By Alan Hilburg
What’s missing from the conversation about the impact of direct foreign investment in South Africa today?
Government leaders, CEOs, economists, and the media obsess about the bottom-line investment figures committed, rather than the single most important asset in the equation. People.
People make investments happen. People, not plans, deliver results.
If you don’t invest in the people of South Africa at the same time one invests in South Africa it’s likely that you won’t contribute to ending the inequalities that keep South Africans from having the opportunity to succeed. Companies that don’t invest in people are repeating the 300 year old tradition of being takers, not givers.
All relationships to achieve trust must have balance and equilibrium. As a result, investments can’t just be extractive, they must also be contributive.
I, like everyone who invests in South Africa, are in South Africa not by chance…but by choice.
With the decision to be here comes a responsibility to end the one way history of first world foreigners in this country. For us at HilburgAssociates, we are trying to build more than an African advisory business for companies whose brand and reputation are being threatened, we want to help build bridges between individuals and institutions that share a common commitment to develop opportunities for South Africans.
Our clients’ challenge is building a culture of trusted relationships in a society that is experiencing a crisis in distrust. This contributes to many of South Africa’s woes. And, while the hostile labour relations climate, and erosion in business confidence, gives many a foreign investor reason to hit the pause button, I believe this is a good moment to press the ‘play’ button and reveal the leadership necessary to guide South Africa to achieve its unique potential.
During the past few months, the opportunity of being in South Africa has extended to the privilege of getting to know some truly incredible people that share my desire to satiate the hunger in South African townships and suburbs for the chance to learn critical thinking skills as well as practical business and vocational skills.
Coca Cola’s initiative to develop people’s business skills in the township economy seems like a great example of responsible corporate citizenry and a business sustainability strategy. Recently I met Coca Cola’s Southern Africa Marketing Director, Sharon Keith. She is a homegrown executive that had benefited from the company’s deep investment in its people and South Africa. With posts in Atlanta HQ, Dublin and professional development experiences in other emerging markets she explained how one of South Africa’s most admired employers train and develop more than 56,000 direct and indirect employees across the Coca Cola system in South Africa—who in turn support approximately 500,000 dependents.
The Coca Cola program to teach informal vendors and spaza shop owners about cash flow management, inventory control, and other skills to run their businesses more successfully is another great example of the multiplier effect of investing in people. It’s good for the community, the country, and the company’s bottomline.
Foreign investors have a vital role to play in the development of scarce technical skills in South Africa as well. Samsung is a powerful example of a pragmatic and progressive solution when confronted with a dire shortage of engineers and technicians to staff their manufacturing and service facilities. The Samsung Engineering Academy is a public-private partnership to reboot vocational training in this country. Samsung professionals help to ensure that the education and training experience is relevant to industry needs.
Another example is Unilever, the fast-moving consumer goods multinational. Employing more than 3,000 South Africans, Unilever’s number one goal is not just to make money. It’s ensuring that the communities where Unilever does business are better off for the fact that Unilever is there. To achieve that, Unilever models ‘best practices’ in its employee engagement strategies. They invest heavily in its South African employees to make certain they create a bright future for them and their communities. The company has, for a second year running, been certified as the Number One Top Employer to work for in South Africa by the Top Employer Institute.This accolade was given to Unilever in part because of their highly regarded graduate programme that offers a world class leadership development curriculum offering international careers and mentorship programmes to South Africans.
In closing, I am reminded of a very thoughtful, well-moderated panel at GIBS about rebranding South Africa. It was there trying to answer my favorite two word question, “what’s missing?” that I proposed that South Africa should simply not accept foreign investment that doesn’t invest in its people.
The thesis was simple, South Africa’s brand promise should become ” South Africa…Success2 ”
When a foreign company invests in South Africans, as well as South Africa…everyone wins.
