Lalor, former leader of the Democratic Alliance (DA), Tony Leon, and CEO of the Public Investment Corporation (PIC), Elias Masilela, recently debated the challenges and opportunities currently facing investors in South Africa at a discussion forum hosted by TIME magazine and Glacier by Sanlam.
Lalor said that while we are not in the middle of a crisis, if we continue to progress at the slow and steady rate of the past 20 years, we won't address the problems currently facing us. Masilela agreed, stating that our problems are not insurmountable. "Long-term infrastructural imbalances must be seen as opportunities to get things right. We cannot wait for government to invest. We need leaders in the private sector to lead and invest," he stated. "The culture and attitude of doing business in the country has to change. We need public service to be client-centric and results to be quantifiable. When the community raises an issue, the public sector needs to see themselves as accountable."
South Africa has a R1 trillion allocation to infrastructure spending over the next few years, but we have yet to see the results of this spend. According to Leon, we spend more than we earn, and we need to look at how we spend what we have. "The public sector wage bill has increased greatly over the last few years. We are spending on consumption rather than investment. We have underspent by 22% on infrastructure over the last few years," he said.
"Cadre deployment is not in the best interest of society if a person is not qualified to do a particular job," he continued. "SARS is an example of a department that works well and the PIC is well run. We should look to these as successes and try to replicate what works in other departments."
Masilela said that when it comes to job creation, the ideal is for the state to govern and regulate and allow the private sector to create jobs. Companies, especially smaller companies, are needed to create jobs, but they need an enabling environment. The first role of business is to make money and pay taxes. Government needs to create the playing field and the right environment. "However, where markets fail, government has to intervene," he said. "The financial services industry is an example. It has much regulation, and yet it has led the economy over the last 20 years. The regulation has provided a degree of certainty. Investors tend to pull back where there is no certainty and so we need this balance."
According to Lalor, investors are generally not losing confidence in South Africa. "In certain sectors perhaps, but in general investment into SA and Africa is growing," he said. "By looking at where our comparative advantages lie, we'll get an indication of where we need to be creating jobs." On the question of credit rating downgrades, Lalor felt that the agencies tend to focus too much attention on the short term. As an open economy, we are exposed to the rest of the world and the economy worldwide is struggling.
Lalor also touched on the issue of corruption, stating that it was a massive problem across our society. The panel agreed, stating that although there is more transparency now than previously, we do appear to be failing in this area. Corruption adds an additional cost to doing business, it creates a level of inefficiency and a climate of uncertainty. We need leadership that sets an example.
