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Business is war: A 10-point economic battle plan for South Africa

Prof Tshilidzi Marwala is the Vice-Chancellor and Principal of the University of Johannesburg, a member of the Namibia 4IR task Force and the author of ‘Leadership Lessons From the Books I Have Read’. He is on Twitter at @txm1971. He recently penned an opinion piece published by Daily Maverick on 31 August 2021.

In one of my favourite Spaghetti Western movies, The Good, the Bad and the Ugly, a mercenary known as Angel Eyes says, “When I’m paid, I always follow my job through.”

This line remains relevant today, as we watched the US withdrawal from Afghanistan. Like much of the rest of the world, I watched in absolute shock as the Taliban took control of Afghanistan in a matter of days, ousting the sitting president and his government. As America was completing its withdrawal of troops, insurgents continued to expand across the country, capturing all major cities. The footage on Al Jazeera of armed men storming through the presidential palace seemed surreal.

It was a stark and rather grim reminder of just how precarious and delicate the concept of leadership is. It appears as if the US did not achieve what it set out to gain and lost an estimated $2-trillion in the war in Afghanistan, and this will burden Americans for generations to come. This does not even consider the 2,500+ US and tens of thousands of Afghan lives lost.

Since the Taliban’s swift takeover, various thought pieces have since emerged, dissecting how this unfolded. How did this happen so quickly? Where was the leadership that the US has honed and trained for the last few decades? Where were the 300,000 personnel and multibillion-dollar equipment that is far more advanced than the Taliban arsenal? What chance does the state stand now?

As has since emerged, Afghan forces were plagued by corruption, poor leadership, lack of training and plummeting morale for years. The withdrawal of US troops had been swift and had significantly lowered morale, and reports of a potential collapse in government seemed to have gone unnoticed. The case of Afghanistan has emerged as a powerful leadership lesson that we can all learn from.

Here in South Africa, we face our own leadership crisis exacerbated by the Covid-19 pandemic and the ensuing national lockdowns. The African National Congress could not submit the complete list of all candidates for the local government elections billed for next year. The unemployment rate now stands at a historical high of 34%. Among the youth, it stands at almost 65%. The unemployment rate surged to the highest on a global list of 82 countries monitored by Bloomberg.

It seems baffling that these numbers come as a shock to South Africans. The reality is that we are still in the midst of a lockdown, our tourism industry is at a standstill and recently we saw unrest and riots that further battered our already ailing economy.

The principle of causality, verbalised by Sir Isaac Newton, which states that there is a reaction for every action also applies to the economy. Every harmful activity in our economy, whether the Covid-19 pandemic or the riots or corruption or weak leadership or our administratively weak bureaucracy, has resulted in a marked reduction in our economic activities.

The leadership that we harness must understand all these causal loops and know which instruments to effect to increase our economic performance.

Given the issues raised above, what is to be done? Perhaps the greatest problem in South Africa are the accusations of parochialism, which can be levelled at our leadership, particularly in the public sector. For example, no single member of the South African Parliament and, by extension, the Cabinet, is registered as a professional engineer according to the Engineering Professional Act of 2000.

Even more worrying, there are no registered professional engineers in most of our 280 municipalities in South Africa. No wonder our municipalities are struggling to deal with issues of electricity, water and sanitation. At best, these municipalities outsource these functions without adequate capabilities to monitor performance. It begs the question, how do we begin to advance reindustrialisation in these critical structures? There are various factors we must consider.

Firstly, we need to reignite our economy by professionalising the civil service. Skills audits that match performance expectations to qualifications and experience should urgently be done.

Secondly, we ought to open the economy. As the vaccine roll-out gains momentum, we have to consider going back to work. Instead of nursing irrational vaccine arguments, employers must be at the fore of combating anti-vaccine sentiment and vaccine hesitancy by urging all employees to get vaccinated as soon as possible for us to reach herd immunity. While exceptions for medical and religious reasons should be accommodated, conspiratorial explanations must not be allowed to derail our economy.

