A roadmap for South Africa by Miller Matola

Certainty breeds confidence. If the recent results of a Moody’s Investor Service action are anything to go by, the best way to garner confidence in a country and to represent it as a stable and consistent environment for investors is to have a plan and stick to it. Not just any plan, however; it has to be credible.

Commentators and experts are in agreement that the recently released National Development Plan is both comprehensive and credible. It identifies the major issues which still need to be addressed in SA and is the road map as to how we can start to do so. If implemented and followed, the plan will also remove a lot of the

doubt and frustration which continues to put our economy at risk.

Key to Moody’s decision to downgrade SA’s outlook last month was what they termed political risk.

According to reports, Moody’s action was driven by “the growing risk that the political commitment to low-budget deficits and the ability to keep within current debt targets could be undermined by popular pressures and rising internal strains within the African National Congress and its labour union allies”.

We believe their assessment is flawed and the government and the National Treasury and Deputy President Kgalema Motlanthe in particular, have criticised their judgement.

What the report does highlight, however, is the need for SA to change some perceptions of our investment and economic climate.

SA remains a globally competitive economy and our best practices – in banking, stock market regulation and auditing and reporting in particular – have drawn favourable ratings from other world bodies.

The World Economic Forum’s 2011/12 Global Competiveness Report identified various competitive advantages enjoyed by SA.

Among others, SA was ranked first in the strength of its auditing and reporting standards as well as regulation of securities exchanges. We were ranked second in soundness of banks and corporate boards and third in protection of minority shareholders’ interest and the availability of financial services.

At 50th overall, SA has the highest competitiveness ranking in sub-Saharan Africa and is second only to China among the Brics (Brazil, Russia, India, China and SA) economies.

The world regards our bankers, financial regulators and chartered accountants as some of the best in the world. Investors want to trust the numbers, and with us they do.

However, the World Economic Forum identified key areas where SA is weak – notably labour market efficiency, health and primary education, the health of the workforce, rigid hiring and firing practices, a lack of flexibility in wage determination by companies and the significant tensions in labour-employer relations.

Again, there are valuable lessons from this which show how we can improve our rankings. The National Development Plan gives us the direction to achieve this. It also shows that we understand our problems as a society and have a credible long-term structural plan to achieve improvements that will improve our reputation and competitiveness.

The plan does not simply gloss over the issues which we face. It lists various goals, but among those which are pertinent to the conversations around a stable economic environment are: improving education and training, providing quality health care, building a capable state, fighting corruption and enhancing accountability, transforming society and uniting the nation.

SA has the means, the goodwill, the people and the resources to eliminate poverty and reduce inequality, but it will require leadership from all sectors of society, a capable state and a social pact.

Having a plan is not enough. What we also need is a collective determination to meet the goals set out in the national plan.

The reality is that we are facing major challenges in labour, health and education.

The government has now outlined how we can meet these challenges. An important aspect of the development plan is its emphasis on active citizenry.

Key to making the plan a success is that South Africans get behind it and play their part to meet the goals outlined in the plan. The obvious benefit of this is that we create a more successful society, a country which functions at a much improved level and an overall better place to live.

Added to that will be a greater sense of policy certainty which will improve our international competitiveness in a world of great uncertainty. This will help attract investment and improve growth.

The plan is currently open for public input for four to six months of public engagement and refinement. President Jacob Zuma will then initiate a process whereby the cabinet considers the refined plan for approval. Once it is passed, it will be a plan for all South Africans irrespective of race, creed, class or political affiliation – a plan which will cultivate the values of a caring society. Before then, however, South Africans from all sectors and with a wide-range of expertise must play their part and lend their voices to the debate surrounding the plan.

We must all help refine it and make sure that, when it is adopted, it is not just a government plan but a vision accepted and created by the nation.

International experiences suggest that trade, tourism and investment respond well to the kind of long-term policy planning we as a nation are doing. And that will improve our competitiveness and give a firm answer to the ratings agencies.

