Nurture our Third-World ‘Children’ through jobs, not handouts – Marius Oosthuizen

Ironically it was a first-generation South African and an insanely talented child of English ‘colonists,’ Johnny Clegg, who assimilated our Zulu culture and gifted us with so many astute lyrical commentaries on our society. Not the least of which is the song, ‘Work for All,’ on his eponymous first album (with Sipho Mchunu), whose choral chant, ‘S’fun-Umsebenzi’ (We Want Work) came to mind reading Marius Oosthuizen’s analysis of our redistributive, non-growth-inducing budget. What could be more dignity-sapping than denying a man or woman work? Just look on your pavements and at the taxi’s pouring township residents into our CBD’s and you’ll see ordinary, honest folk who get up in the dark and travel great distances to put food on the table. And they are cheerful, dignified folk who hold their heads up high, proud of this fact. So, when we see ideologically-driven redistributive policies that cost, not create jobs, and wholesale pilfering, we should be saddened and angered. It’s what Oosthuizen calls a ‘deindustrialisation master plan,’ obsessed with ownership patterns while creating dependency via a paternalistic, burgeoning social welfare state. What he outlines in this hard-hitting, evidence-based argument is anything but music to our ears. But we should listen with the heart of a Zulu warrior and go into battle with and for our fellow countrymen and women. Leaving it up to the self-enriching ideologues who have long forgotten that a person is a person through people, simply won’t cut it. – Chris Bateman

By Marius Oosthuizen*

The writing is on the wall in the policy environment in South Africa as the ANC heads into its conference in June against the looming possibility of losing the last 5% it needs to retain it’s majoritarian rule. In our assessment the political centre has already drifted rapidly to the socialist nationalist left, but South Africa’s business community will largely be caught off guard. The reason for the state of unpreparedness is partly because the business community has treated public policy and public affairs as a necessary evil, and contemplated it solely within the context of “risk”, and partly because of the way business leaders in general too narrowly conceive of their role and leadership within society.  

African National Congress (ANC) president, Jacob Zuma (2nd R) waves to his supporters. REUTERS/Siphiwe Sibeko

The success of B-BBEE is a national failure

Through a large-scale tick-box approach to compliance, the business community has absorbed thousands of black managers and corporate executives onto their boards and into their structures since the 1990s. But, as an owner-manager of a medium sized agro-processing business said to me recently, “I will consider a BEE deal if it makes sense… If it grows the business.” This mentality is precisely what is wrong with the way in which affirmative action has been implemented thus far. Instead of being embraced by business as a legitimate mechanism by which to rapidly transform the economic landscape within the context of our democratic settlement, the policy has been largely condoned with narrow-minded expedience.  

What this has done is to facilitate the creation of a new black elite, mutually dependent on and entrenched in the interests of the longstanding white elite. The approach succeeded in expanding the oligopoly of extractive elitism that has marked South Africa throughout its industrial history. While, from the point of view of business, B–BBEE is lauded a success, from a national point of view it has been a dismal failure. A South African company that expands into Africa or elsewhere, taking along a small cohort of privileged blacks as it grows, hardly represents a catalytic impact on the landscape of inequity. The implication is, that while the integrated reports of our best listed firms set out their extensive compliance programs in relation to B-BBEE, their efforts and ingenuity pale into insignificance when compared to the scale of the economically excluded majority.

Birth rates, employment rates and tax rates

To understand the ANC’s policy conundrum one has to look at the social foundations that are now giving rise to a groundswell of political discontent. In simple terms, the birthrates among black Africans remain almost double that of their white compatriots. This means that for every white person newly employed in the last decade, 10 black people needed to be employed to prevent their relative exclusion from the job market from remaining in tact. The demographic and economic discrepancies between a single member in the white minority compared to their five counterparts in the black majority, means that unemployment in the latter group can only be significantly addressed in relation to the former if opportunities are created for them at 10 times the rate. One could apply the same logic to the distribution of education and skills across these demographic lines and arrive at the same conclusion.

