EDITORIAL: The smart road to lasting recovery
Naspers’s announcement that it will invest a monumental R1.4bn in technology start-ups is the sort of foresight the country needs
If you’re going by the numbers alone, you’d have to say that President Cyril Ramaphosa’s investment summit last week was a huge success. About R290bn has been pledged towards SA’s economy over the next decade. "The investment strike by business is over," the former trade unionist exclaimed. This investment, he said, is "the type of flood to lift many boats". And he flagged "the employment of our people" as the most important boat of all.
As you might expect, he dubbed the conference "a bold and unequivocal statement that we are determined to put behind us the period of uncertainty and discord and embrace a future of co-operation and partnership".
He added that the goal was to build a country "driven by enterprise and innovation" to create a diverse economy with companies that can achieve sustainable returns for everyone. Nor did he skirt the elephant in the room: SA’s horrendous 27.5% unemployment rate, which leaves millions frozen out of the economic system.
It may be true that Ramaphosa deserves the glow of a successful investor event, but the unavoidable reality is that SA’s economy still has a mountain to climb. The word "uncertainty" has often been used in discussions about government policy, especially during the dark days of Mosebenzi Zwane’s time in charge of the mining sector, where the only thing that seemed to bother him was the health of the Guptas’ investments.
But the word "uncertainty" could still be applied to the revised home affairs regulations about travelling with children, as it could be to the tricky issue of land expropriation without compensation — which remains in flux, with deep implications for foreign investment.
Still, it is at least to be welcomed that there is now evidence that some businesses are evidently willing to put money on the table. Arguably the most interesting proposal in the past week is Naspers’s announcement that it will invest a monumental R1.4bn in technology start-ups. This is the sort of foresight the country needs.
SA has a long streak of innovation — from Sasol’s coal-to-liquid-fuel technology to the lowly Kreepy Krauly — but the depressing fact is that when it comes to technology, the country has lagged the rest of Africa for years. Kenya has its Silicon Savannah, Nigeria is the hot spot for innovation. SA isn’t even on the radar.
True, SA has had numerous mobile successes: Vodacom pioneered pay-as-you-go phone calls in the 1990s and MTN’s web-to-SMS service was so successful it had to shut it down before it stole revenue. But today SA is nowhere when it comes to innovative developments. At least the announcement by former FNB CEO Michael Jordaan’s new telecoms operator Rain, that it will spend $68m on a faster 5G network, is evidence that small operators can be disruptive.
The other problem is that Ramaphosa’s conference was big on ideas but poor on specifics.
For example, a few concrete changes to policy — on registering business, and refining labour laws for small business — would have gone a long way to stimulating new sectors of the economy. This is especially so in an era when digitally focused companies should be a priority area for policymakers.
The government needs to understand that investment is not just something that is entirely external, driven by pledges from large investors. Rather, it is something that the government can fast-track itself, by putting in place the right policies. The right tax breaks — as Alibaba founder Jack Ma has advocated for entrepreneurs — could have just as stimulating an effect on SA’s economy as last week’s triumphant announcements. And it could be potentially longer-lasting.