Only in China!

The western, eastern and northern regions of the Republic of China receive very little rainfall and these regions experience prolonged periods of severe drought. The city of Beijing which is situated in the northern region has grown rapidly in recent times with heavy industry in the capital city attracting many people from the rural areas into the city. All this has put a big strain on the water supply in Beijing and these other regions of China. Back in 1952 Chairman Mao recognized the water shortage problems and proposed a radical solution viz., a water diversion system and long after his death, in December 2003 soil was broken in the ambitious “the south-to-north water diversion project”. The aim of the project is to tap into the abundance of water in the country’s four major rivers situated in the south by diverting water from these rivers to the drought-prone regions in the west, east and north. This bold project is expected to result in the building of a network of canals traversing thousands of kilometres and channelling water (using the force of gravity) from the four rivers to landlocked areas in the west, east and north. Since 2003, parts of the south-to-north water diversion project have been coming on stream (pun not intentional) in stages and it is expected that upon completion (at an estimated total cost of US$62 bil) in 2050, the network of canals will divert a staggering 44,8 billion cubic meters of water per annum.

SA has its own water problem

South Africa is generally considered a semi-arid country with some areas receiving heavy rainfall and others little to nothing at all. Having said this, South Africa does have a vast network of rivers and the largest of these, the Orange River has an abundance of water which ultimately flows into the Atlantic Ocean having travelled hundreds of kilometres from its source. It is estimated that 8% of South Africa’s total exports are agricultural and farming-related products ranging from grain, fruits, fruit juices to animal hides. Maize, which is largely grown in the Free Sate and the surrounding provinces, accounts for up to 33% of South Africa’s gross agricultural production and recently there’s has been reports of a crippling drought in the Free State and the surrounding provinces.

SA’s own water diversion project

Now, I’m no specialist on matters related to water technology, but the drought in our country has left me wondering whether or not there’s perhaps an opportunity for South Africa to have its own water diversion project. Through this project, water could be drawn from the Orange River or its main tributary, the Vaal River and be diverted to those parts of the country which receive little to no rainfall. A project of this nature would no doubt have an impact on the environment however I have no doubt in my mind that what South Africa needs is a radical sustainable solution to the water shortage problem.

Crime, crime, crime!

Crime is certainly one of the biggest challenges facing South Africa and there are many studies that have been done in an attempt to identify the causes. One school of thought argues that poverty is the cause of South Africa’s rampant crime rate. Those who subscribe to this school of thought say that with the next meal always uncertain, crime serves the purpose of bringing about certainty for the next meal. Another school of thought argues that it’s actually the high unemployment rate which is responsible for the high rate of crime. Left with nothing to do all day, the unemployed soon find something to occupy themselves with and in this sense crime becomes an occupation. To be sure, there are varying levels of crime ranging from petty, serious to the downright evil crimes such as wanton murder and rape. In recent times, crime in South Africa has been gruesome and violent, with criminals having no regard to human life. In my view, both these schools of thought are valid in their own right however, these schools of thought do not offer sufficient explanation as to the causes of the more gruesome and violent crime that we see happening with regularity.

It’s about firearms and greed

One of the theories I have as a reason for the rise in gruesome and violent crime in South Africa is the abundance of guns on the one hand and greed on the other hand. Two weeks ago, the head of the South Africa Police Services, General, formerly Commissioner Bheki Cele publicly destroyed hundreds of illegal firearms confiscated by the police from criminals and some from lawful owners who no longer had a need for the firearms. What this public display by General Cele demonstrated was the ubiquitous availability and use of firearms by criminals. Criminals by definition, subject terror on their victims and society in general and over the past decade or so, criminals have shown a preference for firearms as instruments of terror. Take a moment to consider when last you heared of a criminal wielding a knife robbing a bank, hijacking a car or carrying out a house break-in?

Balancing energy needs with environmental priorities

Many will remember the World Summit on Sustainable Development hosted by Johannesburg back in 2002, the follow-up event, the 2009 World Climate Change Summit in Copenhagen certainly put a much sharper spotlight on the negative impact of carbon emissions. There were great expectations that the summit would produce a binding agreement among world nations to reduce their carbon emissions, but we now know that the summit failed to deliver this agreement. At best, the summit has made countries such as South Africa aware of the need to re-evaluate their emission problems and propose their own plans to reduce carbon emissions in the long term. By most calculations, South Africa releases in excess of 400 million tons of carbon dioxide into the atmosphere per year. The biggest emissions culprits are the coal-driven electricity stations, which account for 70% of all the carbon dioxide South Africa emits into the atmosphere every year. South Africa’s carbon dioxide emissions make up less than 2% of global emissions but alarmingly, the country’s per capita carbon emissions are more than those of China and India combined. South Africa therefore is under great pressure to come up with a clear action plan to reduce its carbon emissions. In Copenhagen, the government of President Zuma pledged to reduce South Africa’s carbon emissions by at least 34% by the year 2025, a fairly ambitious target indeed.

