Multinationals do not share our interests
At the heart of economic growth must be a new strategy to deal with the contribution of foreign direct investment in the variety of measures that need urgent and detailed revision.
If the strategy by which multinationals engage in the dynamics of our economy was effective, one assumes that we would not be faced with the kind of stagnant growth patterns that we have experienced in the past decade.
Multinationals are an integral part of any economy in the era of heightened globalisation — they therefore can’t be avoided but can be better regulated for maximum benefit for our country.
Our posture after 1994 had an understandable desperation for international acceptance and this may explain the blank cheque I believe was given to multinational companies to operate in SA. Worse, our own parastatals gave in to what amounts to preferential treatment of multinationals as opposed to an attitude of growing our own timber.
The recent story involving German company T-Systems and a local company, Gijima, in a conflict over tender irregularities at Transnet is a case in point, but hardly the only example of a parastatal unashamedly favouring a global company that has hogged the market for decades.
Transnet finds itself in a dilemma that was self-created by enabling foreign companies to dictate the terms of engagement to secure government business.
While I have no brief whatsoever for Gijima, one has to wonder whether this scenario — still to be finally pronounced on by a court of law — is not what happens constantly in the name of foreign direct investment. Even in economies a fraction of the size of SA, foreign companies are expected to comply with what is called indigenisation.
In SA, black economic empowerment (BEE) is seen as an apologetic project where foreign business are given a different set of rules instead of being expected to comply.
In the Information and Communication Technology Charter negotiations, “equity equivalents” had to be put in place instead of genuine black ownership of companies. This was even before BEE was broad-based and ownership was the first port of call for any semblance of empowerment.
I can’t imagine that this situation has changed much, so companies that did not see their way to share ownership with locals in exchange for business in SA can now implement transformation in areas such as procurement and employment equity instead.
As if this unacceptable situation is not enough, enter state capture and it is clear that some of these companies are part of the rot. We have seen how SAP, KPMG and McKinsey have been implicated in this regard, and their BEE credentials will be found wanting. So not only do these firms get away with destroying the framework for engaging in foreign direct investment, they have the nerve to be involved in what amounts to economic sabotage of SA, destroying any hope of achieving radical economic transformation.
Sadly, parastatals that are supposed to champion empowerment have paid scant attention to striking a balance between using black-owned South African-based businesses and using multinationals that are not interested in transformation. Often there is no justification for such bias other than the kind of corruption that we have come face to face with.
The Gijima saga at Transnet brings to the fore how state capture has now also targeted genuine black businesses for destruction. Is this a warning we are prepared to heed as we seek a new path for economic growth?