Looking back on the last 20 years, there is much to celebrate about South Africa’s progress. Indeed, we could easily have become a Syria, Libya, Iraq, or Ukraine—but our leaders had the foresight and the wisdom to give us the amazing gift of a united, inclusive, nonracial constitutional democracy. We can be proud of some great achievements. When we went to the polls in 1994, South Africa was technically bankrupt—yet since then, the economy has tripled in size. Every year, we add 400,000 black families to the middle class. We have lifted 1 million people out of poverty and we have built 3 million houses.
That said, we should also acknowledge that we have messed some things up in a spectacular manner. Not least among our challenges is the stubbornly high level of unemployment, which entrenches poverty and leads to increasing levels of inequality. In fact, I believe we have lost sight of the fact that we are completing Nelson Mandela’s unfinished business of building the greatest nation in the world. Only if we have the honesty to spotlight the areas where we are falling short and the willingness to work together to solve these problems—only then can we deliver on South Africa’s true promise.
We won’t build the greatest nation on earth by being clever and demanding or by emphasizing our entitlement to this or to that. Rather, we will do it the old-fashioned way: through hard work, by creating and producing goods and services that the world wants. Business must play a core role, because net jobs are created by small and medium enterprises. Yet business today is sitting on hundreds of billions of rand that it could invest but does not—because we have not given it a stable environment with regulatory certainty that encourages foreign direct investment.
We also need to employ the rules and skills of business to create a winning state. We have government choosing to be the biggest employer—with a workforce of around 1.3 million people—in the full knowledge that this is not sustainable or efficient. We also need to include a much greater proportion of South Africa’s people as active participants in economic activity and growth. Of the 51 million South Africans, 5 million are responsible for roughly 80 percent of our revenues paid to the South African Revenue Services. We have 16 million people on some sort of social-security program—roughly equivalent to the number of individual taxpayers.
Read more about Middle East & Africa
What You Will Learn
Getting execution right
The National Development Plan is an economic blueprint that all of us can put our shoulders behind. To be frank, though, this is probably the sixth economic document we have put together in 20 years—we are very good at coming up with plan after plan, policy after policy, but so far we have fallen woefully short on the execution. If we get execution right this time, we can grow our economy by the requisite 5.4 percent per annum so that we can absorb the 150,000 young people who enter the job market each year. We might even succeed at growing at 7 percent a year and begin to match the growth of some of our neighbors.
What will it take to achieve this? Resources are not the issue, because we have them in abundance. Rather, South Africa will rise or fall on our ability to manage—that for me is absolutely number one.
This applies in every key area of our economy and society. Consider education. Our spending, per learner and as a percentage of GDP, is greater than that of all 14 other countries in the Southern African Development Community—yet our outcomes in terms of literacy and numeracy are the worst. The same is true in healthcare: we spend more than our neighbors, yet our outcomes in terms of morbidity, mortality, and infant mortality in particular are the absolute worst. There is a lot of wastage and a lot of leakage—a sure sign of poor management. We are simply not getting a good return on our investment.
Many parts of government do a poor job of collecting their revenues. For example, the Johannesburg metro alone currently has around R2 billion ($165 million) in outstanding speeding fines. As another example, we have still not managed to install individual electricity meters in households in many parts of the country—Soweto being a case in point. Nonpayment of rates and taxes is a huge issue, too. Again, this comes down to a failure of management. If you have utilities and provide services, you make sure that people take responsibility and pay for those services. If anyone has contravened the law and been issued a fine, it is a management job to collect it. And if not, there must be repercussions.
Twenty years into democracy, we are only now talking about putting chartered accountants into local municipalities as finance managers—despite the fact that we have struggled to get more than one in ten of our towns and cities to achieve clean audits. It goes back to taking our management roles seriously and being explicit about the profile and requirements of the job.
Financial-management skills are ubiquitous in business and could be shared much more widely with government—including on a pro bono basis. The same is true of project-management skills. In business, this is what we do ordinarily: we deliver megaprojects on time, on budget, and in full. Yet if you reflect on the past 20 years, it is government megaprojects that have failed. From the new multiproduct pipeline to the Medupi power station to the Gautrain, they were late and they all came in tens of billions of rand over budget.
If government partners more readily with the private sector, it can do much to strengthen its project-management skills—and many of us in business would be willing to volunteer our technical know-how. One example that has been a real success is the Inkosi Albert Luthuli Hospital in KwaZulu-Natal—one of South Africa’s best-run and most sophisticated public-healthcare facilities, built and managed by the private sector via a public–private partnership.
Overcoming our mental block
What stops us from accepting and applying basic management principles more consistently? I believe that we, as a nation, have a mental block. We have inherited a mixed economy in which business is the primary driver of growth and job creation, yet relations between government and business are at a low point—there is a “trust deficit” between government and business. Many business leaders, sensing an ever-increasing statism, don’t dare risk articulating their concerns and aspirations, lest they be accused of being unpatriotic.
I should emphasize that the “trust deficit” between labor and business is just as large, and the tragic events of Marikana were in part a result of that. Many labor leaders don’t see themselves as partners in building a successful economy that can outlast them. Unfortunately, we see far too much emphasis on individual, immediate gratification without regard for tomorrow.
The same issue applies more broadly. I think we are in the position where a lot of South Africans are emphasizing their rights and their entitlements and prefer not to think about their responsibilities and obligations. In part this is driven by a lack of political will. To return to the example of nonpayment of rates and service charges, it is clear that much of our political class has never deemed it necessary to say to citizens: “When you use a country’s resources, surely you must pay for them.”
Inevitably, this mind-set breeds corruption—without doubt one of our country’s biggest problems. What drives corruption is a culture of impunity, where people can get away with stealing from the poor, with cheating, with abusing power for personal gain. In a corrupt environment, even if you were to pay double or quadruple, the actual project or service often never gets built. Again, corruption flourishes where management is lacking. What is missing today is effective management, active policing, and conviction of those people who have committed corruption.
Needed now: A common front
We will only start managing our country better—and defeating corruption, wastage, and inefficiency—if we get a critical mass of our society to stand up and demand better governance and better outcomes. We won our freedom in 1994 because a vast spectrum of society was united in saying apartheid was a crime against humanity, and we did everything possible to fight against this common enemy. To take Nelson Mandela’s work of nation building to its logical conclusion, we will need a civil society that is just as vibrant, active, and committed.
For example, why doesn’t civil society demand that the politicians and civil servants who are employed by society use public services in the areas where they live? Public servants should send their children to local schools and use public-health services—so that they know firsthand where the shortfalls and successes lie.
Twenty years into democracy, we have achieved a great deal: freedom, peace, stability, and greater prosperity than ever before. But we still need to be vigilant, both to protect the gains we have made and to insist that the abundant resources of our wonderful country are used honestly, efficiently, and fairly to create opportunity and deliver excellent services for all our people.
This essay is one of 20 from the book Reimagining South Africa, edited by & Company. For more information, visit the McKinsey South Africa website.