“Africans mine minerals,
but we don’t
work along the entire value chain – we
should focus on beneficiation, not on
outsourcing
and exporting. We should leverage
our natural endowments.”
productive, since most want to work. For him, land is a vital component of growth, since the agricultural sector has outperformed other sectors recently (in spite of battling severe drought in recent years). “But this is where infrastructure development comes in, since you can’t do much with land if it’s difficult to access,” he says. “We already know that we’re capable of delivering ‘big infrastructure’ – our highways are a testament to that – but we need to make rural areas more accessible, which will help people who want to work the land, as well as those who want to attract tourists to their towns. In addition, people need access to skills, irrigation, tractors, seeds – land in itself isn’t sufficient for growth.”
He believes an agricultural institute could address many of the issues that are likely to prove challenging for land-owners. “Retailers should enter into contracts with farmers, guaranteeing that they’ll buy their output or what’s called ‘take-off agreements’: if you can’t sell produce to someone, it will rot,” he says. And if you have a take-off agreement, you have access to finance. Although it is vital that risk instruments and insurance cushion some of the blows which new agricultural entrants may face, it is also vital to promote and perhaps incentivise partnerships with established land-owners. “BEE compliance may work, but many farmers are resistant to working with black people because they haven’t done so before,” he says. “Creative thinking may therefore be necessary – such as offering a tax break for successful partnerships with black farmers. It’s all about finding solutions to get people to work together.”
As an asset, land is also valuable to the tourism industry, since many small towns and historical sites could attract local and international visitors. “The aim is to attract business to these places by ensuring that there’s sufficient infrastructure and municipal capacity – and no corruption.”
Payi believes the state should be a supporting instrument, rather than a dominant actor. “You can often bring about change much faster if you collaborate with the private sector and allow people to come up with their own solutions – such as trying to introduce solar energy in Soweto,” he says.
On the subject of education, he says we first have to decide what purpose our education system is trying to serve. “This is the strategic posture we need to take. If we decided to be a country of agriculturalists, then a 30% pass mark in physics wouldn’t be a bother. Also, we’d collaborate with industry in producing the education outcomes and skills that industry needs, rather than shooting in the dark with government acting alone and hoping to get the right educational output and outcomes.”
Payi adds that we should also focus more on the soft skills [often exemplified by humanities degrees] instead of trying to produce more BComs and BScs. “Post-apartheid, we always knew it would be difficult to manage human relations and heal historical wounds, and it’s social workers and psychologists who can help us develop a more cohesive society,” he says.
The ultimate aim, he says, is to ensure that the economy is inclusive and open to everyone.
“One of South Africa’s few long-term competitive advantages is tourism – not gold or platinum.”
Dr Roelof Botha
Botha, a part-time faculty member at the Gordon Institute of Business Science business school in Johannesburg, believes that growing the economy without creating meaningful jobs is a sterile exercise. “There are dozens of ways in which to create labour-intensive economic growth,” he says. “Yes, you can grow the economy by digging more coal or iron ore out of the ground with specialised equipment, but this doesn’t necessarily create employment.”
When Botha was asked what he would like to see emerging from the State of the Nation Address in February, the first thing he said was a job summit. So he was very pleased when this was mooted. However, he is adamant that such a summit should have a practical focus. “It shouldn’t be a talk-shop for academics and politicians,” he says. “It should be a forum in which people who’ve created jobs over the past decade suggest ways of expanding employment opportunities.”
He believes a presidential economic advisory council could sift through the best suggestions emerging from such a summit, applying them appropriately to different sectors of the economy. “Economists could then perform impact assessments to determine how many jobs could be created and what the fiscal impact would be,” he explains, adding that substantial revenues can flow back to government via income tax, company tax, VAT and other indirect taxes.
“The next step would be to improve infrastructure at local authority level and expedite the judicial process where prima facie evidence of fraud and corruption exists,” he says. “Once the functionality
22 An Absa Investment publication
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