Economic recovery hinges on public-private partnership
Recent economic indicators suggest that the economy is in dire straits; but I would argue that SA is already on the path to recovery. It is not surprising that after a decade of maladministration we are still feeling the effects of disinvestment, debt and slow growth.
In the short time that President Cyril Ramaphosa has been in power, he has made significant progress in rooting out corruption and improving efficiency in government. As a result, there has been an improvement in investor sentiment and consumer confidence is slowly ticking up.
The recent depreciation of the rand and shocking growth figures are a significant setback, but they also show how important it is for government and business to grasp the nettle and make the choices that will determine the scale and pace of recovery.
Part of this recovery will require the government to follow the Telkom example and draw private investment into state-owned entities (SOEs).
There is already discussion under way around the potential for the involvement of private equity in the restructuring of Eskom, but this should also seriously be considered for other poorly performing SOEs such as Transnet and SA Airways.
The right kind of public-private partnership will provide a much-needed capital injection into these businesses as well as create momentum to ensure that they become commercially viable engines of growth and development.
Another key aspect of the recovery will be to keep the dialogue between government and business going. This will be crucial to rebuilding trust between corporate South Africa and the new Ramaphosa regime, but it is also necessary if the government is serious about achieving its goals around transformation.
Without the support of business, government alone will not be able to access the largesse required to rebuild our economy. This is particularly important with campaigning under way ahead of the 2019 elections.
An example of this has been the visible leadership and sponsorship of the YES! programme by Ramaphosa. The YES! programme emerged out of engagement between business and government as part of the CEO Initiative and has made it possible to leverage the needs of both parties to skill young people and create jobs.
Similarly, ongoing discussions around the proposed amendments to the BEE codes show what can be done when we listen to each other and share a common purpose. Perhaps most importantly, if the economy is to reach full potential, both government and business need a rapid shift in mindset.
It is true that many challenges we face are unique to our inherited state, but they also present unique opportunities. For example, Telkom CEO Sipho Maseko wrote an open letter to Ramaphosa and other political leaders about the urgent need for SA to embrace the digital economy and to start a national conversation about the fourth industrial revolution.
As a start, we have an urgent need to resolve the spectrum issues and realise the digital dividend to unlock growth, reduce data costs and expand services. The fourth industrial revolution is a real threat to the economy and overcoming it will require a fundamental shift in how we view investment. Over the past decade, a lack of policy certainty in mining, agriculture and industry has resulted in stagnation in these sectors.
In future these sectors will remain important, but the success of our economy lies in improving our productive capabilities across the whole economy.