Good Business Basics: A reality check is needed

Vijay Naidoo.

The announcement that almost R200bn had been pledged by the private sector at the recent investment conference convened by President Rhamaphosa has been greeted with euphoria, and has led to the conference being hailed as a major success. It is almost as though the cure for all the economic ills plaguing our country has been found.

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The reality in my view is much more sober. While the soundbites of major corporates like Anglo American and Naspers pledging billions of rands of ‘investments’ in the local economy, made for interesting radio and television, one needs to question how effective and impactful these investments are going to be in addressing the challenges of unemployment for example.

Large scale mining is not inherently labour intensive under modern, mechanised extraction methods most miners have adopted, and while suppliers of mining equipment and allied services might benefit, how much of this will trickle down to the small and medium companies, who most economists agree, are the drivers of employment creation. Similarly, Nasper’s commitment to invest R3bn in new start-ups.

Is this going to be limited to IT and Technology companies, or are they going to seek out ‘bricks and mortar’ businesses, particularly in the manufacturing sector or businesses in the township economies.

The commitment of corporates and multinationals to major investments, does not to my mind, necessarily signal the end of the investment embargo from the private sector as the President has so confidently trumpeted: until the large number of small and medium enterprises are persuaded to begin investing in their own businesses again, the impact of the investments by the large companies will soon peter out. My sense is that businesses located outside of major municipalities and metros are going to hold back until meaningful change is seen in service delivery and governance at a local and district level.
So the President has a much bigger task in ensuring that the investment commitments made actually translate into the catalyst for economic growth and job creation we all hope for. He needs to swiftly dismantle the networks of patronage and cronyism evident at all levels of government, and get local municipalities working. It is vital that the deployment of these investments is spread judiciously across the country to ensure that the impact on rural and peri-urban poverty and unemployment starts being addressed.

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He also has an uphill task in convincing foreign investors to match the undertakings of local companies. Bearing in mind that foreign investors are rarely driven by the altruistic sentiments of locally based ones, he will have to persuade them that there will be no move towards populism as the national elections approach, and that the policy certainty he is starting to talk about is a reality. Further, he will have to ensure that line departments actively pursue the programme of red tape reduction to accelerate the ‘shovel in the ground time’ of all new projects.

Vijay Naidoo, chairman of the South Coast Chamber of Commerce and Industry.

After matriculating, Vijay Naidoo studied Economics in the UK. Upon his return, hejoined the family construction business as MD for 10 years.

He subsequently joined his sister in their furniture manufacturing business as director for quality assurance and operations. He was responsible for all quality aspects of their products, and led the project to the business achieving an ISO 9000 quality accreditation. As an export focused business, this was important for our international competitiveness.

Mr Naidoo has an abiding interest in quality management and productivity improvement, particularly in manufacturing.

More recently, he has focused a lot of his time on giving back to the community by way of mentorship of small businesses and sitting on the executive of the South Coast Chamber of Commerce. He also sits on the Board of the Ugu South Coast Development Agency.

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