The Directors Event: SA’s biggest board meeting

The time for collaboration and frank discussion between South Africa’s most influential leaders in business, government and civil society has never been as pressing in order to chart a new path for the country, asserted Nicolaas Kruger, CEO of MMI Holdings at the inaugural The Directors Event.

Held in association with the Sunday Times Top 100 Companies Award, MMI Holdings, the Institute of Directors and Mancosa Graduate School of Business, The Directors Event attracted influential leaders from all spheres of society.

The event, which took place in Sandton on Tuesday, 23 June 2015, has been pegged as South Africa’s biggest board meeting. Certainly the calibre of panellists met board member criteria.

According to Kruger, South Africa needs faster growth and to become a more equitable society. “To achieve this requires mobilising all our resources, visionary and values-based leadership, policy certainty, a positive attitude and greater collaboration both locally, regionally and internationally,” he said.

“Collectively we need to rise to the challenge and direct our energies to those inflexion points that make the most impact. As leaders we are accountable to our broader society. While there is a great deal of work to be done, South Africa has extraordinary potential.”

Dr Reuel Khoza, former chairman and non-executive director of Nedbank, then addressed delegates on the important role of the chairman and the chairman’s report.

Chairman, he said, don’t operate in a vacuum, but in context, as do their organisations. They need to be vision led, purpose driven and harbingers of the future – destiny is not a matter of chance, it’s a matter of choice.

The role of the chairman, he stated, was to identify, reflect and report on corporate performance. “The chairman is the ultimate corporate flag bearer,” he said.

Today’s chairs face a plethora of challenges: they’re expected to have an in-depth knowledge of the company and the markets in which they compete; they should draw on their own experiences and insights to guide management teams; and even though ultimate executive control lies with the CEO, he or she has ultimate responsibility for the direction and performance of the corporation.

An engaged chairman should enhance the organisation and have the ability to establish a productive board atmosphere. He or she, added Khoza, is the custodian of the corporation’s moral compass and as such, can’t afford to ignore corrosive forces.

He concluded with a quote from Baltasar Gracian: “Without courage, wisdom bears no fruit.”

The event was broken up into four ‘meetings’ each focusing on different issues: governance, accountability and reputation management; leadership and talent management; infrastructure development; and economy and entrepreneurship.

Governance accountability and reputation management

The first panel discussion examined our adherence – or lack thereof – to the principles of accountability in both the public and private sector and how failure impacts reputation.

The panel consisted of Public Protector, Advocate Thuli Madonsela; PWC Senior Partner for Africa, Suresh Kana; the Institute of Director’s Executive for the Centre of Corporate Governance, Parmi Natesan; Brand South Africa chairman, Chichi Maponya and chairman and non-executive director of companies, Dr Len Konar.

Good governance is a little like health:  you don’t realise how important it is until you lose it, said Bruce Whitfield, the host of the panel discussion as he opened the session.

Increased pressure on earnings and a tough economic climate has seen many businesses resort to short term reporting – and short term benefits, which can ultimately lead to long term damage. “It’s hard to build up trust with stakeholders once you’ve lost it,” reminded Kana, adding that short cuts are not a sustainable solution and that boards have an important role to play in ensuring that a company’s reputation is maintained.

“It takes 20 years to build a corporate reputation – but just five minutes to ruin it, which is why it’s so important for businesses to take corporate governance seriously,” said Konar. He said that corporate governance principles – particularly in the public sector – were not well applied which was why it is so critically important that all organisations have a credible, representative and skilled board in place.

Boards have a particularly important role to play by ensuring that organisations adhere to the principles of good governance. The Minister of Public Enterprises is well aware of the need to ensure that boards in the public sector are made up of individuals with the right skills and that conflict of interest is avoided, revealed Madonsela.

Not only do board members need to set the tone and demand delivery from executives, but they should also have sufficient industry knowledge to advise their executive and management teams, agreed the panel.

“Governance applies to all entities, irrespective of whether they are public or private,” pointed out Natesan, adding that the Institute of Directors has guidelines in place to assist companies implement better governance. She said that as a result of an increased focus on independence, many directors don’t have sufficient industry knowledge to be able to adequately advise either the board or management teams.

Maponya argued that the private sector was over governed with too many statutory requirements. In response Madonsela said the ideal would be for business to take responsibility for doing the right thing and come to the party under the UN Global Compact. This is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption. “However, in addition to obeying the rules and ensuring good governance, companies still need a purpose driven approach. If an organisation’s secretariat is neither competent, nor honest, the board is going to be misled.”

Business mogul Johan Rupert has been quoted as saying it has become increasingly difficult to defend South Africa to potential international investors. Maponya, in her role as chairman of Brand South Africa, agreed this was a concern but pointed out that we should not only focus on the negatives. “Not everything is in crisis. It’s a work in progress and we all need to be part of the solution. Brand South Africa is trying to champion an economic Codesa but at the end of the day it’s South Africans themselves who lack confidence in their own country.”

Madonsela agreed that South African companies are struggling to convince global investors that South Africa is a good investment destination. “We know we’re still a viable investment destination and until very recently one of our areas of pride was that the rule of law was paramount.” However, she added that the recent diplomatic crisis caused by government’s failure to stop Sudanese president Omar Al-Bashir from leaving the country despite an interim court order barring him from leaving, would raise questions about the rule of law amongst investors. South Africa, she said, would now have to work hard to ensure it did not appear to be eroding its reputation as a country which abided by the rule of law.

The panel agreed that South Africa needs to acknowledge its weaknesses rather than deny them. Transparency is required in everything from the country’s cashflow situation to running a due diligence on Eskom. “We need the truth and we need credible, seasoned boards at the helm of public entities,” insisted Konar.

Leadership and talent management

Estimations indicate that there are currently as many as 830 000 unoccupied positions requiring high-skilled workers across a range of occupations in South Africa. “How do we create leadership that shares their talent and avoid some of the epic leadership failures from our recent past,” asked host, Iman Rapetti of her panel including Johnson JJ Njeke, chairman of MMI Holdings; Professor Adam Habib, vice-chancellor and principal of Wits University; Gill Connellan, chairperson of the Association for Skills Development South Africa; Sdumo Dlamini, president of Cosatu; and Glen Nwaila, Geology Superintendant at Sibanye Gold.

“We need to move away from the rhetoric, add a healthy dose of pragmatism, a goal and a plan of how we’re going to get around the obstacles around leadership and talent management,” suggested Habib.

The problem, said Njeke, is that too many organisations parachute people into positions they’re not ready for, instead of nurturing them.

We need to transform the way we identify potential talent out of the youth market, maintained Connellan. In addition, she said many of the structures in place gave rise to serial learnership job hoppers. Organisations need to put strategies in place which embrace people and enable growth and opportunity. Furthermore, leadership needs to be able to recognise and selflessly develop talent, she said, pointing out that a talent development strategy would achieve this. “However, business appears to be afraid of putting people on show and sending them on training.”

Individual development plans are one of the mechanisms many corporates use to enable employee growth but as Nwaila pointed out, they often end up being little more than pieces of paper. “Development plans need to be used for the right reasons rather than just compliance purposes,” he said, adding that all companies have the ability to attract the necessary skills.

Dlamini noted that there is a great deal of talent coming from the SME sector which could ultimately create a larger base of taxpaying South Africans.

The panel cited a number of South African leaders they admire, including the founders of First Rand (Njeke); Trevor Manuel (Connellan); and the leaders of Sibanye Gold and Capitec Bank (Nwaila).

“Different organisations require different types of leaders – too often we think that a leader has to meet certain criteria but ultimately it depends on where the organisation is in terms of its development,” pointed out Habib, adding that it is leaders who go against the grain and who have a plan that are often successful.

He said companies had the ability to be successful locally: “Take Old Mutual and Sanlam, for example. Sanlam went local, Old Mutual went international. Today Sanlam is the company to look out for. Goldfields decided to leave South Africa and split its local assets. Today it is those local assets that are performing better than the offshore assets.””

President Zuma came in for robust criticism from some of the panellists. “One of the attributes of a successful leader is to have a good value system in place and an image that young people can aspire to,” asserted Njeke.

Added Habib: “Zuma is the worst example of a leader; his goal was an inclusive economy and to get business, labour and the state to work together. He hasn’t achieved that. The economic plan is incoherent and nobody is collaborating.”

Dlamini, however, had a different view, arguing that nobody had the right to undermine the voice of the majority. While Zuma has been under attack from the first day he took office, he was still around years later, making him a good leader, he said.

Habib countered this argument saying 15 million people voted for the ANC – not for Jacob Zuma. “He was chosen by 400 people. Majorities do make mistakes. The majority voted Hitler into power in Germany and Al-Bashir into power in Sudan. Just because the majority voted doesn’t mean you suspend your thinking. At some point somebody has to stand up and say enough is enough.”

“The problem within government currently is that there is a culture of protectionism whereas we need a culture of humble leaders who eschew ego,” added Connellan.

The panel was divided on what qualities constitute a good leader mentioning, amongst others, characteristics such as decisiveness, humility and consistency. “Different organisations require different types of leaders – too often we think that a leader has to meet certain criteria but ultimately it depends on where the organisation is in terms of its development,” pointed out Habib.

Many leaders fail when they think they’re bigger than the organisation itself, added Dlamini, forgetting that they’ve been given a mandate.  Leaders need to know when to step down: “I want to see CEOs coming in, saying what they want to achieve and then leaving once they’ve achieved their goals.”

Habib pointed out that racialised networks continue to challenge people to connect to opportunities. We need to learn how to break out of our traditional networks and make linkages with other networks.

With regard to talent retention strategies, Habib said, “There will always be somebody willing to pay more: what keeps people in their jobs is a sense of belonging, being valued, company culture, being treated fairly and feeling that you are making a difference.”

Njeke pointed out that while South Africa appears bent on producing high numbers of university graduates, there are a number of lower level skills required – and we don’t have sufficient numbers of those skills. “We import welders, for goodness sake,” he expostulated. “How difficult can it be to train welders?”

Infrastructure development

There are numerous challenges around infrastructural development including speed of delivery, job creation and the spectre of corruption. Infrastructure development is high on the government agenda based on the need to achieve real economic growth.

Hosting this session was Nikiwe Bikitsha which included panellists, Chris Yelland, MD of EE Publishing; Sisa Njikelana, chairperson of the SA Independent Power Producers Association; Lungelo Gumede, co-founder of Headboy Industries; and Adre Smit, consultant senior policy advisor at ASISA.

Energy is a critical issue in any conversation around infrastructural development and Njikelana admitted that there was a huge opportunity for independent power producers who are predicted to play a significant role in the country’s future generating capacity.

The panel revealed that government are looking for an injection of equity into Eskom. Yelland warned against incessant Eskom tariff hikes arguing that little consideration had been given to affordability both to the economy and the man in the street. “E-tolls should have taught us that you can’t stuff high tariffs that people can’t afford down their throats.”

He suggested that government should focus less on being an implementer and more on being a facilitator citing the renewable energy programme – a programme facilitated by government – as being a great success.

Gumede said he could almost forgive government for its poor track record in terms of execution as this was the first time such a huge infrastructural reform programme was being implemented. However, he argued that the learning curve is just too long. “We have to learn how to learn much faster,” he insisted.

Yelland agreed, adding that we also have to learn from our recent past. “There is only one utility that has not restructured and modernised and that’s Eskom. It hasn’t listed, it has no access to outside management, vision or external capital. It’s time to put ideology aside and modernise Eskom.”

Smit revealed that government were “putting their hand out” and looking for more private sector involvement. “From ASISA’s perspective we are trying to get the private sector involved in the debate because clearly, government’s budgets are stretched. The challenge, however, is how we physically engage, particularly as there is a traditional lack of trust between government and business. We need policy certainty or we won’t get investors.”

The panel agreed that there are opportunities in intra-African trade. Gumede warned that South Africa is perceived as Africa rather than an individual country to investors. “We need investors and we need them to regard perceived risks as even lower than they really are. However, all too often what is reported in international media is an international insight rather than an African insight. It’s time we started telling our own stories so that investors understand what is happening on the ground.”

The panel concluded by saying that the National Development Plan is a good one but that it needs execution to get projects up and running. “We need more partnerships and more engagement,” said Smit. Furthermore, government must not be overly optimistic and needs to be honest and transparent about its shortcomings, said Gumede.  Njikelana concluded by saying there were opportunities for multiple ownership of projects but that he blamed those with the political will who failed to take ownership of infrastructural projects.

The last word went to Yelland: “It’s time to get down to executing and while trust is an inhibiting factor, we need to be less ideological and more practical in our approach. We need real ownership of the revenue stream. Ultimately, we need to start doing things differently.”

Economy and entrepreneurship

Economic growth relies on job creation. The development of smaller businesses is key to solving many of South Africa’s economic woes. But to achieve that we need an enabling environment, one that minimises red tape and legislation, encourages a culture of savings, and has a well-developed venture capital industry, said Andile Khumalo, host of the final panel discussion at The Directors Event.

Panellists included Sanisha Packirisamy, an economist from Momentum Asset Management; Ian Fuhr, CEO of Sorbet; Jabu Mabuza, chairman of Telkom; and Leon Campher, CEO of ASISA.

Packirisamy said that in order to create the nine million jobs required by the NDP, significantly more economic activity is required, adding that 90% of these new jobs would need to come from the SME sector. “Revenue is under pressure which means that government is not going to be able to create more jobs,” she revealed, adding that faster economic growth does not necessarily translate to more jobs.

“Of critical importance is that we normalise industrial relations – many companies are uncomfortable with the labour situation and stringent labour regulations in South Africa, and as a result are moving offshore. We need structural reforms in this area to make us more competitive. In addition, we need to rein in our labour costs and stick to our expenditure limits. It’s about aiming for quick fixes in a low growth market,” she said.

