“CONFIDENCE CRISIS – A LEADERSHIP CHALLENGE IN REBUILDING THE ECONOMY”: ADDRESS BY HIS EXCELLENCY FORMER PRESIDENT OF THE REPUBLIC OF SOUTH AFRICA, KGALEMA MOTLANTHE, ON THE OCCASION OF THE 2019 NORTH WEST UNIVERSITY LEADERSHIP SUMMIT: BIRCHWOOD HOTEL
13 AUGUST 2019
Professor Dan Kgwadi, the Vice Chancellor of the North West University
Esteemed Members of the Academia
Leaders of Civil Society formations
Ladies and Gentlemen:
Thank you for inviting me to this year’s North West University Leadership Summit to speak about a leadership challenge in rebuilding the economy.
The question we are called upon to answer is whether there is indeed a confidence crisis and how it impacts on the matter of rebuilding the economy?
If the answer to the first part of this question is in the positive, it may be important to look at the manifestations of this crisis in leadership.
We live in a time when there is generally a confidence crisis in the economic, political and electoral systems; in parliament, the executive and in all spheres of government. It is only the judiciary that seems to enjoy the confidence of our people.
This loss of confidence is as a result of lack of leadership. It constitutes a crisis as there are no alternative institutions to rely on, and since it cuts across all sectors of society it perpetuates the crisis further.
When people lose confidence in institutions, they lose confidence in leadership. They resort to their own means. They take the law into their own hands. This leads among others to an escalation of crime which threatens lives and property. It also breeds anarchy.
All this impact negatively on the economy, as properties are de-valued and investor confidence diminishes.
In our country, we have seen this lack of confidence in leadership and institutions manifest itself in instances where people have resorted to social upheaval and violence.
Other manifestations of the confidence crisis include:
- The contraction of the economy;
- The near collapse of state-owned enterprises;
- The Auditor General’s adverse findings on the state of municipalities;
- How the fiscus has been used to bail our struggling SOEs, municipalities, provincial governments – including in the North West, from where the North West University has one of its three campuses across the two provinces;
- People taking initiative on their own without political and business leadership;
- The decline in voter participation and general apathy around politics;
- Increasing emergence of alternative forms of engagements that are informal, sporadic and issue based; and
- The erosion of credibility of professional and regulatory bodies.
At an international level, these manifestations include among others:
- The emergence of alternative economic and political blocs;
- Benefits of globalization which unfortunately are overshadowed by the widening gap between the rich and the poor;
- A move towards militarism and strong man politics;
- The rise of populist and narrow nationalist tendencies; and
- The rise of xenophobia and related hate crimes.
In various ways, these manifestations have a long term, profound impact on the South African economic and political landscape.
One example of a major crisis we are facing as a nation is with regards to Eskom. As a supplier of energy, Eskom is at the centre of efforts aimed at rebuilding our economy.
Clearly, urgent and decisive leadership is needed to turn around Eskom. We need leaders who will first and foremost correctly diagnose the problems facing the enterprise, so that appropriate responses can be developed.
Eskom is facing five critical problems:
- A spiraling debt currently sitting at around half a trillion rands;
- Lack of maintenance of aging equipment;
- Poor quality of coal;
- Lack of a credible revenue collection plan; and
- Poor leadership that manifests in the mismanagement of the enterprise as well as poor governance
Eskom’s importance to our economy needs to be looked at in the context of how the various industrial revolutions have evolved: from the first industrial revolution which introduced the steam engine; the second industrial revolution which brought with it electricity; the third industrial revolution which gave us computers and the world wide web and the fourth industrial revolution which has ushered in an era of artificial intelligence, robotics and big data.
The crisis at Eskom and the manner in which it is being handled indicates that essentially as a country we are still grappling with the challenges of the second industrial revolution at a time when other countries are at the cusp of the 4th Industrial Revolution.
