Victor Kgomoeswana is a business expert who is well known for looking beyond the headlines about the business world in Africa. In Africa Is Open For Business, he has collected 50 stories about interesting businesses in Africa.
In the excerpt below, Kgomoeswana looks closely at the idea of South Africa being the gateway to Africa. He looks at the downsides and well as the upsides of the country, and links this to immigration and South Africa’s recent problems with xenophobia.
Read the excerpt:
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SOUTH AFRICA – THE GATEWAY TO AFRICA
I wrote this chapter under the influence. The day was Tuesday and Johannesburg was drenched in showers. A record 100-odd heads of state were congregated at the FNB Stadium to pay homage to the founding father of my country, fondly known as Madiba. Nelson Rolihlahla Mandela had passed away five days before, and the world was united in remembering the multitude of virtues he symbolised.
I recall watching the broadcast, and hearing US President Barack Obama crediting his yearning to be a better man to Madiba. President Manmohan Singh and Ban Ki-Moon of the United Nations were but few of the many speakers who all shared their grief with South Africa, while celebrating the icon of justice, peace and reconciliation.
The magnitude of the event reminded me how significant South Africa had been, politically, in the build-up to independence in April 1994 and afterwards. I recalled how, as the first democratically elected president, Madiba became the epitome of African excellence and hope. For his ability to prevail over adversity with grace and resolve, he joined the elite league of revered African leaders like Julius Kambarage Nyerere of Tanzania, Mzee Jomo Kenyatta of Kenya and Kwame Nkrumah of Ghana. So, yes, I wrote this chapter under the influence of the grief that had gripped South Africa and the world in the second week of December 2013.
The BBC invited me for a radio interview to reflect on the economic legacy of Madiba on Friday – the day after his death. I found the very thought of inviting me to talk awkward, but the reflection profound and realistic in a useful way. What did Madiba bequeath to South Africa’s economy? As others were ululating and singing his praises, was the country’s economic trajectory doing justice to his legacy?
SOUTH AFRICA – THE DOWNSIDE
The education system was making headlines for slip-ups such as the failure to deliver textbooks in time for some schools in Limpopo province, where I come from. Although Limpopo is but one out of nine provinces in South Africa, it was indicative of the problems in the entire country’s education system. The country’s universities – for example, Fort Hare, Cape Town and Wits – used to be the preferred institutions of higher learning, attracting students from many African countries, but are likely to lose their appeal if this is not corrected soon.
In 2012, according to the United Nations, although South Africa was spending 18% of its total government expenditure on education, its literacy rate of 89% was lagging behind that of other developing countries, such as Indonesia and Chile. These two countries were spending the same proportion, with literacy rates of 92% and 98.6% respectively. The rate did not compare favourably with South Africa’s BRICS counterparts, whose literacy rate averaged 90% (Brazil), 93.7% (China) and 99.5% (Russia) after spending only 10%. Without education, no country can lift itself to the next level in terms of development.
Although many good government policies were in place, their implementation did not always match the intent. The Constitution of South Africa, particularly Chapter 2 (Bill of Rights), guarantees basic human rights. However, the rape of six-week old children without evidence of successful prosecutions, for example, does not give hope to citizens and the world. Corruption makes headlines far too often, and involves high-ranking government officials without commensurate follow-up and punishment.
At 41 in the 2014 World Bank Ease of Doing Business report, South Africa’s ranking remained unchanged from the previous year. But the country dropped eight places in sub-indicators such as ‘starting a business’, one place in ‘dealing with construction permits’ and four places for both ‘getting credit’ and ‘registering property’. These are not good areas in which to register deterioration in the eyes of investors.
Lastly, with the country’s economy growing at around 2% and without any marked rise in job creation, we could safely say that South Africa needs to up its game. There are many areas of the country that are worth celebrating, though. But before that, we need to tackle the other elephant in the room.
XENOPHOBIA – OR IS IT AFRO-PHOBIA?
Whenever violence flares up in some of South Africa’s poorer overcrowded settlements and reports of xenophobia blot our media, I hang my head in shame. This is more shameful when I travel to another African country wearing South African colours. I find myself fielding questions about how we could be so inhuman towards other Africans.
At the rate Africans from elsewhere on the continent migrate towards South Africa in search of opportunities, things are not looking up. I would also migrate to South Africa if I had been born in some parts of Africa. That is a natural human instinct – to search for better prospects if they are not available where one happens to be. I then put myself in the shoes of those South Africans without opportunities, for reasons such as education, or the country’s political history.
