SOUTH AFRICA: Beautiful vital statistics

For the last few quarters, South Africa's economic growth has been flirting with the 5% mark, reaching 5.2% in the second quarter of last year, signalling a growth of around 4.4% for 2005. According to Statistics South Africa, growth for 2004 stood at 4.5%, and at 3% in 2003.

Johan Rossouw, chief economist at Vector securities, says that although economic expansion relaxed in the third quarter of last year, South Africa was poised for more growth in the months ahead on the back of state infrastructure investment and strong consumer spending.

Why are these numbers significant? Because, say economists and analysts, it means that South Africa is capable of the 6% growth by 2010 the government says it is aiming at. If it gets there and stays there, or grows beyond it, South Africa's 30% unemployment will start reducing and poverty will be halved by 2014. That's the plan.

What's standing in the way, says Lesetja Kganyago, directorgeneral of the national treasury, are such barriers as currency volatility, red tape, skills shortage, infrastructure-related bottlenecks and a lack of competition in some administered industries. Add a few more, suggests George Glynos of market analysts Econometrix - such as HIV/ Aids and labour market rigidities. Other economists say 6% is pie in the sky as long as Telkom, the state telecoms monopoly, continues to hammer customers with the world's highest fixed-line tariff, and Mittal steel and Sasol fuel continue to keep the price of their commodities high by applying parity pricing.

The biggest mountain to climb is South Africa's soaring skills shortage, brought more clearly into focus recently with government's big plans to spend billions to get the country up to top growth-rate speed. There simply are not enough skilled people in the country to meet the demands of the South African upgrade. The sheer weight of money the government wants to spend - R350bn ($55bn) on infrastructure alone - is a problem in itself, because noone is entirely sure that even South Africa, the continent's mightiest economy, has the wherewithal to dispense it optimally.

Devil in the detail

It was the devil in the detail that prompted the government to establish an economics growth task team whose job it is to identify constraints to higher growth, and that this would be accomplished by the team asking "very difficult questions about growth barriers", says minister in the presidency, Essop Pahad. It was a way of underlining the critical importance President Thabo Mbeki viewed the "6% initiative" with, that he named his deputy, newly installed, to drive the initiative.

Mbeki's appointment late last year of Phumzile Mlambo-Ngcuka as his deputy came as a surprise to most. Names of higher political pedigree had been bandied about and few had speculated on the 'quiet lady', then in charge of the energy and minerals portfolio.

According to Dr Denis Worrall, a former South African ambassador in London, recent developments have squarely swung the spotlight onto Mlambo-Ngcuka, rapidly changing perceptions that she was a stop-gap after the sudden standing down of former deputy president, Jacob Zuma. In the ensuing weeks Mbeki has quietly let it be known that she is his anointed successor.

"In her opening statements as head of the government's Accelerated and Shared Growth Initiative, she has shown a refreshing honesty about problems in the economy, rare insight into what is needed and unusual daring as to how to do it," says Worrall. "In fact, she is very good news."

In an interview with The Suday Times, Mlambo-Ngcuka made the following points:

* Business has long complained that South Africa's labour laws are inflexible and counterproductive. Mlambo-Ngcuka: "We've agreed to review the labour market." This will probably be done by the International Labour Organisation.

* Delivery within the country is seen as critical and poor delivery is the result of a skills shortage. As much as skills development "we need people who have a service culture". She is emphatic that if this means bringing back entrenched whites, so be it.

* Private sector companies should be able to import the skills they need, and if regulations get in the way, the regulations must be changed or go.

Her view of black economic empowerment (BEE) is broadbased: "In the shared and accelerated growth initiative, we are saying that we need to review the unintended consequences of the BEE policy and adjust. Tendering processes will be less entangled with red tape."

* Major state restructuring could be on the cards to bring about better public service delivery.

The deputy president gave her views on the trickiest of the problems:

* Labour reform has labour and capital at odds, with unions determined to protect the gains they have won for their members, while the private sector is looking for ways to make labour costs more flexible.

Mlambo-Ngcuka: "We have agreed that we need to review the labour market. We have to agree on an institution that all parties will accept. The ILO may be one option. We don't just want to have a knee-jerk reaction. It's too sensitive to do it clumsily."

* Skills importation is particularly difficult for companies desperate for qualified peopk they can't source domestically.

Mlambo-Ngcuka: "On the surface, our regulatory environment should make it easy, but people say it doesn't really work I have to say it is important to me that I intervene and that it works. The credibility of the initiative means that you do have to solve the problems when people bring them to your attention."

* Skills development is especially urgent.

Mlambo-Ngcuka: "A structured initiative between government, the private sector and labour is under way. In particular we will be responding to the skills we require for infrastructure, for local government and for the priority sectors - tourism and business process outsourcing, in particular."

* Black economic empowerment (BEE) has irked many, because of the way the process favoured a few in the right place at the right time.

Mlambo-Ngcuka: "There never was an intention that jobs should be given to people who are not qualified - that is indefensible. We also cannot compromise on urgent service delivery because of BEE. Empowerment at the grass-roots level is about giving people the chance to acquire skills."

* South Africa's political reputation has taken a knock with the in-fighting taking place around the dismissal of Jacob Zuma.

Mlambo-Ngcuka: "Everybody is concerned. We know that sometimes, globally, people are more concerned about what is happening in the ANC than what is happening in government, because they know that if the ANC is not holding it can have an impact on government. I don't want to exacerbate the situation by defending - we're just going through a bad patch. We're managing in the best way possible, but we are damned concerned about getting it right, and sooner rather than later."