Certainty breeds confidence. If the recent results of a Moody’s Investor Service action are anything to go by, the best way to garner confidence in a country and to represent it as a stable and consistent environment for investors is to have a plan and stick to it. Not just any plan, however; it has to be credible.

Commentators and experts are in agreement that the recently released National Development Plan is both comprehensive and credible. It identifies the major issues which still need to be addressed in SA and is the road map as to how we can start to do so. If implemented and followed, the plan will also remove a lot of the doubt and frustration which continues to put our economy at risk.

Key to Moody’s decision to downgrade SA’s outlook last month was what they termed political risk.

According to reports, Moody’s action was driven by “the growing risk that the political commitment to low-budget deficits and the ability to keep within current debt targets could be undermined by popular pressures and rising internal strains within the African National Congress and its labour union allies”.

What the report does highlight, however, is the need for SA to change some perceptions of our investment and economic climate.

SA remains a globally competitive economy and our best practices – in banking, stock market regulation and auditing and reporting in particular – have drawn favourable ratings from other world bodies.

The World Economic Forum’s 2011/12 Global Competiveness Report identified various competitive advantages enjoyed by SA.

Among others, SA was ranked first in the strength of its auditing and reporting standards as well as regulation of securities exchanges. We were ranked second in soundness of banks and corporate boards and third in protection of minority shareholders’ interest and the availability of financial services.

At 50th overall, SA has the highest competitiveness ranking in sub-Saharan Africa and is second only to China among the Brics (Brazil, Russia, India, China and SA) economies.

The world regards our bankers, financial regulators and chartered accountants as some of the best in the world. Investors want to trust the numbers, and with us they do.

However, the World Economic Forum identified key areas where SA is weak – notably labour market efficiency, health and primary education, the health of the workforce, rigid hiring and firing practices, a lack of flexibility in wage determination by companies and the significant tensions in labour-employer relations.

Again, there are valuable lessons from this which show how we can improve our rankings. The National Development Plan gives us the direction to achieve this. It also shows that we understand our problems as a society and have a credible long-term structural plan to achieve improvements that will improve our reputation and competitiveness.

The plan does not simply gloss over the issues which we face. It lists various goals, but among those which are pertinent to the conversations around a stable economic environment are: improving education and training, providing quality health care, building a capable state, fighting corruption and enhancing accountability, transforming society and uniting the nation.

SA has the means, the goodwill, the people and the resources to eliminate poverty and reduce inequality, but it will require leadership from all sectors of society, a capable state and a social pact.

Having a plan is not enough. What we also need is a collective determination to meet the goals set out in the national plan.

The reality is that we are facing major challenges in labour, health and education.

The government has now outlined how we can meet these challenges. An important aspect of the development plan is its emphasis on active citizenry.

Key to making the plan a success is that South Africans get behind it and play their part to meet the goals outlined in the plan. The obvious benefit of this is that we create a more successful society, a country which functions at a much improved level and an overall better place to live.

Added to that will be a greater sense of policy certainty which will improve our international competitiveness in a world of great uncertainty. This will help attract investment and improve growth.

The plan is currently open for public input for four to six months of public engagement and refinement. President Jacob Zuma will then initiate a process whereby the cabinet considers the refined plan for approval. Once it is passed, it will be a plan for all South Africans irrespective of race, creed, class or political affiliation – a plan which will cultivate the values of a caring society. Before then, however, South Africans from all sectors and with a wide-range of expertise must play their part and lend their voices to the debate surrounding the plan.

We must all help refine it and make sure that, when it is adopted, it is not just a government plan but a vision accepted and created by the nation.

International experiences suggest that trade, tourism and investment respond well to the kind of long-term policy planning we as a nation are doing. And that will improve our competitiveness and give a firm answer to the ratings agencies.

l Miller Motala is the CEO of Brand South Africa, previously known as the International Marketing Council of SA.

Source: www.iol.co.za/mercury