We are unable to supply reliable power to drive the growth and development of our economy; which is currently growing at less than 1% with more than 6.7 million people out of jobs.
This means, as a country, we cannot successfully move to the 4th Industrial Revolution, which is widely seen as the future.
Our stagnant economy, high levels of unemployment and a private sector that is not investing confirm that indeed our economy is in a crisis of leadership.
Furthermore, low growth puts pressure on communities and the unemployed masses, especially the youth who have no alternative sources of income.
These young people, many of whom are better educated, innovative and connected to the world hold the view that leaders, in business and in government, are holding them back. On their own they can do better!
With the rise of independent and social media, these young people have found alternative avenues to express their disillusionment with those in leadership.
For instance, in the May elections there was a significant decline in the number of young people who registered to vote and those who voted.
Faced with the harsh reality of a stagnant economy and rising unemployment, many South Africans are daily finding alternative pathways out of poverty – mainly in the informal economy.
According to STATS SA the informal sector grew by 114 000 jobs in the second quarter of 2019. This was the largest employment gain per sector.
This tells us that South Africa has a thriving informal economy. It indicates that many South Africans are either starting their own informal businesses or finding jobs in existing ones.
It signals that; away from the radar screens of official numerators and the formal economy, South Africans are building livelihoods for themselves.
Evidence of this can be seen in the streets, pavements and backyards in many townships and rural areas which are humming with entrepreneurial activity.
The nature of our economy is changing. Not only is the informal sector growing in significance but also our economy is localising – people are creating opportunities where they live.
This is consistent with what the majority of our people were raising during the recent election campaign. Many were concerned about local issues.
The increased focus on local issues requires strong leadership at municipal level and the fact that many of our municipalities are dysfunctional confirms the leadership challenge we face.
The focus on local issues also requires the strengthening of efforts to rebuild local economies. This includes the provision of micro-finance for local communities who are not able to be absorbed in the formal economy.
Ladies and Gentlemen;
It is important that we ask the question whether our government has been able to carefully analyse and comprehend what came out of this year’s elections. This is necessary for the development of comprehensive responses to challenges facing local communities, including the need not to overregulate local economies.
Part of the leadership challenge we face in rebuilding our economy, is to fix local issues and support the development of local economies as vividly expressed by the people during the May elections campaign.
Equally, the changing nature of our economy requires a new kind of leadership in the economy – a leadership that is bold, not constrained by convention and a leadership that is in touch with the daily lived experiences of ordinary people.
We need the kind of leadership in the economy that will harness and not stifle the entrepreneurial spirit in many South Africans.
The leadership we need is that which supports and enhances the pathways out of poverty that the poor are already creating for themselves.
Leaders need to listen and be more accommodating to the vendors on our streets, to the small guy fixing cars from his back yard, to the cobbler on the street corner, the young person selling roses in a busy intersection and to the old lady running her own food outlet.
An enabling environment needs to be created for these entrepreneurs to thrive. We need to create markets for them. Informal markets are a significant feature of many African economies.
One of the good examples from which we should draw lessons is the Township Economy Revitalisation Strategy of the Gauteng Provincial Government.
At the core of this strategy are enduring partnerships between government, mainstream business and local entrepreneurs, including those in the informal economy.
For the strategy to be effective it requires adjusting existing laws and regulations so that they do not become obstacles to entrepreneurship.
At the same time both government and established business must be prepared to stay the cause, understanding that successful businesses are not built overnight.
In other words, we must be developmental when dealing with township, rural and informal businesses.
Generally, there is a need for government and business leaders to do away with their obsession with formality. We must challenge the dominant narrative that informality is an abomination that needs to be converted and dislocated.
There is also a need to foster better and more effective collaboration between the private and public sectors in areas such as skills development and transfer as well as vocational and technical training.
In fixing our economy government needs not just to reprioritise the budget and re-allocate money from one department to another. We also need more impactful interventions of a long-term nature to support sustainable growth and job creation. This will require new capital and not just the reprioritisation of budgets.