What is government to do?

As stated above the coal-driven electricity power stations are the biggest carbon emissions culprits, it therefore makes sense that any plan to reduce emissions must seek to reduce South Arica’s reliance on these power stations and look for alternative energy-generation sources. In march of 2009 the national centre for carbon capture storage (CCS)was launched under the auspices of the Central Energy Fund (CEF). The basic intent of the CCS is to somehow capture the carbon dioxide produced by many industrial processes before it escapes into the atmosphere and then compress this gas into a liquid. This liquefied carbon dioxide would then be injected into and “stored” deep underground. In my view, the CCS should not be used as justification for building more coal-driven power stations as national electricity supplier, Eskom, is proposing. Indeed what is really required are alternative cleaner energy sources, such as solar, wind, sea-wave and nuclear. However, the most realistic solution for South Africa is by far nuclear powered electricity generating stations, given the great amount of research and development investment that has gone into the use of this technology to generate cleaner energy, read into this the Pebble Bed Modular Reactor (PBMR) programme which has been running since 1999. Make no mistake, nuclear energy power generation does produce highly toxic waste material and the enriched uranium used in the production of nuclear energy is a highly volatile material with potentially catastrophic results if not managed carefully. Remember the Chernobyl disaster of 1986? I’m no expert on nuclear energy and by my limited understanding, what the PBMR project seeks to achieve is making nuclear power generation safer and the disposal of the resulting toxic waste much easier.

SA needs labour-intensive jobs

How very fitting that President Zuma’s state of the nation address coincided with the 20th anniversary of Nelson Mandela’s release from prison on 11 Feb 1990. Over the past two decades South Africa has come a long way in terms of the democratization of the economy and society in general. Yet, the country continues to face many challenges and perhaps the second biggest challenge behind what I regard as SA’s biggest challenge, education, is the high unemployment rate. According to Stats SA, 89,000 jobs were created during the fourth quarter of 2009, however for the full 2009 calendar year the economy shed just under 900,000 jobs.

A labour-intensive economy

South Africa is a developing economy with very low levels of secondary let alone tertiary education among those entering the job market. Furthermore the high unemployment rate means there is an abundance of labour waiting for the next job opportunity. As such, what is really needed are jobs which are labour intensive requiring little skill, to allow this abundant labour force the opportunity to find employment. The idea of creating a labour-intensive jobs market in a society that has an abundance of labour is not new, however I raise it because I think now more than ever South Africa needs to make such jobs a reality. The continuing high unemployment rate and the prevailing recession, together make this approach to labour a necessity. It was encouraging therefore to hear President Zuma, in his state of the nation address, confirming that the creation of labour intensive jobs will receive attention from his government.

The Cape Town example

Recently I was in the beautiful city of Cape Town and one of the things which struck me was the employment and use of people-operated parking meters in the streets. These people carry electronic gadgets into which they punch the car registration and the time the vehicle arrived to be parked. They then collect a fee from the drive in advance from the drive. Should the drive park their vehicle for a period longer than what they paid initially, they then have to pay the difference before driving off. The people-operated car parking meters in Cape Town epitomize this labour-intensive job creation approach. I do appreciate that recently, there have been reports of the Cape Town car park operators pocketing the money they collect from car owners for their own pockets, resulting in huge revenue loses for the city. In my view improved management is all that is required to ensure that more of the money collected by the people meters goes to the city coffers.

To be sure, there are some services offered by government which are too critical to ever be left to an unskilled labour force to carry out, but where the services are not critical government ought to seriously consider the use of labour instead of high-tech machinery. Some argue that a labour intensive economy, left unchecked, could become inefficient and this government must guard against at all cost. The 16th US President, Abraham Lincoln once said, “Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.” Indeed the context within which this was said must be taken into account but, somehow I think the idea applies perfectly well to the South Africa of today.

More lessons from Israel: from brain-drain to brain-circulation

Since just before the 1994 general elections from circa 1990 when Nelson Mandela was released from prison, South Africa has been experiencing the effects of a much reported brain-drain. Many theories exist regarding the reasons why the brain-drain started in the first place and many a book has been written on the subject. The most popular theory and explanation for the brain-drain is that initially many white South Africans both young and old, thought the future under the ANC government would be filled with uncertainty and therefore took a decision to make a run for “greener” pastures. More recently, the explanation for the brain-drain is the relatively high rate of crime in South Africa. No reliable statistics exist regarding how many people with critical skills are leaving or have left the country however, what is clear is that many of those who have left and are continuing to leave South Africa choose countries such as Australia, New Zealand, the UK and the United States as their new adopted homes. Which brings me to the next theory about brain-drains in general, not specific to South Africa. The Organization for Economic Co-operation and Development (OECD) reports that the brain-drain is characterised by the migration of new university graduates from poor countries to more affluent, first-world countries. By all accounts, South Africa remains a third-world country and effectively a poor country which in my view makes the OECD migration theory applicable as another explanation for South Africa’s brain-drain. Indeed, according to this migration theory, until South Africa becomes a sufficiently wealthy nation, offering high standard of living, the country should continue to lose some of its university graduates to richer countries.

