Working smarter key to SA success
Efficient output vital for growth and jobs, says productivity tsar
● Productivity SA boss Mothunye Mothiba says it’s time the country got serious about productivity.
Lack of productivity is one of its greatest challenges and a major cause of joblessness, he says.
“SA needs to embrace a productivity mindset. We should talk about productivity as the catalyst for competitiveness and growth.”
His remarks come hot on the heels of the presidential jobs summit.
Productivity SA is a creature of the 1998 presidential jobs summit. Its creation was a recognition 20 years ago that SA’s lack of productivity was making it uncompetitive and destroying job opportunities, and that something urgent needed to be done.
Productivity SA was the answer, but Mothiba says a lack of government support has prevented it from making the necessary impact.
Its mandate is to help struggling businesses in the small and medium-size enterprise sector become more productive and competitive by sending in specialists to help them manage costs and streamline production lines and operating procedures.
Since 1998, it has assisted about 5,000 companies and “preserved” 140,000 jobs, says Mothiba. In the 2017/2018 financial year, Productivity SA implemented turnaround strategies that stabilised about 71 companies and saved more than 8,500 jobs.
But he concedes that all of this is “a drop in the ocean” given the thousands of jobs lost every year.
It’s as much as it can do with its present budget, he says. It gets R80m a year from the department of trade & industry and the Unemployment Insurance Fund (UIF), but needs more.
In his recent annual report, he blamed its “poor performance” on “funding challenges”. It doesn’t even have enough money to pay its suppliers, the engineers and other specialists it uses to turn around distressed businesses.
Suppliers went unpaid for more than seven months recently “because the UIF didn’t transfer funds to us on time and in full”, he says. “Our policy is to pay suppliers within 30 days of receiving the invoice.”
Productivity SA, an agency of the department of labour, focuses on businesses in the manufacturing sector, many of them located in the Dube TradePort special economic zone in KwaZulu-Natal, where products are manufactured for the export market.
But even with tax concessions, companies are struggling to compete with their Asian counterparts, says Mothiba.
Along with small and medium businesses in townships and rural areas, they are unable to manage their costs, mainly wages.
“Production costs are too high, so their prices are too high and they’re not competitive,” he says.
They take too long to get their products to market, processes are duplicated and they’re not able to deliver on time.
The relationship between management and workers is often poor, and the number of strikes around the country reflects this.
They often don’t agree on goals, leading to a lack of commitment to achieving them.
“Management and workers are not committed to ensuring that they have a clear understanding of the goals and that they’re all involved.”
He says the high failure rate of businesses is less about market conditions than their lack of productivity and competitiveness.
“From where I’m sitting, enhancing productivity will go a long way.”
Mothiba, 61, who became CEO three years ago after working as a senior manager in the department of labour and COO for the gambling board in the North West, says there is a lot the government can do to make it easier to do business.
It needs to “relook” at labour legislation, the time it takes to register a company and the taxation system for small and medium businesses.
In spite of amendments to the Labour Relations Act, there is still too much red tape.
“You can imagine if someone wants to invest in SA and is having to move from the department of labour for labour matters to another department for registration of the company, and so on.
“We need a one-stop service where the investor can do everything under one roof. It is possible, and these are things government is now looking at.”
But there needs to be a greater sense of urgency in addressing the issues hobbling businesses in the SME sector.
He cites a World Bank report that in economies that are doing well, 95% of businesses are SMEs.
“In those economies SMEs employ more than 70% of the workforce. Our SMEs employ less than 35%.”
Hugely detrimental to small and medium businesses has been the collapse of local government, he adds. For this reason, Productivity SA has begun targeting municipalities as well as the SME sector.
“This is where the bottlenecks are, but it’s where economic activity should be taking place.”
He says municipalities in the Western Cape are a long way ahead of the rest. “We’re struggling in other provinces, because we have not embraced the productivity mindset.”
He says he’s having difficulty promoting the notion of productivity in other provinces, but “with the example of the Western Cape we believe we will sell this idea much better”.
It takes leadership, he says. “A productivity intervention programme will not succeed if there is no leadership.” Is there any leadership?
“We have not picked it up in the other provinces but in the Western Cape I think we’ve got the right leadership.”
He says he would like to see decisive intervention by the South African Local Government Association to improve leadership in municipalities.
“I think they are trying, but we are not yet seeing the results.”
President Cyril Ramaphosa’s stimulus plan is aimed at small and medium enterprises, particularly in townships and rural areas.
“He has told us we need to focus on assisting enterprises in the townships and rural communities.
“These are the spaces where the most dysfunctional municipalities are, and now I think there is beginning to be a sense of urgency because citizens are up in arms because of the [lack of] service delivery.
“I think this is reason enough for anyone who is a leader to have a sense of urgency now.”
Production costs are too high, so their prices are too high and they’re not competitive
Mothunye Mothiba
CEO of Productivity SA