It is in this context that initiatives by President Cyril Ramaphosa to attract greater levels of investment into our economy are welcome. However, these investments must not be channelled into low growth sectors as well as into funding struggling SOEs.
The new money we attract, must be channelled to catalytic projects such as oil and gas as well as agriculture. This will result in the creation of more and new jobs as well as new wealth out of which a Sovereign Wealth Fund could be created to further rebuild our economy.
This Fund will also help drive broad-based empowerment as opposed to previous approaches to empowerment which resulted in the creation of wealth spots.
Leadership also means thinking out of the box, venturing out into uncharted waters and bringing into the national fold new ways and eyes of looking into things, in the end, drastically changing lives of the people for the better.
I refer in this instance to the maritime world, our Blue or Ocean Economy, what Commander Tsietsi Mokhele; the Executive Chairman of Elekhom Global, an international maritime consultancy and former SAMSA CEO, referred to as “South Africa’s 10th Province”, for, from our maritime resources, the economic, social, cultural and other benefits are simply boundless.
South Africa is the only country on the African continent that has access and control over sea waters covering an area equivalent to 1.6 million km² with a coastline of 3 924 km – from the Atlantic Ocean in the west, Southern Ocean to the Antarctic and Indian Ocean in the east.
To include Marine and Maritime Cultural Heritage into the broader South African Maritime Agenda can give rise to a series of social and economic benefits beyond its immediate value: Maritime Heritage generates understanding of the past and public appreciation in the present.
For instance, in 2013 alone, maritime attractions in the UK were visited by more than 300 000 tourists, generating approximately £ 3.7 million in income for the UK.
Economists suggest that there were about 134 000 jobs arising directly from heritage-based tourism in the UK, with Marine and Maritime Cultural tourism making a significant contribution to this figure.
In addition, the concept for Marine and Maritime Cultural Heritage is a new and huge area for research and needs to be explored further.
The social and economic benefits are already occurring in South Africa, but are hidden and unrecognised, and this therefore calls for a closer assessment and study of the potential economic contribution to the GDP and job creation that can come from this sub-sector.
Ladies and Gentlemen, part of rebuilding our economy requires that we act decisively – without fear or favour – against corruption. What is coming out of the various Commissions of Enquiry indicates the extent to which corruption and malfeasance had crept into our body politic.
As leaders we must provide the kind of leadership that will inspire confidence that, as a country, we are indeed making a clean break with corruption and looting of the state and are protecting our institutions and agencies from being hollowed out.
We must send a strong message that corruption has no place in our society and that we are restoring the rule of law.
As I conclude I wish to refer to the words of Chief Albert Luthuli in his acceptance speech of the Nobel Peace Prize in Oslo in 1961 when he said;
“It is the greatest honour in the life of any man to be awarded the Nobel Peace Prize, and no one who appreciates its profound significance can escape a feeling of inadequacy, and I do so very deeply, when selected to receive it. In this instance, the feeling is the deeper, not only because these elections are made by a committee of the most eminent citizens of this country, but also because I find it hard to believe that in this distressed and heavily laden world I could be counted among those whose efforts have amounted to a noticeable contribution to the welfare of mankind.”
Chief Luthuli went on to say; “Happily, I am only one among millions who have dedicated their lives to the service of mankind, who have given time, property and life to ensure that all men shall live in peace and happiness, and I would like to here say that; there are many in my country who are doing so.”
Ladies and Gentlemen, it is this kind of leadership to which we must aspire across society. This is a leadership that places a high premium on the collective – a leadership that merely becomes the public face of the cause being pursued, while the masses of the people are at the centre of driving the desired change. This is servant leadership. Benjamin Franklin once said: “nearly all men can stand adversity, however, if you want to know the true character of any man give him power”
Leaders must harness human talent and human capabilities.
I wish you a successful Summit.