Where we all have to turn on some serious firepower
We must get out of our comfort zones before it becomes downright uncomfortable to be found sitting in them
Service delivery protests are not going away. If anything, they’ll probably intensify. We simply must put money into our informal sector.
Resolution will not be found in meeting demands for basic living standards – that’s necessary, but it’s not the endgame. Investing in township economies is at the core of broad-based economic transformation. It is the bridge we need to build to address economic inequality.
We don’t need more skyscrapers in Sandton. What are they, if not just piles of cash stacked on top of each other as a monument to businesses that are going ex-growth? While they’re being built, and for some service providers afterwards, they may create temporary jobs – but they don’t create new customers or grow new business opportunities. Huge head offices are often the tired endgame, not the new shoots of business.
We don’t need preservation of established business models anything like we do risk-taking in radical new thinking. We’d better get out of our comfort zones before it becomes downright uncomfortable to be found sitting in them.
Let’s invest where there is nothing. Invest to enable. Invest to create economies of new participants, rather than to harvest the diminishing (and departing) client bases built up in times gone by. Invest for opportunity, not obligation – see the virtuous circle of it all; be patient and determined.
The state, through centralised policy and decentralised ownership, will need to lead the way – beyond service provision catch-up, towards meaningful state capitalism, as the major benefactor of a growing economy.
At the margin, all excess capital should be invested in growth. Growth will come from Alexandra, not Sandton. It will come from the future, not the past.
Our approach to investing in the informal sector needs to be less formal. The old, conventional wisdom metrics of business plan formulation will need to tolerate new variables. This isn’t reckless, this is foresight. This is a 2030 discussion – don’t expect results by next Easter.
Extraordinary actions are needed. Electricity must be provided for free to township economies. That alone would be grounds for an economic revolution. Eskom will not get those municipal and township debtors settled and you can’t criminalise people who simply can’t afford to pay.
Infrastructure must be put in place, beyond water and sanitation basics, that will enable the flow of goods and services seamlessly between our formal and informal economies – right down to the spaza shops and doorsteps of individual consumers: roads, efficient public transport, logistics, healthcare, schooling, security at the local level. Access to technology for all is essential, at the right price, subsidised if necessary, down to the lowest functioning economic units of society.
Funding must be made available for the lowest measurable trading flows. Technological oversight will enable need-evidenced lending without asset backing. Real-time trading records become credit scores, loans are advanced and repaid frequently, like intra-day. Borrow R500 at 11am to buy stock (or airtime to confirm an order) and repay the loan by 6pm when you balance the day’s books, to get the (low) intra-day rate.
Enable all manner of electronic settlement with advantages for specific users (such as grant beneficiaries) or pricing specifics (such as VAT-exempt goods) through on-the-spot point-of-sale devices within walking distance of consumers. No need to take time and money to travel to town.
Eventually the economies of scale, created at the local trading point, will enable wholesale purchasing there and lower the retail price to the point where it is more than competitive and a damn sight more convenient than heading to the mall. As a result, the end-point unit cost of consumption will converge and equate across all demographics and geographies and the prospect of broad-based economic dignity will become a visible reality.
Yes, there must be a deal. The deal is that you sign up to participate in the formal economy and pay tax, one day. There’s a difference between paying tax and paying for service delivery – tax comes out of profit and you get to keep more than you pay (for now).
This very same tax is circled back into the very same fledgling economic units until, eventually, independent business units begin to flourish where previously there was just a demand for basic living conditions.The outcome is socially rewarding and yet the inputs are driven by the self-interest of creating more paying customers for established business. The virtuous circle is obvious. It is common sense. Imagine if we don’t do it.• Mark Barnes is CEO of the Post Office.