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Business Must Negotiate Or Face Another Arab Spring

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Recently, I asked a diplomat attached to one of the Western embassies in Pretoria whether the Arab Spring had been predicted in a scenario by his government. The answer was no: it came out of the blue and surprised everybody. In the words of Nassim Taleb, it was a Black Swan event.

Next, I asked him whether a retrospective analysis had identified any flags that they should have picked up on in researching the future of the countries affected by the Arab Spring. He said most definitely yes: in all the countries concerned, there was a high rate of youth unemployment, coupled with a sense of alienation from society. Furthermore, the advent of social networks like Facebook had brought a new dimension of organization to young people in terms of putting together mass demonstrations and filming them.

In South Africa, we have all those conditions. We have an unemployment rate among young people aged 18-24 which is estimated to be somewhere between 40 and 50%. Although most of them are ANC supporters, they are highly frustrated by the lack of progress since 1994 in creating a participative and open economy with an emphasis on economic freedom.

Moreover, the vast majority are up to speed on the latest communication gadgets and the internet.

In order to avoid our own version of an Arab Spring in South Africa, we need to call upon the negotiating skills of our leaders and citizens to put together a blueprint for a new economic order. Codesa I and II in the early 1990s demonstrated that South Africans can pull the iron from the fire through negotiation and avoid the slippery slope into chaos and a civil war. These two conventions for a democratic South Africa fashioned a new constitution and paved the way for the fully open election, which went ahead peacefully on April 27, 1994.

We now need a Codesa III, which I call an ‘Economic Codesa’, because there was unfinished business in the first two Codesas. While we have a political democracy, we certainly do not have an economic democracy in South Africa. There is no way the government alone can achieve the latter. It will require a partnership between the principle economic actors and the government. In the category of economic actors, I would put the CEOs of the top 50 companies in South Africa, representative business bodies, leading entrepreneurs, community champions, the unions and others chosen by civil society.

The Economic Codesa I have in mind would not be a summit or talk shop, but a genuine negotiation, with give and take on all sides. One of the most important outcomes would be to create the conditions for instilling a new entrepreneurial culture in the country, giving small business owners the space and support systems to grow their firms from start-ups to companies that may one day be listed on the Johannesburg Stock Exchange. It is common cause among leading thinkers in government and business that the largest percentage of jobs to be created in order to bring South Africa’s unemployment rate down to an acceptable level, will be in the small business sector.

Indeed, one of the key targets of an Economic Codesa would be to establish an environment within which one million new businesses of a viable nature are likely to be launched by 2020. That is the only way to create five million new jobs and give gainful employment on a widespread basis to young people, either as entrepreneurs or employees. Not everyone has to be an entrepreneur, but on the assumption that the average small business has five employees, the percentage of entrepreneurs in the nation has to be around 20%. The figure is quite achievable with economic freedom in our time.

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