency (1) and soundness of banks (2).

We have a significant number of measures where we rank in the bottom 10 in the world and all of them are critical contributors to improved global competitiveness (and essential components on our national assembly line), and, if I dare say, are the responsibility of government. They are our pre-94 wheels that should be re-engineered urgently if our post-94 car is to compete in the global environment. A few of these are business costs of crime and violence (136), business impact of TB (135), business impact of HIV (136) and co-operation in labour-management relations (138).

We have challenges with some of our lighting and dashboard components: burden of government regulation (112), favouritism in decisions of government officials (114), wastefulness of government spending (69) and public trust of politicians (88).

If we are to reindustrialise competitively then we must pay as much attention to education, government competence, health and labour relations as we have to infrastructure. Reindustrialisation must mean that our global competitiveness improves across the board.

• Steuart Pennington is CEO of South Africa — The Good News.

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