‘Time to throw the rules away’ — experts agree SA must modernise business models, infrastructure to revive economy

From left: Chairperson of Bank Zero Michael Jordaan, Business Maverick's Tim Cohen, Chief Executive of the Harambee Youth Employment Accelerator Kasthuri Soni, founder of the Purple Group and former head of SA Post Office Mark Barnes at The Gathering on 24 November, 2022. (Photo: Felix Dlangamandla)

By Neesa Moodley

24 Nov 2022

Government and private sector both need to go back to the drawing board and start from a trust basis to grow the economy together.

Throw out the script and start fresh. That seemed to be the consensus from the Daily Maverick panel discussing challenges around the business environment and the economy at The Gathering in Cape Town on Thursday morning.

Mark Barnes, former chief executive of the South African Post Office and founder of the Purple Group, suggested moving away from a black economic empowerment model that simply transfers value from old members to a select few and rather moving towards injecting equity capital in local businesses.

“As an example, another 5% increase in social grants would equate to around R10-billion. Why not take that R10-billion and invest it in local businesses to give them a fighting chance?” said Barnes.

Mark Barnes, The Gathering, economy Founder of the Purple Group and former head of SA Post Office Mark Barnes at The Gathering on 24 November, 2022. (Photo: Felix Dlangamandla)

Business Maverick journalist and host Ray Mahlaka posed the question of how to deal with the ticking time bomb of unemployment. Kasthuri Soni, chief executive officer of Harambee Youth Employment Accelerator — a not-for-profit social enterprise that solves youth employment through partnerships — said the NPO has been able to provide 900,000 pathways to young people over the last 11 years, through partnerships with the private sector, government and the civil sector.

“What we have to remember is that the youth unemployment crisis is complex and layered, so there is no silver bullet or linear solution,” she said. Harambee’s suite of solutions includes a core model of unlocking opportunities for youth in both the formal and informal sector by partnering with employers such as Nando’s, Telesure, and Clientele. “First National Bank was an early adopter of the programme and has employed thousands of youth via the Harambee model,” she said.

Kasthuri Soni, The Gathering, economy Kasthuri Soni, chief executive of the Harambee Youth Employment Accelerator. (Photo: Felix Dlangamandla)

Harambee also runs a digital simulation academy called Digilink, which connects employers with entry-level digital talent to bridge the skills gap and bring youth into the economy. One such example is Inga from Khayelitsha who was a qualified software programmer and was unable to find work. Through Digilink, she worked with BMW and is today employed by the company in a software development role.

Michael Jordaan, co-founder of Bank Zero and former chief executive of First National Bank, says finger-pointing when it comes to problems doesn’t lead to results. “I started investing in start-up companies that solve problems I care about. It’s quite amazing and energising to surround yourself with people who make a difference. I encourage South Africans to get involved. Use some of your capital and knowledge to help solve problems,” he advocated.

Michael Jordaan, The Gathering, economy Chairperson of Bank Zero Michael Jordaan at Daily Maverick's The Gathering on 24 November, 2022. (Photo: Felix Dlangamandla)

Jordaan says while there is no magic solution, the right approach could solve South Africa’s economic woes. “If we can make the economy grow, job creation will follow,” he said.

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“The first law of holes is that when you’re in one, stop digging. However, the second law of holes is that when you stop digging, you’re still in a hole. That’s where South Africa is,” noted Business Maverick editor, Tim Cohen. Cohen pointed out that in a country with South Africa’s intense economic problems, stakeholders are so desperate for solutions that they grasp at the wrong solutions and then stick to them, even when they don’t work.

“My solution as an ageing journalist is that we need a completely different approach to government and the private sector. Government is trying to fix the problems but they are doing the wrong things. What they should do is let the private sector take over,” he said.

Tim Cohen, The Gathering, economy Business Maverick's Tim Cohen at The Gathering on 24 November 2022. (Photo: Felix Dlangamandla)

Cohen said the idea that the government should be a job creator is one of the reasons South Africa’s growth rate is lower than it needs to be.

“For example, following the floods in KwaZulu-Natal, there was a tender to rebuild the part of the N2 that was washed away. It’s not rocket science to build a road but there were 34 tenders out for the project and not one was consummated for the simple reason that there were so many impossible stipulations in the contract,” he said.

Barnes added that the government has a huge role to play when it comes to enabling the private sector rather than dictating, starting with tax incentives and regulations to encourage foreign investment. “It’s time to throw the rules away. Even the words we use should be redefined to fit the economic model bespoke to our circumstances now. South African needs to follow the ancient proverb, which says we have two ears and one mouth so we can listen twice as much as we speak,” he said, jokingly adding that he didn’t want to bring up the South African Post Office because “it’s not polite to speak of the dead”.

However, Barnes pointed out that the SA Post Office has a wide footprint nationally and could be used by the government to drive programmes such as vaccine rollouts, as one example. “The trouble is we are stuck in old definitions. There are people in government and business who are too damn old to see a long enough track to make co-designed investments,” he said.

The Gathering - economy From left: Chairperson of Bank Zero Michael Jordaan, Business Maverick's Tim Cohen, Chief Executive of the Harambee Youth Employment Accelerator Kasthuri Soni, founder of the Purple Group and former head of SA Post Office Mark Barnes at The Gathering on 24 November, 2022. (Photo: Felix Dlangamandla)

Soni reiterated that while youth unemployment is a crisis, the scale and depth of the problem is too complex for a single actor to solve. “We need to see government, business and civil society come together as a social compact. Harambee has identified that there are sectors with growth prospects, which we call sunrise sectors. For example, in the digital sector there are over 60,000 entry-level jobs that can be unlocked while the global business services sector has committed to create 3,500 jobs by 2030,” she said.

Coming back to solutions to fix problem areas, Jordaan said South Africa needs to “scrap the ideology and find practical solutions”. “For example, I’d like the ports to work. It doesn’t matter whether its government or the private sector – just make it work. One idea would be to experiment by giving one port to the private sector to run and one to the government to run, and then see which model works best,” he said.

Cohen chipped in with the observation that government should review its opinion of the private sector when seeking solutions. “For example, Pepkor revealed in its results this week that its Paxi solution is delivering an average of 11,500 parcels a day via its Pep store network. It seems to have taken over a huge chunk of what the SA Post Office used to do and that’s such a South African solution,” he said.

Soni’s parting shot was that despite the dire youth unemployment statistics, South African youth show a tenacious desire to actively engage in the economy. “Government and business alike need to keep the voices of the youth at the heart of everything they do. Remember that profit and purpose do not have to be mutually exclusive.” DM/BM

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