Politics

Ramaphosa, merchant of hope, faces a difficult selling job

By J Brooks Spector 10 October 2011

In describing where the National Planning Commission is now, one of its point men, Cyril Ramaphosa described the interrelated issues that include crumbling infrastructure, increasingly imbedded corruption, a lack of bureaucratic competence and skills, and weaknesses of the country’s educational system. Right. So now we know. By J BROOKS SPECTOR.

It is foolish to underestimate Cyril Ramaphosa – or his work. He made his early mark in student politics at the then University of the North with Saso, the Black People’s Convention and pro-Frelimo rallies. That earned him jail time and a chance to shift gears and study law. That, in turn, led him to the National Union of Mineworkers where he helped stare down the hard men in the mining industry. And that led him onto becoming the lead negotiator on behalf of the ANC against the then-National Party’s Roelf Meyer in achieving the big breakthrough.

When Thabo Mbeki aced him out of becoming Nelson Mandela’s successor as head of the ANC and president of the country, Ramaphosa shifted gears yet again and he became one of South Africa’s most successful African business leaders – first through the government encouraged-Nail investment group, then through Shanduka, his own investment vehicle. In an admiring profile, The Economist said of him as he took on the South African franchise of McDonald’s, that ubiquitous fast food chain:

“… (Ramaphosa) Became one of the country’s richest men, and is still occasionally mentioned as a possible future president. Now he is the face of McDonald’s in Africa’s biggest economy. Mr Ramaphosa, who once said his favourite meal was fish with salad, will own and run all the American burger giant’s operations in the country, including 132 outlets. He will have a 20-year franchise and a mandate to “turbocharge” growth.

“…With his formidable connections, negotiating skills and charm, he took to it like a duck to water. He was one of the first to benefit from the ANC government’s black economic empowerment (BEE) policies, building an empire in mining, energy, property, banking, insurance and telecoms. With investments said to be worth 1.55 billion rand ($224m), Mr Ramaphosa has joined the 31-strong club of rand billionaires. His wife is the sister of Patrice Motsepe, another BEE tycoon and the country’s first black dollar billionaire.”

And Forbes, in addition to noting his varied list of board chair and memberships (besides placing a substantially larger value on his investments than The Economist did), explained:

“He set up Shanduka Group, now a leading African black owned and managed investment holding company established with investments cutting across natural resources, financial services, property, energy, beverages and telecom. The company, majorly controlled by the Ramaphosa family trust, now has investments apparently worth close to a billion dollars.”

What both publications managed to elide around in their praise songs of Ramaphosa’s knack for business and his place as a man of affairs was that he is also the deputy chair of the country’s National Planning Commission, supporting the commission’s chairman, the redoubtable minister in the presidency, Trevor Manuel.

This is an important omission because if this investment (of Ramaphosa’s time and intellectual capital) pays the right return, he will have had a signal impact on South Africa’s future success. And in harnessing Ramaphosa with Manuel (as well as veteran mining and business leader Bobby Godsell, with a dozen others) to drive this exercise forward, the result may be the best chance South Africa has to reposition itself as a truly competitive nation – for many years to come. The competition is gaining and there may not be lots of time left.

And so on Friday Ramaphosa was to be found briefing domestic and locally-based foreign business leaders over an American Chamber of Commerce breakfast on the progress of this planning exercise. The briefing came after a year of preliminary thinking, increasingly detailed analysis and just after the Planning Commission’s online consultative “jam” session that had attracted some ten thousand participants for its electronic discussion.

Speaking to his audience, Ramaphosa showed off not only his grasp of the details as well as a deft comic touch. As the first slide of his PowerPoint came up, it showed three touching hands as the visual image of the planning process – as if to announce: “we’re all working together!” Ramaphosa, noting that the topmost hand in the image was white, mentioned that some of the NPC’s critics have been drawing a not-so-subliminal message from this about who’s really in charge; then explained to his audience that a Planning Commission staffer has now worked on this image with PhotoShop for future presentations so that the three hands are the same milk chocolate hue. Is this the blended smoothie version of the rainbow nation?

Ramaphosa argued the need for such a planning exercise was really self-evident. If the country fails to improve its competitive positioning, it runs the risk of sliding right off the graph from a heretofore-impressive economic performance since the early 1990s. This period had also marked measurable improvements in social welfare, but if it does not improve its redistributionist efforts and improve its measures of social and economic equity, it fails in its promise to improve the life of all its citizens and runs the risk of growing social instability. Unexceptional ideas, these. Who, after all, wants to live in an economically failing state that simultaneously boasts a Gini coefficient of inequality like Brazil’s?

Perhaps the most telling element in Ramaphosa’s presentation of the Planning Commission’s task is the attempt to personalise this national challenge – as well as potential solutions. In describing where the commission is now, Ramaphosa described the interrelated issues that include crumbling infrastructure, increasingly imbedded corruption, a lack of bureaucratic competence and skills, the weaknesses of the country’s educational system, an economy overly-dependent on resource extraction as opposed to value-added activities, a mismatch between where people live  versus where jobs are, and the wrong ratio of employed to those supported by the country’s welfare state. Just for starters.

