How to make South Africa work better: Moeletsi Mbeki

Posted on October 31, 2011

True to his name, which means the “advisor”, Moeletsi Mbeki presented a counselling presentation directed at the government on how to make this country work better. This was Mbeki’s second public lecture at the University of Pretoria, the first one was in 2002 when he made his first denunciation of the policy of Black Economic Empowerment.

In his presentation, Mbeki outlined the two greatest threats to South Africa’s democracy, namely extensive unemployment and poverty. He said that these problems can only be solved by harnessing the strengths that the country possesses, that is its private sector – which is also the main source of South Africa’s managerial, professional, and technical skills. In contrast to the private sector, Mbeki said South Africa’s public sector is the weakest segment in our political economy as it cannot be a solution to poverty.

Mbeki used the example of Brazil to illustrate how a country can use its private sector to overcome a massive backlog in higher education. In 2000 Brazil had 1,8 million students in higher education. By 2010 this number had increased to 6 million. This was achieved by opening up investment in higher education to the private sector. Today one of the largest private education providers in Brazil is a company called Anhanguera Educacional Participações SA.

Mbeki also cautioned against a high rate of redistribution of wealth which could lead to high consumption in South Africa. He said that over the last 15 years, the main economic objective has been a huge drive towards redistribution of wealth, which takes the form of social grants, high wages for government employees, and the ballooning of credit — all which have resulted in high levels of consumption. He said that all these measures are making up for the under-consumption by the black population of the last 100 years, which is not entirely a bad thing. However, he cautioned that people should consume what they produce. “What is happening with the driving of consumption in South Africa is that we are consuming more of what we import, not what we produce”, said Mbeki. The consequence of this has been a decline in manufacturing in South Africa. “We are facing a situation where the country’s manufacturing industry is disappearing because, instead of investing, we are consuming. South Africa is a country that lives off its mineral resources rather than diversifying and growing more of its manufacturing industries”, added Mbeki.

Making South Africa work better

“The huge mismanagement of our economy, in the name of promoting consumption and wealth redistribution, is destroying our productive sector, be it in agriculture, mining, or manufacturing”, lamented Moeletsi Mbeki.

So what needs to be done in South Africa?

Mbeki suggested a new industrial policy, which must be anchored in exploiting the strengths of South Africa’s existing private sector rather than constraining them as is the case today. “The public sector does not yet have the same skill levels as the private sector. This is why it is important to create public/private partnerships in our public sector. This is not a matter of ideology, it is a practical necessity”, he said.

A new industrial policy must therefore do the following:

  • Raise the level of scientific, mathematical and managerial skills in the population.
  • Reduce the massive payments to the upper echelons of our skilled population to make their salaries comparable to those of similarly trained people in Asia.
  • Reengineer the structure of our GDP to focus on investment rather than on private consumption.
  • Introduce private sector operators into the railway and power generation sectors that are now dominated by State-owned companies.
  • Radically overhaul the education system and extend private investors’ participation as Brazil has done.
  • Eliminate racial preferences.

Asked if he ever engages the government with his proposals, Mbeki humorously responded by saying that he has done his best to advise the ANC leaders since 1994, but his ideas do not go down very well with them.

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