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SA does not want to deal with the real issues – Elias Masilela

If governance is inadequate, everything else will fail, NPC commissioner says.
Elias Masilela, executive chairperson of DNA Economics

JOHANNESBURG – South Africa does not want to deal with its real issues, the part-time commissioner of the National Planning Commission (NPC) has said.

Speaking about economic inequality, Elias Masilela (pictured), executive chairperson of DNA Economics and former CEO of the Public Investment Corporation (PIC), said unemployment, poverty and inequality were mere symptoms of a fundamental problem presiding elsewhere in the economy.

“There is no point in spending time talking about the symptoms. We need to knuckle down as a society and think about the sources of these problems. How do we resolve them, together?”

It wasn’t only up to the state to resolve the underlying problems, Masilela told an audience hosted by Ashburton Investments and the Principles for Responsible Investment (PRI) Association. Households, corporates and pension funds had to take collective responsibility.

“We do not want to deal with the real issues. We fear the real challenges. We will only talk about the periphery.”

He said politicians and business people have suggested that the emphasis of the presidential CEO group was to avoid a downgrade.

Therein lay the problem, he argued. The best brains in the country came together to discuss a symptom and didn’t ask how South Africa got to such a point.

When South Africa previously voluntarily decided to be rated, it didn’t have an investment grade rating, but it knew that if it addressed the right issues, it could achieve an investment grade rating.

The question that should have been asked in these meetings was why South Africa has digressed, he argued.

“Because it wasn’t asked, because it wasn’t very clear to everybody around the table what this initiative was about, it is probably the reason why we are where we are today. We did not really understand the underlying philosophy of this grouping and this is why I conclude that we probably fear to deal with the real issues.”

It was fashionable to talk about growth and unemployment, because that was what poor people wanted to hear, he said.

“It is not fashionable to talk about building the right governance systems, building the right infrastructure [and] gaining access to good quality services.”

His comments come amidst a turbulent political and economic time for South Africa, after S&P Global Ratings and Fitch downgraded the country’s sovereign credit rating to junk. The downgrade followed a decision by president Jacob Zuma to replace the Minister of Finance, Pravin Gordhan, and spurred fears that South Africa could fall into recession at a time when it was struggling to address poverty, unemployment and inequality.

Masilela said the 2015 Sustainability Leaders Survey previously showed there was a positive correlation between good governance and good economic performance.

“If you believe that, then you will start asking the question: what is the likely outcome for South Africa for the next five to ten years given the governance environment we are faced with?”

Masilela said the survey showed Germany and the Nordic countries were leading the way with governance globally. At the same time, their growth and social welfare records were unparalleled.

“If you want to be like the Nordic countries, we cannot do it by tweaking policies – trying to change exchange rates [and] trying to change interest rates… It has to be the fundamentals first. The rest of the policies sit on your governance structures. If governance is not right, everything else is going to fail.”


Statistics South Africa’s latest Community Survey showed that South Africans have become short-term thinkers, Masilela said.

In 1994, South Africans were looking for housing, education, health and transport. Today, education is at the bottom and locals are thinking about bread and butter issues – including food, water and energy.

“That says to me we have retrogressed socially. Our social objective function is worse today than it was in the past.”

The poorest 20% of the South African population accounted for less than 3% of total expenditure, while the richest 20% accounted for approximately 65%.

Masilela said the common thread across all the determinants of inequality was education.

“If you resolve education as a country, you have resolved a significant part of the inequality conundrum that we are faced with.”

Masilela was not convinced that South Africa was doing enough to overcome the legacy of the Bantu education system.

“If we say we have to educate the previously disadvantaged and the education system continues to educate the previously advantaged, we are never going to close the gap.”

The same applied to skills in the workplace, he said.

But while organised labour called for increasing the social wage, it went against its own mantra when teachers went on strike and compromised the quality of education, he said.

“When we strike as health workers and compromise our nation – which is supposed to be healthy – we compromise the social wage. When we strike as transport workers and compromise the productivity of the economy, we compromise the social wage. That is the discussion we should have.”

Masilela said the social compact was at the heart of the National Development Plan. One of the major objectives of Nedlac, which was set up in 1995, was to develop a social compact for South Africa.

“To this day we don’t have a social compact. That means Nedlac has failed. That means social partners have failed. That means as a country we have failed in delivering the fundamental objective that we have set for ourselves.”

Masilela said Nordic countries understood the social compact. When Swedish citizens paid a significant percentage of their salaries towards tax, they didn’t complain because they knew they would get good service for their contribution. But when South Africans paid 30% they complained because they were not convinced of the value for their money.

“That is the psyche that needs to change. So each one of us has a role to play in making sure that we match the value for money issues in everything that we do.”

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This is true. We have to educate the masses no matter how difficult it is to them (studying in a household where nobody else goes to school including adults, is difficult. What with all the noise, distractions, fear, it’s impossible). Then we have to talk about how people get jobs without having the necessary skills to carry out those jobs and how that is part of the problem. Not to forget the culture in politics of not holding party members responsible for their corruption. We’ll get there. We’ll get to the 5-10% growth we want but we have to educate the poor even if forcibly.

