Can South Africa recover its mojo?

India’s first female President, Prathiba Patil (2007–2012), emphatically claimed “corruption to be the enemy of development and of good governance.

It must be got rid of. Both the government and the people at large must come together to achieve this national objective.” Untrue to her own words, she was accused of spending more on foreign trips than her predecessor.

More major mojo denting comes from falling investor confidence.

Mining has been through a tough time in the past couple of years, reports James Lorimer, opposition Democratic Alliance Shadow Minister of Mineral Resources.

“Production is down. There have been bloody and destructive labour disputes. There has been a world economic crisis which has slashed demand for the minerals that are mined in South Africa. The cost of electricity has soared, as has the cost of labour. Many mines have stopped making profits.”

The question begging an answer is; how much of this damage is self-inflicted? How much of this is due to poor legislation and wrong-headed policy carried out badly? More than anything else, if the government wants to attract the investment our industry needs, it has to restore its own credibility and top up South Africa’s mojo tank.

So what is to be done?

Developing countries still face big challenges. Meeting them will take determination, time and money. Robert Zoellick is a past president of the World Bank Group, US trade representative and deputy secretary of state.

He has made a study of the issue and says that upfront, emerging countries need to develop their human capital – health, education and skills – and draw on the talents of all their people, including women, with flexible labour markets.

He believes that economies can make a difference to their development path by concentrating on the basics. “Many countries need to invest in solutions to overcome transport, energy, telecoms and water bottlenecks,” he advises.

“There are too many impediments to starting new businesses. Too many public services are costly and ineffective. State-owned enterprises are often inefficient and overuse capital. Yet there are many opportunities in these countries to boost productivity through technological improvements if markets are competitive and foreign linkages encouraged.

“Deeper and broader financial markets would help connect foreign and domestic savings to productive investments through a greater variety of investment channels. Greater openness through trade would drive these reforms.”

So the potential is there and a resulting energised mojo will follow as a matter of course. The McKinsey Global Institute estimates that 440 emerging-market cities will account for almost half the world’s expected economic growth between 2010–25.

The rise of a new middle class offers opportunities for new business: already about 2bn people in developing countries earn $3,000-$20,000 per year and collectively possess $12 trillion in purchasing power.

There will be new patterns of south-south trade, investment, tourism, logistics and supply chains, and remittances. There will be new south-north ventures, too. Yet macroeconomic stabilisation is not enough to capitalise on this potential.

“Developed economies should also take note,” notes Zoellick. “After five years, the back-and-forth on fiscal and monetary policies risks diverting their attention from structural reforms for growth.

These include encouraging flexible labour markets with better connectivity among education, skills and jobs, along with immigration policies that better serve labour force needs.

Tax reform also offers growth opportunities, as does innovation in energy markets and public-private infrastructure investments. Trade policies should encourage freer competition.

The challenges facing countries in both the developing and developed world have shifted since the crisis of 2008. Government policies need to shift, too, and it is critical that these policies put the growth of private business at the forefront.”

And that’s how South Africa can get its mojo back.