Political controversy around reappointment of Wesgro CEO puts agency at risk
As the Western Cape emerges from the economic devastation of the Covid-19 response, it will need to draw on the strength of Wesgro
The ability of Cape Town and the Western Cape to compete globally puts the region in a class of its own in SA. The uniquely structured provincial parastatal Wesgro — its trade, tourism and investment agency — has played a major role in building the regional brand as a top global destination.
By pooling the resources of the province, Cape Town and many other municipalities, and drawing on private sector management skills, Wesgro has fostered a collaborative development paradigm in the province that has contributed greatly to the relative strength of its economy, including the stellar results of recent years.
The political imbroglio around the reappointment of Wesgro’s CEO runs the risk of damaging this important agency, and dealing a further setback to the development of effective public-private sector institutions in SA. The issue has already cost the job of highly regarded Wesgro chair Prof Brian Figaji and has drawn the responsible Western Cape MEC and parliamentary committee into the fray.
At the heart of the issue is the difficulty of designing and managing a public-private partnership to grow the economy. Such public-private institutions are critical in all successfully developed and developing economies, and SA has struggled to develop an effective model.
On the positive side, the contretemps has highlighted some of the agency's stellar achievements. In the last five years Wesgro has facilitated an increase in investment in the Western Cape by over 30%, supported the increased tourism levels, achieved a doubling of international direct flight connections to Cape Town, and facilitated $20bn of exports and $8bn of film production in the region.
During the Covid-19 lockdown Wesgro quickly pivoted to providing advice on resources for existing businesses seeking to use government support structures to avoid closing — an action that gained it special mention as best practice in a World Bank global review of investment promotion agencies’ response to Covid.
Wesgro is governed by a board comprising ex-officio representatives from leading municipalities, including the City of Cape Town, the provincial government and private sector leaders. The agency’s funding is sourced predominantly from the city of Cape Town and the Western Cape government, which have responsibility to strengthen the economy in the region.
Following a very strong five-year run under a new CEO, Tim Harris, the board entered into negotiations to extend his contract for a second five-year term. The new remuneration terms were benchmarked against other regional institutions and NGOs, and the new contract, approved by the board in February, resulted in a 20% increase to bring remuneration up to the benchmark of other similar bodies.
After the board’s approval, the provincial government put pressure on the board to revise its decision, leading to the resignation in protest of the chair of the Wesgro board.
This is unfortunate. The board played its role as intended by legislation, and if the province is to retain this excellent institution it needs to respect the respective roles of the board and stakeholders.
Wesgro was established in 1995 by provincial legislation that brought the province into partnership with a 15 year-old NGO called Wesgro. This NGO was itself a partnership between the old City of Cape Town and surrounding municipalities with local chambers of commerce, in a concerted effort to capitalise on all local job creation opportunities during the dying decades of the old SA.
The institution was supported by all sectors of society and established a forum where civic associations, trade unions, business and local politicians explored policy opportunities for the “New SA”. Funding came from local businesses, Cape Town and other provincial municipalities.
When SA’s new constitution established “investment and trade promotion” as a provincial competence, the Western Cape government sought to build on this existing institution rather than seek to create a new one. Taking advice, they established an institution modelled on international experience in Ireland and elsewhere that inspanned provincial and municipal government together with business to drive the development of the local economy. The results can be seen in the economic outperformance of the Western Cape in recent decades.
Legislating to establish this new agency took considerable time and negotiation. The model agreed on was to build on the strengths of the independent agency model, already established in the NGO, but to codify these in new legislation. Provincial legislation established a board, constituted from among the stakeholders, to set the strategy for the agency, manage the institution, maintain high standards of corporate governance and protect the institution from excessive involvement in day-to-day political matters.
This structure was critical in the survival of the agency during the period when its major funders, the provincial government and City of Cape Town, were led by different political parties as the DA and ANC competed for dominance in the Western Cape. After nine years the legislation was amended to expand the activities undertaken by Wesgro.
Wesgro’s track record has enabled it to draw senior, experienced public and private sector leaders to its board, and to attract excellent managers and staff. Multiple international bodies have lauded Wesgro, its achievements and its multi-stakeholder structure. Other SA provinces have sought to copy the Wesgro model.
It has taken considerable maturity and self control for successive generations of city, municipal and provincial government leaders to share credit for the achievements funded by taxpayer funds under their control. Any mayor or provincial MEC would prefer a direct line of sight from their office to good results in the field. That the city, municipalities and province have been able over the last three decades to contribute their economic development funds to an institution at arms-length, so prominently led by well-known politically unaffiliated private sector and NGO leaders, says much for the leadership qualities of local office bearers.
The result of all the work and patience of previous generations of stakeholders has led to the Wesgro we know today, playing its role in strengthening the local economy. As the Western Cape emerges from the economic devastation of the Covid-19 response, it will need to draw on the strength of its world class economic development institution, well known for its excellent technical work.
Hopefully the current generation of political leaders, like their forebears, will keep Wesgro from being overtaken by local politicking and confirm the respective roles of board and stakeholders, and so provide the support and constructive oversight to this valuable institution to ensure it can continue to provide the support that will be so sorely needed to help the economy as it emerges from the lockdown.
• Bridgman served as Wesgro CEO from 1988 to 1998, and led negotiations over the Wesgro Act. He subsequently managed the World Bank Group’s investment climate advisory service in Sub-Saharan Africa.