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Posts Tagged ‘state of the nation

Breaking in new shoes

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trekking

On Sunday, Helanya and I flew back to Utrecht after a wonderful few weeks in South Africa. I had time to catch up with friends and colleagues, meet with students, organise the final ERSA Economic History workshop in Cape Town, and even play a two-day game of cricket. And, of course, do some shopping for the wintery months ahead, including four bottles of blatjang and new hiking shoes to break in during the next three months for a Camino walk I plan to do in May.

I must admit, I was skeptical of the sentiment I would encounter on my return to South Africa. The end of 2015 was not a great time for the country, most directly (for those of us residing in foreign countries, at least) reflected in the rapidly-depreciating currency. The president’s expulsion of Finance Minister Nene, the prolonged protests at universities, and even the poor performance of the Proteas proliferated the pessimism. And the start of 2016, characterised by vitriolic social media slurs, seemed to not augur much hope that 2016 would be any better.

And then we returned and fell in love with our own people all over again. The food, the sun, the languages, the opportunities. Bright students with bright ideas. A we-are-the-change-we-want-to-see-in-this-world attitude. When I was a student, apathy in student affairs was the main issue of the day. Not anymore.

That is not to say that all is well. Even through our over-nostalgic senses, we could feel the disappointment in the status quo, the hunger for a better South Africa. Race is at the forefront of national debates again. As I wrote last year, the narrow focus on race distorts the ‘remarkable story of courage, determination, perseverance and triumph-against-all-odds’ that black South Africans have written since the end of apartheid. By focusing on race, whites are made a co-author of a story that is not theirs to tell. And this remarkable story of self-empowerment continues, although some would argue for more abbreviated chapters.

More can be done, of course, to increase opportunities for all South Africans. It would help if the patronage politics that have become so endemic are tempered – how, I don’t know. It would help if we can encourage South Africans to start businesses that can sell to an outside world now eager to buy cheap South African products. It would help if we can provide quality education to kids that are currently excluded. But we should not dismiss the incredible achievements we have made too easily.

Yesterday I attended a workshop in Amsterdam. Some of the participants were from Sweden and Finland, two countries I have long admired for their open and innovative policies, and over lunch we discussed the immigrant situation across Europe. I knew, of course, about the rise in anti-immigrant sentiment, and the increase in right-wing activity, but I was surprised to hear about their own experiences: large anti-immigrant demonstrations that have strong racist undertones; academics receiving threats when they take a pro-immigrant stance; militias in the streets exercising mob justice.

It is easy to get pessimistic about South Africa when the State of the Nation is as fresh as a forgotten yogurt in a college dorm room. We have serious issues that need to be addressed fast. But we are not alone. Issues of exclusion, discrimination and repression exist in some of the world’s most enlightened (and educated) countries, issues that are unlikely to be resolved soon and may spill over into even worse forms of exclusion and violence.

Our walk to freedom and social justice may be long and winding, but at least our shoes are already broken in.

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Written by Johan Fourie

February 13, 2016 at 11:29

Forget the SONA embarrassment. This is how we change our future.

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lighttunnelWhat South Africans learned last night – if we did not already know it – is that if we are to make progress as a country, it will happen despite and not because of our politicians. Everyone lost in last night’s State of the Nation embarrassment: the EFF who, after chasing around one of their own MPs in the streets of Cape Town, interrupted the president repeatedly during his State of the Nation Address; the Speaker, who ordered armed police to forcibly remove the boisterous EFF members; and ANC MPs, for cheering on while EFF members were assaulted. And I haven’t even mentioned the jamming device used to scramble all cellular networks (shut down only after journalists and opposition MPs insisted that it be turned off). Or the fact that DA members marching outside were hosed down by riot police, and some arrested. The solemn figures of Thabo Mbeki and FW de Klerk in the parliamentary gallery depicted perfectly how far our country’s leadership has fallen.

