AT THE launch of a report on SA’s cities a while ago, Deputy Finance Minister Mcebisi Jonas made the point that the private sector accounted for 80% or more of economic activity and investment in cities — and that the primary role city governments should be playing in economic development was to create an enabling environment for the private sector to invest.  It may seem an obvious point to business people, but it is not obvious in government, where the attitude towards the private sector is ambivalent, at best, and where a former activist such as Jonas, by his own admission, finds it hard to concede that the private sector needs to lead — while the public sector needs simply to enable.

Read Hilary Joffe’s important article Anglo CEO Cutifani speaks economic truth to power first published by Business Day in BDlive today.  See also Mining crisis: More flexible labour structure.


Cutifani talked about SA’s state development model and the challenges China faces as it moves from its state development model to one in which private businesses must play an increasingly important role.  He used this to talk about the crucial role state-owned enterprises (SOEs) play in both economies — and to make some crisp and crucial points about SOEs in SA.  He said the ability of South African industries to compete globally was influenced by the effectiveness of our SOEs; that “pinch points” with SOEs were the cause of severe constraints; and, in essence, that much of the fault was in a state development model in SA that assumed state and private enterprises were almost independent of each other.

We needed to recognise their dependence on each other and the need for collaboration.  We also needed to reflect on why 90% of our SOEs were losing money — and confront the effect of that on SA’s competitiveness and growth.  China has a very different model — it is much tougher on SOEs.

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He appealed to the government to address a list of issues to foster an enabling environment for the mining sector.  He urged the government to demonstrate a more strategic orientation towards mining, and to provide greater clarity on black economic empowerment ownership.  He asked for more consistent and stable policies across departments, as well as action on energy, water and transport infrastructure.  He asked for caution and commercial logic to prevail on issues such as strategic minerals and beneficiation and urged the government to think about SA’s competitiveness when amending mining legislation.