The Israeli experience

Israel has universities which are regarded among the best in the world and these universities have produced some of the leading scientists in the world. To emphasize the point, Israel has consistently produced Nobel prize-winning scientists mainly in the field of economics. In their book, “Start-Up Nation: the story of Israel’s economic miracle” , D. Senor and S. Singer point out that while many of Israel’s top scientists and business people have left and are continuing to leave the country to apply their skills in other countries, mainly the USA and in Europe, thus draining Israel of valuable skills. However, D. Senor and S. Singer also point out that there is a large number of highly skilled Israelis making a return to their home country to apply the skills attained from their experience working for large companies and institutions in foreign countries. The reasons for their return according to Senor and Singer are many and of a combination a large pool of highly skilled people as well as an abundant availability of venture capital funds to help drive innovation and entrepreneurship is one compelling reason. Those returning find that they are able to tap into the talent which already exists in Israel, talent which is often better than that found in countries from which the expatriate are returning. By all accounts (GDP per capita as one measure) Israel is a first-world country and has been for a while now, and this makes it easier for those returning from their experiences in other first-world countries to Israel and makes the transition rather smooth. Senor and Singer also point out that the Israeli government has put in place incentives aimed at attracting the much needed skills back to Israel. These incentives range from tax breaks to very generous currency repatriation regimes, where those returning can either bring with them an unlimited amounts of money or send out an unlimited some of money. All these factors combined have resulted in what some call the “brain-circulation” phenomenon in Israel, where those who left return equipped with skills and contacts necessary to allow them to add more value to the overall economy of their home countty.

Lessons for SA

To be sure, if South Africa is to achieve the “brain circulation” effect, the country has to become generally more affluent in order to make it more attractive for those who have left to return to conditions to which they have become accustomed. Meaning that the high levels of crime must be brought under control, the threat of electricity blackouts and water shortages must be eliminated completely. Incentives similar to the ones put in place in Israel would also play a significant role in luring expatriates to return to SA. In my view, however, the incentives must work hand-in-hand with the general improvement of the standard of living as well as the availability of venture capital funding. Venture capital funds would help bring to life any good ideas of returning expatritates as well as South African entrpreneurs in general. Many may argue that South Africa already has a large amount of venture capital funding available (both government and private), perhaps what is needed are better methods of distributing those funds, especially government funds.

Lessons from Israel: Education and Entrepreneurship

I've just finished reading a rather interesting book, tiltled "Start-Up Nation: the story of Israel's economic miracle" by D. Senor and S. Singer. The book centres around how Israel, a country which only came into   existence in 1948 has become a leader in innovation across many fields ranging from medical equipment to information technology. The auhtors illustrate how, due to a thriving culture of innovation in that country, Israel has become a research and development hub for such prominent companies as Intel, eBay and Microsoft, among others. To further emphanzise their message, the authors also point out that after the USA, Israel has the most number of companies listed on the NASDAQ, the securities exchange for Technology-focused companies.  This is a truly mean feat for a country with a population of 7.1 million. Israel's innovation successes have come about despite the country's small polupation and being constantly under a threat of war from its Arab neighbours. What the authors manage to illustrate very well, is that Israel's success is not a miracle but rather a well though-out plan at the centre of which is a culture which places extremely high value on good education and entrepreneurship. Indeed Israel is considered to have the highest number of universiry degrees per capita in the world. Even more interesting is how the military, the Israeli Defence Force (IDF), has been set up to attract the best minds and it is the IDF veterans who have gone on to harness the skills they've learnt in the military for commercial use. The result is that many of the hi-tech start-up companies in Israel have been created by individuals with IDF experience. The ultimate measure of the success of Israel's education and entrepreneurship plan is a GDP which has grown exponentially over the past 60 years, with it's GDP per capita of US$ 28,900 putting the country among those with the highest GDP per capita in the world. However, to really appreciate the value of the book, I would highly recommend you take time to read the book.

Education and Entrepreneurship

If South Africa is to ever become a great nation and compete globally on an equal footing with countries such as Israel, the country would need more than the political miracle which begun when Nelson Mandela was released from prison in 1990. A clear education plan (as I've often said on this blog) coupled with a culture which favours entrepreneurs would have to be put in place. It would also not be enough to enhance the poor quality of our education, government would further need to put measures in place to nurture and sustain a culture of entrepreneurship. For funding organizations such as the IDC to be effective, they need to operate in an environment where entrepreneurship thrives and new ideas are vigorously cultivated. However, without a high standard of education a thriving culture of entrepreneruship will simply remian a pipe-dream.