Johannesburg, 23 Feb 2012
Mr President,
We all understand and know we have high rates of unemployment. Now the government has announced plans, along the lines of Franklin Delano Roosevelt, to initiate several mega projects to develop infrastructure with a view to industrialise our country, and generate much-needed skills and create jobs. You are to be commended for these bold steps.
Busy as you are, and occupied with many other issues each day, we at IndigoCube would hope you could take a few minutes to read, process and internalise these issues we are raising.
The first problem is that infrastructure development projects are temporal by their very nature. While they are effective as short-term quick fixes, we should find a way to use them as the basis for longer-term programmes aimed at the sustainable development of jobs and skills.
Projects come to an end, the jobs they created disappear, and the skills that were developed seek other opportunities, sometimes elsewhere in the world. The Gautrain and the Gauteng Highway Improvement Project are classic examples of this. What we need are sustainable, and perhaps even more modest, development programmes aimed at predictable and consistent long-term infrastructure development in our country: a steady stream of development work creating sustainable jobs and skills. A more predictable stream of infrastructure development work not only reduces the risk for business, but also encourages long-term thinking and a greater willingness to engage in skills development.
The second problem is that infrastructure costs a lot of money and continues to cost money for ongoing maintenance. Ultimately, this money needs to be sourced from taxpayers, who are already severely taxed, given the relatively small tax base (middle and upper classes) in this country. This limits us to how much we can do and hence my suggestion for a more sustainable realistic pace for infrastructure development. This, combined with a greater focus on developing intellectual property that can be reused and applied commercially, therefore makes good sense. In the long term, intellectual property earns money and doesn`t impose a drag on the fiscus.
I therefore encourage you to focus one of your mega development programmes on the encouragement of innovation in the business sector, as this will leave a lasting legacy for our children.
The third problem is that we are not developing the required volume of skilled resources needed by our country, and the skills shortage remains an area of concern - specifically when we have such a high rate of unemployment. To what extent this will affect the planned infrastructure development, I cannot comment on, but I`m sure there will be some impact and that it will not be positive. The skills shortage has certainly made an impact on the ICT sector, and we are increasingly seeing foreign skills being deployed to do work that South Africans should be doing - if only they had the right education. While the Youth into Science Strategy is a good initiative, its impact is limited by the quality of the school system.
Currently, the education system is not doing enough for us, and the single biggest failing is the poor quality of many public schools - mainly rural schools. Far too many young people with potential and ambition are not being given the opportunity to fulfil their potential because they are the victims of poor rural education. Rural schools need to be reformed entirely - the current model of small schools spread all over the countryside isn`t working. We need to have far larger and fewer rural schools with critical mass that can be managed properly, and where necessary, bus scholars in. This alone could create business opportunities for entrepreneurs in these areas.
Public and private schools are a good litmus test. While the standard of children leaving public schools is questionable, pupils at private schools who wrote the Independent Examinations Board (IEB) matric exams secured outstanding results, with 173 schools achieving a 98.15% pass rate. The 8 281 pupils who wrote the IEB exams represent a fraction of the 620 000 candidates writing the state-set exams.
In addition, universities and other institutions of higher learning are not producing adequate, practically skilled graduates. There is a gap between tertiary education and the practical work environment. Graduates from higher institutions of learning are simply not qualified for the workplace. This gap has been there for as long as I can remember, and I`m by no means suggesting that we try and convert our academic institutions into practical training institutions, but given the current skills shortage, we have to find a way to fast-track talented graduates from the tertiary education system into productive business positions.
We need more learnerships, internships and apprenticeships. We need programmes that are aimed at transforming academically competent young people into practically skilled individuals - just as accountants and lawyers do with their articled clerks. This approach is also needed in other professions, such as engineering and IT, where we need certified business analysts, project managers and developers.
So, how do we incentivise business to do this? One approach is financial, in other words, with easing of tax. As an example, it was reported recently that software developers who create their own IP can enjoy 150% in tax breaks. We could and should do the same with skills development. Unfortunately, the skills levy and the SETAs aren`t delivering the desired results, and we should rather focus our time and money on something that will fast-track skills development.
Mr Zuma, with all respect and humility, we ask that you encourage business to become involved in a structured manner to elevate the skills levels in IT and other industries, with the support of the state.
In this way, we can begin to make a meaningful and sustainable contribution to our country`s future.
Sincerely,
Ziaan Hattingh
MD, IndigoCube
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