Mr President and Ms. Makhaya
This letter is prompted by a some recent articles from international organisations relating to the future directions of industry. My concern is that the ANC government’s Industrial Policy Action Plan doesn’t seem to factor in those forecasts.
The initial spark for this letter was the BBC program Saudi Arabia: After Oil, which went into the plans of Saudi Arabia to diversify away from oil dependence. Relating more generally to fossil fuels, a World Economic Forum article discusses how the future of energy is moving away from fossil fuels. This obviously impacts countries like Saudi Arabia, but it will also affect South Africa as a major coal producer.
The current status
South Africa’s economy is slipping between recession and low growth. The manufacturing sector is stagnating or in decline, due to many factors including labour relations, regulations and being uncompetitive compared to other developing countries. The education system is not keeping up, with The Economist stating that it was “one of the world’s worst“. Related to both of these, the jobs situation is also in a terrible state, with the unemployment rate at over 25%. Finally, the country’s ratio of debt to GDP is around 55%, not bad compared the countries like Greece, but not good.
The ANC government’s plan for economic growth is flawed because they haven’t thought about what Einstein said about solving problems.
You can’t solve them by using the same kind of thinking you used when they were created.
The government seems to believe that industrialization is the answer, but it ignores where the world is going.
Where the world is going
South Africa has some of the world’s biggest reserves of platinum and manganese, and of course it also has significant reserves of gold, iron ore, coal, chrome and zinc. However, it seems likely that the minerals the world will need in the 21st century are different the ones it needed in the 20th century.
Take coal, one of the main non-oil sources for power generation for over 100 years. But Bill Gates’ Breakthrough Energy Coalition wants to do something even more ambitious, and that is to bring free (or very cheap) energy to the world.
Where South Africa is
South Africa has large reserves of coal, but views on the trend of fossil fuels is contradictory.
According to one article:
- the renewables superpower – the shift from coal, oil and natural gas to zero-emission energy generation and transport means a new set of elements will become key
- “A country that creates green energy infrastructure, before political and economic control shifts to a new group of ‘world powers’, will ensure it is less susceptible to future influence or to being held hostage by a lithium or copper giant.”
Another article tells a different story:
- the world invested more in solar energy than coal, gas and nuclear combined in 2017
A chart in www.carbonbrief.org shows growth in world’s coal power plants.
As we are now well aware, employment in the SA gold mining industry is falling and is below 100000, according to Mike Schussler.
We are waiting to hear about your Digital Industrial Revolution Commission. In the meantime, there are other things you can start on.
Rather than focus on industrialization per se, let’s look at alternatives.
- Encourage agriculture to ensure food security and bring in younger people.
- Develop policies and actions to protect water security; the Western Cape has been learning that.
- Focus on the infrastructure that is really needed. That means spend money on replacing decaying infrastructure.
- Consider re-constructing the education system away from a 19th and 20th century curriculum towards one that will be useful for the 21st century.
Please just get started.