“We ap­pear con­tin­u­ously to score own goals”

An­drew Dit­tberner Chief in­vest­ment of­fi­cer at Can­non As­set Man­agers

Finweek English Edition - - COVER STORY POLITICAL ECONOMY -

1 What are the top three pol­icy is­sues that are de­press­ing SA’s growth rate?

Labour unions are dic­tat­ing gov­ern­ment’s labour pol­icy, which is in­creas­ingly busi­ness un­friendly. The net re­sult is a loss of jobs and re­duced prof­itabil­ity, hav­ing ma­te­rial down­stream ef­fects. This leads di­rectly to the sec­ond pol­icy that holds South Africa back, and that is BEE pol­icy. Af­ter 20 years of democ­racy, SA should be fur­ther down the trans­for­ma­tion road. How­ever, proper thought has not been ap­plied in terms of how trans­for­ma­tion should be un­der­taken and this has ma­te­ri­ally im­pacted on the coun­try’s abil­ity to grow. Fi­nally, whether it is a pol­icy is­sue or not, the lack of com­pe­ti­tion that Eskom faces al­lows it to hold SA hostage to its in­abil­ity to pro­vide the nec­es­sary power.

2 What are the pos­i­tives? Can we strengthen and im­prove on th­ese?

One of the coun­try’s key pos­i­tives is our geo­graphic lo­ca­tion. SA be­longs to one of the fastest-grow­ing re­gions in the world, yet we ap­pear con­tin­u­ously to score own goals. Re­mov­ing un­nec­es­sary poli­cies such as the re­cent visa re­stric­tions, which pre­vent South Africa from do­ing busi­ness in the re­gion, can only be ben­e­fi­cial.

SA is the home, or birth­place, of some of the world’s largest and most recog­nised busi­nesses. SABMiller (re­cently the tar­get of a takeover bid), Naspers*, An­glo Amer­i­can and BHP Bil­li­ton, to name a few, give one insight into the in­tel­lec­tual ca­pac­ity of the coun­try, along with the sound cor­po­rate gov­er­nance prin­ci­ples that we fol­low and the op­por­tu­ni­ties and po­ten­tial that ex­ist.

The bur­geon­ing mid­dle class is an­other pos­i­tive. It is this grow­ing mid­dle class that is go­ing to carry our demo­cratic so­ci­ety for­ward. Over the past 20 years at least 3m South Africans have joined this mid­dle class. This num­ber con­tin­ues to grow to­day.

3 What can we do in the short term to boost growth?

A num­ber of short-term so­lu­tions are read­ily avail­able. First, the roll-out of the much-talked­about in­fras­truc­ture spend. Many in­fras­truc­ture projects can start rea­son­ably quickly, while be­ing funded out of cur­rent bud­gets, and have ma­te­rial spill-over ef­fects. While the in­fras­truc­ture spend will cre­ate jobs im­me­di­ately, once com­pleted the in­fras­truc­ture re­mains, im­prov­ing South Africa’s global com­pet­i­tive­ness.

An­other quick fix would in­volve sell­ing off un­der­per­form­ing state-owned en­ter­prises such as SAA and Eskom. This would free up much­needed cap­i­tal that could be di­rected else­where. Fi­nally, im­prov­ing the re­la­tion­ship and co­op­er­a­tion be­tween the pri­vate and pub­lic sec­tor will ma­te­ri­ally im­prove busi­ness and in­vestor con­fi­dence.

4 SA has slid a fur­ther four places to 73 out of 189 coun­tries in the World Bank’s lat­est Do­ing

Busi­ness re­port. Do you agree that SA is slip­ping, and if so, how would you fix it?

I can­not ar­gue with the World Bank’s find­ings. The ease of do­ing busi­ness can, and should, be im­proved quickly and dra­mat­i­cally. Leg­is­la­tion and bu­reau­cracy make do­ing busi­ness in SA in­cred­i­bly tire­some. Re­mov­ing this red tape and putting leg­is­la­tion in place that sup­ports small busi­nesses would go a long way to im­prov­ing em­ploy­ment. Small busi­nesses cre­ate jobs. Mau­ri­tius is a great ex­am­ple of what can be done to im­prove the ease of do­ing busi­ness and, as a re­sult, it is un­sur­pris­ing that many now view Mau­ri­tius as the gate­way to Africa. SA needs to catch up.

5 What would your strat­egy be to ad­dress the need for trans­for­ma­tion and em­pow­er­ment, while en­sur­ing an at­trac­tive busi­ness en­vi­ron­ment for in­vestors?

His­tor­i­cally, black em­pow­er­ment trans­ac­tions have been un­der­taken in an up­side-down man­ner. In­stead of dis­tribut­ing a por­tion of one’s busi­ness to a se­lect few in­di­vid­u­als and ap­point­ing black board mem­bers at the ex­ec­u­tive level, if we had started at the other end of the spec­trum 20 years ago, we would find our­selves in a ma­te­ri­ally dif­fer­ent sit­u­a­tion to­day. While I am 100% be­hind trans­for­ma­tion, it should be un­der­taken in a more co­her­ent man­ner. Em­pow­er­ment should be about re­dis­tribut­ing wealth to the masses, as op­posed to a se­lect few. To do this, the money used on BEE trans­ac­tions could be bet­ter spent at the grass­roots level. It is about im­prov­ing our soft in­fras­truc­ture, which in­cludes ed­u­ca­tion and health. This will ul­ti­mately re­sult in trans­for­ma­tion, as the nat­u­ral pro­gres­sion takes place at an ad­vanced pace.

*fin­week is a pub­li­ca­tion of Me­dia24, which is a sub­sidiary of Naspers.

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