Deputy finance minister and enthusiastic runner David Masondo told a story last week about how he came to a dead halt in the middle of the 42.2km Sanlam Cape Town Marathon in May.
“As I was running the marathon, I heard cheers on the street, and [someone] said: ‘You guys are running better than the government.’ So I had to stop, and that’s why I couldn’t finish the marathon in less than four hours,” he said.
As it was, Masondo finished in four hours and five minutes, in the top third of the 18,526 participants. But the person who made that remark couldn’t have known that their offhand comment, intended to encourage, had been directed at someone with his hand on the levers of power.
“I said: ‘Guys, if the government [had] not [sorted] out this road, we would not be running the way we are running. If the government [had] not [brought] the traffic cops here, we would not be running the way we are running. We are able to run on this road because the government did its job, the private sector organised this marathon, and we are participating.’”
This anecdote, which Masondo told at the INN8 Invest Summit at the Sandton Convention Centre on a panel chaired by the FM, was his argument for why the much-touted collaboration between business and the government is so vital for the economy’s recovery. (A wag might have suggested that were the government genuinely helpful, it would have fixed the potholes, so people could drive on those roads rather than run, but nevertheless.)
“This partnership has been very helpful,” he said. “Business, you’ve got control of capital; government, we don’t have money. All we have to do is to [provide] the necessary environment for us to run this marathon successfully [to] the benefit of everyone."
Masondo was responding to Bernard Swanepoel, the outspoken former CEO of Harmony Gold and the force of nature behind the Junior Indaba and the Joburg Indaba, who had just described this cosy collaboration as part of a “bullshit narrative” that has failed to shift the country’s subpar GDP growth rate.
“I’m not a big fan of perpetuating narratives of collaboration because it’s not resulting in growth. If total failure is 0% growth and decent success is 5% growth, we are very close to total failure,” he said.
“If you think of South Africa not as a nice story with good excuses, but if you think of South Africa as a turnaround situation, you would say whatever we’ve been doing up to now, certainly the last 10 years, we should stop doing some of those [things], and do the opposite.”
As it was, last week Stats SA announced that the economy had shrunk 0.2% in the second quarter, partly due to a spike in the oil price. This reversal, when President Cyril Ramaphosa has been boldly speaking of summiting 3% growth, should “humble us all”, said Busi Mavuso, CEO of Business Leadership South Africa.
While it’s true that reforms in power and logistics improved the base, this hasn’t sparked wider investment, Mavuso said. Earlier at the INN8 Invest event, Stanlib’s Kevin Lings had lamented the fact that investment, measured by gross fixed capital formation, has dropped to 13.6%, a far cry from the 20% needed to create jobs.
This was Swanepoel’s point: the country’s policymakers are still having “off-target conversations” about “beneficiation” or “value-add” in mining that are unlikely to move the dial for most South Africans. It’s not just about making isolated changes to suit the large corporates, but rather providing a real-world difference to small firms and the 47% of people younger than 35 who can’t find a job.
“Society’s job goes beyond solving the problems of the Anglo Americans of the world. We also have to solve the economic challenges facing smaller new entrants,” he said.
Masondo argued, however, that the partnership with business does indeed help solve the bottlenecks that affect everybody. Opening monopolies such as Eskom and Transnet to competition, or dealing with the impact of crime on South African tourism, does ultimately matter to everyone, he said. “If one tourist from Germany gets attacked somewhere in Mpumalanga, it catches international news, [telling investors that] South Africa is not an attractive tourist destination,” he said.
Alan Knott-Craig jnr, the founder of fibertime, which has installed fibre internet in 575,000 homes in the townships, made a similar point to that of Swanepoel, arguing that the government needs to do far more to capacitate small entrepreneurs in townships.
There’s a dual imperative, he said: expand the economy, while dealing with inequality. “You’ve got to bring everybody along as well, but you can’t take away from the rich and give to the poor,” he said. “If I were running for president, I’d go for the township economy.”
The steep growth in fibertime — which sells 100Mbps fibre internet, with no cap, for R5 a day in townships — is the test case.
Knott-Craig said the government could do two things to catalyse townships. First, provide funding for “real entrepreneurs and not politically connected figures” through private sector venture capital funds. And second, deal with crime in the townships, where the law is largely unenforced. “If you just solved crime in the townships, you’d see a doubling of the economy, and you’d get back to 2%, 3% GDP growth.”
That, in the end, underscores Swanepoel’s point. Rather than cotton wool PR of CEOs beaming alongside Ramaphosa, the government has a job to do and it must be held accountable for that, just as the business sector is.
Of course, the private sector can help on the margins, but there’s no point pretending it is empowered to fix crime or roads, or introduce competition to Eskom.
