How competitive is South Africa?


Hopefully my international readers are not following the news in South Africa. Over the last few months we have been blasted with negative and mixed messages from the government. It sometimes seems like the government is fighting itself.

But to be honest. Actually, the mood here is not so positive everyday, and for the first time in my professional career I am being asked by industry associations and by local enterprises on practical ways to move parts of their business out of the country. That is one of the main reasons why I have not blogged much in the last weeks. As a positive leader I felt that I did not have anything optimistic to say because I was feeling depressed about the situation.

But the recent long weekend we had gave me some time to reflect.

Firstly, I spend a lot of my time interviewing and visiting businesses to find innovative and competitive enterprises. Take my word, we have some fantastic business people out there. And not all of them are big. Not all of them are famous. Not all of them are white. Many enterprises just get on with it. While some get the basics right, others get the extraordinary right. Unfortunately I also know (like they do) that many enterprises can do better, they can create more wealth and they are all able to absorb more labour. But then the reasons why they don’t is out there in the press. And I understand this reasoning.

Secondly, I agree with an excellent article by Cindy Mauigue about our competitiveness and the reasons for our declining rankings. I would argue that South Africa can make up for the loss in its international rankings of the WEF and the World Competitiveness Reports by being smart (and by setting some priorities that may not be popular). On many of the areas we are in deep trouble, and with the current power of the unions I am not sure that the cluster of indicators around labour market flexibility and competitiveness will be dealt with soon.

But there are also some “low hanging fruit”, indicators that we can address in the next few years. Some of these deal with technical issues like extending and lowering the costs of internet connectivity (can we please have some decision making on this soon?). If you look at how we perform on the criteria of the WEF then you see that we are ranked very high on many of the economic and technological indicators. In fact, we are frequently ranked in the top 10 or 20 on several of the 12 main areas.

So according to the rankings we are falling behind our peers with every year, but as I have just argued, there are some things that our country can do in the next two or three years as well. Unfortunately not many of these issues are described as urgent or important in the planning that our government is busy with (National Planning Commission and the New Growth Plan, to cite just two).

To improve our rankings would require that the senior leaders of our country make up their minds about the image we want to project inwards (to our local investors, entrepreneurs and young people wondering what to do with their lives) and outwards (foreign investors and people with skills thinking of moving here). If we do not clear up the signals then entrepreneurs will keep their cash safe (probably by moving it out of the country), will take fewer risks, and in general our economy will struggle to absorb more people into the labour force. We have to find ways to harness the creativity and the resources of more South Africans to solve the problems and explore the opportunities that we face.

While I agree that we are sitting on a ticking time bomb caused by unemployment in our country, I do not believe that our main intervention point should be “job creation”(this to me is more a result). There are many other things that must also happen, and the government must acknowledge that they have to happen at the same time, or that sometimes we need some things to happen first. I wonder what would happen if we made “quality education from beginning of school to end” the highest priority? Would that not also create sustainable jobs in the long run?

I do believe that we should focus on getting our existing businesses to invest and grow as a first priority, with economic empowerment as a second priority and job creation as a result. The expanding gap in our gini coefficient is not caused by equity disparities, it is caused by differences in education.

I wish I could drive my kids to school without seeing the posters of the newspapers. We are being poisoned by a lack of clear and consistent leadership on many important economic points in this country that will greatly affect us in the short and the long term. And often it is not about leaders not making up their minds, it about lacking a will to take action. It seems like government leaders are afraid to upset their social partners, or to upset anybody out there!

It reminds me of the saying of David Maister that the essence of strategy is deciding when to say “no”! Just what exactly are we saying no to in South Africa.

My wish is that we say “yes” to some of the issues that MUST be addressed to strengthen our economy and unleash the entrepreneurship that we have (regardless of race, age, gender or social status). Let us get our entrepreneurs to be excited about this country and its potential. But let us also all work together on the huge social challenges that remain. And let us acknowledge that some people will make profit from this, but let us focus on getting the systems to work for our country.

In concluding. Our country is more competitive than we think. Please don’t believe everything you read. Come and visit some businesses with me if you need to be convinced. For now I am staying here, and I am investing here very carefully. But I am constantly evaluating my options.

For my business readers: You have to do whatever it takes to grow and expand your business, and to secure your ability to earn returns today AND tomorrow. The risks in South Africa is high, but the returns are higher.

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