Thirdly, we have to invest in our economy, even though our resource envelope is severely limited. The wastages are unprecedented if one looks at the state of audits in all spheres of government, especially local municipalities.

Famed economist John Maynard Keynes proposed a theory that promoted increased government expenditures and lower taxes to stimulate demand and extract the economy from depression. Increasing government expenditure has its limitations, given the precarious state of the public purse. The scope to lower taxes is limited as it will result in a severe budget deficit that can tip our economy into the Zimbabwean trajectory.

South Africa finds itself at a difficult crossroads. On the one path, we can continue as is without drastic shock therapy into our economy. This trajectory will result in South Africa’s slow death. The second path is to spend our way out of this depression, noting that the risks here are vast given our demonstrated inability to manage even the basic programmes.

Fourthly, we need to re-establish our competitiveness. South Africa has deindustrialised in the last few decades because we are no longer competitive. Our small textile industry is still stuck in the Second Industrial Revolution and, to some extent, still using antiquated tools such as the old Singer sewing machines. Many modern production methods such as Six Sigma, a data-driven approach to manufacturing that eliminates defects, and just-in-time techniques, an inventory strategy that responds directly to demand, are markedly absent in both our public and private sectors. We must create a culture of productivity, beginning with our leaders singing it as gospel.

Fifthly, we should embrace technologies across communities irrespective of geospatial locations, class differences and level of development. The focus cannot be solely on skills development but must extend to fundamental economic reconstruction. Alongside restructuring our education system, improving connectivity, opening up barriers through effective regulation and developing the right skills base, the National Planning Commission estimates that South Africa must grow by 10% annually to absorb the over 700,000 new entrants into the job market. This is a daunting task for all leaders across all spheres. If we stand a chance as a nation, we need decisive leadership from every tier of government.

Sixthly, we need to foster a national work ethic. Our people must be passionate about their work. Early and long lunches should be a thing of the past. The 4.30pm stampede culture to the lifts, especially in our public and education sectors, must be replaced by a culture that puts in extra hours. We cannot catch up with the rest of the world, which is working harder than before, unless we also start working harder.

Seventhly, we have to iron out our import/export regulations. South Africa has become a consumer economy with the bulk of our imports for consumption rather than production. We mustn’t necessarily close our economy, but policies must be adopted that incentivise production imports and disincentivise consumption imports. These policies may vary from nudging people to spend less on consumption to extreme tariffs on unproductive consumer goods.

Eighthly, we must tackle governance. One of the primary reasons why the economic fortunes of Africa have dwindled over the past 50 years is corruption, which has led to the illicit flow of money out of the continent. Former South Africa president Thabo Mbeki was tasked with dealing with this problem by the African Union (AU), but the problem persists. We need to create strong institutions that will reduce corruption in both the public and the private sectors.

Ninthly, we have to re-evaluate our social grants system. We are now spending R202-billion on social grants compared with R50-billion on higher education, which is simply untenable. We need an honest conversation as a nation about whether we are building a distributive and welfare state or a productive state. I would argue that we have to take the necessary and decisive steps to create a productive economy.

Finally, our leaders must be adaptive and understand the Japanese economic proverb, “business is war” and those who lose that war will be condemned to poverty. Accordingly, our leaders must be ethical, driven by knowledge, work hard, and come from diverse backgrounds in terms of skills, disciplines and demographics.

The choices we face are complex, and the path ahead is not easy, but we can lift ourselves from this economic depression with determination. In our lived history, there has arguably been no greater promise or peril, to borrow the words of the Executive Chairman of the World Economic Forum, Klaus Schwab. What matters now are the decisions we take.

The views expressed in this article are that of the author/s and do not necessarily reflect that of the University of Johannesburg.

prof tshilidzi marwala

Professor Tshilidzi Marwala

“Every element harmful to our economy, be it the Covid-19 pandemic, the July riots, corruption, weak leadership or our administratively weak bureaucracy, has depleted our economic potential and activities. South African leadership must understand all these causal loops and know which instruments to effect to increase our economic performance.”

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