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By running the country's fiscus into the ground and into their wallets, black incompetence has indirectly sown the seeds for the creation of an unstoppable class of white mega-entrepreneurs, writes Roy Mathieu Borole.
It has never been a better time to be a white entrepreneur in South African history. Ignore the screams and cries around BBBEEE and Political cronyism. Reject claims of economic exclusion and let's revise your entire perspective on Africa's richest and most fertile economic market.
Through a combination of gross mismanagement and general incompetence - the ANC government has created a fertile environment for white economic prosperity. Running the country's fiscus into the ground and into their wallets, black incompetence indirectly has sown the seeds for the creation of an unstoppable class of white mega-entrepreneurs. Via a simple strategy, white entrepreneurs have created astronomical amounts of value by providing government services to the income-earning class.
Let's unpack this strategy and establish how to become the next billionaire exploiting the state's foibles.
A 5 step guide to building a billion Rand business in South Africa.
Step 1: Identify a failing government service that won't improve - essentially all State Services.
Step 2: Identify what model the state is using to try service this need.
Step 3: Identify the institutional insanity that causes this erosion – generally incompetence or some pseudo-socialist idea that enriches a very small handful of professional gaslighters.
Step 4: Invert the model and optimise for the income-earning class.
Step 5: Wait and watch the market defer to you.
Sounds suspiciously simple, doesn't it?
I know.
But said model has been adopted by some of South Africa's most successful businesses such as DSTV/Showmax, Curro, Fidelity Security, Attaq, and ADvTECH Group.
Let's use this framework to interpret the wildly successful educational company Curro.
Step 1: Identify a failing government service that won't improve - this is essentially all services.
Curro chose schools/education.
Step 2: Identify what model the state is using to try service this need
The state in their model:
- Uses unionised unregulated teaching talent that is impossible to fire.
- Packs the industry with rent-seekers who are in no way accountable.
Step 3: Identify the institutional insanity that causes this erosion
In this instance it's a unionised teaching body that has more power over the state than the state has power over it.
Next to HIV, TB and structural racism, the South African Democratic Teachers Union (SADTU) has been one of the most devastating scourges on South African economic progress. Compounding this is a minister who cannot be dislodged for political reasons. And then complete this absurd stew with the crazy notion that the state can act as a regulator, creator, and executor in the education space.
Step 4: Invert the model and optimise for the income earning class
Curro took a simple model that eliminated all the political posturing of the government sanctioned education system and optimised for education, safety and appearances. And it must be noted that they weren't even that good at any of the above. Up until seven years ago, they were still being caught out for racist behaviors against black and brown paying clients. However, the state alternative is so bad that these people would rather have their children be subjected to racism than deal with the government education system.
Step 5: Wait and watch the market defer to you
Through strategic placement of schools in newly developed areas they were able to service a market that the state could not and was unwilling to do. The state had the funds and legislative ability, but that damn black incompetence got in the way again!
Thus, they collected all these revenues in newly created cities/towns that the state couldn't build or service ie Midrand, Centurion, etc.
According to what I could glean while researching for this article, the Curro Group is well run. Their success is not a by-product of state incompetency. State Incompetency simply accelerated it. A competent state would be able to have caught these trends well before they happened, but we're dealing with the same state that causally paid R26 for a 1-ply roll of toilet-paper. The ANC government is to incompetence what Jefferey Epstein is to paedophilia.
Wealth will always seek out competitive advantages for children, so a private education system of some kind was always inevitable.
But Curro is not an elite private school. Curro is fulfilling the needs of middle-income South Africans not by offering a better product but rather a functional one.
You can rinse and repeat this model for M-Net/Showmax, Fidelity Security, ADvTECH Group and REIT's in the property field, Attaq and Balwin.
How we got here: The downstream effects of racialisation of corruption and mismanagement
Racialising government performance allowed the ANC government to pull off one of the great propaganda bait and switches of the last century. Every time anyone claimed the ANC Government was inept, they immediately tarnished said person with the brush of a "racist". This is not to say that a huge number of these people aren't racists, the gross majority are, but the sane individual in the crowd who shouts the emperor is naked gets lynched regardless of how truthful their argument is.
How and why to fix
I believe a lot of this can be attributed to a lack of growth, which in turn is attributed to poor governance. And a lack of growth creates peculiar outcomes; namely the Curro class and the over-allocation of black talent in corporate South Africa – more on this later.
Low growth sets off a domino effect of economic stagnation.
Poor governance results in lessened foreign investment which results in less capital flows which leds to an erosion of business and consumer confidence, which supports conservative business practices that aim to dislodge state services which channel state revenues into private enterprises like Curro.
The tree may look like white success but the seeds that grew it were black ineptitude.
Why does this matter?
At this point, you may ask why does this actually matter. Let the state fail and then let the "free market" take care of the rest.
I wish South Africa was indeed a "free market" but the reality is much more sinister. Any kind of state intervention in the economy generally results in outmaneuvering of the black government by white corporations. None more so than the over-allocation of black talent in corporate SA as a by-product of BBBEEE policies.
South Africa's young black entrepreneurial class has been hamstrung by inflated salaries and white corporates consuming them to benefit off a combination of tax and funding breaks from the state.
If the South African economy was five times it's current size this would be fine, South Africa could have both an entrepreneurial and white-collar class, but the truth is more sinister.
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South Africa has some of the lowest number of entrepreneurs per graduates in the world. I can't explain this phenomenon fully, but what I can explain is that as someone who experienced food insecurity, the notion of earning a salary that could feed a family of four is extremely enticing. Exaggerating the issue is that corporates are also absorbing most of the best talent that would also be divvied up between themselves, the state and entrepreneurship.
Instead, the only professional class that sees state work as desirable are lawyers and economists - who choose the Treasury over Mckinsey. This leaves almost every other skillset to choose corporate over the state and entrepreneurship. As a result the state is left with the dregs of our intellectual class, further compounding the erosion. Smart people make smart decisions, unambitious people do not. And the latter is currently saturating the state's employment rolls.
Allowing this situation to persist will result in less capital going to the state which will result in less capacity to provide critical services to the most vulnerable in our society.
This trend cannot be reversed unless we see a drastic improvement in governance and execution. The state cannot manifest this; therefore, we need to look towards a seminal model wherein the state acts as regulator and referee but not executor. And execution by private organisations should come with massive rewards for success and massive penalties for failure. This would ensure critical services are delivered and that our society can develop and kick start growth.
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Rejecting the current system and looking for bold new solutions that eliminate highly exploitative practices like race-baiting is our only solution out of this mess.
South Africa is a complex and challenging country. However, it has the revolutionary potential to kickstart not only an entrepreneurial but also a political revolution. Revolutions that look past new options in the current framework and choose a new one altogether. We don't need a different black political party, we need to get rid of traditional representative democracy altogether!
This tragedy is the ultimate opportunity for us to reorganise the great nation of Azania and choose a future that escapes traps around ethnicity and race and forces the best of us to work towards an inclusive, accountable state that creates programmes that are good in principle not good on political campaigns.
Let's build the future!
- Roy Mathieu Borole is an entrepreneur, aspiring writer and novelist. You can visit his site here.
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