SA: still the place to be

2008-09-15 00:00

If cities like Cape Town and Pietermaritzburg think they’ve got problems, they should spare a thought for Sydney and Perth.

So says well-known futurist and chairman of the Anglo American Chairman’s Fund, Clem Sunter.

The Johannesburg-based Sunter, who recently returned from a working trip to Australia, spent time with city planners there and concluded that South Africa is not the only country facing serious problems.

“Perth is running out of water. It’s as simple as that,” Sunter told a city summit in Cape Town, which was aimed at drawing talent to South Africa’s cities and at steering them towards first-league status.

For Perth to be running out of water is a big problem because it is the most remote city in the world, Sunter continued. “Its closest city is Jakarta. The population in Perth has risen from 500 000 to 1,2 million people, probably because of all the South Africans moving there … which means serious water shortages.’’

Perth city planners have to build an expensive desalination plant and are looking at how to move water from a river 3 000 kilometres away.

“Despite their problems, South African cities have at least had the foresight to handle most of their water problems,” Sunter said.

The respected futurist told delegates that he spent hours with city planners in Sydney discussing the massive problem of regular, serious fires in that city. “They have some of the highest concentrations of nitrous oxide and sulphurous oxide north of the bridge.”

Sunter, who has co-written three books, The Mind of the Fox, Games Foxes Play and Socrates and the Fox, is working on his fourth book, For Fox Sake.

Painting a picture of current trends, he said that by mid-century the pendulum will swing away from western or Anglo-American supremacy.

The 21st century will differ from the 20th century in one respect, Sunter said: “We will not see the price of resources we saw in the last century, especially relating to oil. Transport will become a big factor in all economic transactions. This is already happening. People are becoming increasingly alarmed at the cost of freight for important products.

“For instance, New Zealand exports sheep to the Middle East. The freight component of that is becoming much larger. It will affect how we live.

“Localisation will be as strong a force as globalisation. For instance, in South Africa, the textile industry will improve because Chinese T-shirts might cost double or triple, purely because of freight.”

In his speech, entitled “Staying in the First League”, Sunter addressed the issue of whether or not South Africa, and Cape Town in particular, is dropping out of the first league of business players.

A key point Sunter wanted to highlight is the fact that times are tough globally — and that “South Africa is not a bad place to camp out during hard times.

“Other countries are far worse off at the moment. The United States is moving into a hard times economic scenario like in the seventies and Britain is in its worst shape economically in 60 years.

“The overall backdrop for the global economy is that it will be tough for the next year, which means that, in this period, South Africa can compete for talent.

In fact, Sunter said, there are currently huge opportunities for South Africa to attract talent from all over the world. “In the UK there are plenty of engineers, teachers and others being laid off. It is a window of opportunity and we need to work out ways of attracting these people.”

A positive factor which could make South Africa relatively better off is the fact that we have the 2010 Soccer World Cup coming up. “This means our construction industry is okay.”

Another pivotal event for South Africa will be the turnaround in the Zimbabwean economy.

“There will soon be a new leadership and that will carry a price tag of $12 billion. That money is waiting to go into Zimbabwe — and it will all flow through South Africa.

“Times are tougher but the opportunity to attract talent is very open at the moment,” Sunter said. “I think this is a great place to be right now in tough times. People are more willing to move in hard times.”

Despite this optimistic message, Sunter also sounded a few warning bells. Sunter used the soccer analogy to describe South Africa as having once been in the premier league of countries. He pointed out that, after democratic change in 1994, South Africa was ranked in the mid-30s out of 55 countries in the annul Global Competitiveness Report. But last year, South Africa dropped 12 places, from the position of 38 to number 50 in the ranking. This year South Africa ranked 53 out of 55 countries, with Ukraine and Venezuela below it in the rankings.

“One reason for this is that violent crime has been driving talent out of the country. The second reason is that HIV/Aids is shortening people’s life spans. The third is that our infrastructure is showing signs of inefficiency and we are uncompetitive with certain Eastern players.

“This means we are in the relegation zone and if we get relegated we effectively lose our sponsors,” Sunter said. “We have had significant investors because we have been seen as a significant player on the continent. If we go down, another country will take our place — and that country will be Nigeria.

