barriers to entry Events inspiration National Development Plan Vision 2030

Imagining Futures Dialogue

Imagining Futures Nelson Mandela Foundation

inequality political economy public policy Vision 2030 youth entrepreneurship

This nation

You’re gonna burn out all my love
I keep telling you
How you bruised my heart 
Keeping me holding on too long
(Sipho ‘Hotstix’ Mabuse)
Last week, as I was about to be interviewed on a radio show about an issue of competition law, I received a frantic sms from the producer. The show is running 30 minutes late. She is overwhelmed. And close to tears. It turns out that the subject under discussion before I was about to go on the talk show was rape in South Africa, in the wake of the brutal rape and murder of Anene Booysen. The nation is outraged, broken and once again, at a loss for words.
The past few months have reminded us of our brokenness, our demons and our fault lines. But we didn’t learn anything new about our nation. Femicide, violent protest, corruption – I could go on – these are things we know about ourselves already.
The show must go on. And so the producer informs me that the host will talk to me after the news. The news is followed by a commercial break. Then the very talented and gracious radio host helps us all transition from brutal crime to corporate corruption. That’s how we roll, how’ve learnt to roll, from crisis to crisis.
The show must go on. The presidential motorcade winds down Adderley Street. It’s a good show. Red carpet. Military guard of honour. Black-suited men dashing out of big black cars. For a night, the political divide gives way to the afrochic/ball-gown divide.
You’re gonna burn out all my love. Our military band is full of surprises.
You’re gonna burn out all my love, Sipho Hotstix Mabuse sang in the 1980s. The country was on fire. But we danced to Hotstix, and Chaka Chaka and Fassie and Stimela. I listen to that music today, that soundtrack to the eighties that we dismissed as bubble-gum, and it’s hard to discern the pain buried therein. You have to listen closely. The show must go on. We danced then. We dance today.
The 21 gun salute. No-one really wants to talk about guns today. I’m afraid that, unlike the praise singer, pelo ya ka ha e monate.
As the presidency announced earlier this month, this is the first state of the nation speech delivered within the context of the national development plan. The plan will tackle poverty, inequality and unemployment. The head of state rattles of goals that we aspire to. But he acknowledges that we will not achieve the good life, as defined by government, with our tepid Mzansi economic growth rates.
There is a need to engage the social partners for solutions. This is the kind of rhetoric that drives people straight into the arms of authoritarian populism.
I’m not a hater. Concrete projects are mentioned. Power stations, dams and ports are being built. It’s not all tuck shops and rural lifestyle estates, you see. Like, I’m talking about 860 billion Rands. ‘Nuff said, some might think.
I’m really not a hater. Like those people that routinely criticise the speech of being short on detail. It’s a one hour (or thereabouts) speech. Get over it. Go read some policies and annual reports.
There are some recurring ideas and policies. I suppose that is the challenge. The commander-in-chief can keep presenting the nation with new, lofty plans every year or keep plugging at the same general framework, pushing for implementation. And so we learn that some discussions have been concluded on the issue of incentives for youth employment. An accord will be signed later this month. We wait with bated breath. This enterprise is a follow up from the 2010 state of the nation. Other familiar ideas to tackle unemployment include boosting the tourism sector and the expanded public works programme. These are solid ideas, with tireless officials behind them. But there’s the question of impact. There’s an assurance that this programme of action will be implemented differently as departments are expected to align themselves with the National Development Plan.
There are newish ideas that also deserve a chance. The Nationa Health Insurance pilot is such an idea. What’s the point of debating this idea in abstract when sensible experimentation might yield some interesting results? Keep it real, keep it fact-based, and something special might emerge.
The account of the Marikana moment leaves me bewildered. What did I expect? Outrage, even longer pauses, eyes off the page?
We are told that there is policy certainty in the mining sector, mostly because the nationalisation debate was laid to rest late last year. Reports from the recent Mining Indaba paint a less reassuring picture. Anyway, it has been determined that a suitable tax policy is the solution to our mineral resource management woes. Perhaps this is what I love most about this nation. After a few years of vexed debate, bringing us to the brink of serious strife, we find our way out of the mess in the tax code. I just wish we could skip the part where we flirt with the edges.
You’re gonna burn out all my love. Or not. There’s hope. Like Hotstix achieving his matric certificate at 60.
I’m done with my armchair dissing. This is what I’m fighting for this year: fair, efficient and inclusive markets in our economy.
I might burn out all my love. I probably won’t. The show must go on.
barriers to entry competition enterprise development public policy Vision 2030

Competition policy, the South African economy and entrepreneurship

David Goldblatt
Braiding hair on Bree Street, Johannesburg, 2002
Digital Prints on 100% cotton rag paper

