Opinionista Kalim Rajab 19 February 2013

From Johannesburg to London: Mind the gap

Our globalised world is fragile at present, and many countries are facing internal battles for survival. Unlike the administration of President Jacob Zuma, however, many governments are alive to vital issues like youth unemployment and foreign investment, and are focusing their political will on trying to do something about them.

It’s always refreshing to return to London, the city and financial centre I called home for several years.  It’s a throbbing metropolis, high on pace, culture and just about everything. London tends to induce visceral feelings in many South Africans, who write it off as grey, drizzly and frozen. But I delight in its freshness and its vibrant multiculturalism, the swirl of ideas and thoughts which engulf you when you visit it – and the fact that whatever interests you, you can find it somewhere within its confines. I always come away from a trip feeling as if I’ve travelled and made experiences across half the world.

Most recently, I’ve enjoyed London because being there – or any other leading city – puts a lot of what we experience on a daily basis in South Africa, into perspective. One the one hand, it shows us how myopic we are with our troubles, and that there is a bigger world out there, forging ahead. But on the other hand, it brings into focus quite how profound the consequences of our disastrous dance with a parasitic Zuma administration have been. Daily our media has systematically charted our country’s downward trajectory as a society these past few years. But living though these individually subtle shifts, one is often unaware of just how far we’ve fallen, to the point where we’re close to flatlining.

What are the consequences of Mining Minister Susan Shabangu’s manifold incompetence in guiding mineral policy since 2009? Or of the two-faced nature of our trade and industry policy, which promises to welcome international investors on the one hand, but then is blackmailed by over-powerful unions to renege on international deals, as happened with Walmart’s acquisition of Massmart in 2012? Or of there being no political will to impart an orderly, equitable land reform process, to the point where the spectre of unruly expropriation, once unthinkable, now seems more likely? All these are policy failures. We often hear local commentators saying that these failures will drive international investors away, at precisely the time when we need their investment most to create jobs. But to most South Africans, this is a vague and elusive concept. We understand that it will happen, but struggle to see it impacting our daily lives. One of the more interesting pieces of financial news which came out when I was in London was the release of the latest mergers and acquisitions (M&A) data for emerging countries, by the leading international law firm, Freshfields Bruckhaus Deringer. My attention being caught by the headline “M&A deals in emerging markets surge in 2012”, I expectantly scanned the accompanying graphic for details on South Africa. There were none. At the precise time of there being a boom in foreign investment into emerging economies, so has South Africa quietly slipped off the global financial community’s radar.


Source: Freshfields Bruckhaus Deringer LLP

As Western nations face up to the realities of an entire decade being lost economically because of their financial meltdown, this should be the golden time for us. It may not be this good for quite some time to come, because their companies simply have to invest somewhere for growth, and that growth can only come from developing countries. And invest offshore they have, in several major fields of the economy globally – into food and beverages, insurance, metals and mining, banking, retail and property development. Yet according to Freshfields, in 2012 foreign direct investment into South Africa slumped 37%, to just $2.9bn. South Africa has the world’s richest and longest lasting mineral deposits – but in terms of attracting backers willing to work with us, we couldn’t even feature in the top 10 of emerging economies. Peer countries like Brazil, Mexico, Indonesia, Turkey, Chile, Poland and Malaysia were well above us in securing support. In terms of the number of deals finalised, we were just equal to tiny Peru.

It didn’t help my feelings of despondency that as I had left for London, I had just read the Global Entrepreneurship Monitor’s Global Report on South Africa, which made for some rather depressing reading on our country. In a country with 5 million people unemployed, the sizeable portion of them between 16 and 35, a staggering 65% of this group did not believe business opportunities exist. A similar proportion did not feel that they were capable of running their own business – any business, even a rudimentary spaza shop. These figures mean different things to different people, but for me they pointed to the psychological segregation which is occurring within our labour pool – not just the “insiders and outsiders” theory expounded by the DA, but to the further debilitating effect which no work has on unemployed people. The youth surveyed here were not just suffering from being without work, but from the lingering insecurity of ever being good enough to hold down a job in the future, or of having the necessary discipline within themselves to work. This is the insidious psychological scarring which continued unemployment entrenches within people. It is a scarring which can often occur even if people at the start of their productive labour lives are only given temporary contract work, as has occurred with many of the public works schemes trumpeted by government as providing employment. It is difficult to remain confident of the country’s long term future after reading such reports, being published with ever-greater frequency.

Ironically, the United Kingdom seemed to be grappling with overlapping issues. There, a pall of despondency hangs over the country as all signs point to the coalition government’s austerity measures not working. With unemployment among young people hovering around 1 million, there is a real fear of a “lost generation” which loses touch with the labour market ­– the psychological effect mentioned earlier. But here the similarity with South African ends. For the debate occurring in the UK takes on a different tone – because while youth unemployment seems to be common to both countries, the UK government seems to have the political will to focus on it. Their articulated ambition is to focus on getting the youth onto the first rung of the job ladder and off welfare, as an urgent priority. There was much discussion around the back-to-work scheme introduced in trial form by the coalition, which requires young jobseekers who are currently on unemployment welfare to find employment under these schemes, in temporary low skilled jobs, until they find permanent employment. The government would continue to provide the youth with a jobseeker’s allowance throughout this period, but have comfort that these jobseekers were at least actively employed in the productive economy. The argument over whether this constituted “meaningful employment,” or whether indirectly giving subsidies to young job seekers disadvantaged older skilled workers, did not seem to exist, as it does in South Africa. There is much to learn from this for the Zuma administration, hobbled as it is by having to placate its Cosatu partners over the imminently sensible Youth Wage Subsidy. President Jacob Zuma may have tried to obscure the fact in his State of the Nation Address, but the reality is that the subsidy is still a long way off from realisation due to our unions’ intransigence.

The time spent in London underlined how fragile our globalised world is at present, and how so many countries are facing their own internal battles for survival. But it also demonstrated how alive many other governments were to these issues, and how they were focusing their political will on trying to do something about them. The contrast between those governments and ours – still severely conflicted, still full of contradictions and without a clear vision for the road ahead – underlines just how wide the gap is becoming between where we want to be as a society and where we are heading.

One last point to ponder: Since 2011 the UK has been run under coalition politics. Is there conceivably a lesson here waiting for us to pick up on?  With the continued stalemate in policy implementation, perhaps the eventual prospect of coalition politics between the ANC and other parties post-2014 holds the key for our country, as a way to force through policy implementation and usher in a sense of accountability to the electorate. Until then we’ll be forever “minding the gap” between us and other, prosperous countries. DM



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