“Nigeria is full of huge untapped petroleum reserves. It is trying to clear up corruption in the country and it has an ever-growing banking sector.

“We must be careful. At the moment South Africa has the same attitude to Africa that the U.S. has to the rest of the world. We have five percent of Africa’s population, but we generate 21% of the GDP. The rest of Africa is catching up with us. If Nigeria takes our place on the continent, it will be difficult to get it back.

“This will mean that we will lose talent. Although we have had a leakage of talent in the past five years, this will be nothing like what what will happen if we are demoted.

“If Nigeria becomes the leading country on the continent we will also lose the fringe benefits of being the leading nation, such as the seat on the UN Security Council and our status as the voice of Africa. We would also lose our strategic partner of choice, China. Remember, China took a 20% stake in Standard Bank for a reason.”

Using the soccer analogy, Sunter said: “If South Africa gets relegated to the second division, where the bulk of the Third World lies, it will be very galling.

“Such a scenario would mean that the African National Congress’s promise of a better life for all would go out the window, because the country would simply not have the money. We would not be generating the income to give us the financial base with which to do that. If you add public violence to the equation, things look dire and we could move into the scenario of a failed state.

“A failed state,” Sunter continued, means zero investment. “A failed state, such as Somalia, Iraq, Pakistan, Kenya, Myanmar, North Korea or Zimbabwe, means a state towards which other countries have an all hands off attitude. Everybody who can quits that country.”

Since March, Sunter warned, events such as the xenophobic violence and the ramping up of rhetoric among significant players relating to Jacob Zuma have sounded warning bells internationally. “There is nothing that trashes the national brand like violence,” he said.

South Africa needs to start dreaming of returning to its rightful place in the premier league, Sunter said.

Ways of returning to that place include the need for brave leadership, such as that exercised by former Singaporean leader Lee Kwan Yew, who turned Singapore from a basket case into an Asian tiger.

“The U.S. can survive a bad leader because it is a developed country. But a developing country like South Africa cannot survive a bad leader,’’ Sunter said.

“We need a leader who appeals to all South Africans, including those with the talent, who want to feel part of a successful team. We must beware that in our push for egalitarianism, the talent goes out the window.

“That leader must be prepared to hold people accountable.”

South Africa must also adopt a “back to basics” management approach in order to get back into the first league, Sunter continued.

“We must identify problems and fix them. We must take action. We don’t need any more theories,” Sunter said. “We must benchmark other government departments against the South African Revenue Services.”

Another way to get back into the premier league is for South Africa to establish a dual logic economy. “Every economy must have an outward-looking and an inward-looking side to it. The export side is getting more and more competitive.”

South Africa has three areas in which it can perform, Sunter said. “The first is resources, of which we have plenty, including platinum, manganese, chrome and iron ore. We must increasingly add value to these before exporting them.

“The second area is tourism. South Africa is a tourist mecca with huge potential. The 2010 Soccer World Cup is the biggest event in the world. Germany rebranded itself from a stern, sombre country to a friendly one as a result of the Soccer World Cup.

“The third area is the gateway space. South Africa has the largest economy in Africa. It has skills which Africa wants. We can, as a nation, contribute to Africa’s growth. The notion of the shackled continent is out of date. Africa is open for business. Angola has the fastest growing economy in the world. It is the number one exporter of oil to China. In the same way that Hong Kong is the gateway to China, South Africa could be the gateway to Africa.

“Cape Town for instance, could be a gateway to attract world-class businesses that want to come to Africa.”

Turning to the second aspect of a dual logic economy, Sunter said it is crucial to link South Africa’s two economies. “This is crucial to the future of the region. We have not promoted small business. It is terrible that economies, for instance in Khayelitsha, are isolated. Thabo Mbeki is right. There are two worlds, two economies.’’

But, he stressed, what is needed more than ever now is good leadership. “I think the kind of messages coming from the new ANC leadership are more appropriate now. They are talking about making things work, about sunset clauses on affirmative action. They are asking talented people to stick around. That message has not been there before. I feel good about it.”

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