Absa at WEF
Moving SA into the Fourth Industrial Revolution
WEF 2019 provides an opportunity to glean insights into the Fourth Industrial Revolution, empowering our country to compete globally.
WEF 2019 must be the beginning of our work to move SA into the Fourth Industrial Revolution
This week over 3, 000 delegates from across the world will attend the World Economic Forum (WEF) in Davos, Switzerland. Once again South Africa will be represented by a team led by our President, Cyril Ramaphosa that includes business and labour representatives, among others.
Last year questions relating to corruption, state capture, governance challenges at key state owned companies (SOCs) and poor economic outcomes hindered South Africa’s investment pitch. Twelve months later, we can see progress on many of those issues but there is a lot we still need to do, and 2019 must be the year in which we relentlessly focus on producing economic outcomes that restore hope to South Africans.
The election of President Ramaphosa signalled the beginning of a return a normality in many respects. Whilst there remain many challenges, I am more confident about our country’s prospects now than I was last year, in particular the work to repair critical institutions and organs of state.
This work has laid the foundation for the acceleration of our collective action to return the country to a path of inclusive growth and achieving the kind of South Africa envisioned in our constitution.
When he came into office, the President announced a program of work. The first element of this program was addressing the governance challenges at SOCs. Eskom, Transnet, Denel, and SA Express have new Boards and management teams. Whilst not all of the challenges have been resolved, the quality, integrity and commitment of those placed in leadership are no longer in question.
The other priority was to fight corruption and state capture, the latter being a phenomenon highlighted by the Public Protector’s 2016 report. The judicial commission of inquiry appointed to investigate state capture has so far demonstrated thoroughness and transparency - critical ingredients in building public confidence. The reconstruction of the investigative and prosecutorial capacity of the state is also underway, with a new National Director of Public Prosecutions, Advocate Shamiela Batohi beginning her tenure at the NPA.
Towards the end of last year, the government hosted a successful SA Investment Summit and the Jobs Summit. The investment summit resulted in an R290bn private sector investment pipeline spanning the next 5 to 10 years. In addition, President Ramaphosa also revealed that R400bn in foreign direct investment had been pledged by various countries he or his team of envoys had visited during the last year. This brings the total investment pledged to R690bn.
The message we are taking to the WEF this year, therefore, is more positive than it was last year but we all have an enormous amount of work to do. Having said that, messages we take to investors are worth nothing if we do not continue follow up with tangible policy and administrative actions that demonstrate that the united front we present whenever we collectively see international investors, is real.
In the short term, we need bold action to urgently improve the state of government finances. Although significant steps have been taken to appoint new management and improve governance at our most critical SOCs, their financial difficulties remain a risk the country cannot countenance for too long. This is because some, like Eskom, are central to our economic growth ambitions, and it is vital that they are financially robust.
With respect to some SOC’s, however, we have to ask seriously whether the government and, by implication, ordinary taxpayers need to continue taking on 100% of the financial risk. Telkom is a very good example of what is possible when the government and private investors share the risk yet the SOC continues to have a clear developmental mandate.
Secondly, with an election due in a few months’ time, it would be ideal if all political players resist the temptation to take extreme, adversarial policy positions that make national consensus difficult. The significant structural reforms we need in order to build a modern and resilient economy need pragmatic policy solutions that serve society in the long term.
Thirdly, we need to be very deliberate about sectors of our economy that will drive our growth, and support them accordingly. This means clear policy choices and appropriate supporting administrative actions from government, such as incentives and other support measures, will pave the way for private investment and financial sector lending.
Fourthly, we need to manage the important land reform constitutional and legislative process very carefully. It provides us with an opportunity to provide long-term policy certainty, reform the land claims process to accelerate the finalization of claims and to produce land and agrarian policies that aid spatial planning and economic development.
This is a keystone legislative development that is being watched very carefully by local and international investors. If we produce a comprehensive outcome that settles the historically divisive issue for the long term, we will remove a significant driver of investor uncertainty and include more South Africans in the economy through farming and related opportunities.
Finally, we need to urgently start a new conversation about the objectives of our education system. The topic of this year’s WEF, Globalisation 4.0: Shaping a Global Architecture in the Age Fourth Industrial Revolution” is instructive in this regard.
While President Ramaphosa, Professor Marwala of the University of Johannesburg and others have on numerous occasions spoken on the Fourth Industrial Revolution, we will be left behind if we do not work together to fashion urgent solutions for our basic education system. This is so that the majority of our learners are adequately prepared for a digital future.
This is not just about providing tablets to learners but also about affordable or free internet access, adequately trained teachers and a curriculum that accommodates a radically different future to what we currently imagine. It is precisely because these take time to plan, develop and provide resources for that we have to start our work now - an endeavour that needs organized business to partner with and provide support to the government, schools and other actors in the education space.
We have to develop the capacity to normalize coding, robotics, data analytics and artificial intelligence, among others instead of leaving this to large companies that have the resources to do this or to source experts globally. It is key to South Africa’s ability to compete globally in the near future.
Last year South Africa slipped from number 62 to 67 out of 140 countries in the WEF’s Global Competitiveness Report. While this report is not a measure of readiness for or advancement in terms of the Fourth Industrial Revolution, it nonetheless demonstrates clearly how the speed of adaptation to the digital age will determine the competitiveness of countries. The work we must do therefore is fundamentally about ensuring that our people and economy are globally more competitive in the future.
For the past three years, we at Absa have invested R381m in university scholarships alone, and more in TVET colleges, basic education governance, digitizing the curriculum and other programs we pursue in partnership with government and the education sector. While the university scholarship investment has assisted over 3 100 students to continue with or complete their studies, it is now clear that we have to cast our eyes further into the future and support early development stage education with a much wider, long-term impact.
This year’s WEF provides us with an opportunity to glean useful insights on the meaning of the Fourth Industrial Revolution and its key drivers - and to act with focus and determination in building the country’s capacity to harvest its benefits. I believe that when we start succeeding with just some of them we will begin to see a transformation of our economic and social landscape and build an inclusive society.
*This article first appeared in the City Press