At the 2018 World Economic Forum Annual Meeting in Davos, leaders from the world of business, government and academia were charged with finding ways to strengthen cooperation in an increasingly fractured world. Headline growth at the time may have been healthier than at any point since the Great Recession, but it masked deep divisions, both within societies and across borders.
South Africa, under new leadership and buoyed by the beginnings of an economic upturn, stood out as a beacon of optimism. Its government under President Cyril Ramaphosa is determined to herald a new dawn for the country. It has succeeded in building trust among the international community for the reform programme that it knows is necessary to place South Africa’s story back on track.
Now is the time to turn goodwill into action. This week, at the invitation of the World Economic Forum, 70 leaders from global businesses will convene in Johannesburg to advise and devise new ways that the private sector can help tackle the country’s deep-seated challenges. They are here because they know that South Africa’s government cannot provide solutions on its own, and they know that a prosperous, fair and inclusive South Africa is in their long-term interest.
The top priority for business is making South Africa a magnet once again for investment. The world’s best businesses want to invest and create jobs in the country - that was clear from the Annual Meeting. The challenge is rebuilding an enabling environment that allows competition to flourish. According to the Global Competitiveness Report, South Africa’s long-term competitiveness is in decline, not simply because of chronic challenges such as education, but also in areas of past relative strength, such as the quality of its institutions and financial markets. This decline suggests a complacency that cannot be allowed to continue.
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The ultimate goal of investment is to create jobs and a more prosperous society. The urgency of this task is not lost on South Africa's leadership, but the global transformation of labour markets is one megatrend that no government alone can fix. Economic anxiety stimulated by automation and globalization is driving political agendas across the globe. As it looks to diversify and strengthen its economy, South Africa needs to attract more manufacturing jobs. But it must go further, with nothing short of a massive reskilling drive to equip workers for success in the 21st century.
Improving the job prospects of South Africans is important, but so is building a fairer society. According to the Forum’s Inclusive Development Index, South Africa is one of the most unequal countries in the world. Wealth and incomes are highly concentrated, yet 36% of the population are considered poor, with a median consumption level of around $5 per day. A more inclusive growth model is urgently needed, one that encourages entrepreneurship, takes a zero-tolerance attitude to corruption, discourages rent-seeking and unproductive investing, and provides a safety net for the displaced.
Lastly, global business leaders want South Africa to prepare for the Fourth Industrial Revolution. Technology is rapidly altering the terms of global trade, disrupting not just job categories but whole industries. The implications for South Africa are profound and require a complete rethink of development strategy. This means going beyond traditional manufacturing and services industries, and applying the technologies of the future, including the blockchain, big data analytics, artificial intelligence and drones, to put South Africa in the big league of future-ready economies. This approach must not be seen as simply one option; the country cannot rely on a jobs bonanza from manufacturing, as other economies have in the past on their way up the development ladder.
South Africa’s challenges are not going to be fixed overnight. Building a fairer, more prosperous and more resilient society will be an ongoing endeavour. It requires restored trust and faith in institutions and governance. It demands commitment and energy from all of the country’s stakeholders, from civil society and labour unions to business and government. The international business community stands ready to play its role in supporting this great transformation.