This poses a structural problem from a nation building point of you – how do you “transform” the status quo if the wealth, skills, fixed assets and capital are centralized to the extent that they currently are? Well of course one way of doing so is via the state in the form of “progressive tax”. Recent tax increases for high-income earners is simply another step in this direction. This is a scenario in which a Robin Hood state quite literally takes from the rich and gives to the poor and allows us to kick our collective can of responsibility for meaningful change down our shared road to real freedom.

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While this approach to distribution has buoyed a massive underclass for almost a decade, lifting them out of extreme poverty, it is hardly able to deliver on the real rising expectations of an increasingly young black electorate. Once these citizens have “decent” housing, running water and occasional bursts of free electricity, what they will want next is airtime and data, trendy clothing, and the ever-illusive dignity that was denied their communities over centuries. The upward mobility of the white minority, from the disadvantaged point of view of young blacks, is offensive and easily scapegoated for their own lack of access. Simply put, no amount of progressive taxation will quell their cry for radical redistribution.

Running a business is not like running a country

Business leaders, as is to be expected, hardly understand the complexity of running a country. Of course there is tremendous capacity in the private sector, to deliver goods and services efficiently through complex logistics networks and human resource systems, across borders, oceans and the skies. The private sector, especially that of South Africa, is impressive in its capabilities. But, their narrow focus of producing products or services at a value greater than their cost, of delivering these consistently to clients to sustain their brand, is a simple task compared to presiding over a middle income, postcolonial, post-apartheid nation that as recently as two decades ago was on the brink of a civil race war.

The calculation the ANC will have to make is this: “do we retain the popular vote through populist promise while holding true to our centrist, free-market friendly, neo-liberalist track record?” This is no longer working. The alternative is for the ANC to veer left or right, either to pander in substantive terms to populist pressure and accelerate “radical transformation” in the form of “redistribution without compensation” – and in the process collapse the system, or to go right and use increasingly authoritarian and repressive force in the form of riot police and eventually soldiers, to retain their current oligopolistic control over South African society.

The problem the ANC has, is that the communists in their ranks have realised the true colors on the party’s mast, and its not egalitarian. The worker formations too have realised that the ANC might be a broad church in its ideological head, but is deeply capitalist at heart. Our communities have begun to realise that an ANC government is willing to use force to stunt their claims while upholding the “rule of law” and sustaining the framework within which the status quo is preserved.

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What the ANC will do in their policy conference in June is to boil all the demanding ingredients of our multifaceted society down to their common denominators and then present this to the nation as an election manifesto. This will be a predictable mistake.  From a policy point of view this spells “indigenization” and implies a process whereby everything of value must somehow be re-assigned, either symbolically or substantively, to someone of black African descent. Historically and emotionally charged issues such as land ownership, mining and minerals and the large banks are easy targets, until the populists realise that the whites do not all farm or mine or work in the banks, and pursue a more informed and direct set of demands.

ANC logo stencilled on a wall in Soweto, Johannesburg.

There is a way out of the impasse but it will require a radical paradigm shift on the part of government and business followed by aggressive implementation with almost military precision – a new pact around productive investment for re-industrialisation. This is the only way to absorb the 9 million low or unskilled members of the national workforce currently unemployed. Even if this task was tabled today in every boardroom in the country, as the NDP supposedly was five years ago, the time has run out to have its effects set at ease the minds of voters. The NDP may have been the last chance for big business to show leadership. It endorsed the NDP gleefully and then sat on the cash required to implement it.

As a strategist and ethicist with a bias towards socially responsible business, I can imagine a growth path for the country that meets the demands of the people. What I find more difficult is to identify the army of willing corporate leaders who can make the case to their shareholders and mobilise the resources that such an endeavor would require. Similarly, matching these leaders to collaborative public sector counterparts seems an equally difficult task. Time will tell whether cooler heads prevail in the ANC. In the meantime, business may want to consider their options and hopefully develop a response that places the national interest in the forefront. Time is of the essence.

  • Marius Oosthuizen is a member of faculty at the Gordon Institute of Business Science (GIBS) where he teaches scenario planning and strategic foresight.