Little can be done to drive an economic recovery without a clear understanding between business and government. So last week I joined other business representatives in a meeting with the president and his senior colleagues to discuss what is needed to get this economy back on track.
I’m pleased to say there is close alignment on diagnosing the problems. The president is clearly focused on the issues that constrain business from investing, ranging from the red tape that increases the costs of doing business to the structural reforms we have often highlighted as crucial to improving the functioning of the economy.
Of course, implementation is what really matters, and on that I have both appreciation for the president’s focus on getting things done through mechanisms like Operation Vulindlela but also some sympathy for the challenges that stand in the way of certain reforms, from the skills that are available in the public sector to the political blockages erected by vested interests.
I took away from the meeting that fixing the working of the economy must be a joint endeavour. The president gratefully acknowledged the resources that organised business has put into supporting the government in key areas where capacity is needed, such as through Tamdev, which has brought engineers, project managers and finance professionals out of retirement to fill important gaps in the public sector. But many of the issues that constrain reform require business to be active stakeholders in the way regulation and public services are provided. Spectrum is one such issue. Independent regulators like Icasa, which I have criticised in this column for not considering the needs of end users, are independent of government for good reasons. It is why the end-users affected, including business, should be making their case clearly to Icasa directly.
The management of the pandemic has obviously been important to the economy. An effective vaccination programme is very important to allowing the economy to fully reopen. I welcome the government’s move last week to adjusted level 1, making it easier for economic sectors like entertainment and hospitality. However, I’m concerned by the apparent slowdown in vaccination rates.
I think government has done well to get the programme working with good capacity – but not all South Africans have done as well to take advantage and get vaccinated. Vaccine mandates are one mechanism, as I’ve written before, that we all need to consider both to ensure workplace safety and to ensure greater take up.
The president is also rightly concerned about the unemployment crisis and he has devoted considerable effort to addressing it through his Presidential Employment Initiative. The president is rallying the whole government to confront it, strengthening its capabilities in key areas to be able to deliver.
Business is obviously the biggest employer and has a crucial role in dealing with the unemployment challenge. Growth, of course, is essential – businesses that are expanding are also going to be employing more. But we can work harder to increase the employment intensity of that growth.
Part of the red tape that the president wants to free businesses from must cover factors that make it difficult to employ people. There is also room for industrial policy that accelerates labour-intensive industries particularly. The business process outsourcing sector is a notable example that has been a good source of employment growth for several years. It shows what is possible if business and government work together to establish the right policy environment for success in key industries.
Of course, change is hard. Businesses know that well – it is the ultimate test of any manager. It is no less hard in the public sector. Engaging with the presidency is helpful not only to discuss the change we think is important, but also to understand what makes change difficult. That builds trust but also allows business to work on solutions that can support government.
The president’s efforts were complemented well by Finance Minister Enoch Godongwana last week when he gave an important speech on his policy objectives. These also strongly focus on improving the business environment to drive the economy.
The alignment is another positive indicator that government is focused on doing what is needed to get the economy growing. It helps support business confidence and faith that it is safe to invest into this economy. Of course, it is delivery and implementation of reform that matters, rather than plans, but we appreciate the efforts to deliver and see the way to success on many fronts.
We need to focus on fiscal and policy reform to ensure that our economic rebound from last year’s catastrophic collapse continues.
The COP26 international climate change meeting in Glasgow next month is a chance for President Cyril Ramaphosa to put SA back on the global map as a green investment destination.
It’s also a chance to kickstart his much-vaunted infrastructure plans. The first five years of our renewable energy independent power producers’ programme generated investment of R194 billion and procured 6 800MW of energy capacity.
Busi Mavuso is CEO Business Leadership South Africa.