“The only way to confront the challenges of inequality and poverty is to ensure economic growth,” stated Mabuza. “And while we’ve had jobless growth, it hasn’t been inclusive. We need predictable legislation and a more enabling environment – one that is conducive to the creation of small businesses and entrepreneurship. Entrepreneurs are those individuals who see the gap between needs and opportunities – and we need more of them.”

A key element of entrepreneurship is mentorship, maintained Fuhr, adding that the mentorship groundswell needs to become a tidal wave going forward. He outlined the characteristics of an entrepreneur as somebody with intuition (intuitively knowing that something will work even without the empirical evidence); courage (it’s important to always keep your head); perseverance (being in business is about being in it for the long haul); and the ability to serve people (if you serve people you will ultimately make money). “Don’t go into business just to make money,” he asserted.

Campher maintained that while South Africa was still in a reasonable shape economically, it was headed in the wrong direction. “We need to agree on the priorities emanating from the NDP plan – energy, infrastructure, education and water – and act on them,” he said.

In terms of employment, he argued that many graduates were unable to find jobs because they had inappropriate majors. He pointed out that the country needs more artisans and welders, for example. He suggested deploying retired people with experience into industries where their knowledge could be passed on and where their skills could be utilised.

Mabuza argued that business leaders don’t wake up in the morning pondering the challenge of job creation. “We wake up thinking of ways to make money,” he insisted. “A consequence of making money is that we will employ more people. The bottom line is that executives make decisions in the best interests of their organisation. Sometimes we also have to make tough decisions – like retrenching people.” He revealed that Telkom set up a R100 million enterprise development fund to set some retrenched Telkom employees up as entrepreneurs.

The Directors Event: an exercise in nation building

“This event has been a focused exercise in nation building,” said Nicolaas Kruger, CEO of MMI Holdings Limited. “We need visionary, value-based leadership, a positive attitude, inclusive collaboration and to be prepared to change the way we do things if we want to create a better future for our country.

“MMI has been proud to be associated with the inaugural Director’s Event and we trust that these proceedings are only the start of the conversation towards collaboratively charting a new path of economic prosperity for all South Africans,” he concluded.

Business, government and NGO leaders gathered for the second annual Sunday Times Top 100 Companies Directors Event in Sandton recently to confront and debate several of the country’s most pressing issues including innovation, healthcare, education and global competitiveness, in an effort to find lasting solutions to these challenges.

The Directors Event, dubbed ’SA’s biggest board meeting’, sponsorsed by financial services group MMI Holdings in association with the Institute of Directors Southern Africa, University of Stellenbosch Business School  Executive Development and law firm Hogan Lovells.

A challenging environment both globally and locally needed to be taken into account, said Nicolaas Kruger, Group CEO at MMI Holdings when he welcomed delegates. He said initiating and participating in meaningful conversation and action to drive nation building through engagement, collaboration, and values-based leadership was important. The only certainty in this day and age is change, he argued, making the solutions put forward at The Directors Event more important than ever before and making action to drive nation-building a necessity.

South Africa needs to face and address its issues directly, agreed Wiphold founder and director, Gloria Serobe in her Chairman’s Report. Drastic steps are required to effectively deal with the macro-economic environment and government needs to implement austerity measures. She added that the country needs inclusive growth, driven by partnerships between business and government in targeted sectors such as agriculture, tourism and financial services.

South Africa is lagging in terms of its global competitiveness, said Caroline Galvan, Lead Economist and Editor of the World Economic Forum’s Africa Competitiveness Report, when she addressed delegates on South Africa’s competitiveness ranking. Not surprisingly, South Africa performs poorly in terms of its human capital deficit, restrictive labour regulations and inefficient government bureaucracy. Galvan emphasised that the country’s goal to become a knowledge-driven economy is a crucial challenge. Key to improving its competitiveness ranking is to focus on finding solutions where they are most needed.

Subhead: Facilitating innovation that pays

The first panel discussion focused on how innovation could be used to drive the economy forward. Yusuf Randera-Rees, CEO and co-founder of The Awethu Project; Matsi Modise, MD of SiMODiSA; Dr Rethabile Melamu, Acting Chief Director of Sector and Industry Development in the Gauteng Provincial Government; Justin Stanford, co-founding partner of 4Di Capital; and Boris Urban, Professor and Chair in Entrepreneurship of the Lamberti Foundation at Wits Business School. The panel was hosted by Andile Khumalo, Power FM 98.7 business presenter, and it thrashed out the inherent challenges facing entrepreneurship and small businesses in South Africa.

Talent in South Africa is fundamentally under-utilised and the current models of entrepreneurship development simply don’t work, said Randera-Rees. Added to this, the entrepreneur ecosystem is fragmented, said Modise, and the country needs to advocate and lobby for more entrepreneurs in business.

Government, particularly at a provincial level, has recognised the need to bridge the gap between entrepreneurs, funding and training. The result is the establishment of The Innovation Hub in Pretoria to incubate entrepreneurs with good ideas, said Melamu. The hub provides opportunities for government to partner with the private sector to provide mentorship and support to budding entrepreneurs.

Recognising the diversity of entrepreneurs will help to drive innovation but – and this was a consistent theme throughout this discussion – South Africa needs to create an enabling environment which removes as many barriers to doing business as possible. “The sooner we realise that only individuals can create businesses and ensure that legislators provide the right environment with appropriate incentives, the quicker natural entrepreneurs will emerge,” insisted Urban.

Entrepreneurship needs to focus on more than just the idea. While a good idea is important, strong execution of that idea is even more important, said Stanford.

Subhead: Aiding wellness with quality healthcare

The second panel focused its discussion on South Africa’s healthcare system which requires a concerted effort on the part of business and government to address its challenges. Hosted by Talk Radio 702  business presenter Bruce Whitfield, this panel comprised Precious Matsoso, Director General at the Department of Health; Christine du Preez, Director of the Hlokomela Clinic, Dylan Garnett, CEO of Metropolitan Health; Prakash Devchand, Chairman and CEO of Lenmed Health; and Simon Hlungwani, President of the Democratic Nursing Organisation of South Africa.

Challenges facing the sector include significant staff shortages, existing staff rotating through facilities, the loss of nurses to Middle Eastern countries and a lack of incoming talent. The challenges facing the sector are so enormous it’s hard to know where to begin in addressing them, admitted Garnett.

These issues all contribute negatively on both the quality and cost of healthcare. Alarmingly, the panel of experts agreed there was little indication of any improvement in the coming years. “If we don’t rectify the lack of trained nurses and specialists, the healthcare system will suffer a meltdown within the next five years,” predicted Devchand.

These concerns, said Hlungwani, are present in both the private and public healthcare systems, but a lack of trust between the public and private sectors is making it harder to find solutions.

However, Matsoso believes there are many innovative ideas being used in the private sector and these need to be implemented in the public sector too. A holistic approach is needed, Du Preez added, and public-private partnerships present numerous opportunities.

Subhead: Developing the youth through education

Education joins healthcare as one of the primary challenges facing South Africa today. Putting forward possible solutions to the deepening crisis was Fasiha Hassan, Secretary General of the Wits SRC; Mary Metcalfe, Visiting Adjunct Professor at the Wits School of Governance; Robyn Beere, Director of Inclusive Education South Africa; Dr Felicity Coughlan, Director of Independent Institute of Education; Debbie Schӓfer, Western Cape MEC for Education; and Panyaza Lesufi, Gauteng MEC for Education. Broadcasting news anchor Iman Rappetti led the discussion.

Ultimately, pointed out Schӓfer, money determines what interventions can be put in place. The province has implemented numerous programmes including a feeding scheme and additional resources in previously disadvantaged areas where it could. Change, argued Lesufi, doesn’t happen overnight. The task of amalgamating the education that the rich and poor receive will take some time to resolve.

Research indicates that 75 to 80% of South African schools are unable to provide the education that children require, said Beere. Even more disheartening than schools that fail to cater to children’s needs, said Coughlan, is the replication of the middle class. “Social capital is virtually impossible to escape, as the middle class replicates itself – meaning that no matter what degree an individual might do or how well they do, unless they behave a certain way, these individuals will be unlikely to get a job,” she said.

Structural inequalities of the system mean that poor students are the ones who fail and suffer the most, Hassan pointed out. In order to address these inequalities changes need to be made at a foundation phase level. “Education needs to provide young people with skills that make them adaptable, open thinkers who contribute to society as a whole,” Metcalfe said.

Subhead: Driving global competitiveness

Growing the economy to remain competitive globally continues to be a top priority for business and government. In the current volatile economic climate, becoming more competitive has never been as critical.

The panel members for this discussion included Caroline Galvan, editor of the Africa Competitiveness Report; Nontombi Marule, Director of Innovation and Technology at the Department of Trade and Industry; Dion Shango, CEO of PwC Southern Africa; Richard Poplak, co-author of Continental Shift: A Journey Through Africa’s Changing Fortunes; and Muhammad Seedat, founder and MD of Smartrac. Broadcaster Bronwyn Nielsen hosted the meeting.

A key issue of competitiveness is talent and this is an area where South Africa lags significantly, said Galvan.

“South Africa has to mobilise the youth in the right direction, and entrepreneurship is an effective tool to do so,” advised Seedat. “It’s not about creating jobs, but rather about creating an enabling environment for individuals to create businesses.”

South Africa needs to focus on three factors going forward, said Marule. With stringent SMME strategies, improving the agility of programmes and implementing long-term planning, South Africa should be able to improve its competitiveness.

What holds the country back from moving up the WEF’s index though, argued Poplak, is a lack of leadership – and until that can be resolved, it will impact negatively on the country’s competitiveness.

While many of the issues raised at this year’s Directors Event gave little cause for optimism, it’s not all doom and gloom for South Africa, insisted Dion Shango, CEO of PwC Southern Africa. The country has a formidable economy and if we all focus on fixing the right issues without getting distracted, progress can be made. “The country has all the tools it needs to make it work, it’s now a case of putting them into action,” Poplak concluded.

Addressing SA’s many challenges

Protecting South Africa’s economy, navigating the risks of geopolitical uncertainty and South Africa’s challenges around youth education and employment were the main themes discussed at the third annual Sunday Times Top 100 Companies Directors Event held last week in Sandton. The event was brought to you by MMI Holdings, in association with the IoDSA, Hogan Lovells, Johnnie Walker, USB Executive Development, Aluwani Capital Partners and Times Media Events. The event commenced with a welcome from the MC and Head: Group Communication and CSI, Dan Moyane, who pointed out that this time one year ago, the world was a different place – before Brexit and before Donald Trump become the US president, and before political uncertainty in South Africa became the new norm. He was followed by Ron Derby, editor of the Sunday Times Business Times. “We’re in recessionary times, both in terms of the economy and in our government,” he said. He added that South Africa, over the past decade, has seen a collapse in government, and the future of the country must be renegotiated.

Nicolaas Kruger, Group CEO of MMI Holdings Limited discussed the tough environment facing South Africans, saying that the country’s problems need to be acknowledged before solutions can be found. He said South Africans have more in common than not, and that we should face our challenges together. Recapping last year’s Director’s Event, Jeremy Maggs, eNCA news anchor and contributor for Financial Mail, recalled the four key themes that were covered in 2016: South Africa’s lag in global competitiveness; the need to build an enabling environment for small businesses and entrepreneurs; the healthcare sector facing a crisis; and the declining standards of education. Fast forward 12 months later and South Africa faces the negative impacts of political instability and its first economic downgrades. As a result, there has been little to no improvement, and in many areas a backward slide in terms of each of the four themes highlighted at last year’s event.

South Africa’s constitution is what has made democracy a success, said Bonang Mohale, Chairman of Shell SA and the Deputy Chairman of Business Leadership South Africa (BLSA), at what has been dubbed South Africa’s biggest board meeting. The constitution has been the line that separates the country’s best from its worst, good from evil, right from wrong and freedom of speech from hate speech. However, both the constitution and South Africa’s democratic values are at risk and under attack, he said, adding the country has lost credibility in the eyes of the world. The country’s tipping point, he said, is corruption and will be what determines whether it operates according to state capture, or as a democracy which serves all its citizens. Our state entities, he added, have to work well, or we will lose everything. It is the responsibility of businesses in South Africa to protect its reputation and to fight against what he termed “state capture becoming corporate capture”, where common thieves masquerade as business people, destroying rather than creating value.

BLSA has developed the ‘State of Integrity Six Pack’, a series of six guidelines which could reverse the vicious cycle towards the downward trajectory that South Africa finds itself on. The first of the six points is to launch a judicial enquiry into state capture. Next, Mohale said the nuclear programme must be shelved; the public sector must be professionalised and depoliticised; best practice procedures must be adapted by the state; and state entities including the judiciary, police, NPA and Hawks must have new leadership and become independent of political influence. Finally, the funding of political parties must be transparent. Business is the answer to South Africa’s problems and not the enemy as it is currently being portrayed, Mohale concluded. Mcebisi Jonas, the former Deputy Minister of Finance delivered the event’s keynote address during which he presented a SWOT analysis of South Africa. The South African economy is in a period of low growth and has entered a recession, he pointed out, even though mining and agriculture have shown growth. In the case of mining, this growth is a result of global economic growth while agriculture’s recovery is a result of the end of the drought rather than an economic recovery.

The trade sector has contracted by 5.9 percent and people are spending less on goods and services such as food, clothing, restaurants and hotels. There is less money in circulation, said Jonas and the low growth is not cyclical, but structural, with the economy growing by just one percent since 1990, whilst the whole of emerging Asia has grown by seven percent over the same period. Despite having the necessary infrastructure, he said South Africa’s poor growth was the result of an over-dependence on unreliable sources of foreign investment, resulting in a greater susceptibility to global market shocks. From a structural point of view, said Jonas, South Africa does not invest in sufficient fixed capital – which forms just 18 percent of the GDP, in comparison to China’s 37 percent of GDP. Foreign investors are choosing to invest in other developing markets rather than South Africa as a result of policy uncertainty which is damaging the mining industry and causing widespread social and political instability.