But perhaps, in search of our dark cloud’s silver lining, what happened in parliament yesterday, although a reflection of the state of the nation, is not a reflection of the future of the nation. Another South African made news yesterday, news that will affect countless more lives (even South African ones) than what our president did or could say in a State of the Nation address. Instead of focusing on the sorry figure of Zuma, perhaps we should pay more attention to the ideas and plans of our greatest export in recent years: Elon Musk, founder and owner of Tesla and SpaceX, who is, incredibly, still only 41 years old. Musk announced on Wednesday that Tesla is planning to unveil a new lithium-ion battery pack that homeowners could buy to store and supply their own energy. Here’s Time Magazine:

Details on the batteries were sparse, but an obvious use would be placing them in homes equipped with solar panels to store excess energy. Solar energy company SolarCity already offers Tesla battery packs in some markets that customers can use to store energy and use as a kind of emergency generator. Musk is the chairman of SolarCity and its largest shareholder.

In addition to selling to residential customers, Tesla could also sell batteries to utilities trying to increase energy efficiency.

A shortage of electricity is arguably South Africa’s most immediate constraint: South Africa is producing less electricity than it did twenty years ago, owing to a lack of investment in new power plants and maintenance on existing ones. It is embarrassing to explain to my international visitors that, yes, we have a schedule about when power cuts will occur. Load shedding is killing investment, growth and jobs. Zuma acknowledged as much: “The country is currently experiencing serious energy constraints which are an impediment to economic growth and is a major inconvenience to everyone in the country”. He outlined short, medium and long-term responses, none new. According to most experts, we can expect load shedding for most of 2015 and well into 2016.

That is, if we trust government to deliver on its promises. We shouldn’t. Last night showed us that the best we can hope for is a government that does little harm. Don’t expect that any time soon, though. Instead, we should trust those people who have an incentive to get things right: if they do, and we begin to use batteries in our homes like we use toasters, they win fame and fortune. Musk will become an even richer genius. Politicians, in contrast, have none of those incentives. The way they make money is to skim the cream off a big tender. Delays mean larger contracts and more to skim off. There is nothing in politics that incentivize leaders to be efficient.

Entrepreneurs are different. They must innovate, improve, and deliver to satisfy the demands of millions of consumers. The better they do this, the more money they make. And this innovation improves the planet, too. Battery-powered homes (and cars and offices) will allow us to make better use of renewable energies, especially in a sunny and windy South Africa. It will allow us to connect the 3.5 million people that still don’t have access to electricity. (Consider the impact cell phone technology on African living standards.) And it will allow us to escape the inefficiencies of badly-run state monopolies. #powertothepeople #inmuskwetrust

Better politicians are not the answer to South Africa’s woes. Better entrepreneurs are. For South Africans, the light at the end of Eskom’s dark tunnel is a fast-approaching train. For Musk, it’s an entirely new world.

Written by Johan Fourie

February 13, 2015 at 10:28

Infrastructure

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The main highlight of President Zuma’s State of the Nation Address was his announcement of several new infrastructure projects. This seemed to go down well with the popular media, who called it an “ambitious” speech, and the general impression seems to be that infrastructure spending is difficult to fault given the crumbling condition of many rural roads, the frequent warnings of electricity shortages and the high costs, and slow speed, of internet access.

But what is often missing in the public discourse is that infrastructure spending decisions are implicitly decisions about industrial policy, which implicitly influences a country’s comparative advantage. Because infrastructure are expensive, it is simply impossible to simultaneously provide all infrastructure service requirements at once: fix all roads, reduce all port charges, provide low cost internet coverage across the country. Choosing one project means not choosing another. This means favouring certain industries against others: a new railway linking a iron-ore mining town to a port, for example, would entail few benefits for those sectors outside mining.

So what were the projects Zuma announced: firstly, a “plan to develop and integrate rail, road and water infrastructure, centred around two main areas in Limpopo: the Waterberg in the Western part of the province and Steelpoort in the eastern part”. Zuma is clear on its intentions: this investment is intended to “unlock the enormous mineral belt of coal, platinum, palladium, chrome and other minerals, in order to facilitate increased mining as well as stepped-up beneficiation of minerals”. There should be no doubt about the sector that profits from this investment.

