Rebuilding SA’s economy with a focus on agility and education

Published 26 May 2020 on The Daily Maverick by dean Jon Foster-Pedley

AS THE CLAMOUR rises for the Lockdown restrictions to be eased so that we can kickstart South Africa’s economy and avert financial catastrophe, there’s one question that few are asking; what kind of economy is it that we want?

South Africa pre-COVID-19 was a country with spiralling unemployment of 29.1%. Irrespective of which model you choose to believe projecting the effects of the lockdown, that number is going to be far worse by the end of the year.

Compounding the issue is that the small, micro and medium enterprise (SMME) sector, which numbered about 525 000 providing 6-million jobs before the Lockdown has faced an unprecedented existential threat.

But will our economy in its current form provide the answer? The short answer has to be no. The reality is that that our economy has hardly changed in the last 20 years. We need a more resilient, modern and complex economy. We don’t have that. Vietnam and China do, which is why you can expect them to bounce back much faster to pre-COVID levels than we can.

Our most realistic prospect instead is that as the country with the highest GINI co-efficient in the world, the gap between the haves and the have-nots is going to widen even further – partly because of COVID, but also partly because the structure is wrong . Shareholder capitalism might have fostered the development of our deep level mines and associated manufacturing sector, but it also created the elites and disparities that have hardly shifted.

Today, those industries risk being a shadow of their former selves; we are moving from being miners to minors when we need to become majors. We have a highly politicised and largely inefficient public service and embedded corruption, too often abetted by corporate collusion. And corruption is the single most certain enabler of continued poverty as it creates feudal barons, not Robin Hoods.

The only answer is a radical reset of the purpose of both government and corporates: government must adapt to being about citizen wellness, not a fast-track enrichment scheme for politically connected tenderpreneurs, and business must be about citizen value, not solely returns for shareholders.

Not all ‘ism’s are bad.  Optimism for example.  But there’s a register of toxic ‘ism’s.  At the dark core of these, tacitly or overtly, is the view that one group is better, cleverer, more worthy than the other, which is in some way at fault for its own lack of significance.  We have to create a prosperous society, but how do we that when the talent is locked in poverty with all the negative association that ‘povertism’ entails? We are a country that’s wrestled with racism; classifying people as incapable and inferior because of their skin colour, we’ve struggled with sexism, prioritising one gender beyond another. Now we are going to feel the full force of povertism, consigning an entire generation and perhaps even more to the thought that they can’t break out of their caste because they are unworthy and incapable of doing so because they are poor.

So how do we break the cycle? We use what we have, because we actually have plenty. Per capita, South Africa spends more on education than most advanced economies such as the US and the UK but it is only ranked 126^th out of 138 countries ranked by the World Economic Forum. We have done a lot to increase the number of graduates we produce, but we lag embarrassingly behind the global averages: we have one engineer for every 3 200 people compared to 1 for every 130 in China, 1 for every 250 in Europe and 1 for every 450 in Australia.

Recently, figures show that 70 000 positions were available in information technology but only 17 000 students have qualified over the last 10 years. We need 30 000 registered nurses and 10 000 pharmacy assistants, there is a shortage of 400 000 teachers, including educators at TVET colleges.

Our educational system – despite the money spent on it, is wholly dysfunctional: half the children at school won’t reach matric; half of the children in primary school can’t do basic maths after five years of education, but what do you expect when 60% of the Grade 1-6 teachers themselves failed to pass tests at grade level?

Neither government nor business have been able to develop the skills nor create the employment to grow the economy over the last 20 years. What COVID-19 does is to render us incredibly vulnerable to long term social and economic damage if we come out of this lockdown believing more of the same is the answer.

The real answer can only be innovation, which will lead to the diversification of the economy into one that is not just fit for society’s purpose but is sufficiently diverse and complex to weather the storms that still lie ahead.

The key to this is re-gear our education system to close the gap between our current skills base and the relevant skills we actually need. Our universities and universities of technology are critical fixed national assets but, in spite of some brilliant and energised people there,  they’re not agile enough for the task that awaits – in fact, they are insufficiently skilled to provide the necessary training that we need right now. For them to achieve what we need will take between 10- and 15 years, we’ve already wasted 20.

The answer lies in the TVET system, which can be adapted to adopt off-the-shelf international solutions driven by high-level technology and learning cheaply or in public private consortia for delivery in the next 12-24 months.

We need to learn from the countries that have diversified their economies, we need to innovate without conscience and bypass national institutions that are delaying progress. Knowledge has no nationality, instead, we need to be like the Japanese, Koreans, Vietnamese and Singaporeans we need to learn from the world not hide behind the hubris of imagining that we have these skills.

And we will do it, thanks to the lessons of COVID-19 through massive online and virtual learning and at the same time adopt a culture of continuous lifelong learning while we continue earning, finally breaking a system that firstly only educates you once and secondly places huge barriers to entry in the form of time and money for an education that might well be obsolete by the time you graduate.

When we do it this way, we will break the shackles of povertism, unlock the talent that lies trapped within and set off the catalysts to massively diversity our economy and build a society predicated on prosperity.

This has to be COVID-19’s legacy for us; changing our context as we knew it and forcing us to become agile and inventive, responsive to the realities around us, whether it’s the health of our public or the health of our planet.

The good news is that we can make a difference. The last two months have shown us just how much.

• Jon Foster-Pedley is dean and director of Henley Business School Africa, a leading global business school with campuses in Europe, Asia and Africa. It holds elite triple international accreditation; has the number 1 business school alumni network in the world for potential to network (Economist 2017); and is the number 1 African-accredited and -campused business school in the world for executive education (FT 2018, 2020), as well as the number 1 MBA business school in South Africa as rated by corporate SA (PMR 2018, 2019).