The urgent need for a Vision 2030 and a relentless focus on being world class

The urgent need for a Vision 2030 and a relentless focus on being world class

A recent regional talent summit co-hosted by Accelerate Cape Town heard that around the world people are increasingly choosing where they want to live before looking for a job.  Often, if they can’t find a job where they want to live, they will create their own.  This may be one of the reasons why a recent international study found that Cape Town, a place characterised by great lifestyle, ranks 14th out of 34 cities in entrepreneurial activity, and why the city’s Early-Stage Entrepreneurial Activity is a massive 190% greater than South Africa’s national average.

However, for the creative, talented individuals that this city region needs, the world is a small place indeed. Global skills shortages ensure that they can go pretty much wherever they want to, whenever they want to, and they know how much in demand they are.  Where they choose to go is, of course, usually somewhere where they feel that they and their children will have a bright future.  These highly mobile people will generally avoid places that are perceived to have an uncertain future. 

That is one of our city’s biggest challenges in competing with places like Boston, Beijing and Barcelona for the world’s best talent.  We have no shared vision of what we intend our economy to be characterised by in the future, and we do not have a clear and commonly agreed upon strategy of how we will become a leading global business destination over the next twenty years.

This is why Accelerate Cape Town is in the process of rolling out a project called Vision 2030.  Vision 2030 was born out of the wish by a group of business leaders in the region to turn the Cape into something that we refer to as the Southern Tiger; a region characterised by high, inclusive and sustainable economic growth, comparable to the Celtic Tiger of Ireland or the Asian Tigers of South-East Asia.  Vision 2030 will canvas the opinions of a broad range of leaders in the Cape Town city region, aiming to come up with an economic vision for the next twenty years, as well as a strategy for developing the key economic sectors that we must focus on to drive the required growth.

The focus on specific sectors with the promise of future growth is a core part of any vision, and it is something that has not happened nearly enough in the Cape.  Government still seems determined to revive the terminally ill clothing sector, at the same time as creating sixteen Special Purpose Vehicles that aim to encourage other sectors as diverse as IT, furniture manufacture and boatbuilding.  No-one can be reasonably expected to become world leaders in 16 different sectors.  Singapore, for example, has always focused on 2 or 3 at a time – first it was shipping and oil refining, then hi-tech and financial services, and now biotechnology and nanotechnology.  Their other industry sectors have also differentiated themselves on these industries; for example some of the best legal and accounting advice for the shipping industry can be found in Singapore.  And today Singapore’s universities are completely geared up to provide the best brains for the biotech industry.

Without wanting to cut off support to the 16 job-creating sectors, we simply have to identify 3 or 4 winners that will position us internationally as amongst the world’s best and lead the economy from the front.  Once we’ve identified them we must get all stakeholders – investors, educational institutions, parastatals, Home Affairs, the media and so on – to create the skills, infrastructure, policies and self-belief that enable us to lead the world in these winning sectors.

Currently our only world-beater is tourism.  That sector has done very well, but we have become completely seduced by it in the Cape, hoping that it will provide for all our needs.  Alone it will not, particularly as it is highly seasonal and very susceptible to international shocks such as terrorist attacks and fuel price increases.  One just has to look at how the economies of Egypt and Kenya suffered after the 9/11 attacks in New York.

Tourism must continue to be developed as aggressively as possible, especially with the 2010 World Cup coming, and it must be enhanced by growth in international conferences and other business travel.  But we must also identify two or three other winners to focus upon, particularly winners that create jobs for people with low-, medium- and high-skill levels.  Vision 2030 intends to tease those out. 

Without wanting to pre-empt the results of this project, which will be completed towards the beginning of next year, I would like to suggest a few other sectors in addition to tourism that could take us into the arena of world class cities.  These are oil and gas services, business process outsourcing and financial services.  This is a first stab for the purposes of the debate, and I am fully aware that there are other candidates that could qualify, such as advertising, film, IT and renewable energy.

The oil and gas industry on the west coast of Africa is growing at breakneck speed.  Angola, virtually next door, has now become Africa’s biggest oil producer, while other countries on the Gulf of Guinea grow their economies in double figures.  It is estimated that by 2015 around 25% of US oil imports will come from Africa. Currently most rigs and other vessels operating in the region head for ports like Houston and Singapore to be refurbished and repaired.  Cape Town and Saldanha are receiving increasing numbers, but nowhere near as many as we should considering our obvious geographical advantage.  Each rig or vessel creates hundreds of manual jobs, often for months at a time.  For this sector not to grow at the same speed as the west African oil industry would be a missed opportunity of monumental proportions. 
We must combine our thinking and actions to promote the region as a world leader in oil and gas services, overcoming constraints like a lack of skills and a complete lack of transparency by harbour authorities (Transnet National Port Authority) around leases, contracts and future plans.  And industries supporting this sector, such as financial and legal, must grow their skills base too; there are enough people with experience in the oil industry kicking around Cape Town after the departure of the Shell and BP head offices to Johannesburg to make this possible quickly.

Business process outsourcing (BPO), including call centres, is currently growing strongly, in spite of challenges like high telecommunications costs and lack of bandwidth.  Since 2005, employment in the sector in Cape Town has grown by more than 20% a year.  Moreover, the sector continues to grow worldwide; the global market for outsourcing and managed services is expected to grow at 4.7% a year between now and 2012, to reach US$402bn.  Much of the local growth has been driven by the arrival of large international outsourcing companies such as JP Morgan and TeleTech, as well as the consolidation of the back office operations in Cape Town by companies such as Shell and BP.  The industry can act as a good alternative to the clothing sector that has lost so many thousands of jobs, especially for employing large numbers of women and people with mid-level skills. The Cape has higher literacy levels and matric pass rates than elsewhere in the country, and therefore should be able to offer the skills required.  However, we do need significantly more skills, bandwidth and incentives to continue this sector’s growth.  Showing real commitment to it, as opposed to the current “me too” status that it has alongside its peer sectors, will help us to be considered a serious contender against the usual suspects over the next two decades.

Financial services, particularly in insurance and asset management, have long been significant in the Cape economy, but recently the industry’s attentions have been straying north.  The relocation of Old Mutual’s head office to Johannesburg is an obvious example, but other problems challenge its long-term viability, particularly the inability to attract and retain the best finance professionals (especially black professionals).  Cape Town is considered far too often by these “gold collar workers” as a fishing village and tourist destination, and not enough as an international financial hub.  Nevertheless, we can certainly take on the likes of Boston, Edinburgh, Bermuda and Hong Kong as a place where decisions about the international allocation of capital are made.  We can start by positioning our universities to provide the best financial training in Africa.  We are already home to one of the top business schools in the world; why does it not offer an internationally lauded Masters in Finance?

None of this is rocket science, of course.  Tourism, oil and gas services, BPO and financial services are already established sectors in the Cape, and the Provincial government has included all of them in their economic development strategy. Tourism, oil and gas and BPO even have their own agencies promoting them.  The difference, however, is that there is currently a lack of real commitment across the board in the Cape to becoming truly world class in this limited number of sectors. 

By creating a powerful economic vision and relentless focus, we can definitely drive sustained, high, inclusive economic growth over the next twenty years and position Cape Town as an international business destination, otherwise known around the world as the Southern Tiger.