Personal economic depression does not make torching a fellow human being, let alone an African, inexcusable, but I often wonder where the solution lies. Immigration control is a problem all over the world. South Africa is not coping with its own socio-economic complications. Its economic growth is not creating enough jobs to support the many South Africans without marketable skills. With growing inequalities and no promise of a better tomorrow, those of us privileged South Africans should make the elimination of Afro-phobic attacks our priority. We should do this by taking individual responsibility to create a better life for those less fortunate than we are. We need to do this by using our social standing and better income to improve the quality of life for our families (especially extended families) and create a sustainable way of life for others.
The government is not going to be able to do it alone. Developed societies of the world are not better off because of governments. They are effective because they cherish active citizenship, including holding their governments accountable. Alongside that, however, are ordinary citizens who accept responsibility for making things happen. It is no different in South Africa.
SOUTH AFRICA – THE UPSIDE
Good news abounds in South Africa. First of all, the infrastructure is world class in certain areas. For example, the high-speed train connecting certain parts of the Gauteng province is as good as you can find anywhere in the world. Even if the service is not necessarily the most affordable, it is still one commendable piece of pioneering work for Africa and the world to emulate.
The roads, highways in particular, are the best in Africa. Innovative services such as the Bus Rapid Transit system in parts of the country’s major centres are indicative of how – compared to the rest of the continent – South Africa is streaks ahead. Getting around the country is relatively easier than in most African countries.
South African airports are outstanding. I do not particularly feel any different landing at OR Tambo International or Heathrow. Other than size, the level of sophistication, safety checks and general aviation ambiance are on par with the best in the world. This state of the aviation industry makes South Africa the logical and safe option for anyone coming to Africa for the first time; more so when South African Airways has been voted Africa’s best airline, in the customer survey by SKYTRAX – a global aviation research organisation – for ten years in a row, up to 2012.
The attractive tourism industry is booming (page 266). The long coastline, biodiversity, sunny climate and cultural variety are among the country’s major selling points. Hotels in the country are at the level one would expect in Africa’s leading economy. Compared to other emerging markets, the biggest test of South Africa’s tourism potential was the 2010 FIFA World Cup (page 263), but before that, there had been other events that cast this small African country in a very positive light. Take the World Summit on Sustainable Development in Johannesburg in 2002, for example; or the BRICS Summit in Durban ten years later. In between, there were also the All Africa Games, the African Cup of Nations twice – 1996 and 2012 – as well as the Rugby World Cup in 1995. Be it leisure, or business and conference tourism, every time South Africa has had a chance to host a major event it came up trumps.
Then there is the financial reporting excellence. The country is top in the world, and I have had the benefit of working for two of the Big Four audit firms. Even smaller firms such as Nkonki Inc. and SizweNtsalubaGobodo are highly competitive in their trade. Nkonki Inc., for instance, hosts the Annual Audit Committee Conference and recognises excellence in sustainability reporting. The CEO has published a great book (The ACE Model) on the effectiveness of audit committees in 2013.
Over and above that, the South African banking system sailed through the rough seas of the 2008/9 global financial crisis without any major incident, attesting to the financial stability of its banking system.
Top that up with South Africa’s reliable legal system backed by a good constitution. Most individuals and companies would prefer to litigate in South Africa than anywhere else on the continent. The constitution also opened the way for women to assume positions of leadership in both the public and private sectors, achieving the highest levels of representation in parliament – matched only by Rwanda.
The same can be said for the Johannesburg Stock Exchange, JSE, (page 51). Given a choice, most investors and entrepreneurs would rather list their company on the JSE than anywhere else on the continent. This should be expected, since the 2014 World Bank Ease of Doing Business report ranks the country at 10 out 189 for protecting investors.
South African companies like Shoprite, Tiger Brands, SAB, Standard Bank and MTN are among the trailblazers elsewhere on the continent, matching multinationals from other parts of the world on competitiveness and capitalising on their Africanness to drive Africa’s economic renaissance. State-owned development finance institutions, including the Industrial Development Corporation (IDC), the Development Bank of Southern Africa (DBSA) and the Public Investment Corporation (PIC) are also making investment inroads north of the South African border. My enduring disappointment – and that of most business leaders I meet on the continent – is why more South African enterprises aren’t taking advantage of what Africa has to offer in growth.
Post-1994, South Africa also played a crucial role in improving stability and democracy in other parts of the continent, including Rwanda, Burundi, Sudan (and South Sudan) and the Democratic Republic of Congo. Anyone who appreciates the significance of these countries to the general peace and stability of the continent will appreciate how vital South Africa’s interventions are to the long-term sustainability of democracy in Africa.
Former president, Thabo Mbeki, is a well-respected thinker on African matters. His presidency intensified South Africa’s seniority in advancing the cause of the African Union, as well as its predecessor the Organisation of African Unity. It is not surprising that he continues to take part in facilitating dialogue to bring about lasting African solutions to African problems.