Business Maverick

The Gathering 2020

South Africa should stop planning for the past and plan for the future

South Africa should stop planning for the past and plan for the future
Dr Morne Mostert, Trudi Hartzenberg, and Jackie Cilliers speak at Daily Maverick’s The Gathering in Cape Town on Friday 6 March 2020. Moderated by Ottilla Anna Maunganidze. (Photo: Bernard Kotze)

That was the succinct advice of experts at Daily Maverick’s The Gathering here on Friday about how this country – and for that matter the continent of Africa – should lift themselves out of their socio-economic problems.

The future, experts at Daily Maverick’s The Gathering insisted, was looking a lot rosier than the present – and much more so than the past.

They were discussing South Africa’s prospects in the context of the new book Africa First! which has just been published by Jakkie Cilliers, chairperson and head of the futures programme at the Institute for Security Studies (ISS) in Pretoria.

The topic of the discussion was Africa First; Can South Africa ride Africa’s Development Wave.

Morne Mostert, head of the Institute for Future Research, said the trouble with South Africa was the large focus on a debate among people “who want a different past”. While he understood their concerns, this was not going to create a better future. He said the institute’s interactions with business showed that a company or a country should focus 20% of its time and energy on the past – to detect historical patterns and so on – 3o% on the present and 50% on the future.

He noted that a country like Sierra Leone – which as others noted was wracked in bloody civil war less than 20 years ago – was now mobilising block chain technology to combat infant mortality.

In response to a question from moderator Ottilia Maunganidze, Cilliers agreed that one of the most promising prospects for a better African future was the potential to leapfrog traditional technologies.

Trudi Hartzenberg, head of the Trade Law Centre, concurred, saying that the digital economy was not just another aspect of the total economy – it was intrinsic to it. It was unnecessary for Africa to duplicate the huge power producing plants of the past as it could use renewables – which would be decentralised.

Mostert noted that in a generally unpromising global economic environment foreign direct investment (FDI) into Africa grew by 11% in 2018 when six of the fastest growing economies in the world had been African countries. South Africa’s FDI into Africa more than doubled that year, taking it to 7th place in the ranking of global investors in the continent.

He said South Africa and the rest of the continent would begin reaping the benefits of that investment within three to five years.

Relating to South Africa’s own major problems with dealing with the State Capture of the Zuma years, he said, “The moment you’re in the emergency room, you’re better off. Things are more transparent and you get a much better diagnosis. The picture of the future looks better.”

Cilliers said that some of Africa’s development indicators were slowly improving, such as infant and maternal mortality and life expectancy. But it was still growing economically slower than the rest of the world. There were many reasons why Africa had not developed as fast as most of the rest of the world but one of the reasons was that it would only reap its “demographic dividend” after 2054. The demographic dividend refers to the optimum ratio of working age population to dependents.

Cilliers explained that many believed that Africa would automatically benefit from its very large youth population. He noted that by 2050 one in two people born in the world would be African. But population itself was not the key to the development of a country or region. It was a beneficial ratio of working age people to dependents – the elderly and the youth.

This demographic dividend could contribute between one third to one half of growth – with the rest coming from capital and technology

In his book he models 11 different interventions which could accelerate Africa’s development and economic growth to 2040, including better governance, a critical factor. He said governments were imposing a “wet blanket” on economic growth and development in Africa with anti-growth policies. Pro-growth policies – even more than democracy – were the greatest boosters of economic growth in countries at lower levels of development, he said, as the governments like Rwanda and Ethiopia had demonstrated.

And business confidence was the greatest gift governments could give to a country.

But he said his forecast showed that the most promising factor for greater economic growth was economic integration through the African Continent Free Trade Agreement (AfCFTA) which is due to begin trading on 1 July 2020.

This could boost both African and South Africa’s growth prospects, the panellists agreed.

Hartzenberg said the big challenge for Africa was to produce goods which could be traded profitably and that needed foreign direct investment (FDI) from companies that could make those goods. She noted that intra-Africa trade was now only 17% of the continent’s total trade and that was dominated by South Africa and southern Africa.

South Africa contributed 34% of total intra-African exports and two thirds of the continent’s trade with itself was from southern Africa.

Consequently, South Africa stood to benefit most from the AfCFTA. She noted that South Africa had no free trade agreements yet with the continent beyond southern Africa. However, she also said it was not so much trade tariffs that were the impediments to trade. It was much more the non-tariff barriers such as poor roads and other infrastructure and blockages by customs at border posts.

“If we reduce by 20% the time it takes for goods to travel by road and to cross border posts, it would bring greater benefits than removing all tariffs,” she said. DM

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