22 on Sloane: Inclusive Growth Forum proposes a social compact for SA
Over the past five years, the Kgalema Motlanthe Foundation has gathered over 200 captains of industry from private and public sector, academia, civil society and more.
This year’s discussions focused on trade and economy; Government of National Unity (GNU), democracy and global politics; key economic challenges for South Africa; education, training and skills development; technology and sustainability. Without delving too much through every presentation, here are a few notes from various prominent role players:
Former finance minister and MTN chairman Mcebisi Jonas emphasised the need to build a stable political centre and cautioned against thinking or celebrating the GNU as the ‘be all and end all’.
Yet the ability to build a shared minimum programme that will guide parties in the GNU remains crucial. Another point was how South Africa positions itself globally, given the geopolitical tensions faced around the world. This warrants that South Africa’s foreign policy should be driven by its national agenda.
Of key importance is also highlighting pathways to grow the economy, while ensuring that the GNU fills necessary gaps in the economy to ensure equity. Without building strong economic equality and creating jobs, we risk having the alternative where other parties could appeal to the broader masses which are marginalised and could take over political and economic power.
Ministers Blade Nzimande and Aaron Motsoaledi echoed the challenges faced in both education and health, where access remains a key challenge for the majority of the population. Investing in vocational education and National Health insurance should be a priority for both private and public sector.
Commissioner Edward Kieswetter highlighted that over the past 30 years, the South African Revenue Service has collected R21.5 trillion in net tax revenues. Revenue collections have soared from R114 billion in 1995, to R1.741trl – at a compounded annual growth rate of 9.9% and an average tax-to-GDP ratio of 22.2%. Revenue collections contribute to over 90% of the government’s consolidated budget, which is pivotal for developing a capable state that serves the needs of all its citizens.
The big challenge remains South Africa’s wage bill, which is the third largest in the world as a proportion to the GDP. Approximately 55% of South Africans live below the national poverty line, while 25% live in extreme poverty and cannot afford basic food items for minimum nutritional needs. The country also has one of the highest Gini coefficients in the world of around 0.63 while wealth and income disparities remain significant.
Many other speakers echoed similar sentiments, including the need to build the states capacity to deliver the need for infrastructure investments, more funding support and ‘access’ for black-owned businesses.
Ralph Mupita, the MTN CEO, highlighted that the digital economy can unlock up to 4.5 million jobs in South Africa but it requires an innovative approach to talent development.
I had the opportunity to present on Startups, Small Businesses and Job Creation in Africa. I highlighted the need for us to create and grow a pipeline of investable startups in Africa. The scarcity of investable deals, combined with increases in venture capital allocation, has led to inflated valuations, which has led to portfolio underperformance for investors as startups in Africa fail to live up to their valuations. The result and danger of this could be capital flight or the hoarding of dry powder as the investment community terms it.
On the local front, I highlighted that South Africa is unlikely to achieve its National Development Plan (NDP) 2030 targets for SMMEs. The NDP envisioned that the sector would contribute 60-80% to GDP and provide 90% of all employment, but these targets are not on track to be met.
A white paper published by 22 On Sloane earlier this year, gave a view that to achieve the NDP targets, we’ll need to create 3.2 million new SMMEs that will create 11.9 million new jobs.
In closing, former president Kgalema Motlanthe and former first lady Gugu Motlanthe highlighted the need for us to build a social compact, have shared responsibility of our roles and responsibilities and the shared national value and aspirations, while addressing the imbalance in our economy.
The weekend ‘Dialogue Among Equals’ lived up to its expectations once more and over the years has helped shape the political and economic discussions in the country. One can only look forward to the final report from the dialogue and work collaboratively to implement the discussions and deliberations.
Kizito Okechukwu is the Executive Head of 22 On Sloane; and co-Chair of the Global Entrepreneurship Network (GEN) Africa.
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