Edition of 6

 In this week’s Mail and Guardian, two senior economists from the Competition Commission of South Africa (Simon Roberts and Trudi Makhaya) write about the role of competition policy in promoting an environment conducive to new entry and business growth in the economy. Below are some extracts though it would be far more enlightening to read the full article:

Vision 2030, the plan released by the National Planning Commission, presents a vision of a South Africa in which mass entrepreneurship is possible…
For the plan to succeed it implies a positive understanding of competition as the ability to enter and compete effectively, where effort and creativity is rewarded rather than an inherited incumbency…
A strong emphasis on promoting competition is important in South Africa because of the stifling nature of old networks…
Although these networks may have lost the type of access they had to the state, recent competition cases have shown that they are able to continue to control private activity. Multilayer cartels have been uncovered in concrete pipes, cement, reinforcing steel, scrap metals, flour and bread.

What is often not recognised is that for cartels to be sustained they must not just agree among themselves, but must also keep out new entrants attracted by the high profits. So, not only are consumers harmed by the ­collusive prices, but so is opportunity. Dynamism is harmed in another way as managers who guaranteed their market share through collusive arrangements enjoy the “quiet life” rather than worrying about quality and service…

The orientation to protecting their position through erecting defences to potential rivals has been characterised as “handicap competition”, seeking strategies to disadvantage and undermine other firms outside the club through devious schemes, as compared with “performance competition” where managers commit themselves to winning in the marketplace through the legitimate pursuit of productivity and efficiency…

Given our status quo, not facing up to the tension between the interests of entrants and incumbents is in effect a decision to support the existing networks, albeit with some new members likely buying into them.

The Latin American experience may be instructive where the development of competition law was hostage to the region’s economic history. As these economies were largely dependent on extractive industries and agriculture, elites were indifferent to the value of competition in the economy.It has only been through globalisation and concerns over inequality that competition law has gained traction in recent times.

We believe that in South Africa it is necessary to take a positive stand on future competition through widening participation and increased diversity as guiding principles. This is consistent with supporting entrepreneurship and creativity whereby different ideas and approaches are introduced to the marketplace and tested.”

Trudi Makhaya and Simon Roberts are economists at the Competition Commission. They write in their personal capacity

base of the pyramid public policy Video Vision 2030

Mass entrepreneurship – a key component of Vision 2030’s proposals

The National Development Plan, Vision 2030, is quite clear about its ambitions for entrepreneurship in South Africa. It is right that it should be so given that the National Planning Commission estimates that 11 million jobs have to be created in the next 20 years if the country is to reach full employment of the economically active population. And as the plan acknowledges, new jobs tend to come from the entry of new firms into the market and the expansion of such firms. Old, established firms don’t create as much net new jobs. Small and expanding firms are expected to create 90% of new jobs.
The National Planning Commission’s channel on YouTube (cool animation technique)
The Plan
Various themes emerge from the Plan’s chapter on Economy and Employment. These themes present a challenge to the private sector (and particularly to entrepreneurs I would say) to produce innovative products and services that will unlock growth in the economy. Below are some of these themes with top of the mind ideas about what I think areas of opportunity for the private sector might be:
           Lowering costs of production: developing local inputs for key industries such as mining and retail, using lower cost (and hopefully labour intensive) technologies
           Lowering costs faced by poor households: new ways of distributing products and services to poor areas (developing affordable “last mile” distribution solutions for healthcare, daily groceries etc.), organising households to aggregate their buying power, bringing poor households into the internet economy
           Community based production in areas such as house-building, small scale agriculture
           Enabling access to finance for small and expanding firms: risk mitigation plays that make the extension of financial services possible to new borrowers
           Enabling access to markets for small and expanding firms: the business advisory space seems to be dying for skilled consultants and advisors, innovate curriculums for business training, institutions that co-ordinate activities across value chains and help new businesses to crack into mature  corporate and public sector supply chains
           Developing regional supply chains: this applies to many value propositions that could be extended to serve the regional market, thus realising economies of scale and revenue growth. However, dealing with multiple regimes is always a challenge in SADC.
           Labour matching services to reduce the costs of employment searches for the unemployed and preparing applicants for the labour market: this calls for a new philosophy towards staffing solutions at the low income end of the market, with a move away from commoditised, short term placements to solutions that are socially innovative and meet the specific needs of companies and individuals.
Reading the plan, I find I am filled with optimism about the opportunities that exist to build a new economy that is better oriented to the needs and the realities of the majority of the population. What remains to be seen is whether and how the “social partners” – business, labour and government will fall behind this plan to make a more prosperous nation a reality.