Despite the rise of Uber for example, the idea that you don’t have to own an asset outright to be successful is not new. Prof Pat Naidoo, who gave the SAIMechE John Orr lecture late last year, in fact took delegates to circa 1900 when the famous British economist, John Maynard Keynes argued that government’s chief job is to get the economy moving.
He motivated that the hand of government, through public policies, should intervene to stimulate the economy and employment. The role of the public sector is setting policies and regulations; that of the private sector is investment.
Fresh produce
Prof Naidoo cites two main examples close to home, the oldest being the City of Johannesburg Fresh Produce Market (FPM) established in 1893. FPM does not own the fresh produce or the farm or the trucks and distribution networks; neither does it provide for or take any ownership, accountability or responsibility for capital, debt, or operating cash for fresh produce, infrastructure development, operations and maintenance.
COJ provides the policies, regulations and practices for a trading environment for a fee (commission) which makes a healthy contribution to COJ coffers to this day. A bank of computers connects farmers to customers therefore price discovery takes place in real time. And as the FPM serves farmers of all sizes, it is the ideal platform for emerging and small farmers.
Large scale
Another example on a much larger scale is the emergence of the Southern African Power Pool (SAPP), from Cape Town to Kinsasha, and Windhoek to Maputo. Established in 1995, SAPP daily takes its share of the trade as market commission; now exceeding 1 million US annually.
SAPP does not own the electrical energy or the power stations or the transmission and distribution networks; neither does it provide for or take ownership, accountability or responsibility for capital, debt or operating cost for energy provision or energy infrastructure establishment, development, operations and maintenance.
Confidence
Government’s role is to stimulate buy-in by the private sector. In order to do so, it must have the confidence of investors. In this way, employment increases, consumption increases, exports increase, taxes increase, GDP increases, leaving more money for societal investments such as in health and education.
Education is key to mitigating technological unemployment which is a real threat, the outcome of which will be determined by the country’s digitalization strategy, its speed of adoption and preparedness of the education system to retrain vulnerable labour market groups. Digitalization will be unavoidable as its strength will be competitive, by virtue of reducing marginal costs of production.
Water
Another threat is that of climate change especially as South Africa is warming at a rate that is over twice the global average temperature increase. If not addressed, the consequences will be unfavourable for both GDP and employment. Prof Naidoo warns that if one stays on the business-as usual path, the outcomes could be distorted; the affluent few will switch to alternatives while the majority will be abandoned and stranded.
The same warning is applied to a looming water crisis but the upside is that water has the potential to drive new job creation plus sustain existing jobs. Talk of establishing a Southern African Water Pool has taken hold. Here the private sector should be looking after big data, blockchain/smart contract, AI, sensor/sensor network, nanotechnology etc.
Tying the knot
At its 20-year celebration, held in Lusaka in 2015, the founding members’ message to SAPPP was clear – Time for Marriage; partner + private sector.
An electrical engineer, Prof Naidoo has worked extensively at a senior level in the South African electrical engineering industry. He retired from Eskom in 2010 and has since contributed significantly in the academic space. Appointed Research Professor of Mechanical Engineering Science at UJ, Prof Naidoo retired in 2021 and is currently a Visiting Scholar and Professor of Practice FEBE UJ, secretariat of the FEBE IAB.
Is there a date set for this lecture?