While all of these issues are important – and interlinked – Ramaphosa and his commission seem to have chosen national educational failure as the key – and they may well be right. The educational system is failing the people, but too many people are failing when they are within the system as well.

To drive home his point, Ramaphosa presented a vivid exemplar of this slow-moving disaster in the person of one Thandi Nene, a young woman living in the rural reaches of South Africa. Nene is starkly representative of the country’s young people in that she only has a 13% chance of gaining a high school matriculation certification and even less of a chance of a university exemption.

And, as the years pass, Nene’s options will close, one after the other. She will be hard-pressed to find a permanent job at reasonable wages; she is increasingly unlikely to have access to the kind of health care that can help her consistently when she (or members of her family) confront diseases like HIV/Aids or TB; and she will almost certainly be unable to gain access to adequate shelter, nutrition, clean running water and all the rest of things that go into making up an acceptable standard of living. Finally, she almost certainly will not live to old age surrounded by her children, grandchildren and great-grandchildren either. Education, then, is the key variable in moving her from this cul de sac.

When the audience had a chance to ask its questions, one of the first was why the NPC hasn’t been focusing more on the mechanisms of job creation and the nurture of entrepreneurship. Ramaphosa responded that one recommendation from the electronic jam session was for a sovereign wealth fund to disperse funds for investments in growth industries picked by government. And it is here where a key difficulty in the National Planning Commission’s approach may lie. The plan, so far, seems to say rather a lot about what the government will do to aid its citizens, rather than what it will do to support conditions for the creation of new jobs, together with the learning of new skills and the melding of those skills and jobs for the next wave of growth industries. As the NPC’s own website describes it:

“Lack of a coherent long term plan has weakened our ability to provide clear and consistent policies. It has limited our capacity to mobilise all of society in pursuit of our developmental objectives. It has hampered our efforts to prioritise resource allocations and to drive the implementation of government’s objectives and priorities. In addition, weaknesses in coordination of government have led to policy inconsistencies and, in several cases, poor service delivery outcomes.”

As a result, the NPC’s approach appears deeply respectful of the fearsome reputation of what Japan, then the Little Dragons of Asia (Singapore, Korea, Hong Kong and Taiwan), and then most, recently, China have all achieved, where governments tried to pick the future winners and then to shape the trajectory of economic growth accordingly. Lurking in the background, too, it seems the NPC’s orientation seems to lean towards following in the tradition of those durable centralised five-year plans of the old Soviet Union, China or even India – where governments try to monitor and then tweak the inputs needed in an economy to generate growth patterns of particular proportions; in short where the input-output model matters rather more than market signals.

But too often that five-year plan exercise was about the production of so many million tons of pig iron and so many more of coal and coke, regardless of cost or utility; instead of an economy aiming beyond current technologies and sectors. (Although, to be fair, this kind of command-driven exercise also produced the World War II’s Manhattan Project and Nasa’s Mercury, Gemini and Apollo programs to get to the Moon. Meanwhile, the experiences of the globe over the past three years can easily support the argument that dirigiste economic policies do have a role in lieu of an economic and financial “wild west”.)

Too often, however, international respect for the Asian model has not understood that there were also real errors of judgment as well. Japanese economic history shows that its government also failed to back crucial new technologies or growing industrial sectors. Famously, this included its initial aversion to the transistor and Akio Morita’s nascent company, Sony, or that it refused to support Honda’s entry to the two axled-motor vehicle market with crucial investment capital, insisting there was only room in the economy for the firms Toyota, Datsun, Isuzu and Suzuki. Entrepreneur Suehiro Honda should restrict his attention to the fine motorcycles his company already made, rather than the superb cars it might make in future. This is the modern version of supporting the buggy whip manufacturers rather than the automobile to preserve jobs.

Embedded in Ramaphosa’s comments, though, is an acknowledgement that the heart of the matter is a significant failure – so far – of government’s will to nurture an innovation-centric economy and a skilled, corruption-free civil service. Or that when it says it is going to direct the resources needed to produce an educational system consistent with the needs of the 21st century – it will do just that. The challenge is to embrace the policies it must deliver to support the needs of the society it wants to nurture for the broad-based prosperity its wishes to achieve.

Ramaphosa’s presentation clearly caught his audience’s attention as numerous attendees asked how they could get on board and help. And his announcement that commission head Trevor Manuel is going to reveal an interim report on the 11th day of the 11th month of the year 2011 – at 11 minutes and 11 seconds past 11am – guarantees attention to the contents, and hopefully, lots of debate about it. And then some action. Time’s a wasting. DM



Read more:

  • The National Planning Commission’s website;
  • Cyril Ramaphosa’s business empire in the Economist;
  • Rich And Powerful Africans: Cyril Ramaphosa in Forbes;
  • Matamela Cyril Ramaphosa at Wiki;
  • Ramaphosa, Godsell on National Planning Commission at the Mail and Guardian;
  • Ramaphosa draws parallels between Constitution-making and Planning Commission at Polity.org.za website;
  • Cyril Matamela Ramaphosa, National Planning Commission: Deputy Chairperson at the GIBS website;
  • Five-year plan in Wiki;
  • Planning Commission members named at the Bua website.

Photo: REUTERS

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