Simple asset redistribution will only increase unemployment and inequality, he argued, in much the same way as BEE policies have made only a handful of black business people wealthy. “We need to have a different conversation about how to create real economic participation for all,” he said, adding this would mean more incubation programmes for black entrepreneurs, and the creation of jobs for the low income, low skilled section of the population. Government’s abilities to affect change are constrained by the deep levels of state capture and corruption within the system, he said, adding that corruption in state owned enterprises had significantly raised the cost of utilities. “The money we use to sustain our inefficiencies could be better used elsewhere,” he said.

A priority was to ensure that South Africa rid itself of corruption, starting with better management of the fiscus, insisted Jonas. “It makes no sense to focus less on growing the economy and more on public spending,” he added. Jonas also said South Africa’s recent downgrade to junk status posed a major challenge and needed to be reversed. Growing populism happens when low levels of trust exist, he said, adding that the country needed to resist the populist rhetoric of calls to destroy ‘white monopoly capital’. This, he said, divides South Africans and puts business into the role of the enemy. Populism, said Jonas, denies risks and takes the focus off the issues which need to be addressed, appealing to desperate politicians. He said South Africa could find itself on a path to economic destruction, similar to what has occurred in Venezuela and Zimbabwe. On the upside, he said the South African constitution was a strength and is what differentiates the country from others like Zimbabwe, and safeguards it from absolute collapse. Other factors in its favour include an extensive infrastructure and a sophisticated business sector. Jonas said a diversified economy is the answer to many of South Africa’s problems, together with expanded trade into the rest of Africa.

PROTECTING SA’S ECONOMY

Protecting South Africa’s economy and finding short-term solutions for long-term goals was the topic of the first panel discussion. Panellists included Mohale Ralebitso, founder and CEO of Itataise Investments; Mpho Sedibe, Managing Director of MOPSY Strategic Advisors; Dr Iraj Abedian, Chairman and Chief Executive of Pan African Investment and Research; Lungisa Fuzile, the former Director General of the Department of National Treasury; and Sibusiso Mabuza, Chief Executive Officer of Aluwani Capital Partners. A functioning government depends on existing businesses to be able to make money legitimately, said Fuzile. The priority, he said, should be about expanding existing businesses and supporting the establishment of new businesses. High unemployment levels, he continued, reflect the fact that there are just not enough jobs around. Those impacted most detrimentally by a lack of jobs are the youth. A growing economy would ensure job creation.

One of the biggest impediments to solving the unemployment crisis, said Abedian, is a lack of economic literacy, adding that people need to be economically literate in order to understand what the engines of job creation are. He said the conversation needed to move beyond slogans such as “white monopoly capital” and “radical economic transformation” in order to deal with the real issues. Black economic empowerment (BEE) has not been done properly, said Sedibe, with the result that the value chain has not been enhanced, and BEE has not created jobs. “While people are not as economically literate as we would like, they’re also not idiots. They’re experiencing high levels of frustration and this is creating social instability,” she said. BEE is not the problem, insisted Fuzile, but it is how we are going about it and the fact that we have allowed some people to take advantage of it. BEE should not only be benefiting a select few, he cautioned.

We need a Truth and Reconciliation Committee to establish how South Africa got to this point, suggested Ralebitso. No sooner had we ushered apartheid out than we got locked into a new – equally damaging status quo and we’ve continued to make the same mistakes for the past 20 years. “Many of the issues we face haven’t changed. We should not have needed BEE to protect the economy.” Going forward, he said, we need to protect and grow our economy. We need co-operation, and open and honest dialogue. Criminality needs to be recognised for what it is. South Africa needs to get its investment grade rating back, while policy uncertainty and barriers to growth need to be removed. The public and private sector need to work together to ensure sustainable growth takes place, said Mabuza. We waited too long to turn the situation around and business leaders were only taking a stand now that it was hurting their pockets. Members of the audience made a number of observations: South Africa was producing people who were not interested in the greater good, but only in self-enrichment and how do we ensure accountability going forward from elected leadership. In their concluding statements, Mabuza said business had a crucial role to play in terms of ensuring that meaningful transformation took place. Ralebitso said business needed to be held more accountable, and Abedian pointed out that businesses needed to be future fit if they hoped to be sustainable and competitive.

GEOPOLITICAL UNCERTAINTY

The second panel discussion focused on navigating the risks around geopolitical uncertainty. Panellists included Dr Johan van Zyl, co-founder of African Rainbow Capital; Dr Kingsley Makhubela, CEO of Brand South Africa; Innocent Dutiro, CEO: Africa & Asia of MMI Holdings Limited; and Karima Brown, Independent Political Analyst. Dutiro pointed out that living in a global economy it’s important that we understand our value. Globalisation, he added, has introduced certain complexities and technology has made it harder to hide. Given this new connected world, protectionism does not work. High unemployment was coupled with a skills shortage because graduates don’t have appropriate skills to meet the needs of businesses. The main driver of geopolitical risk is inequality, said Brown, adding that business and industry was partly responsible: in their quest to keep costs down they were deliberately not employing older people with skills because they were more expensive than younger employees. “This is a spectacular fail on the part of business leadership,” she said.

Profit equates to risk, said Van Zyl. “What we forget today is that money goes to where there are profits to be made.” Discussing South Africa as an investment destination, Kingsley said Brand South Africa focused on selling the country. “Governments come and go,” he pointed out. The prevailing narrative around radical economic transformation was essentially aimed at ensuring institutional compliance with the wishes of President Zuma and his friends, said Brown. She cautioned that while nobody should be comfortable with the idea of state capture, any change needed to be done within the boundaries of legality. South Africa’s economy is a dichotomy: 20% of it is first world while the bottom 10% is as bad as the Republic of Congo. In the past 24 years South Africa has not addressed the issue of education sufficiently, said Dutiro. “Until we do that, anything else we do will be based on shaky foundations,” he said, adding that we need a better allocation of resources. We need to better understand our strengths and then build on them.”

One of the problems facing South Africa is the trade challenge: our largest trading partners are located in other continents. A member of the audience pointed out that it was the responsibility of employers to upskill employees and make them more marketable. South Africa needs to think more broadly about the skills required for the Fourth Industrial Revolution, said Makhubela, and how the country could compete with the rest of the world. Furthermore, he said we need to figure out how to leapfrog developed countries in terms of disruptive technologies. We need to choose our battles given our available resources, said Van Zyl. “We have a competitive advantage in Africa, now we just need to compete better on the continent.” Taking the geopolitical risks and uncertainty in the rest of the world into account – US uncertainty around Trump; Brexit; a nervous Europe; and disarray in emerging markets – South Africa is not that badly off, he maintained. In the broader context South Africa is not alone and we have something positive to sell. The best way to mitigate risk right now is to decide on the tough conversations that are required between all parties, said Brown. We need to go back to the table and rebuild trust in order to find a compromise that everybody can agree on. There are ways to navigate risks and uncertainty, agreed the panel. Van Zyl said instead of focusing on the negatives, the country has great people, a free and powerful press, and strong financial services intuitions in its favour. We need to fix our economy or the money will disappear, he warned. Ultimately, it’s about dealing with an imperfect situation to the best of our collective ability.

YOUTH EDUCATION AND EMPLOYMENT – BRIDGING THE GAP IN DIGITAL TIMES

The final panel discussion focused on youth education and employment and how to bridge the gap in digital times. The panel consisted of Barrie Bramley, partner at Calidascope; Debbie Goodman-Bhyat, CEO at Jack Hammer Executive Headhunters; Maryana Iskander, CEO at Harambee Youth Employment Accelerator; Sizwe Nxasana, chairman at NSFAS and Sifiso Learning Group; Hlomela Bucwa, youth activist and former SRC president at Nelson Mandela Metropolitan University; and Gwebinkundla Qonde, director general at the Department of Higher Education. The panel agreed that the country’s education system did not adequately prepare school leavers or graduates for the world of work. In a slow economy, said Nxasana, even those with skills are not guaranteed of a job. He agreed the education system was lacking and said it needed to be revised to address the skills shortages. A different attitude towards risk taking, entrepreneurship and a mindset that created jobs rather than looked for jobs needs to be created, he said.

Both government and business had failed to address the crisis in education adequately, said Bucwa. “Institutions of higher education may have opened their doors further but there are still barriers to success: if students don’t have adequate support at university they’re not going to succeed. They need to be able to afford books, for instance,” she said. The curriculum needs to be redesigned to address the skills shortage, agreed Qonde. He said the Department of Higher Education was cognisant of the need to maximise quality teaching and learning. “We need to innovate to ensure that the skills coming out of the system are usable and productive.”

Most people find jobs through their networks, pointed out Iskander. Job seekers without networks often find it hard to find employment. “Sometimes, all they need is information,” she pointed out. Referring to a survey conducted in association with the University of Johannesburg, she said it costs the average young person R938 a month to look for a job – primarily for transport and data costs. Adding to the challenge for many job seekers is the fact that many employers don’t think matric or a degree is a good predictor of performance so put additional barriers in place like numeracy tests – even for jobs that don’t require numeracy skills. The Fourth Industrial Revolution would shrink the job pool even further, said Goodman-Bhyat. “Business leaders are trying to ensure their survival and will be replacing every kind of repetitive job with technology. This will impact on internships and learnerships. Educational institutions are moving far too slowly in terms of adapting the skills they teach and cultivating creativity and entrepreneurialism.” Youth who don’t study beyond matric are ill-equipped for the job market, said Nxasana, adding that they should be leaving school better prepared for the fourth industrial revolution. The academic component of education need to be overhauled to include higher order thinking skills and technical education needs to be strengthened, he said.

Qonde agreed that community training colleges need to be teaching marketable skills rather than only basic reading and writing skills. “We need less of the rhetoric and work on what works,” he said. A member of the audience suggested that teachers should be incentivised to be more competitive and effective. Qonde agreed that teachers should be held accountable for the work they do. Partnerships are the only way to achieve large scale solutions, pointed out Iskander, adding that for many young people it is only by working that they can acquire further education. The youth need to prepare themselves for a lack of employment structure as they will increasingly be their own employers.” Gender inequality continues to be an issue. While more than half of university graduates are women, revealed Nxasana, the corporate environment continues to be male dominated. A member of the audience pointed out the dire shortage of artisans and said the quality of artisan skills coming out of colleges was inadequate. In response, his company was training its own artisans.

PARTNER COMMENTS

The Institute of Directors in Southern Africa (IoDSA) supported the Directors Event as part of its mandate to enhance director competence, professionalise the practice of directorship, and make available standards and guidelines for governance. “Dialogue of this nature is important among business leaders and decision makers and should be done more regularly in the boardrooms of South Africa,” said IoDSA CEO, Angela Cherrington. “We hope that some tangible initiatives will emanate from these discussions to ensure that the dialogue turns into action.”

“The protection of South Africa’s economy, geopolitics and youth education, are exactly the types of conversations needed to better equip us as directors to redefine and realign our own company strategies to focus on improving South Africa’s future,” said Brigitte Schwartz, marketing director at USB Executive Development (USB-ED).

“The well-attended Directors Event 2017 again provided a platform for open and frank discussions on critical aspects affecting the South African economy,” said Partner and head of mining at Hogan Lovells, Warren Beech. “The opening sessions succinctly identified the enormous challenges facing all South Africans generally, and the specific threats to the South African business sector. That said, South Africans are resilient and provided that the business sector stands up, South Africa will be able to address the various challenges, and get through this turbulent and extremely unsettling period”.

There is much work to be done if South Africa is to alleviate the current pressure on both its citizens and its economy. Governments focus needs to change and attention must be given to creating security and sustainability in terms of policies, as well as a major effort to eliminate corruption and state capture

Business heeds the call ‘Thuma Mina’ and says Count Us In

The overriding theme of this year’s The Directors Event, ‘SA’s biggest board meeting’ held in Sandton, Johannesburg on 8 June, was the response by business to President Cyril Ramaphosa’s ‘Thuma Mina’ (Send Me) call.

This was the fourth edition of the event which has become an annual platform for dialogue and debate between keynote speakers, panellists and delegates on some of the challenges facing the country. This year, the spotlight was on technology solutions to grow a more inclusive economy, solutions to alleviate youth unemployment and promote entrepreneurialism as well as the impact of politics on the economy.

A NEW SENSE OF OPTIMISM

There is no doubt that President Ramaphosa has inspired a new sense of optimism. This optimism is in large part the result of a visible effort to undo the previous administration’s patronage network. President Ramaphosa’s overhaul of the boards of state owned enterprises (SOEs) to ensure good governance is restored to these critical institutions as well as his determination to attract investment back into the country to grow the economy is the first step towards restoring faith in government.

This past year was always going to be a watershed year for SA as the impact of former President Zuma’s poorly managed presidency began to be felt more strongly, said Sunday Times Business Times editor, Ron Derby. It now needed to get back to work and take advantage of a window of opportunity to effect a turnaround.

Key will be how the government addresses the challenges facing the country, insisted Derby, including fiscal stability in SOEs; policy certainty around the mining charter; economic growth; and policy solutions for the health and education sectors.

GOVERNMENT CALLS ON BUSINESS TO GET INVOLVED

However, as several speakers attested – including Minister of Finance, Nhlanhla Nene, Business Leadership South Africa (BLSA) chairman, Dr Jabu Mabuza and newly appointed deputy CEO of MMI Holdings Limited, Jeanette Marais – government cannot hope to ignite economic growth and alleviate unemployment without the aid of the private sector.

Having emerged from a period where South Africans had lost confidence in the leadership of the country, with scarce resources being mismanaged, misallocated and misappropriated; low economic growth marked by persistently high unemployment, and low levels of foreign direct investment, it is time for all South Africans to heed President Ramaphosa’s call and lend a hand. As such, said Marais, South Africans must start to act in a way that will build confidence in the country bearing in mind that business can only prosper in a prosperous society.

