At the WEF Africa meeting, independent-minded Dr Martyn Davies of Deloitte picked up a bunch of penetrating questions from the Biznews community – and provided his own forthright responses. Davies, who is fluent in Mandarin and travels widely, tackled thorny issues ranging from the proposed NHI through to stalling economic growth and a perceived inability to tackle corruption. He reckons it’s all about the national mindset – and believes the time for talking is past and for action has arrived. – Alec Hogg
I’m with Dr. Martyn Davies one of my favourite people in the whole world. Now Cape Town, the last time we were in London. We’ve got a pile of questions from the Biznews community that I’m going to throw at you.
You’re here as one of the co-sponsors with Deloitte?
Strategic partner with the World Economic Forum. We’re part of the furniture here and it’s good to be back in Cape Town.
How much of the proceedings here are related to education?
The uniqueness – and not in a good way – of the the Africa summit is often the repetition of the conversations that we’ve been having for many years. It’s in stark contrast to other regional summits particularly those in Asia where it’s more about the performance in previous years rather than the aspirations. So lots of aspirations here at at the Africa summit, but – as you saw with the protests yesterday – we’re tired of the rhetoric of aspiration. We want to see the action of delivery.
Myles Fourie wrote us this question. He wrote a letter to Tito – quite a long and well articulated one – he says that investment in education has the highest return at pre-school level. Yet why did we as a South African country under the Zuma administration, invest so much into tertiary education?
Just to build on the previous, the ultimate lead indicator of the progression of a society in a country, is how it educates its young people. That’s the story of the successful Breakout Nations – particular the Asian ones. It’s not so much the capital as it is the quantum of the money directed towards education. It’s the quality of the management thereof. There is a disconnect in South Africa, the political will is to spend there, however the challenge of many frontier countries – including South Africa – is a general management failure on how to manage money effectively. In South Africa’s case, we often get confused with Africa’s challenges, fourth industrial revolution which is clearly top of the economy, basic math literacy for primary school kids etc. Where do you start? The fact of the matter is we have to do everything at the same time. This is stretching our relatively thin resources even thinner.
But should they be more focused on the under 14? In other words nought to 14.
Yeah I agree but everyone needs to receive the best education you possibly can. You need kids to come out of school to be globally competitive from English and multiple languages, maths and science. But the biggest challenge here is, if you’re not getting it in the first two years you are probably never going to get it. It’s a sponge – young people’s, children’s minds – it’s not a sponge forever.
So you go with him. You’d say it’s a good place to be putting the money – at the little ones?
I don’t think it’s about the money, I think it’s about the mindset and the commitment of educators to provide education in a decent professional manner. It’s not a money issue in this country, it’s a management issue.
Tess Fairweather asks: When she was a lot younger, they used to have things called loan levies. It was quite fun when it was repaid by the government. Loan levies would be additional to the taxes and it would be used for a particular project. When it was repaid it could almost be stimulatory to the economy. Is that not a fiscal tool for South Africa given the issues that we are facing?
I think it is. There’s a couple of additional points to consider. Firstly, in today’s world, everyone expects something for free. Whether it’s data, connectivity, education, everyone – especially younger people – expect things for free and it’s not. I’m not saying it’s right or wrong, just how it is. Secondly, on the financing side, there’s been significant deflationary pressures. What you’re paying for your TV, your consumer electronics. The price has gone down significantly in the last 10 years. The flip side is true on services – non-tradable services that are offered to the consumer. Healthcare, education, particularly private insurance. On the non-tradable side, there’s been significant inflation. Primarily so in education. When we start talking about student debt and student access to finance, it’s a significant problem particularly in first world economies. I was talking to a dean of a leading business school in the US recently and I asked her to please explain why your education cost $120,000 a year. She literally couldn’t explain to me. And she’s one of the smartest people in town. From a South African context you have additional factors, we have 50% plus youth unemployment which is socially, economically, politically and morally unacceptable by any measure. So even if one does graduate, getting a job and repaying loans is challenging. You have dysfunctional homes, parents are not earning – never mind two incomes – they may not be earning an income whatsoever. At the same time the State has not been as creative as it could have been around providing new educational solutions, as well as being anti-private sector when it comes to education. All of this combined has been a lethal combination for the education of young people in our country.
Okay. Mike Hill wants to know. How do we change the education of teachers? At the moment, the education of teachers, nurses and other civil servants is not being done as well as it could be. Do you have any thoughts?
