As Team South Africa returns from the World Economic Forum in Davos, Minister of Finance Nhlanhla Nene reflects on the common challenges faced by different countries across the globe – including ours – and reports back on the message communicated to the forum about the South African success story.
|Minister of Finance Nhlanhla Nene|
For one week of the year, Davos becomes the centre of an increasingly complex world. Corporate, political and thought leaders join representatives of civil society groupings in this snow-covered town in the Swiss alps. For this one week, rank and status fall away as we seek solutions to the challenges facing the global community.
In our discussions this year, what struck Team South Africa is that developed economies face similar challenges to those in developing countries like South Africa. Youth unemployment, achieving faster inclusive economic growth, job creation, competition for global investment, cost of energy – all of our respective nations are tackling these problems.
Of course there are differences. The scale and depth of the challenges differ. For example, 90% of the world’s youth population lives in developing countries. And as the International Labour Organisation (ILO) points out, labour markets for young people in developing economies are very different from those in developed economies. The irregular nature of employment among youth and the tendency for young people in developing economies to leave education early are the labour market characteristics that contrast most directly with those of youth in developed economies. Compared with advanced economies, the ILO says, developing countries face the additional challenges of underemployment and working poverty, with young people making up the bulk of the workers in the informal economy in both rural and urban areas.
As emphasised in the National Development Plan (NDP), reducing the cost of living for low-income and working-class households is essential for broadening economic participation and inclusive growth. Government contributes to reducing the cost of living in three ways:
• Investment in the social wage, made up of education, health services, social development, public transport, housing and local amenities
• Support to vulnerable households through the old age grant, the child support grant and other social assistance grants
• Contributory social security, including unemployment insurance, injury compensation and death or disability benefits
The government is also working to ensure there is sufficient infrastructure to lower the cost of doing business. South Africa needs to invest in a strong network of economic infrastructure designed to support the country’s medium- and long-term economic and social objectives. Economic infrastructure is a precondition for providing basic services such as electricity, water, sanitation, telecommunications and public transport. It must be robust and extensive enough to meet industrial, commercial and household needs.
In South Africa we have identified a few key things that must be done to ensure we close the gap between expectations of our people and the reality they live.
1. Leadership of our institutions
We cannot build the country envisaged in the National Development Plan without strong leadership. In fact this is so important that it is included as the sixth pillar of the National Development Plan. When one looks at definitions of leadership, there are common features – trust, inspirational, common vision, ability to motivate and inspire others to participate in achieving a common goal. And in South Africa we need to combine this with an ethos of service to ensure that our public institutions serve the needs of constituencies they were established to serve. Leadership cannot be legislated – it must be something we must cultivate within ourselves and exercise for the greater good.
2. The implementation of the policies we have drafted
South Africa’s growth and development will not be achieved by writing more policies and legislation. At the same time, the mere presence of policies and legislation will not result in the growth and development of our country. We need to begin to fill the execution deficit – the gap between policy and legislation, and implementation. This is the only way in which we can ensure that South Africa achieves the goals we have set for ourselves. We must begin to implement what are often described as some of the most progressive legislation and policies in the world.
3. Common purpose
The common purpose by which we should all be united is the National Development Plan. This plan will, if implemented in earnest, ensure that that we address the great disparity and inequality in our country – at all levels and in all spheres. We need to bring all our focus and determination to the implementation of this plan. The leadership in our country should be at all levels and in all sectors should be focused towards growing our economy in a way that meets the needs of our people. I am not suggesting that we do away with our respective roles – I am suggesting that we find, within our respective spheres, the common purpose of working towards South Africa’s sustained growth and development.
South Africa’s message to the world
So how did South Africa fare at the centre of the world this week? I believe that for an emerging economy we were able to communicate consistently and strongly that South Africa is open for business.
We were able to contextualise our growth and development imperatives for our investors and other members of the global community. We communicated awareness of our challenges, but equally explained how we are addressing them.
We communicated that we are committed to the growth and development of our southern Africa neighbourhood and the rest of the continent. We also contextualised for investors the many opportunities available in South Africa, SADC and the rest of the continent. In this context, South Africa will be hosting the African chapter of the World Economic Forum in Cape Town from 2 to 6 June 2015.
This year’s WEF Africa will be especially significant as the World Economic Forum will be celebrating its 25th anniversary in terms of meetings held in Africa.
This year’s theme will be “Then and Now: Reimagining Africa’s Future” with the following subthemes:
(a) Marshalling Resources
(b) Enabling/Expanding Business
(c) Inspiring Creativity
I am positive that the deliberations in Cape Town between government, business and other stakeholders will be vibrant and that it will also provide a platform to share and exchange ideas on how we can collectively position Africa to become a greater force in the global economy.
I was proud to be part of Team South Africa to Davos and I look forward to 2016 when we will be able to communicate to this microcosm of the global community the achievements and progress we would have made this year in delivering on our developmental agenda.