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The Gauteng government has announced interventions to change the space and structure of the province’s economy to help address unemployment, poverty and inequality. Speaking during the State of the Province Address on Monday, Premier David Makhura said these interventions were spatial reconfiguration; township economy revitalisation; and investment in infrastructure that the provincial government would undertake in partnership with municipalities and the private sector. Gauteng City Region’s space and economy would be configured into five development corridors that would have distinct industries and different comparative advantages, Makhura said.These are:
- Central Development Corridor, which will anchored around the City of Johannesburg as the hub of finance, services, ICT and pharmaceutical industries;
- Eastern Development Corridor, which will be anchored around the economy of the Ekurhuleni Metro as the hub of manufacturing, logistics and transport industries;
- Northern Development Corridor, which will anchored around Tshwane as South Africa’s administrative capital city and the hub of the automotive sector, research, development, innovation and the knowledge-based economy;
- Western Corridor, which encompasses the economy of the West Rand district and the creation of new industries, new economic nodes and new cities; and
- Southern Corridor, which encompasses the economy of the Sedibeng district and the creation of new industries, new economic nodes and new cities.
Makhura said the provincial government would “mobilise” more than R10-billion in public and private investments in the regeneration of the Joburg CBD as the seat of the provincial government.The Premier said Gauteng would work with national government and the City of Joburg to ensure that the Central Corridor became the home of the proposed Brics regional development bank.A plan to revitalise the townships of Kliptown and Alexandra was also under discussion with government and the City as “the two townships are in a terrible and sorry state of disrepair”, Makhura said.
Makhura also announced that 140 000 housing units would be built in the next five years in the area to help change human settlement patterns.Together with the private sector and the City of Johannesburg, there were plans to transform the spatial landscape of the Central Corridor, which include:
- Masingita City, an integrated commercial and industrial hub, is a R3- billion private investment that is expected to create 15 500 jobs during its construction, which will begin in March.
- Rietfontein. With an investment of R20-billion, this will be a complete mixed-use node with more than 8 000 proposed residential units, including commercial property, distribution and warehousing, retail and education facilities.
- Waterfall City, the largest city to be built in post-apartheid South Africa. The estimated investment during construction is R71-billion, with an estimated 100 000 jobs to be created by the project.
- The Modderfontein development will inject R84-billion into the economy of the Gauteng City Region and is expected to create 150 000 jobs over the next 20 years.
Turning to the Eastern Development Corridor, Makhura said 29 industrial initiatives under the banner of the Aerotropolis would be undertaken to revitalise manufacturing, aviation, transport and logistics industries linked to OR Tambo International Airport.”This will dramatically transform the current industrial structure of the economy of Ekurhuleni,” Makhura told the legislature.Other projects in the corridor will be the Tambo Springs Inland Port Development, with an estimated R7.5-billion investment over five years.The first phase of the Bus Rapid Transit System in Ekurhuleni would be operational by March next year, Makhura said, and more than 100 000 housing units would be built in the area over the next five years.
SA’s biggest convention centre
Makhura said Gauteng would be working with Tshwane to develop the West Capital development project in the Northern Corridor. This will include a student village, sport incubatory centre, retail and commercial components, inner city housing and health facilities.The African Gateway in the heart of Centurion would be a partnership with the private sector and will comprise South Africa’s largest convention centre, an hotel, residential, commercial and additional office space.
The City of Tshwane would be investing R525-million to establish a business process outsourcing park in Hammanskraal, Makhura said. “The park will offer on-site training, technical support and incubators for SMMEs. The project is expected to create more than 1 000 jobs during construction and more than 1 000 indirect jobs.”Working with the private sector, Tshwane would also continue to rolling out free wi-fi within the City. To date, R150-million had already been invested in this initiative.Makhura said more than 160 000 houses would be built in the area.Green economyThe economy of the Western Corridor would focus on green and blue economy initiatives, tourism, agro-processing and logistics, said Makhura.”Lanseria Airport and Maropeng World Heritage Site will be the main anchors of the new city and new economy of the West Rand,” he said.The corridor would be positioned as a hub of agriculture and agroprocessing, and a public-private partnership would see the development of aquaculture projects, such as the prawn farming facility, the premier said.He said more than 160 000 houses are to be built in the area.
Makhura said the economy of the Southern Corridor needed to move from an “over- reliance on the steel industry” to one that included tourism and entertainment, agro- processing and logistics management.Among the projects would be the development of the new Vaal River City (hydropolis), with a private sector investment of more than R4-billion.Over the next five years, more than 120 000 houses in Sedibeng will be built.”Also in this corridor, we will continue to support the Gauteng Highlands development, a mixed-use development comprising industrial and residential space. This is a R40-billion investment aimed at creating 25 000 direct and indirect jobs,” said Makhura.
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