Despite remarkable achievements during the past decade, South Africa’s second ”golden age” (after its acclaimed Sixties boom period) has come to an end, leaving behind some obdurate structural shortcomings.
It is now widely acknowledged that the past decade had some critical policy inadequacies and outright failures. The most obstinate factors hindering socioeconomic development include inadequacies in our education and training system and the absence of a well-defined industrial strategy that is rooted in the country’s comparative advantages. General lack of effective implementation capacity within the various spheres of public sector is another evident shortcoming.
Yet, it may be argued that the most critical challenge facing the next phase of our democratic dispensation is none other than the absence of a set of well-defined and generally accepted ethical and moral values. As the forefathers of modern economics have convincingly argued, no socioeconomic system is sustainable, let alone prosperous, without a set of moral values that are generally internalised across the society. Democratic South Africa is no exception.
Over the past decade, a gradual but tangible rift has emerged between the country’s socio-economic ”formal (professed)” as opposed to ”informal (practised)” ethics. For example, in the business sector, business executives and corporations formally subscribe to the ”codes of good corporate governance”. Their annual glossy reports are decorated with impressive evidence of their socially responsible citizenship.
Yet operationally they do not hesitate to collude and/or abuse their market powers. Evidence of price fixing among pharmaceutical companies, bread producers and steel manufacturers has emerged in high-profile cases over the past year or so. Sasol, South Africa’s most celebrated petrochemical corporation, has been heavily fined, both locally and internationally, for its extensive anti-competitive practices.
The country’s banking sector is also accused of malpractices and a report in this regard is yet to be made public by the Competition Commission. The banking sector appears to be exerting every pressure to halt its publication.
The gap between the formal and informal ethics within the government is even more pervasive. Frequently, government ministers and departmental executives espouse ”global best practices”, and in pursuit of such practices, they do not hesitate to spend considerable amounts of scarce fiscal resources on global travels and case studies. Yet operationally in their organisational and managerial behaviour there is little evidence of the values, standards or practices that conform to their formal statements.
It may be argued that much of the public sector’s inability to perform may be attributable to the gap between the formal and informal rules. This is particularly pronounced at the top levels of public sector organisations which in turn filter down through the entire system.
Most importantly, the absence of political and executive accountability has been a key contributing factor. For instance, very few, if any, ministers or heads of department are taken to task when their annual financial audits are found unsatisfactory year after year.
Such blatant condoning of poor performance and suboptimal use of public resources has a strong systemic and corruptive impact on the operational efficiency of the public sector. Indeed, the entire economy has been adversely affected. Duality of values is equally prevalent in labour unions and other social structures.
A socioeconomic and political milieu that admits and promotes duality of values is conducive to operational inefficiency and developmental inconsistencies. A case in point is our public sector environment, which lacks efficiency, consistency, coordination and systemic dynamism. This is true despite initiatives such as Batho Pele, the new Public Service Act and the Public Finance Management Act.
Given that nearly 40% of the country’s GDP is managed within such an environment, unless the productivity of public sector improves drastically, the country’s global competitiveness as well as its developmental imperatives is at risk. So is the prospect of accelerated social delivery.
More generally, it may be argued that the absence of a well-defined national value system is a major contributing factor to criminal behaviour within South Africa. The sooner a process of defining and adopting a generally agreed ethical value system is established, the sooner we are likely to lay the foundation for curbing crime and criminality in society.
As importantly, the raising of public sector productivity is a prerequisite for the ability of the economy to raise wage levels for the working classes. Ironically, the logjam between organised labour and government over the past decade has been one of the key contributors to the declining productivity in the public sector.
The South African economy now needs an appropriate mix of macro- and micro-economic policies to help increase the country’s global competitiveness and achieve our developmental goals, dealing with growing socio-economic inequalities. Significantly, the conceptualisation of such a policy mix and its successful implementation require a skilful state. The success of economic policy henceforth rests on the capabilities of the state infrastructure and its effectiveness in policy development, coordination, integration and implementation. Transforming the modus operandi of the state therefore is indispensable if we hope to reverse some of the failures of the recent past.
The state as well as business and other organisational management, however, operates within a broader social value system. To turn the prevailing ”formal-informal divide” within society around requires resolute business and socio-political leadership. Clearly, this is not a goal that government on its own can achieve. A much broader set of national capabilities has to be brought to bear on the subject.
However, government has a critical role to play. To this end, a conscious de-politicisation of the public service is the first and necessary step. This needs to be reinforced by a political and management leadership whose actions are congruent with their formal policy pronouncements.
At the same time, business leadership as well as labour unions and the broader social groupings have equally significant parts to play. Their commitment to and the promotion of an explicit set of value systems is as critical for changing the current pernicious culture of national resource utilisation.
Procrastination in this regard is bound to deepen a culture of operational mediocrity across private and public sectors and a deepening of inconsistent value systems within the society. Given the recent public pronouncements by President Jacob Zuma, the timing might well be right for a national initiative in this regard.
Dr Iraj Abedian is founder and chief executive of Pan-African Investment and Research Services