Tasked with engaging with the forum’s topic: “South African-Russian youth achieving the sustainability of development through pragmatic cooperation.” I heeded a call from Alicia Barcena Ibarra, the executive secretary of the UN’s Economic Commission for Latin America and the Caribbean to tackle the question posed to me: “How can SA and Russia youth cooperate on youth entrepreneurship?” … writes Yola Mafuna
Alicia Barcena remarked on her progressive and visionary term in office; recovering better from the Covid-19 pandemic in the Global South means recovering with equality, but importantly equality is considered an objective of economic development.
Barcena emphatically stresses that: “The impact of equality should be seen in productivity, growth, and economic diversification by means of an expansion of human capabilities.”
Tackling any sustainability topic is not exactly an easy task as there are many environmental, social, and economic dimensions to the concept, which makes it a contested terrain.
Of the many scholars who wrote about it, I leaned towards the definition provided by one A Sen in 1999 who said: “A sustainable society is one in which people’s ability to do what they have good reason to value is continually enhanced.” Having this in mind, and taking Barcena into consideration, it would be very hard to fashion any “how to” argument without placing it in its correct historical and prevailing contexts.
In this case, Marxist scholars introduced us to “Dialectic Materialism”, a methodology that instructs us to seek to understand the laws of society and nature in order to change them.
South Africa has come a long way since the advent of democracy, but its transition remains incomplete. Poverty has declined significantly since 1994, but inequality remains extremely high. We are increasingly a ticking time bomb as the most unequal country in the world.
Comprehensively, five key constraints to South Africa’s economic growth have been identified by experts. These are:
- insufficient skills
- the skewed distribution of land and productive assets
- low competition and integration in global and regional value chains
- limited or expensive spatial connectivity and under-serviced historically disadvantaged settlements and
- climate shocks: the transition to a low-carbon economy and water insecurity.
Although the skills deficit is an increasingly controversial element in light of the record-high number of unemployed graduates, including those with qualifications in scarce skills.
The country’s land must be redistributed to diversify the economy. The diversification of the economy will be achieved by transforming the ownership patterns of the means of production, inclusive of the land.
For achieving sustainable development by promoting social and economic equality, the government must calculatedly expropriate privately owned land without compensation and then use those assets to empower the majority. Equal access to the land will mean greater opportunity for newer, more creative, and innovative entrepreneurial ventures to be pursued.
It goes without saying that such an envisaged land redistribution strategy must go hand in hand with financial and structural support to the entrepreneurial efforts of all the new landowners.
This can be achieved by setting new transformative performance objectives for the National Treasury and the Department of Trade and Industry and its agencies. The Department of Women, Youth and People with Disabilities developed a National Youth Policy 2020–2030 in recognition of the youth as a separate and independently recognised segment of the population. Drafted as a collaborative effort this policy is aimed at effecting positive youth development outcomes in the country.
Alicia Barcena reminds us of the need to have expansive fiscal policies and to fight tax evasion, as two elements that have a great influence on the pace of national development. As defined by Global Financial Integrity, a non-profit organisation, Illicit Financial Flow is the illegal movement of money from one country to another.
This definition narrowly covers activities including hiding the proceeds of crime, channelling funds toward criminal destinations, and evading tariffs and taxes through the misreporting of transactions. Broader definitions focus on actions that are not firmly illegal but are undesirable as they result in reduced tax revenue, including tax avoidance actions like strategic transfer pricing.
A well-evidenced policy brief titled Illicit Financial Flows in Africa by Professor Landry Signe, a distinguished fellow at Stanford University’s Centre for African Studies, along with research analysts Mariama Sow and Payce Madden presents information on the permeable financial status of the continent. Between 1980 to 2018 sub-Saharan Africa received nearly $2 trillion in foreign direct investment and official development assistance but emitted more than $1 trillion in illicit financial flows.
Under the free market conditions we have allowed ourselves to remain under, multinational companies tend to find clever and creative ways to evade trade regulations such as trade misinvoicing. Trade misinvoicing occurs when exporters understate the value of exports and importers overstate the value of imports, allowing firms to evade trade restrictions and customs duties by illicitly moving profits between countries.
Glencore, an England-based multinational firm focused on mineral extraction in many African countries including South Africa, recently admitted to bribing hundreds of government officials including heads of state in order to avoid tax regulations and export levies. They usually pay powerful individuals in US dollars, cash. It is hard to imagine that this kind of illicit financial crime has not occurred in South Africa considering much that has been reported on by the media lately.
It is clear that the underdevelopment of Africa is still underway as this continues to pose a development challenge to the region because it removes domestic resources which could have been crucial for the continent’s economic development.
Combined with the extractive trade patterns that lock our economy into the primary sector, the more profitable levels of the value chains have been built and are maintained overseas. This status quo stifles the growth of emerging economies and perpetuates unfair and uneven market conditions that advantage multinational monopolies.
To drive the growth of the local economy, the government through departments in the economic cluster must deliberately take protectionist policies while embracing globalisation in a progressive manner.
We must go back to basics! South Africa must reconquer the 2nd and 3rd industrial revolutions by rebuilding the manufacturing capacity of South Africa as we continue to prepare for the 4th industrial revolution in a way that will stop the shedding of jobs.
Yola Mafuna was one of the speakers at the SA BRICS Youth Association bilateral with Russia. The views expressed here are his own.