Gordhan highlights role of economic institutions

Thursday, August 30, 2012

Johannesburg - Nations fail because they don't have inclusive political and economic institutions, Finance Minister Pravin Gordhan said on Thursday.

"Globally today from my experience it's very clear that unless the world and we in South Africa find or strengthen inclusive economic and political institutions we will have serious problems," he said at the Discovery Invest leadership summit in Johannesburg.

The shift in world economics meant that things should no longer be done the same way and that South Africa should learn critical lessons from the economic crisis that has crippled world markets since 2008, Gordhan said.

"South Africans have expectations; these expectations include a decent house, good schools and many other things. We can deliver all of those if we have the right institutions in place. When people see that something is changing in their lives they learn to be patient," he said.

The financial crunch in world markets had also exposed many fault lines. One of the serious problems elevated by this crisis was sharpening inequalities in societies.

"Also from what we witnessed, particularly in the European context, is that economic decisions have become more difficult particularly because leaders would be more concern on winning the next election as they make those economic decisions".

He weighed in on the "inability" of some leaders to balance national interest and global interests.

"The lessons of leadership for me is lack of recognition of what economist call spill over effects, in other words what this means is that the decisions made by one firm will have spill over effects on the economy and that also goes for the world."

The world, Gordhan said lacked pragmatic cooperation and that leadership in the global contest was seriously lacking at this point in time.

He said it was in that context that South Africa should learn a lot more to build on the lessons of its own past leaders. Leaders such as Nelson Mandela and Oliver Tambo had placed vision on top of everything they did.

"They taught us that sometimes you need to compromise to achieve your goals and really what is important from the lessons we learned from our own leaders is the question of having a vision".

He warned that one of the main challenges facing leadership in South Africa was fighting corruption.

"From where I stand and from what I see this a disease that our hospitals will not cure, it's going to require a moral decisions from us as South Africans so let us join hands with millions of honest people we have in SA to solve this problem, "said Gordhan to loud applause from an audience made up of mainly business people.

The world, he added, needed to fight greed "and the culture of consumption and the culture that says I want to be a millionaire now and I want to own an expensive car even if I can't afford it".

Other expected speakers at the summit included CEO of First Rand Group Sizwe Nxasana and former British Prime Minister Tony Blair.