In many ways, she pointed out, the economy runs on confidence as it is confidence that encourages consumers to make purchases, convinces investors to place their money in the country, encourages growth and creates jobs. Marais argues that it’s as much the responsibility of the private sector to pitch in and ensure that the new dawn is not a false dawn, as it is the responsibility of the public sector. Just as government has to address its challenges, so too must the private sector address and fight corruption, fraud and collusion. Inclusive growth, she pointed out, can only be achieved if the country as a whole, comes together to find practical ways to create jobs, drive investment and speed up real transformation.

The president’s task to rebuild the economy is both formidable and enormous, agreed Mabuza. He implored every business leader attending the conference to think carefully about what they could do to drive economic growth and transformation. In addition, he called for business and government to work together on scalable projects and to come up with practical and workable solutions to address the lack of capacity in the public sector.

Businesses, reminded Mabuza, don’t operate in isolation and it is everybody’s duty to ensure a more equitable society because equitable societies do better in the long run in almost every measure.

Without a sustained increase in economic growth, unemployment cannot be addressed. Government will play its part to deliver on reforms, strengthen good governance at SOEs and maintain a stable fiscus, said Nene, as well as address structural challenges such as high costs around broadband, transportation and regulation to make it easier for small firms to enter the market and compete against large players.

UNEMPLOYMENT

A key element within the South African economy – and one of the major themes discussed throughout the conference – involves addressing unemployment, particularly among the youth, to allow more people to play a meaningful role in the formal economy. The Youth Employment Service (YES) initiative which launched earlier this year with the aim of providing more than one million young South Africans between the ages of 18 and 35 with paid work experience over the next three years is a positive first step, but on its own is not enough.

Speakers from both the public and private sectors acknowledged that addressing SA’s high rate of unemployment is an urgent imperative. Job creation, said Marais, requires multiple approaches from all sectors of society, particularly when one considers recent research from Accenture which revealed that 35% of all jobs in SA are currently at risk of total automation and that machines can perform three quarters of the activities that make up these white and blue-collar jobs.

Addressing the country’s unemployment problem, said Dr Tashmia Ismail-Saville, CEO of YES, will require creativity and disruption, and the creation of new economic spaces to literally invent jobs. Rather than focusing on high growth unicorn type model to provide employment she suggested focusing instead on growing the number of SMEs that each employ a small number of people because ultimately, the majority of jobs, should come from this sector.

To support these small and medium sized enterprises a suggestion was made to develop a database of SMEs and their products or services on offer.

SKILLS DEVELOPMENT
In addition to youth unemployment there is a growing adult unemployment problem which requires interventions to be put in place in order to reskill people, said Professor Barry Dwolatzky, Director of the Jo’burg Centre for Software Engineering at Wits University. A university degree is no longer a guarantee of a job and while he conceded that there is much wrong with universities including the fact that they compete for scarce resources and the best students, and operate in silos, he argued that where they succeed is in creating deep thinkers who are capable of delivering solutions.

There is little doubt that there is a need for both current and future workforces to be prepared to compete in the future digital workspace. As more routine jobs become redundant we need cool headed dialogue on this issue, insisted Mabuza, referencing the fact that coal workers had marched to halt renewable energy projects fearing that their jobs would be jeopardised.

EDUCATIONAL CRISIS

In addition to the need to reskill the existing labour force, SA’s poor educational outcomes and lack of sufficiently trained teachers were frequently referenced during the course of the conference. SA’s track record on educating the future generation is woeful, said Marais, referring to alarming statistics proving her point including the fact that only six percent of matriculants this year will achieve a reasonable mathematics mark of 60% while only half will pass matric. It’s no surprise that 75% of the country’s unemployed are the youth given the 80% illiteracy rate for Grade 4 learners.

Perhaps not unsurprisingly, most unemployed youth don’t have a matric certificate, revealed Ismail-Saville and are educationally, culturally and geographically distant from opportunities given SA’s industrial concentration. Without a matric certificate they are automatically excluded from any bursary schemes, with the result that the majority are thus constrained from making a meaningful contribution to the formal economy.

The recent World Bank Systematic Country Diagnostic for South Africa identifies a focus on children and young adults as critical, said Marais. She suggested a holistic approach that will transform the entire education system, with an emphasis on literacy and numeracy, as well as the upskilling of teachers, focusing on these factors from the foundation phase and not solely at matric level.

SA cannot keep supplying commercial solutions to its educational crisis, argued Barbara Mallinson, founder and CEO of Obami, given that brick and mortar structures are expensive and that we don’t have enough suitably qualified teachers. Technology has the ability to address many of these challenges through online learning platforms and qualitative facilitators which will allow both SA and the continent to scale educational and skills development solutions.

Education and unemployment are two of the most crucial areas in which South Africans must come together to build confidence, argued Marais, adding that the greatest asset of a country is not its land or infrastructure, but rather its people. Investing in people and building human capital is the best investment a country can make, she insisted.

TECHNOLOGY

Technology, agreed many of the speakers at the 2018 The Directors Event, has the potential to unlock economic growth but, perhaps even more importantly, to allow for inclusive growth through the deployment of large scale infrastructure advancements that place ICT at their core. It has the potential to deliver transformative solutions to unemployment, for example because it cuts across multiple barriers and allows a technically sound enterprise to indirectly have a spider effect on job creation, said Zachariah George, co-founder and chief investment officer of Startupbootcamp Africa.

During his keynote address, Nene revealed that reducing costs in the ICT sector by half could increase GDP growth by 0.3 percentage points per year and create 200 000 jobs over the next decade.

All indications are that government is prepared to play its part. Minister of Science and Technology, Mmamoloko Kubayi-Ngubane acknowledged that government needs to fast-track the migration to digital in order to free up spectrum. A lack of spectrum has been blamed by network operators for the high costs of data.

However, government is limited in what it can achieve given its constrained fiscus. Rolling out ICT infrastructure is an example of one area where government will not be investing and where private sector investment has played a significant role. Under discussion was the fact that private sector organisations have tended to prioritise rolling out ICT infrastructure in urban rather than rural areas. This has resulted in a digital divide between urban and rural areas which threatens to further exacerbate the class divide.

There was widespread recognition amongst speakers that priority needs to be given to connecting low income communities as well as lowering the cost of communication and connectivity, given that connectivity provides a myriad of social benefits. While the argument was tendered that network providers are raking in huge profits, business leaders countered this vehemently, arguing that input costs currently are unnecessarily high as a result of a lack of spectrum.

SA does have the ability to deliver world class technologies and these technologies can deliver economic opportunities and create employment, as evidenced by the success of the drone technology sector, as just one example. SA, it was pointed out, is currently at the forefront of drone regulations globally.

POLICY CERTAINTY

Another theme that emerged from the conference was the need for policy certainty. Investors require policy certainty now more than ever, and SA’s policy responses are inadequate, particularly around the mining charter, said Derby. And these inadequate policy responses are dissuading much needed foreign investors, insisted Peter Major, Director Mining at Cadiz Corporate Solutions.

Mabuza agreed on the need for policy certainty, revealing that one of the challenges faced by Telkom recently was a decision of which business entity to buy fibre from. One of the contenders employed 600 people but Telkom would get low empowerment credits if it bought from them. Another contender involved a black businesswoman who imports fibre from China – and employs no-one – but the company would get full points if it procured from them. These kinds of issues, said Mabuza, needed to be addressed.

One of the failings of the ruling party, said economic strategist, Thabi Leoka, was the ANC’s tendency to formulate policy without committing to implementing it. Business Leadership South Africa COO, Busiswe Mavuso, concurred and said she was not convinced that the current administration understood the urgency of the situation and was putting any meaningful reforms on hold until after the 2019 elections, prioritising political decision making over what was best for SA and its economy.

During a panel discussion on politics and the economy, it was agreed that coming in midterm for President Ramaphosa is a challenge given that he does not have sufficient support from within his own party. Political analyst and author, Ralph Mathekga, urged the president to ‘avoid unnecessary adventures’ and rather just ‘close the tap at Transnet’ and ‘plug the holes’ in the run-up to the 2019 elections.

Conceding that the country had been through a challenging phase, Enoch Godongwana, chairperson of the ANC’s sub-committee on Economic Transformation, said government’s priority now was to rebuild trust in the ruling party, strengthen the balance sheet of SEOs and end corruption in order to rebuild the economy and take the country forward.

TRUST DEFICIT

In addition, it appears as if there is still a significant trust deficit between the public and private sectors and a perception amongst government that if a solution is privately supplied it is not a quality offering, revealed Mallinson. Mallinson founded Obami, a digital-solutions teaching company which offered its online teaching and learning solution to government for free – and had been turned down.

This trust deficit manifests in other ways too. In the ICT space, revealed SEACOM CEO, Suveer Ramdhani, government – in the form of regulator ICASA – and business have been at a stalemate for far too long.

A frequent call from business leaders at this year’s conference was that government, for its part, needs to understand the impact and consequences of decisions made from a political perspective that restrict businesses from being globally competitive. The disconnect needs to be addressed and both the public and private sector need to collaborate in order to find workable and sustainable solutions which promote inclusive growth.

BUSINESS UNDER PRESSURE TO DEMONSTRATE VALUE

Another theme emanating from the 2018 event was the fact that businesses are under increasing pressure to demonstrate their value to society. This trend is not unique to SA, pointed out Mabuza, explaining that every business’s license to operate is dependent on its ability to demonstrate its value. This is why, he said, SA businesses need to give due consideration to the creation of social value and find ways to work together to get both the country’s economy and society on a sustainable trajectory. He implored business leaders to provide SA with the solutions it requires to take it forward.

Delegates at the conference were encouraged to play a part in creating the country they want to see, by contributing to skills education and as Mabuza so succinctly put it, to consider bursaries as an advance payment for more stable future.

Arena Holdings owners of Sunday Times, Business Day and Financial Mail, together with headline sponsor MMI Holdings heeded this call and together have contributed R450 000 as well as a percentage of ticket sales from The Directors Event to the YES initiative.

The risks facing SA remain significant as indicated by Statistics SA’s announcement that real GDP fell by 2.2% in the first quarter of 2018. These results, said Nene, will mean a downward revision of optimistic predictions for growth in 2018. The message is clear: while SA may have been dragged back from the precipice, there is no room for complacency.

Both government and business need to heed the calls made at The Directors Event to show leadership and to ensure the public and private sector collaborate meaningfully and constructively to find sustainable solutions to SA’s most urgent and pressing challenges.

To achieve this, they will have to bridge the distrust that currently divides them. Furthermore, we need less empty talk and more constructive engagement. Government entities need to stop operating in silos and instead work together along with the private sector if SA is to realise President Ramaphosa’s new dawn.

The message from this year’s The Directors Event is that if the public and private sector can work together to catalyse investments into the economy, SA will be able to find sustainable solutions to its most pressing challenges and grow the economy.

The conference was bought to you by the Sunday Times Top 100 Companies and JSI listed MMI Holdings, in partnership with the Institute of Directors Southern Africa (IoDSA), Mancosa (GSB) and Greymatter & Finch.

Nontokozo Madonsela, Chief Marketing Officer of MMI Holdings commented that The Directors Event is an opportunity to discuss how we as business can lend a hand in fixing some of the country’s pressing problems. “We want to be counted in to help shape a much better future for all of us. MMI believes this platform enables constructive conversations between the public and private sectors as a starting point to create solutions together.”

“The value of an event such as this is that it creates a platform to discuss difficult issues in SA – the fact that it includes public, private and entrepreneurial members with different insights is a boon. Moreover, it provides a rare opportunity to see them interact and air their views. The value of The Directors Event in particular is that it provides insights into what people are doing in the entrepreneurial space in terms of initiatives, ideas and approaches. My clients shared the same view – as bleak as some of the information was, the overall feeling generated was that of hope, enthusiasm and a renewed excitement for South Africa,” said Adriana De Roock, MD, Greymatter & Finch.

The IoDSA’s Vusani Ndlovu believes that it is imperative that conversations around the boardroom table do not revolve only around the financial performance of an organisation. “The solutions to complex problems might just be contained in suggestions by stakeholders. It is also important to ensure that those involved in boardroom discussions should hail from a variety of backgrounds, upbringings, and lifestyles. South Africa – now more than ever – needs directors that don’t sit on boards, but that serve for the greater good.”

SA’S BIGGEST BOARD MEETING CALLS FOR MORE ACCOUNTABILITY FROM LEADERS

SA’s biggest board meeting, an annual event which seeks solutions to some of the country’s many challenges, took place recently in Sandton. The Directors Event is presented in association with the prestigious Sunday Times Top 100 Companies Awards, the Institute of Directors (IodSA), and futured by BCX.

Welcoming this year’s board members, Sunday Times editor, Bongani Siqoko said The Directors Event provided an ideal platform to debate the many challenges facing the country including poverty and growing inequality as it grapples with the after-effects of years of sustained corruption. It’s only through co-operation between the public and private sectors that SA can grow, he said.

However, more than just dialogue between the public and private sectors, The Directors Event needs to result in concrete action plans mapping out how SA can grow beyond the 2019 elections, urged Jonas Bogoshi, CEO at BCX. A subsidiary of Telkom, BCX provides end to end digital solutions.

Acknowledging the critical importance of innovation in an increasingly digital age, Bogoshi announced the establishment of the BCX Digital Innovation Award in conjunction with the Sunday Times Top Companies awards. Two awards will be made at this year’s Sunday Times Top Companies awards to be held later this year including the Disruptor award and the Incremental Innovation award. For more information on these awards visit www.bcx.co.za

The chairman’s report

This year’s chairman’s report was delivered by Phuti Mahanyele-Dabengwa, Executive Chairperson of Sigma Capital and a trustee of the Cyril Ramaphosa Foundation (previously known as the Shanduka Foundation).