I think there’s been too much of a heavy state approach to education. It’s a mindset issue. South Africa has great institutions – somewhat eroded in recent times – but if we had the right mindset, a far more pragmatic mindset, more sense of patriotism, you could turn this country around on a dime. This plays out in education, in healthcare where you have world class services, so this training mindset that is required comes from leadership, which sets the tone of how people should should practice their professions in our country.
That’s a good segway into our next question from a community member who just wanted to call himself David. He says there are many similarities between Argentina and South Africa. He reckons a president who failed to act decisively in Argentina has now been kicked out. Shouldn’t Cyril Ramaphosa be more decisive – act now and avoid the kind of issues that Macri has faced in Argentina?
We’ve gone from structural decline to arguably drift. South Africans want direction, they want leadership. Ethical, certain, confident and clear. Ultimately people want to live in a fair society. Whether you are in a company or a country, people want fairness and I think the challenges in today’s age of populism, seeking to accommodate this majoritarian approach at times prevents pragmatic leadership from acting as it should or leadership acting pragmatically. We need more decisiveness. I think that the frustrations that David echoes is you need to have decisive leadership and people need to get a sense that they are living in a society, where they’re treated equitably and fairly.
Paul Hoffman, the founder of Accountability Now, sent through this question. Given that corruption scares off investors, why hasn’t the government created an independent and specialist unit of well-trained investigators and prosecutors who have security of tenure and are properly supported to tackle grand corruption?
Paul’s stating the obvious and this is the burning issue of our time. It’s about when do we see fairness and accountability – and rightfully so. I think these institutions are there but they’ve been so eroded and it shows the cost of appointing bad people into key positions. No matter what your pre-existing institutional capacity or integrity is, wrong individuals in positions of power can rapidly erode that integrity and that trust factor that societies require. Trust is a bonding agent, which without institutions rapidly deteriorate. The frustration is these things are taking time. If you’re sitting in a view from Beijing perhaps it’ll be a very different dynamic. But we have a very different constitutional legal construct. We are thin on patience, we are requiring action and we are hoping these institutions will recover from the damage that’s been inflicted in recent times.
Amos Moledie wants to know what impact will the national health insurance have on the economy?
This is a key point. I don’t have an opinion per say, I’m not an expert in healthcare, but it depends on which lens you look at it. Of course people want access to services, particularly basic services like healthcare. How does one do that? My only concern through a financial lens, is we lack growth in South Africa – particularly of a middle class – resulting in a very thin tax base, stating the obvious. Unlike Brazil arguably, we should not be making similar mistakes where a country puts in social welfare systems before it can afford it. That I’m afraid is the situation in China. So can we have Rolls Royce systems in an economy that can’t afford it? That’s reality. It’s not what I personally want, but had we been growing at a 5% GDP with some real trickle down into the economy creating a more embedded crisis-resistant middle class in South Africa that would have solved a lot of our problems. We have to make sacrifices about what policies we want to push through and what services we want to provide.
It’s all about priorities. Last question from Dr. Paddy Lawless. Can we promote a proposal for all elected official members of parliament, members of provincial legislatures even municipal leaders, that they must purchase or rent their own home. That they must send their children to state schools, that they must use transport that is available to ordinary people i.e. taxis, buses, trains, private vehicles, that they must use government medical facilities and that they must pay for their own lunch and work? Pay for their own travelling around the country and be taxed like everybody else?
Paddy, I agree.
Is it realistic? Could it happen
Let me give a word for it. It’s called patriotism. I’ll take it further. I don’t want to sound protectionist, but for Deloitte, one of the sectors we lead is the automotive sector. Here at the World Economic Forum, we talk about industrial policy and industrial strategy and how to create jobs. That’s a key issue. So I would like to see every single – particularly government official. Any government procurement contract should purchase a vehicle that’s not from an OEM that’s invested in South Africa, but from a particular model of that car that’s made in South Africa. Made by South African hands supporting a locally invested – multinational listed – into South Africa. The first, second, even third tier supply chain around it that are all managed or run by South African employees. That’s what you call patriotic purchasing. I think that would be a short term, very beneficial win for this economy. I simply can’t understand why it doesn’t happen. I see it elsewhere in the world. Maybe the WTO disagrees with me, but I’ll take them on this point. I want to see this grade of commitment to walking the talk. We have these glib and generic comments around the World Economic Forum and I go back to what I said earlier – let’s get some action going.
