YOU are situated on the Southern tip of Africa, far away from the world’s markets to the east, north and west. You have a highly unionised labour force and inflexible labour laws that make hiring a very large commitment. Your wages are way in excess of those of your competitors. Your country is one of the most dangerous in the world with raging crime statistics. Your desperately need foreign investment.
Ranged against all these obstacles (many of which could be eliminated by effective government) you have only four competitive advantages to the industrial investor.
The first is a relatively stable macro-economic and political environment.
The second advantage is that you are the gateway to Africa when it comes to financial services, political influence and sophisticated infrastructure. The third is that you are a resource producing country which can offer a range of raw materials without massive transport costs to plant. The fourth is that your electricity is the cheapest in the world.
What government is supposed to do is to diminish our disadvantages and enhance our competitive advantages.
There is nothing that can be done about the accident of geography, but there is much that can be done to change the rest of our investment environment by adopting the right policies and playing to our strengths.
We can make our labour market more competitive by reviewing our archaic labour laws. We can fight crime by improving policing and bolstering our criminal justice system.
When it comes to our advantages, we can do a lot more. We can integrate much better with Africa, welcoming African skills onto our shores by getting rid of our ridiculous immigration laws.
We should be embracing Africans instead of treating them with suspicion and we should be turning South Africa into a country that is proudly and assertively African.
We can build on the competitive advantage our financial services sector enjoys on the continent and clear the way for our banks to expand their networks in Africa by turning this into an industrial development priority.
This would mean actively developing skills in this area and turning our priorities from defensive ones aimed to keeping alive industries in sectors where we cannot compete to an aggressive one that seeks to drive home our strengths.
Another strength we should be driving home is our competitive advantage when it comes to cheap energy.
That is why massive investments have been made by the likes of BHP Billiton in smelters on our shores despite the fact that they are far from the markets where the finished product will be sold.
But what has government actually done to diminish our weaknesses and build our competitive strengths?
With the exception of crime, where we are at least blustering in the right direction, the answer appears to be “very little, indeed”.
There is a danger that not only are we doing very little to attract investment, but that the very structure of our politics mitigates against us prioritising this.
We have a political elite that has, despite its many utterances to the contrary, closed the door on job creation.
Dependent on “allies” to the left to keep its political power, the elite has begun concentrating its energy on the futile task of preserving uncompetitive jobs instead of creating new ones where we can compete.
Add to this the fact that this alliance makes it impossible to review the labour laws which reduce the flexibility of the labour market and the possibility of creating jobs is further diminished.
Ideological choices which harken back to statism are being made.
Instead of embracing the skills, talent and the markets of Africa, we appear quietly hostile to Africans.
Our leaders travel the continent meeting with heads of state and attending summits, but back home they do precious little to make South Africa a welcoming place for Africans.
Low-level xenophobia is allowed to continue with very little active intervention. Has anyone been prosecuted for the shocking slaughter of hundreds of foreigners in the xenophobic attacks? Apparently this is not a law enforcement priority.
Which brings us to the questions of electricity.
Last week the respected economist Mike Shussler pointed out that we are about to become among the world’s most expensive producers of electricity.
We have already lost precious foreign investment in a smelter in the Eastern Cape because of our high electricity prices.
The three consecutive increases of 45% proposed for electricity will sound the death knell for heavy industrial investment and could cause those already here, such as car manufacturers to reconsider.
We had better wake up to the reality of competing in a ruthless world. We don’t need faux Ubuntu, we need the competitive mindset of Shaka Zulu.