Emphasising the importance of education, Mahanyele-Dabengwa said the Cyril Ramaphosa Foundation had prioritised educational initiatives and to date had made significant contributions to effect real change in education. The foundation works in around 450 schools and has helped numerous students to access tertiary education.

Referencing the Ninja generation (no income, no jobs and no assets), she said the reality was that neither the public nor private sectors would be able to absorb all school leavers, which made the creation of an entrepreneurial culture so vital.

While the Cyril Ramaphosa Foundation has adopted a number of meaningful models, Mahanyele-Dabengwa urged board members to become involved in education initiatives and to make their own meaningful difference.

It matters who becomes president

This year’s keynote address was delivered by Chief Justice Mogoeng Mogoeng who questioned how SA had jettisoned its value system to the extent that corruption was allowed to flourish and resulted in a degeneration of the country’s debt levels.

Mogoeng said SA’s election process was fundamentally flawed. “It matters who becomes president of the country, who becomes a premier, a cabinet minister or a mayor,” he argued.

He questioned how we choose leaders and who qualifies to be a leader. Leaders should not be chosen from the ranks of those who have resources or for their connections but rather because they have the necessary skills to address the many problems facing the country, he insisted.

It is the president who appoints heads of state owned enterprises, and those heads who in turn determine who they are surrounded with. Just one rotten apple, said Mogoeng, taints the whole. “We owe it to ourselves and to prosperity to only appoint the best to positions of responsibility.”

He said candidates for leadership positions should be required to meet stringent requirements before even being considered and should be subjected to much greater public scrutiny. “We need to be asking the hard questions of our potential leaders so that we get the best to lead us, not only those who have the means,” he said, adding that once voted into power these leaders should feel accountable to their voters.

Mogoeng called for a reflection on how political parties are funded, particularly during elections. Political parties may need to be funded by tax payers, he suggested, so that the public would be accounted to. The current system encourages favours in return, he noted, adding that “money speaks”.

SA needs public servants who are not perceived to be beholden to anybody. And while the country has an abundance of good plans in place, too few are implemented. We need to appoint implementers, he said.

“We thought once democracy was in place that the rest would fall into place,” Mogoeng said, adding that as a country we have lost our self-respect, integrity and ability to be accountable.

Mogoeng called on South Africans to focus on what could unite us rather than what divides us and to find solutions to the issues that divide us. We need to have the hard conversations, he said, and reject greed, embrace generosity, be a mobilised and very active civil society, pursue good governance and servant leadership.

Securing SA’s future through youth employment and entrepreneurship

The Directors Event grappled with the issue of youth employment and the promotion of entrepreneurship in order to better secure South Africa’s future. While unemployment drives inequality, the reality currently is that when it comes to youth unemployment we have to run just to stay in the same place, pointed out panel moderator Thabiso Tema.

There are a number of initiatives in place to address the issue of youth employment. The Youth Employment Service (YES), as an example, is a business-driven initiative in partnership with government and labour, which aims to create one million jobs for the youth. A registered not for profit organisation, it focuses on previously disadvantaged youth and provides work experience for one year, allowing each participant to demonstrate their abilities, establish their work ethic and prove their worth.

YES CEO Dr Tashmia Ismail-Saville explained that YES advocated for a policy change to the codes of good practice to reward businesses for employing youth. It delivers appropriate training content to the youth via a zero-rated mobile phone.

Big Brands Media designs and implements programmes that support the development of the youth through various initiatives aimed at instilling a culture of responsibility and unlocking opportunities. CEO Lebogang Ramodike explained that the organisation addresses issues on the ground through master classes and working groups. It works with organisations such as the Girl Child network to help girls from social grant backgrounds as well as traditional and community leaders.

The Entrepreneurship and Cooperative Development, Services SETA, meanwhile, does not implement training and development but instead works as a bridge between training and the world of work. It offers a number of initiatives within its programme of action including offering business advisory services, funding and enabling access to reliable services.

One way to deal with youth unemployment is to promote entrepreneurship, said Liesel Köstlich, Executive Manager of Entrepreneurship and Cooperative Development at, Services SETA. Employment, she said, can be a pathway to entrepreneurship and entrepreneurial competence can be taught.

She conceded that not everybody has the appetite or aptitude for entrepreneurship, but given a viable concept and a going concern they were more likely to succeed. Köstlich said the Services SETA was aware that entrepreneurs needed different things at different stages of their life cycles, including business incubation sites that provide real and ongoing support and more support for youth with viable business concepts.

“There are successes and failures and we need to measure impact and root cause, and solve for the root cause. Critically, we need to do all this fast and at speed,” said Köstlich.

While SETA’s are in the process of researching the gap between available skills and what skills are required, she urged corporates to proactively engage with their communities and local schools with regard to the qualifications they need.

An impediment to success as an entrepreneur is a lack of work experience. It’s hard to start a business if you’ve never worked in a business before, conceded Ismail-Saville. Exacerbating the situation is the fact that 56% of youth don’t have a matric certificate and have low confidence in their abilities as a result.

“The psychology of running a business is even more important than technical knowledge such as financial management,” she said. YES’s solution to this problem has been to build an app which helps prospective entrepreneurs to navigate the world of work and how to run a business.

Big businesses are frequently accused of not doing enough to address the youth unemployment problem. Chief operating officer of Nedbank, Mfundo Nkuhlu, said the single biggest impediment to the youth is lack of previous experience. The bank has partnered with YES to provide youth work experiences, acknowledging that the next generation of the work force must have the requisite skills.

Admitting that there is no silver bullet to the growing problem of youth unemployment, Nkuhlu said any solution needs to be medium to long term. At the same time the education system needs to be reformed and the curriculum amended to better prepare the workforce of the future.

Is SA focusing sufficiently on the transition of the youth from dependence to employment, questioned Gcina Mtengwane, a lecturer at the University of the Free State. He argued that many internship programmes leave participants feeling disempowered and called for a standard structure which matched intent to outcomes.

Despite the numerous initiatives in place to address the plight of the unemployed, more can be done, including better information provided to work seekers and a platform to connect work seekers to employers, he said.

Digital Transformation: Will inclusive technology innovation develop SA’s economy?

There has been much talk in recent years on digital transformation but to what extent is this transformation accessible to all South Africans – and is it even good for us – was a question posed to a panel of experts at The Director’s Event.

The speed with which society is transforming from a digital perspective is perhaps the most

significant element, impacting and affecting even those living in the most rural areas, pointed outTembinkosi Bonakele, Commissioner of the Competition Commission South Africa.

Not only has competition disrupted numerous industries and sectors but from a competition perspective, he said, it’s leading to situations where the winner takes all – or at least takes the most – and the losers completely miss out. By way of illustration he pointed out that the largest firms in the US in the early 2000s were all oil giants. Their positions have been usurped in recent years by digital companies. Bonakele pointed out that the biggest penalties awarded in the EU have all been against protecting monopoly positions from incoming challengers.

While he considered digital disruption good for competition, Bonakele said the caveat was that Internet access and access to technology and infrastructure needs to be equal and equitable. SA, however, is plagued by inequitable access to technology which perpetuates inequality.

From a corporate perspective, Vish Rajpal, chief of IT Solutions at BCX, said learning would be the key differentiator going forward. “For all employees, irrespective of age, their ability to learn, relearn and unlearn, will be indicative of their value to the organisation,” he said, that adding that those who can’t do that will become a hindrance to their organisations.

There is increasing compelling evidence indicating that the Fourth Industrial Revolution (4IR) is good for business, said Prof Brian Armstrong, Adjunct Professor at the Wits University Graduate School of Business Administration. Digitally transformed companies, he said, deliver better customer experiences; are more likely to survive given that they tend to outperform their competitors; deliver more shareholder returns; and deliver more revenue and profit than less digitally orientated companies.

However, while digitalisation is good for business, it’s also affecting society profoundly, explained Armstrong. The waves of change are coming faster than society is able to adjust leading to increased alienation and dysfunction; it is changing the nature of work and making a growing number of people redundant; while issues around trust and privacy is causing significant stress in society. Digital illiteracy, he added, is disempowering. In spite of this, Armstrong said technology is a means to reducing inequality.

Digital technology is changing the mechanism whereby challenges are being addressed and solved, said Nyari Samushonga, MD at WeThinkCode, a company which partners with businesses to provide digital skills. She said digital literacy within organisations was imperative. The challenge in the SA context, however, is how to successfully implement digital education given the country’s struggles to implement traditional education.

Samushonga called on company management and even board members to take responsibility for better understanding technology. “They need to educate themselves and become literate in terms of technology so that they can adopt responsible practices,” she said.

Digital technologies are not neutral, commented Garth Williams, Research Specialist: Intelligence at the Technology Innovation Agency (TIA). They create big changes and significant disruption. He argued that the term Fourth Industrial Revolution (4IR) was a recent construct of the World Economic Forum, and was influenced by political systems and commercial constructs.

The TIA is a fairly recent agency of government, established in 2010, which uses grant funding to develop technologies towards commercialisation. In addition to a profit motive, the agency focuses on making a positive societal impact.

He said SA needed to be intentional in terms of its adoption of digital technologies and think about the social consequences of any technology beyond a profit motive. “There are 4.2 million people in SA who spend their days collecting water, firewood and dung,” he pointed out.

Earlier this year the Department of Science and Technology, in partnership with the World Economic Forum’s Centre for the Fourth Industrial Revolution Network, established an Affiliate Centre to prepare SA for the 4IR. The centre aims to bring together business leaders, governments, start-ups, civil society, academia and international organisations to co-design and pilot innovative new approaches to policy and governance in the 4IR. The centre, explained Williams, intends to connect disparate initiatives and entrepreneurs to local hubs where they can better grapple with the challenges of the 4IR.

One of the results of a more digital world is the availability of increased data on consumers. Bonakele pointed out that the fact that many companies rely on this data to provide them with a competitive edge over their competitors is problematic.

A possible solution to this is the democratization of data and engendering a school of thought that there is more value in co-creation and sharing of information in order to create new business value and improve lives, suggested Rajpal.

Politics and the economy

SA’s politics, the economy and what to expect post the 2019 elections came under the spotlight during a panel discussion moderated by Siki Mgabadeli. A high-level panel of experts agreed that SA is currently in a state of crisis: a crisis of politics, economics and confidence which is hampering any potential for economic recovery.

Providing context to SA’s current situation, Professor André Duvenhage, Political Science Professor at North-West University said the country was in a very challenging situation, particularly given the general state of decay within local government, municipalities and state-owned enterprises. This state of decay is having dire consequences for service delivery. Factional in-fighting within the ruling governing party, the ANC, is exacerbating the situation.

The ANC’s struggle narrative no longer works and needs to be adjusted, he said, calling for the country to make a fresh start and develop a new paradigm to take SA forward. He said President Cyril Ramaphosa needs to consolidate his position as it appears the so-called Zuma faction still have significant influence given the individuals appointed to head up various portfolio committees.

SA has the ability to achieve a so-called ‘high road’, he said, but only if all stakeholders played their part in acting in the best interests of the country and implemented policies and took action.

Despite the criticism President Cyril Ramaphosa received for his vision during his recent State of the Nation address, that vision was necessary, said Cas Coovadia, managing director of the Banking Association of South Africa.

He agreed with Duvenhage that the country is in crisis, pointing out that both agriculture and mining – sectors which traditionally are creators of jobs – saw decreases in the last quarter. According to the Auditor-General’s latest report into the performance of municipalities, more municipalities have regressed in terms of their performance and are now classified as ‘dysfunctional’.

“This has been the longest continual trend of poor business confidence since 1947,” said Coovadia. As patriotic citizens, he urged all South Africans to stop skirting around the issue of the crisis the country finds itself in. This is a society in turmoil which seems to have lost its values and become immunized to what’s happening, he said.

Coovadia called on leaders to recognise this crisis situation and make some hard trade-offs and compromises. It’s got to be all about growing the economy now which requires a president to lead as the president, with the best interest of the country first and foremost.

Responding to a question regarding whether the country was putting too much pressure on President Ramaphosa to deliver the new dawn that he promised, Coovadia said the president had the legitimate vote of the people. His priorities need to be dealing with the critical issues, surrounding himself with the right people, rising above party politics and acting in the national interest. SA, said, Coovadia, no longer has the luxury of time to keep spinning the wheels pointlessly.

Tshediso Matona, Secretary of Planning at the National Planning Commission, agreed that it was time to press the reset button given the very difficult space the country is currently in. There is widespread acknowledgement that the country is at a precipice and the only way it can go forward is if business and civil society come to the table and partner with government. The president’s SONA identified the right issues to be addressed, he maintained.

If there was a world cup of planning, SA would win hands down, commented Mgabadeli. But how does the country go from being really good at planning to being really good at implementing, an area in which it has traditionally not excelled, she asked.

In many ways government is broken, conceded Matona. It doesn’t have the money to pay for much needed infrastructure required to underpin the growth of the economy. Given the state of government the burden would fall on the private sector to work together in very practical ways. He said he was pleased the National Development Plan, a plan which had the support of all political parties, had been re-asserted, and said there was interest in seeing the National Economic Development & Labour Council (Nedlac) reinvigorated to fulfill its mandate.

“Until we address the political crisis we’re unlikely to fix the confidence and policy crisis,” pointed out chief economist at Alexander Forbes Investments, Isaah Mhlanga. And until these issues are addressed the private sector, which requires assurances that its investments are safe, will shy away from investing in the country.

He said those in the political sphere were not sufficiently appreciative of the extent to which their internal dynamics impacted the economy and neither did the country have the right people with the right skills in the right jobs at a governmental level. “We need people who can show vision and who can implement that vision,” he said, adding that a lack of accountability at all levels of government was of significant concern.

