Leadership is delighted to bring you an extract from Kgalema Motlanthe’s speech at the recent Inclusive Economic Growth summit held in the Drakensburg
Currently, the world is going through one of the many periods of political and economic transitions, as society experiences an inevitable rise and fall of empires compounded today by climate change. Such transitions are seismic in nature and scale and, are characterised by tectonic shifts in the institutions and centres of power, both political and economic.
But we are familiar with these cycles of transformation and change in the natural ecology of earth, in the evolution of civilizations, and in our own personal existence. Natural disasters and social upheavals continue to shape history and mould humankind, however, as we face our very own precarious stretch in the timeline of humanity, we realise more and more that the lessons of the past lie in the rubble, waiting for us to uncover them.
Given a chance to review the crises that the global community faces today and tomorrow, we can observe and identify the tell-tale signs of gradual change that may assist in predicting a better future outcome, one that is underpinned by the ability to identify catalytic projects and opportunities to deliver equitable and inclusive growth, to all. I will come to one such example in a few moments.
The concept of a “global polycrisis” may provide a necessary and productive framework with which to understand how layers of data can be applied to historical events in addressing major issues afflicting humanity today and finding solutions. We understand that a global polycrisis occurs when crises in multiple global systems become causally entangled in ways that significantly degrade humanity’s prospects.
Just looking at our immediate history, we may clearly observe how global systems are susceptible to localised systemic risk. Our environmental, political, legal, economic, financial, and cultural systems are knotted with such density that a relatively invisible element can destabilise and disable an entire global system.
The Cascade Institute, a Canadian research centre addressing converging global crises, says that the causal linkages by which one global crisis triggers or exacerbates another, represent a growing danger to humanity.
In 2019, here at the Drakensberg Inclusive Growth Forum, the rationale to focus on local government and local economies, was informed by the understanding that local government is the sphere of government closest to the people and is at the coalface of service delivery.
A case should be made on how to improve efficiency and capacity of local government and local economies through the informal sector and tourism. So, if we are to examine the data provided by Minister in the Presidency for Planning, Monitoring, and Evaluation, it reveals that almost 90% of the 257 municipalities are in trouble, with 163 of them currently distressed and 66 dysfunctional.
In addition, the Auditor-General found that only 38 out of the 257 municipalities, and only two out of the eight metros, achieved clean audits in the 2021/2022 financial year.
Many of these municipalities fail to fully spend their Municipal Infrastructure Grants.
In the spirit of finding solutions to weaknesses in local governments and economies, let us look at the Mexico example: Mexico is a country with a population of 128.5 million people and has achieved an unemployment rate of record-breaking levels at 2.7%. Comparatively, South Africa with a population of 62 million people, it saddled with an unemployment rate of 32.9%, which is among the highest in the world.
How did Mexico achieve these remarkable results?
Through tourism.
In developing its tourist industry, the Mexican government had three main goals:
- Earning foreign exchange;
- Creating employment; and
- Diverting internal migration toward tourism development poles.
The 2008 article entitled, ‘Economic and Social Impacts of Tourism in Mexico’, in the Latin American Perspectives journal, explains that Mexican tourist development was state-led with major investment in infrastructure and capacity building, as well as creating an enabling environment for the informal sector to trade and grow.
The article demonstrates the impact of Mexico’s state-led tourist development on reaching its national goals with significantly expanded employment creation in tourist services such as restaurants and hotels, and in the construction of tourist accommodations and attractions, and local infrastructure in tourist centres.Tourism is therefore a catalytic sector that may offer countless opportunities for government to narrow down their focus and concentrate on certain issues that need attention.
For instance, enhancing the experience of tourists by providing safety and security for holidaymakers; enabling an environment for heritage-based livelihoods, including arts and crafts, and local cuisine that can be enjoyed at both established and smaller informal kitchens; holiday accommodation infrastructure; leisure and adventure activities; tour guides; ground transport; two-way air travel; and all the spin-off industries that serve the variety of businesses in the tourism sector.
However, we must appreciate that ease of travel for our local and international guests is of paramount importance, including faster and easier South African VISA application processes in more locations around the world; and the protection and securing of tourists and tourist destinations.
For instance, my recent experience traveling from Liberia, having to connect an SAA flight in Accra, Ghana, I observed part of the connections section having an area designated for travellers to apply for a tourist VISAs on arrival at the airport in Accra.
In order to achieve the list of tourism virtues above, the tourism rating council could create clear criteria for areas of improvement which earn a locality certain ratings and those ratings should qualify them for clear government support to further boost that sector.
If a municipality’s allocation is based on its capacity and knowhow to properly spend the funds, then we could deduce that we should be directing more efforts toward a model of a permanent State at a local government level made up of trained professionals who have the required skills.
However, the present division of revenue formula is skewed in favour of National and Provincial government.
We see a division of revenue of 48.3% of the budget to National government; 41.5% distributed to Provinces; and only 10% is made available to Local government.
Clearly Treasury is following the Matthew Principle, which refers to a pattern in which the well-endowed receive further privilege and accumulate more advantage over time leaving those who begin with relatively little to become more disadvantaged over time and ever widening the inequality gap.
Matthew 12:13: “For whosoever has, to him shall be given, and he shall have more abundance: but whosoever has not, from him shall be taken away even what he has.”
Empowering municipalities by identifying catalytic projects, such as the case of the informal sector through tourism in Mexico; investing in their capacity to drive local economic development and inclusive growth; and retaining human capital at tourist destinations outside of urban areas, could be a game changer for municipalities.
Encouraging a higher spend at local level to improve capacity building for municipal staff could be an opportunity to unlock some of the economic opportunities available through tourism.
Likewise, there are weaknesses in the African economic regional communities that could benefit from giving effect to African Continental Free Trade Areas (African Continental Free Trade Agreement).
Advancing the interconnectivity and the intra-trade on the continent through the Forum on China-Africa Cooperation (FOCAC) and the Belt and Road Initiative, could prove as an additional catalytic project that further contributes to local, national, and continental capacity building. Boosting the movement of people and goods across borders and therefore accessing bigger markets.
Political stability is a precondition for economic development through industrialisation.
Indeed, this years’ Forum is an opportunity to look into solutions to some to some of the enduring crises.
The waves of humanity over time may not be an exact science but, given the creative power of all our ideas and the atmosphere to operate in a dialogue among equals, we can remember that the game of life requires a level of sportsmanship, deliberate choices, and clarity of what the next step is.
Thank you to my wife, Gugu, the Executive Trustee of the Foundation, and the captain of the Team, steering the entire Forum, for their tireless commitment to gathering all of us here in the Drakensberg, and for reminding us of the importance of the virtues of teamwork.
Kgalema Motlanthe is the former President of South Africa.
Photo published courtesy of Copyright Economic Forum (www.weforum.org) / Eric Miller em*****@ia*****.com – 2010 – World Economic Forum on Africa 2009, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=7140207
