Big business in South Africa has initiated a campaign, loosely dubbed ‘Vision 2040’, which sets out as its overall goal the transformation of the country from a developing to a developed one over 30 years. To achieve that, a target of doubling gross domestic product (GDP) per person over the period should be set, alongside aims for reducing poverty and inequality. Should the aims be met, the country’s GDP per capita would rise from $9 765 currently, to between $20 000 and $30 000 by 2040.
Business Leadership South Africa (BLSA), whose members comprise the CEOs of the 70 largest enterprises operating in South Africa, including multinationals and State-owned enterprises, outlined the vision last week.
Chairperson Bobby Godsell said that the aim of the proposal was to provide a unifying theme beyond the 2010 FIFA World Cup, as well as to offer an antidote to the prevailing sense of “cynicism and defeatism”.
The ‘Big Idea’
The so-called ‘big idea’ had its genesis in a meeting between business, labour and government in November, where President Jacob Zuma expressed his desire for South Africa to cease being a developing country and to emerge as a developed nation.
At a meeting of 45 of BLSA’s member CEOs last week the concept was adopted, together with a programme of initiating a ‘Vision 2040’ dialogue between various stakeholders, as well as the country’s best-performing companies and entrepreneurs.
BLSA hoped the campaign could gain traction among all citizens, arguing that it could only be successful if the ‘cab driver’ transporting visitors around South Africa was enthused and confident enough to be able to elaborate on the vision.
CEO Micheal Spicer reported that BLSA would be setting up “conversations” with top-performing entrepreneurs over the period of 2010 to interrogate what had been key success factors in driving their recent growth, as well as what it would take for them to either double or treble the size of their enterprises in South Africa, or within the region, by 2040.
These discussions would focus on the kinds of legislative, regulatory, infrastructure and market conditions that would have to prevail for the attainment of such an expansionary vision.
Godsell was also of the view that much more could be achieved if the growth target was expanded to include the countries of the Southern African Development Community and the Common Market of East African States, which he said would immediately offer a market of 500-million people and an economy worth about $800-billion.
Business was concerned that South Africa had started to lag its peers in the growth stakes, with Spicer indicating that 2%-type growth levels were “just not going to hack it”.
“We need to be growing at above 5% or 6%,” he averred.
There was also concern that, while there was a ‘market’ for a new national vision and an increasing willingness within government to engage on the development of such a vision, the conversation was becoming bogged down in some specific policy levers (such as the debate on nationalisation) rather than on developing a picture of the type of country South Africans desire and then setting about identifying the tools for delivery.
Beyond Nationalisation Posturing
That said, Godsell and Spicer, both of whom previously worked within mining group Anglo American, were adamant that the nationalisation of mines should not even feature among the future policy options.
Godsell said that he would be “delighted” to have a discussion with African National Congress (ANC) Youth League president Julius Malema about why he and his organisation were calling for nationalisation and what it could mean for the industry, tax resources and development.
He noted that, when the Mining Charter was devised in the early 2000s to guide the sale of the initial 15% (and eventual 26%) of the country’s mines to previously disadvantaged South Africans, it was found that that 15% was worth R150-billion. Company valuations would have increased markedly since that time, he added.
He also noted that many of the black economic-empowerment transactions were facilitated through debt financing, and that those structures had become problematic during the recent downturn in resource company earnings.
“Why would you want to take massive State resources to own something that you already regulate very comprehensively?
“In truth, the South African State is the custodian of the mineral resources . . . and license out exploration and exploitation to individual companies, the conditions for which are set out, in great detail (including the social and employment equity benefits that should flow), through the Mining Charter, which is currently being reviewed.
“So, I would be asking what public good is achieved by taking away ownership,” Godsell said, noting that ongoing capital expenditure at the mines would also have to be funded, which could further deplete tax revenues.
Spicer noted that a recent analysis done by one of its member companies of 180 mining regimes internationally had shown that there had not been one example of a successful nationalised mining sector.
There were successful State-owned mining companies, but nationalised industries had failed, he said.
“This is a plane that has flown . . . 180 pilots have flown this, and whenever [the industry] has been nationalised, it’s crashed,” Spicer said.
Godsell concluded by saying that he would “love to join the ANC Youth League in a slightly different kind of debate, where I would like to ask them: ‘When you think of South Africa in 2040, what would you like South Africa to look like?’”