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The UK and SA, playing on the same global teamSouth Africa and the United Kingdom have a special connection: anyone who knows history or who spends even a few days in the country can see and feel how the two nations are tied together in history, culture and commerce.
Let us take the small example of the time zone and expert services such as law. With law firms in Europe looking to be more cost efficient and move some work to other centres, it stands to reason that an English-speaking country along the same time zone is in a good position to compete and grow its services sector, if it can delivery top advice more efficiently.
Or take the opportunities that exist in the field of investment. Enormous pools of liquidity exist in London, with an investor community that is expert in assessing opportunities and risks in many specialist global sectors, for example minerals.
Infrastructure advice, too, either for project management or for wider finance options, is plentiful in the UK where public-private partnership (PPP) structures were pioneered and where there are many globally experienced advisers who can assist.
The above three examples are merely some of the sort of opportunities that exist and which were among the issues that my City of London business delegation discussed on its nine-day visit to South Africa recently.
A key interlocutor was President Jacob Zuma. He made it clear to me that finding solutions to the country’s key challenges was an urgent priority.
For its part, the City delegation acknowledged that opportunities for prosperity and growth for South Africa were strong, but we did not underestimate the obstacles.
Speaking frankly, South Africa’s colonial past and the blight of apartheid means that since 1994, this country has had to construct a new democracy and also reverse a deeply embedded social regime of unique injustice. The task still facing 49 million South Africans of every hue is a great one, but it has the support of friends such as the UK.
One of the benefits of bringing a delegation on an extended visit rather than merely a three-day visit, is that we had an opportunity truly to get to know South Africa’s culture, and explore some of its past.
So a day-long visit to Soweto included visiting the Mandela House Museum and also a tin shack where Phillip, Joyce and Rebecca P raise their family in well-kept and neat – but very challenging – surroundings.
Their home was more fragile than a UK potting shed, but the P family’s grit in fighting to rise above its circumstances was a humbling lesson in the difference that determination can make.
The P family had a shack, a yard and a thunder drop – and that is all. But they know they are among many third-world poor in a South
Africa where a minority enjoys a first-world life. And they want to work to change that.
So the challenges are seen – not only by Rebecca, Phillip, Joyce and their family – but also by your president and others I met, including Finance Minister Pravin Gordhan, Reserve Bank Governor Gill Marcus, plus the 12 ministers I met during the state visit to London in March.
The heart of the matter is that South Africa requires major infrastructure, enlarged energy-generation capacity, new ports, roads, trains, buses, hospitals, and a much stronger education for the broader population. And a major leap forward in general and sector skills is required, too.
Some of the South Africans we met asked me how profit-oriented businesspeople based in the UK could assist. A very fair question that demands a direct answer on whether the profit motive ever can be right for public services, and whether foreign investment and foreign advice truly are compatible with a home country’s interests.
Each country must decide, but global experience suggests the state may not always be the best deliverer of services. In some contexts, services delivered by the state can be inflexible, bureaucratic and inefficient. They further may fall victim to corruption, and can conceal hidden costs and inefficiencies that turn out to be very large, indeed.
It is a choice that any country can make, but some find that, where services are delivered by commercial agents (but paid for by the state), a fair profit can be made by the deliverer, as long as it is all transparent, open and does not exploit employees illegally.
Of course, genuine competition must be built into the process from the outset, but the advantages include: establishing the real cost over time, a clear contract, and perhaps even a lesser cost to the taxpayer.
For example, instead of a municipality running a large staff and a vehicle fleet to collect rubbish, it can set clear outcomes, run a genuinely open and transparent tender for a three-year contract, and then can choose a provider that gives the best overall value for the outcomes required.
Not all countries are comfortable with such arrangements where they involve staff or toll-style payments, but in the UK, we have constructed road networks and hospital and school buildings using PPPs – and in many cases, the public has no idea their new infrastructure is financed in this way.
PPPs can be used also for water and sewage, bus networks and even prisons – anything where the state has clear goals and there is a stable funding stream – either directly in the form of payments for free use by the citizens or by conceding the right to charge directly (as in a toll bridge).
Of course, I recognise PPP is not a panacea and may not suit all, but it is a debate worth starting.
On the issue of the involvement of foreign investors and advisers: this should follow very much the same principles of clear outcomes, open competition and complete transparency.
When building a billion-dollar railway or a dozen new ports, a set of highly experienced investing banks peering over the plans, testing the financial models and examining the risks actually helps it being built in the best way. Of course, foreign investment requires a return (related to risk), but the host country benefits as well.
Financial skills have an important direct impact, too.
For example, many South African municipalities are short of bookkeeping staff, leading to slow or inaccurate booking of charges, inefficient payment of bills and many other failures of process – including budgets that are unreliable and thus open to abuse.
I am very pleased that the Association of Accounting Technicians (AAT), supported by independent professional accountancy bodies in the UK, has been working to develop training tailored to and delivered in South Africa. From a pilot scheme for hundreds, it now is rolling out nationwide in its thousands under the newly formed AAT South Africa.
It even has a special governance module that teaches how a public servant should behave, right down to remembering that unjustified absenteeism hurts the community served; and how to deal with your boss if he/she strays from the straight and narrow.
This is a good example of how the UK and South Africa are working together on the skills agenda, and at the same time improving the services used by people such as Rebecca P’s family.
Can the City of London help South Africa all by itself? By no means – it needs to be a group effort and South Africa’s political leaders, its businessmen and women and – most of all – its ordinary people have the greatest job still to do if they are to make the 21st century the time when one of the most glaring large-scale social injustices of all time is turned into one of the greatest proofs of the united human spirit.
But the UK, as a global finance centre, an international business and advisory hub and a gateway to the giant European and Persian Gulf markets, does stand ready to be your partner – and what the UK can do, will help substantially.
The success of a new and equitably prosperous South Africa is something we must all work together to achieve. Much is being done already, and we all recognise the magnificent achievement of South Africa in getting ready for what surely will be a great World Cup (from which London can learn for the Olympics in 2012).
After all, we are playing on the same global team.
Lord Mayor Nick Anstee
City of London Lord Mayor Anstee is the annually elected representative of the City’s global business district. He is working with UK Trade & Investment to follow up on President Jacob Zuma’s major business and state visit to London in March.
London voted for our man, but Nelson's still not there/
We want another Nelson in Trafalgar Square/
We want another Nelson in Trafalgar Square!
"a friend of South Africa". Ha!