State failure: Why SA should move towards an entrepreneurial state
- Associate Professor Isaac Khambule
Government has failed to entrench an entrepreneurial mindset to its developmental statehood ambitions for a poverty alleviation mindset, which has led to our current challenges.
With South Africa failing to arrest the growing rates of unemployment and the inevitable impact of poverty and inequality, the country is quickly reaching a state of decay. Some pundits already toy with the idea of South Africa as a failing state or a failed state. How does South Africa get out of this conundrum?
Before we grapple with the way forward, we must understand how we got into this situation in the first place. The genesis of the problem is the current leadership’s inability to address three interrelated setbacks: service delivery failure, institutional deficiencies in the state, and the failure to create a capable and ethical developmental state.
In relation to service delivery, most municipalities are incapable of delivering basic services, let alone maintaining public infrastructure. This is evident in the crumbling roads and water infrastructure throughout the country. Even former world-class cities such as Johannesburg and Durban are now in a state of decay - mirroring the state of the country's direction. Former industrial towns are now in ruins with deteriorating living standards across society.
Failure of national leadership
Of course, infrastructure issues are not only the competency of the local government. The ongoing electricity cuts reflect the failure of the national leadership, with water infrastructure soon to follow, based on the Minister of Water and Sanitation pointing to the pressure emanating from the lack of infrastructure maintenance. The Hammanskraal Cholera outbreak is only a sign of things to come if the country continues in this direction.
The combination of these failures reveals institutional deficiencies within the state. These institutional deficiencies are underpinned by a lack of a meritocratic system in South Africa's public services. A recent investigation revealed that over 50% of employees in eThekwini Metropolitan Municipality did not have the required qualifications - this explains the decaying state of the city and the constant capital flight. Nationally, over 1800 government officials are unqualified for their positions.
Over recent months, many articles have been written sustaining the argument that some of these failures were a result of the ANC’s cadre deployment policies. In political circles, some point to the AG reports showing that most ANC-run municipalities are incapable of good governance, with the DA using this as a posture to show their good governance records by virtue of the clean audits where they govern.
Despite political differences, cadre deployment, in one form or another, is practised by all parties throughout the world. The problem with the ANC's cadre deployment is that it promotes loyalty to the party instead of promoting national interests. This is something the Chinese and many developmental states have gotten right through the meritocratic recruitment process. As to why the ANC has remained tone-deaf to this issue, is anybody's guess.
The resulting predicament from these interrelated challenges is the failure to create a capable, ethical and developmental state enshrined in the National Development Plan (NDP). Ten years have now passed, and the country is in a worse state than it was when this policy was adopted.
So, what is the way forward?
Developmental states cannot be divorced from an entrepreneurial mindset through the state laying path for local businesses to benefit from policies. In our context, the failure is found in the government's failure to entrench an entrepreneurial mindset to its developmental statehood ambitions for a poverty alleviation mindset. This explains the consistent increase in unemployment rates - because the required jobs are not created because of the absence of new ventures. The country's entrepreneurial intention is at a low of 11-20% compared to 40% in the African region.
South Africa should move towards a developmental state underpinned by an entrepreneurial mindset by unearthing and nurturing the entrepreneurial spirit of its young population to become future venture creators. This requires extensive investment in business incubations run by the most competent people in a non-partisan manner to improve economic competitiveness.
Getting the groundwork right remains a priority for this venture to work. Erik Stam’s work has shown that getting these ten entrepreneurship ecosystem elements (infrastructure, finance, institutions, leadership, talent, entrepreneurship culture, knowledge, intermediaries, demand and networks) is a necessity for entrepreneurship to work. Even the US, through its hidden network developmental state, has prioritised these very tenets to enable globally competitive venture creation in all economic sectors.
South Africa already has some of the groundwork right through institutions such as the Industrial Development Corporation, the Development Bank of Southern Africa and the Council for Scientific and Industrial Research (CSIR) capable of unlocking the country’s potential. However, the right leadership is required to ensure the ten entrepreneurial ecosystem elements are healthy for new ventures and value creation.
Energies need to be shifted toward a state capable of facilitating a healthy environment for innovation and other new venture creation mechanisms. As Professor Marianna Mazzacuto rightly observes, the state is responsible for primarily creating a landscape where the private sector finds "the courage to invest after an entrepreneurial state has made the high-risk investments". The role of the IDC in the creation of the energy mineral complex is exemplary of the role the state is required in ushering the re-birth of the entrepreneurial state in South Africa.
Private sector must take some blame
Blame must also be directed towards the private sector for hoarding investment. In the country's effort to recover from 沙巴体育官网_2024欧洲杯博彩app@, former finance minister Tito Mboweni lambasted banks for failing to use effectively the R200 billion Loan Guarantee Scheme to support businesses.
Despite 94% of the risk being on the government's doorstep, the banks failed to promote national interests. This may explain the political posture announced by the president to ensure PostBank will become a state bank to ensure access to finance. However, this may not work with the current leadership failing to make state-owned enterprises work for the greater society.
The government's envisaged social compact will be a mere document if it is not embedded in ushering in a new era of an entrepreneurial state capable of unearthing and nurturing the entrepreneurial spirits of South Africans. To do this effectively, the government must fix the ten entrepreneurial ecosystem elements and promote responsible entrepreneurship to address the country's high socio-economic inequality rates.
This article was first published on News24.com