Policy certainty was required in order to boost confidence, as was the establishment of efficient and inclusive infrastructure, insisted Mhlanga. He said the country’s energy crisis needed to be addressed, spectrum needs to be licensed, the education sector reformed and the role of women elevated in society. “It seems as though our leadership don’t recognise the engines of an efficient economy. Why haven’t we addressed the crisis at Eskom yet and what’s holding up the licensing of spectrum?”

The public sector needs to become a more attractive working environment if it is to attract skills but this will only happen if the political crisis is addressed and an environment conducive to growth and accountability is created rather than one where corruption and malfeasance is allowed to thrive, agreed Mhlanga and Coovadia.

Political contestation within the ruling party is the biggest obstacle to addressing the political crisis, said political analyst, Dumisani Hlophe. This contestation, he explained, is not based on policy or ideological differences, but rather on the fight for control of the party. While political contestations are not uncommon, they needed to be appropriately managed, he said. “I don’t think the current leadership appreciates the chaos this contestation creates.”

He disputed the idea that the president was an isolated individual within the ANC, arguing that the president is a product of the party and won’t act independently.

BUILDING A SUSTAINABLE NEW NORMAL

South Africa has entered a decade where SA’s longstanding challenges have been exacerbated by the Covid-19 crisis. In addition to the financial and social strains of the pandemic, SA still needs to overcome historic hurdles that put us on the back foot during the lockdown. These include the slow pace of government reforms; the skills-readiness of our workforce to gain employment in Fourth Industrial Revolution (4IR) jobs; the devastating effects of rapid climate change in a country already gripped by drought; and an energy crisis that is straining our economy.

The 6^th annual Director’s Event, presented by the Sunday Times Top 100 Companies and futured by BCX, took place online recently, where these issues were debated and brainstormed, and potential solutions recommended.

Sunday Times editor, S’thembiso Msomi said President Ramaphosa needs to be brave in forging ahead with actions to establish SA as an economy that investors can once again trust. However, to achieve that will take commitment, hard work, and the co-operation of both the public and private sectors.”

SA is poised for a future where our fundamental industries will be revolutionized, and it is imperative that we harness this innovation,” said Mandisa Ntloko-Petersen, chief marketing officer at BCX, adding that those companies that embrace innovation will thrive rather than merely survive.

Chairperson’s report for 2020

Delivering the chairman’s report for 2020, Wendy Lucas-Bull, chairman of Absa Group Limited discussed what it takes to do business successfully in SA and what is required to drive our economy forward. To address SA’s downward spiral requires drastic changes in the composition and efficacy of government spending. What matters most now is a clear response plan that all stakeholders can support and a relentless focus on its implementation underpinned by a credible accountability framework.

The journey towards an economic recovery, she said, will require a socio-economic compact between government, organised business, labour and civil society. In the short-term, there are a number of low hanging fruits which could help to arrest the current downward spiral, including reforming state owned entities into efficient economic growth drivers; ensure a stable supply of electricity in a liberalised market; a review of regulatory frameworks to facilitate digital migration and release much needed spectrum; amending SA’s visa regulations; and easing regulatory red tape for small businesses. In the medium to long term, unemployment needs to be addressed and the state’s capabilities bolstered while infrastructure projects with multiplier impacts need to be prioritised.

Saving Eskom a collective effort

Delivering the keynote address, Andre de Ruyter, the group CEO of Eskom said if the power utility fails it will have dire consequences on SA. He acknowledged concerns around rising electricity tariffs but said that there was no avoiding the fact that electricity would be costing more in future.

Eskom has identified a number of priorities to put the business on a more sustainable footing, including a focus on maintenance, the quantity and quality of coal, reducing its headcount, addressing its debt challenge, restructuring and recovering a culture of excellence. He concluded by saying he alone could not fix Eskom and that it would require a collective effort.

How to revive an economy in ICU

The first panel discussion focused on strategies to revive the economy and included Professor Ruth Hall, professor of Poverty, Land and Agrarian Studies at the University of Western Cape; independent energy expert Ted Blom; and Tebele Luthuli, MD of Business Against Crime.

The big issues emanating from the discussions were that the Covid-19 pandemic had become a humanitarian and food crisis, exaggerating structural inequalities. A basic income grant was one suggested solution. The high cost of doing business in SA – exacerbated by the growing cost of electricity – needs to be addressed, and the power grid needs to be opened up to households to self-generate. Other solutions include reform of labour regulations and better capacitation of the NPA, Hawks and SARS in order to create a more capable state.

The biggest takeaway from this discussion, said Ntloko-Petersen, is the need for collaboration. “There is no question that an economic recovery will require a collective effort combined with effective policy and a sustainable energy supply,” she said.

Managing climate change to become self-sufficient

The second panel discussion focused on how SA needs to manage climate change in order to become self-sufficient. The panel included Tasneem Essop, executive director of Climate Action Network International; Dr Inga Jacobs-Mata, country representative for the International Water Management Institute, Southern Africa; Kekeletso Tsiloane, the founder of Ramtsilo Manufacturing & Construction; Shamini Harrington, vice president of climate change at Sasol; and David Nicholls, chairman of the South African Nuclear Energy Corporation (NECSA).

The main take-outs were that SA cannot afford not to be concerned about climate change given that it’s not just an environmental issue but also an economic and social issue. We need to implement an inclusive process to enable a just energy transition. A climate change programme done right will lead to better development and better growth. However, while there has been progress in terms of policy evolution and development there is a lack of technical capacity to implement, as well as a disconnect between climate change and development goals. The argument for nuclear energy as the only viable alternative to coal was not accepted by all the panellists, many of whom called for a bigger focus on renewable energies.

4IR and jobs

The final panel discussion of the day put the spotlight on how the Fourth Industrial Revolution (4IR) will create jobs and grow the SA economy. The panel included Professor Brian Armstrong, adjunct professor at the Wits Business School; Dr Michael Gastrow, director for Science in Society at the Human Sciences Research Council’s Impact Centre; Gur Geva, the founder and CEO of iiDENTIFii; and Shaheen Vawda, chief sales officer at BCX.

The big take-outs from this discussion include the fact that SA does not have the luxury of time and needs to urgently embrace 4IR technologies in order to harness potential opportunities and become globally competitive. However, SA’s IT infrastructure has room for improvement. We urgently need to ensure that the youth and those in marginalised areas have access to affordable data and we need to build science and technology skills for the 4IR. Connectivity is the biggest challenge facing the country, and is something that risks growing the current digital divide.

From a business perspective, digital transformation is a journey rather than a destination, and one that can’t be focused on cost cutting but instead needs to be focused on top line growth.

Tangible areas to create jobs going forward are to build labour consuming platforms (like Uber and AirBnB); build more globally traded resources; and create a vibrant hub for the application of emerging technologies in an emerging market context – and then scale them up for export.

The Institute of Directors South Africa (IoDSA) has partnered with The Director’s Event since its inception. An event of this nature is even more important in a difficult year, said IoDSA CEO, Parmi Natesan. “It is in times of crisis that companies need their directors more than ever to steer them through choppy waters. It’s also in times of crisis that we realise how inter-connected business, society and the environment are – having either a positive or negative impact. Certainly, there is no question that business has an impact on our social and environmental capital.”

She added that boards need to be directing their companies to survive and thrive. However, this can only be achieved if the legitimate needs and expectations of stakeholders are taken into account.

The seventh annual Directors Event, billed the largest boardroom meeting in SA, was held on 11 June 2021 in partnership with BCX and in association with the Institute of Directors in South Africa. The event is an opportunity for leaders in the private and public sectors to come together to debate, brainstorm and recommend solutions to steer the country forward.

The recurring themes that emanated during the meeting and subsequent panel discussions were the need for accountable, transparent and bold leadership as the country plots a new course for its future; a call for better collaboration and co-operation between the public and private sectors; and the need for reform in re-imagining the future for SA.

Welcoming delegates to the Director’s Event, Sunday Times editor S’thembiso Msomi pointed out that change has become our new normal and that to survive, requires us to adapt while thriving requires that we start to think differently.

He said a new course for the country needs to be plotted, one that leaves no one behind. The pandemic has highlighted the fragile links between the formal and informal sectors. Whether it’s maintaining food security and sustainability, supporting tourism and hospitality, making it easier for international trade and foreign investment, ensuring a reliable and efficient energy grid, re-thinking education and skills development in a 4IR world or re-thinking and restructuring our over-stretched healthcare system, Msomi called for the public and private sectors to actively – and creatively – engage.

“Despite SA’s numerous challenges, we have a great deal to be optimistic about,” he said, adding that while our diversity brings challenges it also fuels innovation.

Jonas Bogoshi, CEO of BCX – the headline partner of the event – pointed out that the effects of the pandemic will continue to be felt for some time to come in SA. He was concerned, he said, about our readiness for the next pandemic, our ability to provide sufficient levels of healthcare, high levels of unemployment, and the impact that corruption has had on our collective psyche and moral fibre.

According to the 2021 Edelman Trust Barometer there is widespread mistrust of societal leaders. Business, however, is emerging as the only area where people still have trust and which still has competence and credibility. Increased trust in business leaders such as CEOs comes with certain expectations, said Bogoshi, adding that business leaders need to step in where government has struggled to solve societal problems. The call for CEOs to no longer just be accountable to shareholders but to society can no longer be ignored. For the sake of SA’s future their response can’t be timid or half-hearted but instead needs to be swift and determined.

Chairman’s Report

There is an urgent need to strengthen SA’s democracy and build confidence. To achieve this requires that leaders are both conscious and conscientious in re-imagining their role to ensure that they are accountable and transparent, said Tsakani Maluleke, the auditor-general (AG) of South Africa, during the delivery of the Chairman’s Report.

The pandemic has brought into sharp focus the impact of alarming inequality and growing unemployment against a backdrop of weak capabilities on the part of government. “Our shared experiences over the past 14 months have highlighted the urgency with which we must work collectively and cohesively to design and implement solutions that are both effective and sustainable,” she urged, adding that at a minimum, those trusted with leadership positons meet their responsibilities.

The only way to inspire confidence, strengthen our democracy and deliver lasting value and benefits to citizens is for leaders to be accountable, responsible and practice effective oversight, she said.

To provide oversight is the primary role of the office of the AG. As the supreme audit institution of SA it is mandated by the constitution to strengthen the country’s democracy by enabling oversight, accountability and governance in the public sector through auditing, in the process building public confidence.

The AG’s annual audit reports focus on three key areas: the reliable and credible performance information for predetermined objectives; fair representation and the absence of significant misstatements in financial statements; and compliance with key laws and regulations that relate to financial performance management.

Audit reports typically flag three kinds of problems in government spending, explained Maluleke: unauthorised expenditure which is classified as spending that goes over budget or was not used for its intended purpose; irregular expenditure which is spending that was incurred with complying with the applicable legislation; and fruitless and wasteful expenditure which is classified as pointless spending that could have been avoided.

After several years of reporting no meaningful improvements in audit outcomes, ongoing irregular expenditure and lamenting the lack of consequence management, the powers of the AG were strengthened in 2019 when President Ramaphosa signed into law amendments to the Public Audit Act which enabled the AG to not only report on audit outcomes, but also to enforce accountability. In other words, explained Maluleke, the AG’s office can now step in when accounting officers from public institutions fail to enforce accountability.

This means that in addition to providing corrective recommendations aimed at addressing wrongdoing that significantly impacts on public resources and service delivery, the AG can take remedial action which is legally binding should the recommendation be ignored. It also has the power to issue a certificate of debt in the names of those charged with overseeing public resources should the remedial action not be complied with and can refer wrongdoing found during an audit for investigation by relevant public bodies such as the public protector, the Hawks, NPA and the police.

In the last cycle of audit reports, the AG identified 75 material irregularities valued at losses of R6.9 billion on aggregate. Citizens, said Maluleke, are impatient that oversight has been sacrificed for so long which is manifesting in a growing level of dissatisfaction in the form of service delivery protests. The AG’s office, she said, was determined not to abandon its responsibilities and would continue to focus on oversight to ensure elected office bearers were held accountable where public finances are concerned.

Keynote Address

Herman Warren, The Economist Corporate Network’s director for Africa, delivered the keynote address during which he said the Covid-19 pandemic shone a light on deficiencies and inequalities both within and across nations. In too many instances, those paying the heaviest price are the least capacitated to shoulder the burden, including hourly workers, those without the option to work remotely and those without access to adequate healthcare.

Middle income countries such as SA – home to 75% of the world’s population, 62% of the poor and just 33% of global GDP – have been particularly hard hit by the pandemic, he pointed out. In SA poor governance and decision making has resulted in a lack of adequate water and sanitation, insufficient power generation, lack of access to affordable ICT infrastructure and services, high unemployment and limited fiscal space to respond with the same largesse as wealthier nations.

The US, for example, has passed trillions of dollars in aid packages. Between March 2020 and March 2021 it passed $5 trillion in aid packages, equal to around 25% of GDP with a further $4 trillion proposed by the Biden administration as part of an effort to build back better. “These injections are raising concerns about inflation and the potential need to increase interest rates, which could scupper fragile recoveries and unsettle the global financial system,” said Warren.

The Economist Intelligence Unit, he revealed, has forecasted that the recent and sharp rise in inflation in the US is short term in nature and that low interest rates will remain a feature over the near-to-medium term. “Nonetheless, the inflation outlook is an area to keep an eye on,” said Warren.

Pointing out that Sub-Saharan Africa will have the weakest recovery amongst the sub regions of the global economy, Warren said that faster and sustainable economic recovery will not be assured until – and unless – we tackle the virus with variants underscoring the reality that no-one is safe until we all are.

“No-one has a crystal ball: as leaders we deal with uncertainty, complexity, volatility, we consult stakeholders, distil risks and opportunities, develop scenarios, apply probabilities where appropriate and make calls with varying degrees of conviction and confidence,” he said, adding that the pandemic has reinforced the importance of doing the basics right, as well as addressing the hard things consistently.