More thinking from leaders like this and I could get hopeful for the country

Elias has always been a very insightful individual, wow a great speech. We could do with more of him around.

I agree with the thoughts expressed, but the title should be “SA LEADERS do not want to deal with the real issues (because they are too self-serving)”. The other issue is that the reason that Germany and the Nordic countries were leading the way with governance is that they probably have the best educated and experienced parliamentarians in the world, who are given portfolios to match their individual skill sets.

Compare that to the buffoons we see being appointed in SA and then, to cap it, just have a look at our CLUELESS president. All of whom have no concept of their responsibilities, even to the point of saying they serve the ANC first, whereas to succeed as a country they MUST look first to SA’s interest and then the party. None of them were elected to sit in parliament and serve the ANC. So there is the first crisis of governance and all the rest of what we have been experiencing is a race to the bottom of the barrel as a result.

A very good article and set of views in which a very good point concerning governance in general and education specifically is made. However, everything seems to be interlinked. For good government and education, uplifting the poor etc., one needs a stable growing tax base while one is improving governance and education. Others have argued one cannot do anything until violence is down because some people cannot access education or food because it is unsafe to leave their houses.

Perhaps a social compact is the place to start. Not sure how we will agree though. We have this wonderful word “ubuntu”, but it is not seen in practice. Corruption is the opposite of “ubuntu” and a massive hole in the tax bucket. A lack of governance.

Is all of this not essentially a heart issue? I believe that several survey’s have shown that the bulk of South Africans are not ill-willed towards each other. We need inspirational leadership. Although none of us is perfect, Mandela was a blessing and we are unlikely to find a replacement. All I can do is make sure that I do what I can. If enough do this we should be alright. The nation is waking up.

Nice to hear from Elias Masilela. Gives one hope.

Very good strategic guidance and well articulated article! Setiing a standard for future publications

Three key problems: Poverty, Unemployment & Inequality requiring three key solutions: Education. Education & more Education. Education must be seen as a holistic solution coming not only from formal academic sources. Anybody with any form of skill and knowledge can be harnessed to impart education and training. Government is best suited to co-ordinate this as the bulk of the citizenry trusts it. Prioritisation of types of training and education should be focussed on and the empowerment process can begin almost immediately. Places like community halls, vacant factories, stadiums, churches, prisons etc can be put to use. Opportunities are endless and if basic concepts of good citizenship, morals and ethics were pursued as vigorously as political education we would be well on our way to healing the broken society.

Fine prespective. With such increasing polairty in the country (reminiscent of the early 90s), is it not time for an “Economic Codesa” as a means of getting out of this quagmire?

This is the kind of strategic and visionary leadership thinking we need in SA. The vast majority of people in any society want to do the right thing and be positive. It is the task of leaders to identify those things and inspire people to do them. Unfortunately, at the moment, to achieve what Mr Masilela is talking about, SA has to find ways to do these things DESPITE current political authority (I don’t want to call it political “leadership”). But do them, we have to. The alternative is unacceptable.

I personally do not see us turning the situation around. Why? Because our politicians have a scapegoat that they can blame everything on. Everything wrong with South Africa is attributed to white capital and the masses eat it up like cake. According to the majority the very businesses that are trying to keep the economy afloat, while the government continue to destroy and loot away, are the cause of all our problems. The sad reality is that until our electorate are educated (a process that the ANC is also messing up big time) we will continue to have these inept, ineffective and inefficient governments. Democracy is only effective if the electorate is educated and informed.

China, as the new superpower, was built on two main pillars:
1) Exceptionally high economic growth,and
2) Low population growth.

Singapoer, Japan, Germany and others did the same. We have the opposite, low economic growth and high population growth.

Stats SA recently showed that the black population increased from 30m in 1994 to 45 m people now. That is growth of 50% – 15m people that have to be fed, housed, educated etc. and a major cost on the taxes.

To lower population growth cost a fraction of creating new jobs. If Namibia can have huge billboards proclaiming couples not to have more children, than they can afford – so can SA.

I refer to Altron CEO Mteto Nyati podcast interview with TechCentral on MW Soapbox,9 April. – ‘How do we create the space to allow the new players to come in while protecting what is working?’” and “That is what we need to be encouraging as a country, versus saying, ‘Let’s take away from the people who have done something’. That will damage this country.”(Brilliant Mr Nyati)

The answer is before us “That is the psyche (denial) that needs to change and that is the discussion we should have.”, that South Africa is for all of us, not just to 90%, nothing will change until SA (jobs, economy, and ownership) is for all (100%) equity of us.

We all agree that education is important but what is taught is also critical. We need to teach our population to be to be open minded and to accept in the real world there are very few truly absolute truths. We need citizens who can evaluate the situation and make a reasoned response, not just learn by rote and put ticks in tick boxes.
The best skill for a good citizen is empathy and ability to reach out to others even when they do not act or think in the same way as we do.

End of comments.





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