Business must roll up its sleeves and invest in human capital
There has never been a more pertinent time than now for corporate SA to engage with the shared value business strategy.
On August 22, Statistician-General Pali Lehohla released the latest poverty report, which states that more than half of the population, 30.4-million people, live in poverty. One in three live on less than R797 a month.
Moreover, the report shows that women and children are worst affected, with the age group zero to 17 the biggest victims of poverty. What these numbers show us is that solving SA’s societal ills requires business to be more proactive.
The report further indicates the poverty rates are largely due to entrenched systemic issues of a slow economic growth trajectory, high unemployment rates and poor basic education for children from underresourced households.
We face issues that are multifaceted and require a multidimensional approach by a wide array of stakeholders to solve them.
Shared value, as premised by Harvard Business School professor Michael Porter and FSG partner Mark R Kramer, posits that businesses should reimagine how they have always done business. Simply maximising profits without societal and environmental considerations is no longer feasible. The concept demands that societal and environmental challenges be seen as opportunities that will yield profits and have a positive effect on society.
Education and poverty should thus be the starting point of corporate SA’s shared value strategy.
With more people living under the poverty line, consumer buying power at a low and vast numbers of young people either unemployed or unemployable, the situation is unsustainable.
A case can be made that business has a societal imperative to invest in the human capital of the country through education as a starting point.
The Statistics SA report states that 79.2% of people without formal education were poor in 2015, while only 8.4% of those with postmatric qualification fell in the same classification. There is a direct correlation between the age group worst affected by poverty and their education level.
In 2014, the Department of Basic Education reported more than 1-million grade 10 pupils in the education system, whereas in 2016 only 610,000 pupils were registered for matric. This exceptionally high drop-out rate, compounded by the statistic of one in every three young people between the ages of 15 and 25 not being in any form of employment, educational institution or training programme, creates a worrisome picture.
The facts are clear: the more educated you are, the less likely you are to be poor.
In addition to education, poverty is a fundamental element in changing the public narrative.
Linda Godfrey of the Council for Scientific and Industrial Research tells us that we waste more than 9-million tonnes of food a year. That is equal to about R61.5bn, roughly 2.1% of the country’s GDP.
This kind of waste is criminal in a country where more than 13.8-million people live in extreme poverty with an average of less than R441 to sustain each person per month.
Furthermore, the broader effect of such waste includes health ramifications for people who live near landfills, who more often than not live in poverty. Opportunities of creating shared value are tremendous here. Employment opportunities could arise throughout the food value chain if there is a concerted effort to deal with food waste in a manner that also curbs hunger and extreme poverty.
This young democracy faces endemic challenges; wealth and poverty are still largely reflected along racial lines and our democracy remains fragile due in part to these immense disparities, but the potential for positive change lies in our collective ability to collaborate.
Thus, it is an economic and societal imperative that business stops being idle or selective in tackling the challenges facing the country, but actively participates with civil society, policy makers and the broader populace.
As at February 2016, there was about R719bn of liquid capital on the balance sheets of private sector companies, which should under normal circumstances be invested in the economy.
SA will progress only if all stakeholders come to the fore and contribute, and the shared value strategy gives us an opportunity to build that society.
BUSINESS HAS AN IMPERATIVE TO INVEST IN THE HUMAN CAPITAL OF THE COUNTRY THROUGH EDUCATION AS A STARTING POINT