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Investee cynicism won’t help us

As a university student, I often mistook cynicism for being smart. “I abhor enthusiasm”, I would say, puffing a cigarette while ogling the “sheep” around me sent hoop-jumping by the “pseudo-academics” at the “employment shelter” I called my university.

Just as I learnt that smoking can seriously dent your health, I also discovered that such crude, unchecked cynicism much sooner leads to loneliness and poverty than recognition and prosperity. I have tried putting down the experience to the consequences of a well-spent youth, but the nagging feeling persists that I wasted a lot of time being nothing but an unpleasant, dogmatic doorstop.

I thought of this experience recently when I read the following quote: “If we were to believe everything we do must be approved by [private] investors, we will be stuck in the current situation for 100 years more.” The quote was attributed to Cosatu Secretary-General Zwelinzima Vavi at the launch of his labour federation’s discussion document “A Growth Path towards Full Employment” ahead of the ANC’s National General Council held in Durban this week.

Ironically, Mr Vavi was arguing for investment — investment by the state to edge out private capital where it had, in Cosatu’s opinion, become too monopolised. Leading labour in the divided South African economy must be one hell of a horse to ride, so I don’t blame Mr Vavi for being so cynical. Still his logic needs some checking in that big room — the room for improvement!

Financial Mail reported last year that approximately 25% of Cosatu’s subscribers were degreed professionals and 40% were working for government. They should therefore be in a good position to reveal to their labour federation that government cannot automatically be assumed competent to make and manage such investments if it was unable to promote competition in key sectors through effective regulation.

In addition to the improbability of government effectively running of, say, Sasol and the old Iscor (now belonging to Arcelor-Mittal), it has struggled to do something as comparatively simple as enforcing caps on executive remuneration at existing state-owned enterprises. Is it therefore guaranteed that state ownership will stop the profiteering and boost competition? Or, are the proposed takeovers intended to achieve other aims, like help boost Cosatu’s membership?

Investors are not a monolithic block do-gooders, no. But not all of them are cold-blooded portfolio profiteers, boardroom bandits and truant titleholders either.

We do need the state to invest, yes. In fact, investors are asking the state to invest in a number of things, which has needed to change radically for a very long time, if not for hundred years; some things in which it has either failed to invest adequately, or failed to manage getting the necessary bang for some significant bucks. I am thinking of:

• Education, in which we (at more than 7% of our GDP) invest multiples of what the BRIC countries (Brazil, Russia, India and China) do, but fail to produce employable school leavers;

• The quality of our maths and science education and occupational skills development and tertiary education throughput figures that are woefully inadequate; and

• Access to basic healthcare, which also sees us lag behind many economies much less developed than us.

These are key things that will meet the needs of the poorest of the poor, if not Cosatu’s sizeable middle-class membership. But the state simply does not have the human and financial resources to do these things and directly lead development of the economy in half the “strategic sectors” that Cosatu is contemplating.

As it stands, the state is not performing to standard in the key network industries in which it is currently dominant, such as in power generation and fixed-line telecommunications. It is also struggling to get emerging legislation effecting economic growth and job creation, such as the Companies Amendment Bill, the Consumer Protection Act and the new traffic offences act (Aarto) to implementation phase — the much-vaunted regulatory review, so far, not having materialised.

We need investors: overseas portfolio investors to pump money into our stocks, helping to narrow our current account deficit to ease upward pressure on inflation; foreign direct investors to invest in new job-creating concerns locally to compensate for our lack of saved capital and supplement our expertise and innovativeness, and, local direct investors to chance it on good local ideas in new business, big and small.

Crude investee cynicism is the enemy of getting these needs met and so, also, the enemy of job-creating economic growth.