How does SA get back on the high road?

Finweek English Edition - - INSIDE - BY PA­TRICK CAIRNS


or many South Africans, the fu­ture is a per­plex­ing place. The coun­try ap­pears to have lost its way in many re­spects and there are high lev­els of un­cer­tainty about where the cur­rent pol­icy di­rec­tion will take us.

This is not a new feel­ing. The coun­try has faced this a num­ber of times be­fore. The be­wil­der­ment that we are feel­ing now is not all that far re­moved from how the coun­try felt when it be­came a Union in 1910, or when the Na­tional Party came to power in 1948, or most re­cently dur­ing the po­lit­i­cal up­heaval of the early 1990s.

One way of mak­ing sense of where we are headed is through the use of sce­nar­ios. Th­ese plot dif­fer­ent paths that the coun­try may take de­pend­ing on whether key cri­te­ria are met.

Spea k i ng a t t he I nv es t ment Man­agers Con­fer­ence in Cape Town, the chief economist at the Old Mu­tual In­vest­ment Group Rian le Roux called th­ese sce­nar­ios “road maps to the fu­ture”. They show us what to look out for so that we know which path we are on. South Africa’s first ma­jor sce­nar­ios were the Mont Fleur Sce­nar­ios that were de­vel­oped in 1991 and 1992. The ques­tion they tried to an­swer was what SA might look like a decade and a half later.

They took into ac­count two crit­i­cal fac­tors: whether t he t ran­si­tion to democ­racy would be fast or slow, and whether t he poli­cies i mple­mented there­after would be sus­tain­able or pop­ulist. The ‘high road’ for the coun­try would be a sit­u­a­tion where the tran­si­tion was quick and the poli­cies sus­tain­able, and largely that is what took place.

“I al­ways re­mind peo­ple that when the ANC gov­ern­ment came into power in 1994 it in­her­ited a mess,” Le Roux says. “And the first new gov­ern­ment term they ac­tu­ally spent a lot of time fix­ing things.

“I can’t say that the Mont Fleur sce­nar­ios di­rectly re­sulted in t hat oc­cur­ring, but I would guess that be­cause the likes of Trevor Manuel and Tito Mboweni were part of it, they might well have played a role in the think­ing at the time. And, es­sen­tially, if you look at those sce­nar­ios we did quite well.”

How­ever, what ha s hap­pened since then has been less en­cour­ag­ing. As a coun­try we have failed to cap­i­talise on many of the gains we made.


This was part of the rea­son that a sec­ond set of sce­nar­ios was spon­sored by Old Mu­tual i n 2008. Th­ese were t he Di­no­keng Sce­nar­ios that tried to cap­ture the chal­lenges that SA was fac­ing and how they needed to be met.

“Es­sen­tially what Di­no­keng ar g u e d wa s that so­ci­ety was be­com­ing in­creas­ingly dis­en­gaged,” Le Roux says. “They saw that it would be very dif­fi­cult to make progress if a rift de­vel­oped be­tween gov­ern­ment and the pop­u­la­tion at large.”

The Di­no­keng Sce­nar­ios worked on two key fac­tors – the level of so­cial en­gage­ment and the ef­fec­tive­ness of the state. The high-road sce­nario was ti­tled “walk to­gether”, and de­pended on a co­he­sive ap­proach from all lev­els of so­ci­ety and a gov­ern­ment that acted as an en­abler to eco­nomic growth.

“It’s dif­fi­cult to ar­gue that we are on that high road,” Le Roux says. “We are sim­ply too po­larised.”

But t hat doesn’t mean t hat we should despair. Le Roux ar­gues that it’s im­por­tant to re­visit the sce­nar­ios and as­sess what it will take to cre­ate work­able so­lu­tions to the coun­try’s chal­lenges.


For a start, Le Roux says that it is ob­vi­ous that there is pres­sure on gov­ern­ment to re­form, and this is com­ing from a num­ber of dif­fer­ent places.

“It’s clear that pres­sure from the rat­ings agen­cies caused the f inance min­is­ter Nh­lanhla Nene to stand up last month and say we can no longer af­ford slip­page in the fis­cal sit­u­a­tion,” he says. “Once you are down­graded it costs you even more to bor­row and if in­ter­est pay­ments con­tinue to go up, that crowds out other things like in­fra­struc­ture spend and the so­cial wage.”

The num­ber of ser vice de­liver y protests and grow­ing dis­sat­is­fac­tion with lo­cal au­thor­i­ties is another warn­ing sign for the gov­ern­ment. So is the de­pre­ci­a­tion in the value of the rand.

How­ever, chang­ing paths is not only up to the state. Le Roux be­lieves that the pri­vate sec­tor can­not claim in­no­cence when it comes to the prob­lems the coun­try faces.

“We can­not sit in the pri­vate sec­tor and point fin­gers at gov­ern­ment if we don’t take re­spon­si­bil­ity,” he says. “We have to ac­knowl­edge that we are partly re­spon­si­ble for the lack of trust that has de­vel­oped.”

He points to the num­ber of com­pa­nies that have been fined for col­lu­sion and other prac­tices as an in­di­ca­tion of the fail­ures in the business sec­tor. The South African Rev­enue Ser­vice also es­ti­mates that ta x eva­sion by high-net-worth in­di­vid­u­als is rife and that around 9 500 South Africans owe an es­ti­mated R50bn in un­paid taxes.

Th­ese are is­sues that need to be ad­dressed just as much as gov­ern­ment needs to be held more ac­count­able. Very lit­tle can be achieved in iso­la­tion, how­ever. It needs a co­he­sive ap­proach and an un­der­stand­ing that it will take time.

“It ’s not go­ing to be a si t ua­tion where you s ay to­day ev­ery­thing is bad and t omorrow e ver y t hing is good,” Le Roux says. “It’s a grad­ual process and you have to be on a look­out for a num­ber of sign­posts.”

For him, the most crit­i­cal of th­ese is the re­la­tion­ship be­tween gov­ern­ment, business and labour. He be­lieves that there has to be a com­pact that in­volves com­pro­mises from all sides.

Gov­ern­ment needs to com­mit to pol­icy cer­tainty and in­stil a sense of pro­fes­sion­al­ism and ser­vice de­liv­ery in the civil ser­vice. Labour has to ac­cept less oner­ous labour laws and business has to agree to greater so­cial in­volve­ment, in­clud­ing in ed­u­ca­tion and train­ing.

None of this is rad­i­cal think­ing. In fact, it al­ready ex­ists in the Na­tional De­vel­op­ment Plan (NDP).

“If you look at the NDP, it es­sen­tially makes the same noises,” Le Roux says. “We need to gather every­body around a shared vi­sion.”

So the path is al­ready laid out and we know where it takes us. What is re­quired is im­ple­men­ta­tion and the ac­cep­tance from all stake­hold­ers to ac­cept that the greater good can­not be served if we only follow nar­row self-in­ter­est.


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