Warren called on leaders to reflect on what is urgent or likely to be within their domains of influence and responsibility. “What is the writing on your wall indicating; what should you be doing in the spaces you occupy and are charged with improving to address the most important issues at hand or with the potential to materialise?”

His message was that leaders should never take themselves too seriously – humility is a virtue, after all – but to take what they do seriously. “Let’s hold ourselves to a higher standard and expect in a constructive fashion no less from others including suppliers, staff, politicians and so on.”

In the expectation of further curved balls, he said what matters is not just what we do during a crisis but what we do before it. “I would argue the pre-crisis actions matter most,” he concluded.

How to drive a healthy economy during a pandemic

The Covid-19 pandemic and subsequent lockdown had a very negative impact on SA’s GDP. Certainly the lived experience for most South Africans doesn’t reflect much optimism, pointed out Bruce Whitfield, the moderator of the first panel discussion which focused on how to re-invigorate the economy amidst an ongoing pandemic.

Tourism was one of the worst hit sectors and continues to struggle without international visitors or conferences. Despite the resumption of domestic travel, accommodation occupancy rates remain low which is not sustainable, revealed CEO of the Tourism Business Council, Tshifhiwa Tshivhengwa.

Tourism makes a valuable contribution to the economy with every 12 tourists to SA creating one job opportunity. There is currently much work being done to get government to understand the role of tourism and sorting out legacy issues like e-visas. “For the tourism sector to grow requires the holistic support of government in order to remove constraints,” said Tshivhengwa.

The industry was encouraged by the announcement that 51% of South African Airways had been sold to a private consortium given the airlines role in providing international visitor’s access to SA.

The agricultural sector, on the other hand, weathered the pandemic significantly more successfully. Certainly, said Wandile Sihlobo, chief economist at the Agricultural Business Chamber of South Africa, the sector is in a stronger position than it was five years ago thanks to favourable weather conditions and investments which have played to its advantage. However, although the sector expects further growth this year it won’t be an economic panacea. In the same way that the tourism sector requires a holistic response from government, so too does the agricultural sector, he said, adding that SA needs to decide on a national focus and concentrate on areas which have potential such as agro processing and expanding agricultural land space.

The agricultural sector continues to face challenges around inclusion, said Sihlobo, revealing that blended finance instruments will accelerate inclusive growth. He said we need to be focusing attention on how much land is available on government’s balance sheet and ensuring that this land is not made available on a lease basis given that this removes the incentive to make land improvements. “This is not the road to economic growth,” he said.

Other glimmers of hope have come from president Ramaphosa’s announcement that businesses are now permitted to generate and even sell-on electricity up to 100MW without a licence. In the face of a national grid which is collapsing this announcement is very welcome and will make a difference within the next 18 months, said Zwelakhe Gila, an energy specialist and co-founder of Chommie Co.

However, it’s unfortunate that we had to hit the bottom before we made any progress on energy reform, he added. Load shedding is costing the economy around R500 million per stage and is halving our total production capabilities which is why the Independent Power Producer Programme and the ability for businesses to self-generate power is so important given that it will lessen the country’s reliance on Eskom.

The pandemic has accelerated the rate of change and taught important lessons. We need to use these lessons to ignite change and encourage a new way of doing things, said Professor Mills Soko, professor in International Business & Strategy at Wits Business School.

In particular it has highlighted the importance of leadership, he said, adding that we need to be pragmatic in terms of how we deal with problems and find new ways of doing things. Although the changing structure of the economy has created new job opportunities, Soko questioned whether new entrants to the jobs market were equipped with the necessary skills to take advantage of these opportunities.

Pointing out that SA needs employment at scale, he said public-private partnerships and a local manufacturing capability will be crucial to SA’s economic recovery.

“We’ve witnessed a seismic change in the past 15 months. Now we need a fundamental shift in policy thinking and bold and visionary leadership that can make big decisions and help us define the new normal,” he concluded.

A skills and unemployment crisis – can tech turn our fortunes around?

The second panel discussion, moderated by Nozipho Tshabalala, focused on SA’s skills and unemployment crisis and the extent to which technology can potentially turn our fortunes around.

The Covid-19 pandemic has rapidly accelerated the pace of digital transformation in SA. The dramatic shift into the online space has widened the disparity between the haves and the have-nots, noted Tshabalala, adding that Stats SA data reveals that more than a third of those between the ages of 15 and 24 are not in education, training or employment of any sort and more than 20 million South Africans under the age of 35 are unemployed. Does a transition to a tech-driven future provide an opportunity?

SA has a fairly sophisticated economy on the one hand but only a small percentage of the population can access this sophisticated economy, pointed out Professor Jonathan Jansen, distinguished professor of Education at Stellenbosch University. “When lockdown hit only about 20% of schools could transition fairly seamlessly to online. The rest didn’t. Our research shows enormous learning losses have occurred.”

The elephant in the room, said Jansen, was how to create affordable access to quality education for the majority of learners because it is only once we have achieved that, that we will be able to transform the base of our economy through full participation in the opportunities that technology offers.

SA needs to fundamentally transform its economy, reduce inequality and become more efficient. Fixing a flawed basic education system and making it more relevant to the world of work is a key component of this transformation, said Ann Bernstein, CEO of the Centre for Development and Enterprise South Africa. We need to think fundamentally about reforming basic education to create a better performing system. Technology, she argued, is not the solution so we should stop looking for short-cuts. If necessary we need to import the necessary teaching skills.

Seliki Tlhabane, chief director for MST and Curriculum Enhancement at the Department of Basic Education said the three basic skills – reading, writing and arithmetic – had been expanded to include life orientation but learners also need digital skills in order to be able to function effectively in society.

Conceding that education systems have a responsibility to supply the world of work with relevant skills, he said the introduction of coding and robotics was government’s way of acknowledging the changing nature of work.

He agreed with Bernstein that SA should import teaching skills where there are shortages – but only for a defined period of time. Government has prioritised budget allocations towards education and is busy reviewing mechanisms to ensure schools are better resourced. “There is no silver bullet and it won’t be a quick fix, but government is seriously committed to addressing the gaps,” he said.

However, as Jansen was quick to point out, a government that can’t fix 2000 pit latrine toilets in the Eastern Cape is not going to be able to provide the platform to develop 4IR skills for learners. “Let’s be honest with each other: a school that still has pit latrines can’t even begin to think of 4IR,” said Jansen.

Public private partnerships will be required to provide these schools with basic infrastructure. He said SA was already importing teaching skills. “The best maths and science teachers in Soweto and Thoyandou, for example, are from Zimbabwe and India. Why do we only want them here for a defined period of time? Let’s keep them here and open our borders to get the best teachers here. The reality is that we’re not going to be able to rebuild South African schools in a short period of time. However, building a strong economy relies on a strong skills base.”

Riaz Moola, CEO of HyperionDev, has been closely involved in supporting universities to transition to online instruction. The company is also assisting universities to launch cost-effective and more accessible short courses.

Working and studying remotely has meant that people have become somewhat isolated. For younger people, it means that they need to be re-taught how to connect and collaborate with others and how to network, pointed out Vikela Rankin, the founder of Value Ed and Elevate. “Their sense of self-worth is not being heightened and they have higher levels of anxiety.”

Agreeing that digital offers a huge potential, he cautioned that access and scale will be a critical ingredient. “Rather than a brilliant teacher teaching 20 learners, they should be teaching 20 000 learners,” he said.

A technology driven world has the potential to create more jobs if we focus on creating the right skills, maintained Hope Lukoto, the chief human resource officer at BCX. The fourth industrial revolution (4IR) is happening regardless of SA’s readiness. Technology is becoming disruptive with digital permeating everything we do. A McKinsey study predicts that by 2030 as many of 14% of the global workforce will have to change jobs or acquire new skills.

“Given SA’s high rate of unemployment we can’t afford not to focus on technology. We have to get comfortable with technology and get fluent in it. At the same we need to start thinking differently about careers and jobs and focus more on outputs. Data science, for example can be applied throughout the value chain. Automation will not displace skills but will require different skills such as design thinking, innovation, curiosity, critical thinking and problem solving,” said Lukoto.

Better managing our healthcare resources

The final panel discussion, moderated by Andile Khumalo, put the focus on how we can better manage our healthcare resources in SA. There is no question that SA’s healthcare system is in a less than optimal state characterised by insufficient capacity, a shortage of healthcare skills and crumbling infrastructure. The pandemic has highlighted the disparities between the public and private healthcare sectors.

The immediate challenge for the healthcare system is to gain control of the Covid-19 pandemic which relies on citizens practicing the recommended safety guidelines such as social distancing, mask wearing and sanitising until they are vaccinated, said Dr Nicholas Crisp, deputy director general: National Health Insurance at the National Department of Health.

SA’s healthcare system is in a mess, he said, adding that the public and private split is not sustainable. “We need a massive revolution in the healthcare space so that resources are more equitably split,” he said, adding that government’s proposed National Health Insurance (NHI) Act, which aims to provide universal healthcare, will go some way towards pooling all available resources and undo some of the structural problems facing the sector.

Conceding that a few lessons have been learnt during the pandemic including the value of a digital planning system and how the procurement of medicines could potentially be restructured, he said the sharing of capacity and resources between the public and private sector has been encouraging.

The pandemic has highlighted the need for better management of the limited resources available in the healthcare sector, agreed Dr Memela Makiwane, chairperson of the Council for Medical Schemes, adding that one way to achieve this is stop the current fragmented approach to healthcare. For its part the Council for Medical Schemes is encouraging smaller medical schemes to consolidate in order to achieve economies of scale. This has resulted in 140 schemes consolidating into 76 schemes.

Despite ‘noise’ objecting to NHI, Makiwane said nobody was fundamentally opposed to NHI. He pointed to the UK as an example of a country which had successfully implemented universal healthcare coverage.

A lack of adequate planning, poor human resource management and failing infrastructure are just some of the challenges facing the healthcare sector currently. “The problem currently is not insufficient beds but rather a lack of experienced doctors and nurses,” said Dr Angelique Coetzee, chairperson of The South African Medical Association. “We have nurses working in ICU’s or high care without sufficient experience – yet we have a moratorium on new appointments.”

Coetzee said trust between the public and private sectors needs to be restored, public hospital CEOs need to have the power to maintain infrastructure, and the sector should not be employing non healthcare professionals who don’t understand the environment into positions of responsibility. The problem, she said, is that the foundations of our healthcare system are flawed. “It’s time to start over and build back better,” she advised.

Simon Hlungwani, president of the Democratic Nursing Organisation of South Africa (DENOSA) agreed that human resources is one of the biggest challenges facing the healthcare sector. “We don’t need people who are not fit for purpose,” he argued.

Poor planning, he said, has resulted in insufficient healthcare providers being trained. The World Health Organisation recommends that developing nations increase their intake of doctors and nurses by 8-10%. SA, on the other hand, is reducing the number of nurses it is training and the shortage of nursing skills is being exacerbated by the pandemic and the vaccination rollout. Nurses undergo four years of training, followed by a year of community service, so it is vital that our future human resources needs are carefully considered as there is no quick fix. Despite this shortage, many nurses complete their training only to be told there is no budget to employ them. “Planning is poor and myopic and doesn’t consider the longer term,” said Hlungwani.

Going forward, he said, we need a more resilient healthcare system and one that is fit for purpose. To achieve that will require partnership and collaboration.

The panellists agreed that all citizens need to be encouraged to get registered for the vaccine and to get vaccinated. “Vaccinating everybody is for the public good and is essential for our economic recovery because a healthy economy requires a healthy population,” said Hlungwani.

The past two years have been challenging ones for SA with the Covid-19 pandemic highlighting and exacerbating the stark economic divide between the haves and have-nots. The post-pandemic period has been characterised by constrained supply chains, rising interest rates, growing inflation and soaring commodity prices, all of which have been worsened by the war in Ukraine. As a result initial projections around how quickly the economy would recover have had to be revised. At the same time there is a growing recognition that rebuilding the economy requires a greater focus on social responsibility.

This year, the annual Sunday Times Directors Event, in partnership with BCX, was focused on reigniting the sense of Ubuntu. Not in its eighth year, The Directors Event, dubbed SA’s largest board meeting, has become an important platform for dialogue and debate.

Welcoming delegates to the event, Sunday Times editor S’thembiso Msomi pointed out that The Directors Event brings together the public and private sectors, as well as civil society, to discuss and debate the most effective path to SA’s economic recovery as it focuses on the major issues of the day including climate change, rising food and fuel prices, fragile supply chains and growing inequality.

Jonas Bogoshi, CEO of BCX said The Directors Event is a platform for leaders to listen and reflect. Critically, it’s also an opportunity to ask a fundamental question: what can we do to make things better? “The Fourth Industrial Revolution is real and is impacting how we live, learn and work,” he said.

While most successful, developed countries have succeeded despite constraints and challenges, he said SA tends to focus too much on the challenges and constraints. Change and progress needs to be a given and there should be nothing stopping us from developing solutions at scale.

Keynote address

The inspirational Dr Imtiaz Sooliman, founder and chairman of Gift of the Givers delivered this year’s keynote address. Previously a medical practitioner in private practice, he said he was instructed to establish the organisation 30 years ago by a spiritual teacher in Turkey.

Today, Gift of the Givers is the largest and most comprehensive disaster response organisation globally. It provides assistance unconditionally, assisting the needy, irrespective of race, religion, colour, class, political affiliation or geographic location.

Since its establishment it has been responsible for delivering life-saving goods and on-the-ground support in more than 43 countries around the world including Bosnia, Zimbabwe, Somalia, Yemen, Malawi, Palestine, Syria, Ukraine and SA.

Locally, it provided support in Knysna in the aftermath of the 2017 fires both to people affected by the fires as well as to save bee populations in the area; in Sutherland to save Merino sheep; it drilled boreholes in Beaufort West and Makhanda (Grahamstown) to provide communities with water; provided support in Cape Town as the city approached day zero in terms of its water supplies; and throughout the country during the Covid pandemic. Amongst other initiatives, Gift of the Givers also provided support in KwaZulu-Natal after the July 2021 civil unrest and after the April 2022 flooding.

