‘Black business has a duty to the community’
Along with the closed sessions, the glad-handing and self-interested networking for World Economic Forum insiders, the forum issues a biennial Global Competitiveness Index for Africa and selected comparators.
Analysis of the latest list of 144 countries, on which South Africa sits at 56, shows Africa’s best-performing economy is Mauritius at number 39, and the worst is Guinea at number 144.
South Africa has slipped three places since the 2013/14 index and Mauritius has gained six places, while Guinea just bounces along the bottom.
The index is the result of collaboration between the World Economic Forum, the International Bank for Reconstruction and Development/the World Bank and the African Development Bank, as well as the Organisation for Economic Cooperation and Development.
The World Economic Forum sees 2015 as a “promising” time for the African continent: for 15 years, growth rates have averaged at more than 5%, and rapid population growth promises a large emerging consumer market and labour force potential.
The rapid takeoff of mobile communications points to the continent’s growth potential in other sectors.
But the rah-rah is only about potential, not the reality for most Africans.
“However, Africa continues to be largely agrarian, with an economy that is underpinned by resource-driven growth and a large and expanding informal sector,” the report says.
“Indeed, more than a decade of consistently high growth rates have not yet trickled down to significant parts of the population: nearly one out of two Africans continue to live in extreme poverty, and income inequality in the region remains among the highest in the world.
“What is more, across sectors – from agriculture to manufacturing and services – productivity levels remain low.
“It will be necessary to raise productivity across all sectors of the economy to achieve higher growth and create quality employment, and turn this progress into sustainable and inclusive growth,” the report says.
“Across the region, agriculture’s share of gross domestic product (GDP) is declining and manufacturing is stagnating, while the service sector, in contrast, is increasing as a share of total employment and GDP, providing critical inputs to boost other economic activities.”
This evolution in Africa’s economic structure is happening in parallel with Africa’s unique and evolving demographic dynamics: 450 million workers were projected to join the workforce between 2010 and 2035.
High unemployment rates among youth with secondary and tertiary education even in countries that do well on educational attainment, such as Mauritius and Tunisia, indicate a mismatch between the education system and the needs of employers.
Surveys among employers confirm these trends: 54% of African employers state that jobseekers’ skills do not match their needs, and 41% of employers believe that unemployed people lack skills in general. At a time when international investment flows were stalling elsewhere, foreign direct investment into the region reached $57 billion (R715 billion at the current exchange rate) in 2013.
Mauritius and South Africa, the continent’s top performers, come in above the southeast Asian average – an improvement since the last report, when they ranked below that comparator region. They also rank above the emerging market economies of Brazil and India.
They are followed by a second cluster of countries – Rwanda (62), Morocco (72), Botswana (74) and Algeria (79) – which, on average, are more competitive than Latin America.
Billionaire businessman Patrice Motsepe admires Afrikaans entrepreneurs for “intertwining” their success with that of their communities. He says entrepreneurship in South Africa is disappointing and government nepotism is laughable.
He feels strongly about redressing black inequality, but has no plans to become a politician himself.
On Thursday, the soft-spoken Motsepe addressed journalists at the World Economic Forum on Africa, hosted at the Cape Town International Convention Centre.
“We have no future in South Africa if we don’t create opportunities for poor people. And regarding [government] corruption and jobs for pals, you cannot build an economy on that,” he said.
When asked whether he would enter the political arena himself, the 53-year-old mining tycoon laughed and said he wouldn’t.
“I can make a bigger change, make a larger positive contribution, by saying politically incorrect things from where I am sitting right now,” he said.
Motsepe, founder and executive chairperson of African Rainbow Minerals, and the owner of Mamelodi Sundowns football club, again spoke of his commitment to The Giving Pledge, an international charity through which billionaires donate vast chunks of wealth to philanthropy. It was founded in 2012 by Bill Gates and Warren Buffett.
“Most successful families have a duty to their community and to those less fortunate. Take the Afrikaans business community. The great success of families was intertwined with the success of their communities,” he said.
He said his parents, who owned a thriving grocery store and beer hall outside Pretoria, did the same when he was younger.
“They paid school fees for people in the village. This reflected their recognition that they had no future if no one in their village succeeded,” he said.
He said entrepreneurship in South Africa was a disappointment.
“There needs to be more focus on entrepreneurship. When I was growing up, my father and grandfather were entrepreneurs. From them I learnt that the colour of skin is irrelevant to being competitive.”
Asked about BEE policy inhibiting economic regularity and certainty in South Africa, he said while the latter were crucial, so was BEE. In principle, it helped to redress black inequality. “If you look at what happened in many African countries, when colonialism came to an end, there was a new black elite in power.
“They were the exclusive beneficiaries of economic growth and development. But the majority of the black population went backwards, or did not benefit. This is a recipe for long-term political and social instability.
“So the thinking behind BEE is sound, that we create meaningful black participation in the economy.
“We need to create a middle class of black and white people.”
When asked about the Fifa scandal, he said: “I have learnt not to express an opinion until I know the facts.
“South Africa has to adhere to global best conduct. But I will use the starting point of innocent until proven guilty.”
Motsepe’s fortune is estimated to be worth R36 billion.