Opinionista Adam Craker 17 May 2019

President Cyril Ramaphosa’s first, biggest and most important post-election priority is to fix the education system

We can’t go over it and we can’t go under it, we just have to go through it. The biggest obstacle to sustained growth in the South African economy is a structural problem that stems from a devastating lack of investment in human capital.

President Cyril Ramaphosa’s first, biggest and most important post-election priority is to fix the education system

We can’t go over it and we can’t go under it, we just have to go through it. The biggest obstacle to sustained growth in the South African economy is a structural problem that stems from a devastating lack of investment in human capital.

No matter the results of the 2019 national elections, South Africa’s economy is expected to remain in low-growth territory for at least the next two to three years. In April, the International Monetary Fund (IMF) revised the country’s projected GDP growth rate for 2019 down from 1.4% to a meagre 1.2%. The outlook for 2020 may be slightly better at 1.5%, but it remains well below the 4% growth rate required to reduce unemployment and make a meaningful dent in poverty and inequality. Beyond 2020 the IMF warned that “structural bottlenecks continue to weigh on investment and productivity” and that growth was likely to stabilise at around 1.75%.

You could argue that these figures are an improvement on 2018’s paltry 0.8% annual growth rate, but for the many business owners who have already been forced to retrench workers and scale back — or even outright close — their operations, they represent a bitter reality. For those who remain in business, it is also a reality that they are more in control of the economy’s immediate growth prospects than the government.

As much as I am encouraged by President Ramaphosa’s election pledges that he will bring about policy reform that will boost economic growth and investment, the truth is that these are only short-term fixes. The same applies to his promises that he will continue to root out mismanagement and corruption in government and state-owned enterprises. As pointed out by the IMF, this is because the biggest obstacle to sustained growth in the South African economy is a structural problem that stems from a devastating lack of investment in human capital. Fortunately, it is also an area where business can potentially make the greatest contribution to turning the economy around.

We know that access to education is a major factor in the productivity of a country’s labour force, but studies show that it is the quality of the education, not the quantity, that really matters. And it’s here where South Africa falls short. Low educational achievements are linked to low productivity growth — the bedrock of sustained economic growth. Poor educational achievements are also linked to high levels of poverty, unemployment and inequality. It is this structural problem that the IMF sees as a “bottleneck” to SA’s growth beyond 2020.

Although the government has made significant strides in improving the rates of enrolment in basic and tertiary education since 1994, our productivity growth has stalled. The most recent School Monitoring Survey published by the Department of Basic Education earlier in May found several areas of concern, including vacant teaching posts, teacher absenteeism, access to books and libraries, and the functionality of school governing bodies. In some cases, the study found that up to 10% of teachers in primary schools and nearly 15% in secondary schools were absent without leave on a given day.

The results of these shortfalls are apparent in the numbers: Almost half the learners that start Grade 1 never complete their secondary education. Of those who make it to secondary school and are fortunate enough to make it to their matric exams, nearly half will fail. A recent Progress in International Reading Literacy Study report showed that 80% of South African children in Grade 4 still can’t read for meaning.

These shocking outcomes occur despite the fact that South Africa spends 6% of total GDP — nearly 20% of its total budget — on education. This is on par with many OECD countries and significantly more than many of our sub-Saharan peers who manage to spend less per capita on education and achieve better educational outcomes.

For a country that allocates a higher proportion of its budget towards education than the United States, the United Kingdom and Germany, it is difficult to argue that SA schools are under-resourced. This is perhaps fortunate given that credit rating agency Moody’s expects SA’s government finances and debt profile to deteriorate further and economic growth to recover only slowly over the next two years. Put another way, even if the economy was in better shape, throwing more money at this problem isn’t going to fix it.

There is no question that the bulk of the responsibility to fix SA’s schools rests with the government. National and provincial education departments need to be overhauled, many teachers need to be re-trained, and basic operational issues such as the delivery of textbooks and teacher absenteeism need to be addressed. All these things are achievable with sufficient political will, but it will take time.

This is why, in the short run, the business has a key role to play in fixing South Africa’s human capital shortfall, but the government must meet business half-way. This can be achieved relatively simply by providing greater tax incentives to businesses who hire and train young school-leavers, and by ensuring that every employee in the private sector has the opportunity to be upskilled in their place of work. Business can also play a role in partnering with government to share much-needed management and leadership skills and expertise with the education sector.

As a business, we may have limited influence over the factors driving South Africa’s low growth rate over the next two to three years, but we do have direct influence over how we respond to these challenges. How we choose to create value on our balance sheets, within our organisations, and within our country, is entirely up to us. DM

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