Explaining that most corporate social responsibility initiatives “don’t have a clue” and “don’t address the real issues”, Sooliman said it was only once CEOs started dealing directly with Gift of the Givers that things really started to happen for the better.

Food insecurity has become a very real problem, he insisted. “Right now in the Eastern Cape children are dying of hunger,” he said, adding that when people have no dignity and are hungry, they lose all hope.

If leaders want to make a real difference then they need to give people hope. This requires that businesses and the economy grows in order to create and support more jobs for more people.

He reminded the audience that SA does not belong to the government but rather to its citizens. Therefore, “it’s our responsibility to fix SA.”

Ubuntu, he added, is about everybody doing their bit to save SA. “We lost too much through state capture and corruption which means we now all need to step in until SA has been rebuilt,” he concluded.

Keynote analysis

Political analyst and director of Political Futures Consultancy, Daniel Silke delivered the keynote analysis. Irrespective of whether you live in SA or another part of the world, the macro environment has become increasingly difficult, said Silke.

Supply chain disruptions will remain a challenge for some time to come, he predicted, but also offers opportunities. The war in Ukraine is exacerbating challenges created by the Covid pandemic and has global ramifications. The World Bank recently cut the global GDP forecast to 2.9% from 4.1%.

Silke predicted a frozen conflict in Ukraine and a potential for the conflict to escalate given Russia’s desire for expansion. The global economy and world order will be impacted, inflation will spike and rising food prices will hit poorer countries the hardest. While Europe will be the hardest hit, commodity exporters like SA will fare better.

The unilateral world we’ve become accustomed to is giving way to competing blocks and a potential redrawing of the world’s borders, he said.

SA is currently faced with a moral dilemma with the ruling ANC aligning itself with Russia and Ukraine despite the fact that it has far more trade and economic ties to the West. “SA is caught between its economic ties to the West and an emotional and ideological connection to Russia,” he said, adding that SA needs to bear in mind that it needs foreign direct investment from all countries. As such, neutrality, might be an advantage in the long term.

While SA’s tax windfall as a result of the commodity boom was welcome, it’s not likely to be sustainable, said Silke. “Tellingly, while commodity values have risen, volumes have not, primarily due to logistical constraints.”

SA’s biggest challenge, he maintained, is its disgruntled and largely unemployed youth population. Only 25% of SA’s youth population believe the country is going the right way.

To attract investment it is critical that SA creates an environment which enables businesses to grow and prosper. The country only just made it into the top 10 of Deloitte’s 2022 Africa Investment Attractiveness Index released this month. The survey identified Côte d’Ivoire, Ghana and Nigeria as the three most attractive African investment destinations.

As global supply chains slow down even further SA needs to look at the opportunities offered by the African Continental Free Trade Agreement (AfCFTA) and put the right building blocks in place – an enabling environment and an ethical government – in order to grow the economy and ensure an improved GDP, said Silke.

He ended his presentation with the following advice for SA: As Winston Churchill said, ‘Never let a good crisis go to waste’; from a foreign policy perspective, SA needs to be careful of not finding itself on the wrong side of history; it’s time for action from a beleaguered government and corporate SA; and finally that business and government need to work together.

Fixing the economy to improve livelihoods

The first panel discussion, moderated by Gugulethu Mfuphi, focused on fixing the economy to improve livelihoods.

For the first time president Cyril Ramaphosa admitted during his February 2022 state of the nation address that government is not the creator of jobs in SA and that the business sector is the key enabler of employment. He said he was committed to reducing red tape to encourage investment and the development of the small business sector. This could be a silver lining for job creation – if it materialises. Challenges, however remain, including skills shortages, an inadequate and struggling education system and a social welfare system that is supporting a growing number of people and requires ongoing government funding. In this environment, how can business step up to deliver real social impact?

Chief economist at Econometrix, Dr Azar Jammine said he was concerned about the impact of the global environment on SA given the rise in the country’s borrowings and high debt levels. As liquidity is withdrawn from the global economy and interest rates increase, the global economy could be faced with a significant downturn exacerbated by the war in Ukraine.

In this environment, SA is not the worst off, he revealed, explaining that a struggling local economy and low demand may ironically help to mitigate against some of the global risks.

Nontobeko Hlele, a researcher for the SA Office of the Tricontinental Institute for Social Research said unemployment is a massive problem in SA that is not receiving the attention it deserves. It is not ideal that so many people have no stake – or hope – in the country. She disagreed with the president’s comment that government is not a job creator, pointing out government employs teachers, nurses and doctors. It also needed to employ people to fix our infrastructure including roads and bridges. “Give those jobs to the unemployed,” she said.

Hlele called on government to invest in the economy, particularly in infrastructure. “If government is not investing in the economy, why should foreigners be investing,” she questioned.

She also called on business to work more closely with government, particularly the Department of Higher Education, to ensure that tertiary education institutions are teaching the skills that businesses actually need.

CEO of the Small Business Institute, John Dludlu, said SA is in a crisis situation as far as the SME sector was concerned. B-BBEE legislation has led to a rise in ‘tendertrepeneurs’ and politically connected people which is stifling genuine black entrepreneurs, he said. Explaining that the pandemic saw an upsurge in company’s being registered, he said these are not true entrepreneurs but rather opportunists. SA urgently needs to create a more enabling environment for small businesses to thrive, and for SMEs to be treated as the rock stars of the economy that they are, he said.

From an education perspective, Dludlu said SA does not get an appropriate return on its investment in education. “We need to assess what has gone wrong in the past 28 years and why we are not getting better education outcomes.”

To address the socioeconomic issues facing SA we need to grow the entrepreneurial sector and small businesses, agreed Hendrik Malan, CEO of research and consulting firm Frost & Sullivan Africa. Critically, everybody needs to have a stake in SA’s future.

He believes the war in Ukraine has opened up opportunities for SA and Africa. To realise these opportunities will require making better use of arable land, a move away from extractive economies to focus on beneficiating to a greater extent, as well as taking advantage of modern technologies to tap into the global economy.

Jan Bouwer, chief of Digital Platform Solutions at BCX agreed that there were huge opportunities in the IT space. “Technology can help us to fast-track innovations,” he said, pointing out that there are opportunities for South Africans to provide global services to multinational companies. However, this requires that we build up our skills base.

He called on government to embrace technology in order to reduce the red tape facing businesses and to make it easier to do business in SA.

SA is no longer the gateway into Africa and in a slow growth economy, capital is becoming more cautions, said Bouwer. He agreed with Malan that SA needs to take advantage of opportunities in Africa to create economies of scale and larger markets.

Eustace Mashimbye, CEO of Proudly SA agreed that it is important for SA to embrace technology in order to remain competitive. In particular, he said, it’s important not to divorce localisation from competitiveness.

Feeding the nation

The second panel discussion, moderated by Uveka Rangappa, focused on feeding the nation. Approximately 2.3 million households reported child hunger in 2021. Currently, more than 40% of South Africans are affected by hunger. Climate change is likely to exacerbate this situation. Unpredictable and extreme weather patterns – floods, droughts and wildfires – are playing havoc with agricultural supply chains which is impacting food security. The war in Ukraine, meanwhile, has resulted in skyrocketing fuel and food prices.

The challenge for SA is how to mitigate climate change, manage water resources more effectively, execute a just energy transition and support agriculture to ensure food security so that no South African goes to be hungry.

Dr Jaisheila Rajput, founder and CEO of Tomorrow Matters Now, a green economy consultancy, revealed that hunger has worsened since the onset of the pandemic making it more urgent than ever that SA doubles down on securing food supply chains and makes sure that these supply chains are resilient. She called for a structural and systemic approach to link various initiatives and activities that currently operate in isolation.

“Food waste and food loss, for example, mostly happens upstream of the consumer. We need better education, identify where the loss is occurring and ensure surplus food is donated to hungry people. To achieve this requires an enabling environment, and a practical and tangible approach,” said Rajput.

Professor Mark Swilling, co-director of the Centre for Sustainability Transitions at the University of Stellenbosch, explained that SA produces enough food. The problem is that the available food supplies are not evenly distributed. Affordability and accessibility have become a growing issue with the result that close to 40% of South Africans suffer from nutrient deficiencies.

“Our food system is embedded in an environmentally unsustainable global food system. We urgently need to transition away from an industrialised food system towards more ecologically friendly agricultural methods,” argued Swilling.

The war in Ukraine has revealed the weaknesses inherent in the current global food system and the fact that the world is dependent on fewer and fewer food exporting countries.

From a health perspective, SA is dealing with two distinct groups of people: those who don’t have enough food and, at the other end of the scale, those who eat too much and end up suffering from obesity, said pro-vice chancellor: climate, sustainability and inequality at the University of the Witwatersrand, professor Imraan Valodia.

He said the current food supply system is broken. When it is under pressure – as it currently is – food prices will rise. Valodia agreed with Swilling that it’s time to rethink the whole food production system.

SA’s food security crisis predates both the war in Ukraine and the Covid-19 pandemic, pointed out Andy du Plessis, MD of FoodForward SA, an organisation which recovers quality edible surplus food from the consumer goods supply chain and distributes it to community organisations that serve the poor.

He agreed that the pandemic has exacerbated the situation and explained that when people can’t afford healthy food, they resort to less healthy food options. Civil society, he explained, has taken it upon itself to address hunger because government has failed to take action. He agreed with Rajput that government needs to implement regulation to regulate food donations to ensure less food is wasted.

Professor Francois Engelbrecht, director and professor of Climatology, Global Change Institute at the University of Witwatersrand, said the climate risks for the sub-Saharan African region will be increasing in the years ahead. He warned that the region is likely to become warmer and drier with the risk of extended droughts lasting for up to six years. An increase in the frequency and duration of droughts will put even more pressure on food security as sustained droughts will make it more challenging for farmers, he said.

Even though Africa accounts for only a fraction global carbon emissions, it is in the continent’s interest to curb its emissions given that it will suffer the biggest risks from climate change and a rise in the earth’s temperature, he warned.

New ways of tackling inequality

The third – and final – panel discussion, moderated by Nompumelelo Runji, put the spotlight on new ways of tackling inequality. The World Bank ranks SA as the most unequal country in the world with one of the highest Gini coefficients – a measure of income distribution that highlights the stark gap between the country’s richest and poorest – globally. SA’s level of inequality is worsened by slow GDP growth, increased household debt, political polarisation and increased levels of poverty.

The big question put to the panel was what actions need to be taken to improve the circumstances of those most affected by poverty? And how should the public and private sectors work together to remove SA from its classification in the ‘fragile five’ of emerging economies?

High levels of inequality are underpinned by inherited lack of opportunity, explained Precious Zikhali, senior economist in the Poverty and Equity Global Practice at the World Bank. She correlated poor economic opportunity to poor access to credit and jobs and pointed out that women and the youth are disproportionately affected by unemployment. Women also experience a substantial wage gap compared to men. Despite a high rate of social spending by government this does not mitigate against extreme inequality, she said.

Phelisa Nkomo, development economist and chairperson of Oxfam South Africa agreed that these were all significant issues. She added food insecurity and poor access to land to the list of issues exacerbating inequality. Government’s social security net is a fragile initiative, she said, adding that nobody can survive on social grants alone.

Pointing out that two million people lost their jobs during the pandemic, Nkomo pointed out that a staggering 40% of black South Africans don’t lead productive lives. “We’re building a society which is perpetually dependant on the fiscus to support it which is not sustainable.”

She argued that the macroeconomic tools at government’s disposal are not being effectively utilised. SA has lost industrial capacity it could ill afford to lose. Rather than exporting raw commodities, she said we need to focus on beneficiating. High rates of crime are a sign of social instability and a lack of political willingness to address the issue. For too long SA has been addressing the symptoms rather than the roots of the problem with policy responses that are not addressing the core issues.

SA’s GEAR policy (Growth, Employment and Redistribution: A macroeconomic strategy for South Africa) was a mistake from the outset, said Cosatu spokesperson Sizwe Pamla. Government expected the private sector to address the unemployment problem which it has not. The ruling ANC party inherited an unequal system but have not had the political will to address the problem and do what needs to be done, he argued, adding that government has made poor choices and has not sufficiently used the levers available to it.

Pamla criticised government’s procurement policy which gives tenders to entities that are already large in size rather than developing rural and township economies. He also criticised banks and development finance institutions which, he said, have not supported SMEs or done enough.

He argued that while Nedlac was a good platform, it needed to be based on principles of solidarity.

Professor Murray Leibbrandt, MRF chair in Poverty and Inequality Research and director of the Southern Africa Labour and Development Research Unit at UCT says high rates of inequality and high unemployment limits our productivity as a country. He agreed that SA is not addressing the problem adequately and said that SA urgently needs to move towards a social compact that breaks down structural impediments. Achieving this, he argues, requires mutual accountability, including business holding government to account.

Tackling inequality, said Leibbrandt, needs to start with a vision and credible leadership focused on creating an inclusive economy. This requires seeing the productive potential of all people. “We have the solutions but we need political will to implement them.”

Busisiwe Memela-Khambula, CEO of the South African Social Security Agency (SASSA) revealed that the organisation is effectively disbursing R200 billion to the most vulnerable in the country, including the elderly, the disabled and children.

Of concern is that a growing number of people are falling into the social security net. A total of four million people have matric but have never worked and one million people have degrees but have never worked. She agreed with previous speakers that people need to be provided with hope. This will require a co-ordinated approach between government and business to create opportunities for employment.

One of the over-arching take-outs from this year’s Sunday Times Director’s Event is that while SA faces numerous significant challenges currently, its recovery will be dependent on leaders in both the public and private sectors charting a bold and brave new path for the country.