PSG’s inaugural Think Big SA 2024 competition, arranged together with Economic Research Southern Africa, sought to get South Africans to propose novel ideas for making the economy grow faster.
More than 100 academic entries were received. Among the top papers is “Faster, Stronger, Together: How knowledge of our past can help us build a prosperous South Africa that works for everyone” by economic historian Prof Johan Fourie of Stellenbosch University.
Fourie asserts that after years of income stagnation, many South Africans believe the economy is a zero-sum game, in which one person’s gain means another’s loss. The country appears to exemplify this principle. After all, many of the rich became rich by exploiting the country’s resources and its poor.
But, says Fourie, economic history offers another lesson. The real reason the average person is 18 times more affluent than two centuries ago is the increase in our productivity.
“Economic historians know that this improvement came not from expropriation but from collaboration, and that economic growth is a positive-sum game that benefits everyone.”
Drawing on historical examples and recent research, Fourie proposes that to achieve faster and more inclusive growth, South Africa needs policies that drive innovation and strengthen state capacity. But we must start, he argues, with scripting “a new narrative of progress”.
“Of course, this new narrative will fall flat if not supported by the policies that give substance to these ideas,” he concedes. “Yet a new story of an innovative and entrepreneurial society can be a catalyst — much as the ‘rainbow nation’ idea [was] in the 1990s — towards a more prosperous country for all.”
The reality is that young South Africans have been born into an era defined by load-shedding, corruption and economic stagnation.
“They know only a country where wealth has been siphoned off by the politically connected, where private enterprise is frequently vilified, and where the promise of growth through science and technology has been overshadowed by the failures of the state,” he writes.
“In impoverished areas, children have few entrepreneurial role models to look up to, and instead often see politics — and, sadly, crime — as the only viable paths to upward social mobility.
“Their perception of the private sector has been shaped by a narrative that blames it for the nation’s social ills rather than recognising its potential as a driver of prosperity.”
Fourie feels that the government of national unity (GNU) presents an opportunity for a new narrative that emphasises the importance of innovation in driving economic growth. To achieve this, he proposes that, among other things, the GNU launch a public storytelling campaign, using artists, sports stars and social media personalities.
The aim would be to raise the status of innovators and entrepreneurs, just as happened in 18th-century England when profit-making began to be seen not as exploitative but as a respectable pursuit.
This cultural shift towards embracing knowledge, learning and scientific inquiry created an environment that fostered innovation and paved the way for the Industrial Revolution, explains Fourie.
“Money was put into education, research & development (R&D) and supportive institutions that encouraged collaboration between scientists, inventors and entrepreneurs,” he writes. “Nowhere before had such a culture of progress existed.”
This is exactly what is needed to propel South Africa forward, he feels. But for this to happen we will also need innovation policies to supercharge our research output, skills development and communications infrastructure.
Specifically, South Africa needs large and concentrated investment in R&D to build export winners, moving beyond reliance on traditional industries. So, for example, he proposes leveraging the country’s expertise in gold and platinum production to advance fields like renewable energy storage, green hydrogen and fuel cell development.
To achieve this would require a big investment in not only physical but also human capital, especially at the upper end of knowledge generation. Fourie suggests we fast-track this process by attracting top international scientists to move here through a special visa programme.
“But targeting knowledge elites is not enough,” writes Fourie. “We also need to build a more inclusive pipeline, so that budding scientists, whether born in Mamelodi or in Mitchells Plain, can also participate.”
To improve education outcomes and access, he proposes introducing competition in the schooling system by experimenting with a voucher programme through which parents get a voucher from the state for school fees and can shop around for the best option.
Of course, young scientists, and the entrepreneurs who commercialise their innovations, also need infrastructure and ecosystems to support their work.
Throughout history, infrastructure has been instrumental in driving development, writes Fourie. Take trains: the Cape Colony’s railway, built to service the mining industry to the north, reduced transport costs and contributed to a 22%-25% increase in labour productivity between 1873 and 1905.
Today’s railway, he says, is broadband. Fourie would launch government-backed digital infrastructure bonds to finance the development of high-speed internet across underserved areas and would invite Starlink, a satellite internet provider, to set up shop here.
The final plank of Fourie’s proposals is to realise the GNU’s vision of building a capable state. Among other things, he would establish a well-resourced civil service commission to oversee the appointment of public officials on the basis of merit, not political connections.
He would also simplify the excessive auditing and compliance requirements that have led to the “auditing paralysis” that has made the public sector sluggish and inefficient.
The winning paper, “Building Sustainable Township Economies: Integrating micro-investment ecosystems and entrepreneurial innovation”, was written by Teboho Nthoana, a PhD student at North-West University.
He argues that the township economy — which occupies a land mass bigger than that of Joburg and Durban combined and is home to about 40% of the country’s urban population — represents “a vital yet underutilised engine for economic growth”.
Townships remain marginalised and underserved but have managed to become vibrant economic centres, driven primarily by the informal sector, he writes. Yet their efforts are stifled by systemic challenges, including lack of capital, inadequate infrastructure and limited market reach.
As a result, most township businesses are unable to grow beyond a storefront or small-scale operation, he says, and most tend to operate informally, with low financial and employment returns.
In his paper, Nthoana argues that South Africa needs to adopt an integrated approach that combines micro-investment initiatives with entrepreneurial innovation and targeted policy interventions.
By the former he means small-scale, tailored investments that meet the specific needs of informal enterprises.
Venture capital funds and microfinance institutions do this, but Nthoana highlights less well-known examples like the Ekasi Bucks initiative, which has introduced a digital currency system that enables township residents to invest directly in local businesses. It has facilitated more than 500 transactions and injected vital capital into areas where traditional financial institutions are often absent.
Another example is informal community-based savings or investment groups, such as Kenya’s chamas. They have successfully pooled resources to fund small businesses, offering access to capital without the stringent requirements of conventional banking.
“The success of these ecosystems depends on their ability to adapt to the unique needs of township environments,” says Nthoana.
Entrepreneurial innovation is the second plank of his proposal, and echoes Fourie’s paper.
While Nthoana argues that business incubators, accelerators and innovation hubs — which provide entrepreneurs with training, mentorship and resources — are all important, it is technology that can be a real game-changer.
“In the context of South Africa’s townships, where traditional business models often falter due to limited resources and infrastructure, innovative approaches are not just beneficial but essential,” Nthoana writes.
He cites the Vuleka platform — a mobile app that connects township retailers with suppliers. By streamlining procurement processes, this innovation has significantly reduced costs and increased the operational efficiency of more than 1,000 small businesses.
“Encouraging the use of technology in township businesses can significantly enhance efficiency, productivity and competitiveness,” he writes. “Whether through digital platforms, mobile apps or e-commerce solutions, technology adoption is a critical driver of growth in these communities.”
But these kinds of measures will not be enough on their own, he argues; they must be integrated with targeted policy interventions that create a more supportive environment for township economies.
This means South Africa must, among other things, expedite the formalisation of informal firms by cutting red tape, invest in infrastructure (especially transportation, energy and digital connectivity), promote financial inclusion (access to microloans, savings accounts and insurance), and address crime and corruption, which are increasingly plaguing township businesses.
“Building sustainable township economies is not just an economic imperative but a social one as well,” he points out. It’s a way to create sustainable, inclusive and resilient communities that can contribute meaningfully to South Africa’s future.
The success of his proposals, he says, will hinge on collaboration (between policymakers, private sector actors and development agencies), innovation and a deep understanding of the local context.
“But the rewards — economic growth, job creation, and improved quality of life — will be well worth the effort.”