Deloitte Africa consultant on South Africa's emerging role on the continent

The Managing Director for Emerging Markets at Deloitte Africa, Martyn Davies has called for South Africa to take on the role of driving entrepreneurship and economic development for the region of Africa, to which he recommends the utilisation of President Ramaphosa’s Investment Conference. 

Given its high levels of diversification and its position as the second largest economy by GDP in Africa, South Africa has long been touted as one of the continent’s flagship economy. Nevertheless, a number of economic and political obstacles have prevented it from realising its position as a driver of economic growth, much like China or India in Asia.

Leaders of the country’s business environment have come up with a sea of recommendations in recent years, to help the country accelerate its development. Innovation across all business segments has been amongst the primary principles advocated by experts.

To help enhance South Africa’s status, the country’s new leader Cyril Ramaphosa has organised the South Africa Investment Conference, aimed at drawing investment of up to $100 billion over the next half-decade. According to Martyn Davies, South Africa should use this conference as a platform to declare its economic openness.

Davies identifies a need in the international market for a clear policy framework in South Africa that will remove the ambiguity in the country’s business environment and promote a more pragmatic and functional approach. In essence, the state – which has thus far played an active role in the country’s business environment – must not take a step back according to Davies.

“The state needs to become the entrepreneur in the same way as Asian states have underwritten the incredible economic development of their societies. t is proven that the state cannot effectively provide governance oversight of the country’s leading SOEs. This can only come about through a private shareholding, which will force accountability,” says Davies.

He elaborates, “Consider Eskom and Transnet. These companies with their monopolistic practices mean that alternative power stations cannot be built, alternative railway links linking commodity assets to ports cannot be built, and private ports cannot be built. This has had the effect of squeezing out significant private sector opportunity and capital. The capital is not allowed to flow where it is required because of state monopoly capital.”

Davies continued to emphasise the need for privatisation amongst South Africa’s state-owned enterprises, highlighting the importance of competition for the advancement of intellectual innovation. “President Ramaphosa should focus on building economic dynamism in South Africa. The stakes cannot be higher and the need more urgent. The time to act is now,” says Davies.