Secondly, government “will improve the movement of goods and economic integration through a Durban-Free State-Gauteng logistics and industrial corridor”. R200 billion will be allocated to rail improvements and R100 billion on port projects to “connect the major economic centres of Gauteng and Durban/Pinetown, and at the same time, connect these centres with improved export capacity through our sea-ports”. As South Africa’s main industrial hub, Gauteng needs a rapid, reliable and low-cost connection to the global market, and this certainly is an attempt to reduce these transport costs. Manufacturing seems to be the main beneficiary of this investment, although Zuma does mention that “amongst the list of planned projects, is the expansion of the Iron Ore Export channel from 60 million tons per annum to 82 million tons per annum”, as is a “new 16 million tons per annum manganese export channel through the Port of Ngqura in Nelson Mandela Bay”. Mining, again, seems to benefit.

A third project envisages the agricultural development and improvement of export capacity in the Eastern Cape region. Less detail is available in the President’s speech, but this lower logistics costs seems to be the main focus. A new dam will also provide water to farmers in the former Transkei. Agriculture, thus, and perhaps the existing motor vehicle manufacturing industry are the most likely beneficiaries of these plans.

Fourthly, in the North West, government “will expand the roll-out of water, roads, rail and electricity infrastructure. Ten priority roads will be upgraded.” The main economic activity in North West remains agriculture and mining, and they will arguably be the main beneficiaries of this investment.

Fifthly, Zuma sees “enormous potential along the west coast of the country and [we] need to improve infrastructure to unlock this potential. Our plans include the expansion of the iron-ore rail line between Sishen in Northern Cape and Saldanha Bay in the Western Cape, which will create large numbers of jobs in both provinces. The iron-ore capacity on the transport-side will increase capacity to 100 million tons per annum.” Mining.

Of the five key infrastructure projects South Africa chooses to invest in, two is entirely dedicated to mining, while another two will, in addition to agriculture and manufacturing, also benefit mining. Considering that the Industrial Policy Action Plan (IPAP2) released by Minister of Trade and Industry Rob Davies in 2010 focus on “metals fabrication, capital and transport equipment, green and energy saving industries and agro-processing” as strategic sectors, as well as sectors which were identified in the first Industrial Policy Action Plan, namely “automotives and components, medium and heavy vehicles, plastics, pharmaceuticals and chemicals, clothing, textiles, footwear and leather, bio-fuels, forestry, paper, pulp and furniture, cultural industries and tourism and business process services (or call centers), nuclear, advanced materials and aerospace” the infrastructure spending plans of government seems to weight too heavily on one specific sector.

There is no mention in the infrastructure plan, for example, of investments in information and telecommunication networks. The only investment of note in the service industry, is the Square Kilometre Array radio telescope which South Africa is bidding to host. No extra funds, though, is promised. Rather, “we urge you to support the country’s bid”.

Infrastructure investment offers a rare chance to shape a country’s industrial future. There is no doubt our existing comparative advantage is in mineral resources. But is that the future we collectively envisage? Will we, for example, be satisfied if we reduce our high unemployment rate by providing jobs in the static, low-paying mining sector, jobs that can easily shift to lower-paying jobs in other resource rich countries? Will our dwindling mineral resources be able to compete with the mineral wealth of the rest of Africa? In addition, mining companies often provide their own infrastructure; by substituting private infrastructure with public infrastructure, the government is in fact boosting mining profits, exactly the opposite intention of the nationalisation/mining tax debate that is currently in the public sphere.

This is the most opportune time in our history to shift our comparative advantage to a dynamic, entrepreneurial and, incidentally, the fastest growing sector globally: services. Our kids should dream of designing mobile applications rather than working in an iron-ore mine. They should dream of becoming accountants, designers, bankers, scientists, musicians, football stars to a global audience, rather than forced to work menial jobs. Infrastructure investment is the catalyst to such a future. Rather than focus on the mining industry, this country should ensure that every urban kid has access to a fast and cheap internet connection, has a computer in her school, has access to quality health, education and, as she grows older, financial services. Reliable rail services, quality roads and reliable electricity are important, as are lower port fees, but so are clean water and sanitation services. Cities are the incubators of economic growth, which means we should direct infrastructure spending to these areas.

Our country has a scarred history. If we want to live in a nation where the past has less of a footprint, and where the chance to prosper is not restricted to a fortunate few, we need to put much greater emphasis on the services sector, and less on mining. While infrastructure investment may alleviate the acute unemployment problem that defines the state of our nation, the type of infrastructure we choose reflects, perhaps unwittingly, the state of our future.

Written by Johan Fourie

February 11, 2012 at 07:43