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There is hope for SA yet – BBC’s Sandile Zungu

Black Business Council president discusses matters addressed at the body’s annual summit, including the fragile SA economy and cutting the wage bill.

NOMPU SIZIBA: The Black Business Council held its annual summit today [March 4, 2020]. It’s happening over the next two days, and of course conversations around transformation and how to get ahead in a difficult economy continue to be pressing issues for this business body, among other issues. The summit had heavy-hitters in attendance, including the Deputy Minister of Finance, David Masondo, who gave the keynote address, Mohamed Shameel Joosub, the CEO of Vodacom, and Irene Charnley, the head of Smile Communications – and many other prominent black business people.

To find out more about the summit, and what hopefully can come out of it, I’m joined on the line by Sandile Zungu, the president of the Black Business Council. Thanks very much, Mr Zungu, for joining us. What were the key themes on the summit’s agenda today?

SANDILE ZUNGU: Thank you so much for having me here. The key things? One was to see how South Africans can take full advantage of the opportunities that come from the African Continental Free Trade Agreement. This was one of the last sessions today.

The session that was addressed by minister…… who was dealing with the frustrations that black professionals, in particular, are experiencing in state-owned enterprises, as well as definite private sector and academia – a very insightful session indeed, comprising at least three professors, some who have written books on the subject matter.

There was a very good discussion earlier on basically how the budget, with some of the off-the-wall kind of ideas, such as a state bank, the sovereign wealth fund, could leverage a call to different black participation in the economy, as well as free the potential of SMMEs who are crying about access to capital, access to markets, as well as poor payment by their own debtors.

NOMPU SIZIBA: The Deputy Finance Minister, David Masondo, gave the keynote address, I understand, and he was quite candid about the country’s debt situation – that South Africa is likely to have to borrow several billion rand in the new fiscal year, noting that most of the country’s borrowings are not for things that will get the country productive, but rather paying down more debt and paying wages. That must have been quite a concern to you as business.

SANDILE ZUNGU: It is an absolute concern. The income is about R1.6 trillion; the expenditure is over R1.9 trillion, and the budget deficit in excess of R300 billion, which must be borrowed. He explained the effects are there for themselves to be seen, that most of that is going towards paying off interest on debt. And some of it is going towards the very bloated wage bill, which is something that the minister addressed.

So it was of great concern to us that we’re not investing in infrastructure which will create productive capacity for us to create employment and support the economy in future.

So yes, those are some very concerning features of the budget. But we do appreciate that we are all in this crisis together. A stretch for solutions must come from all of us together.

NOMPU SIZIBA: So where do you stand on National Treasury and, by extension, the government’s announcement that they need to rein in the public sector wage bill, which labour has categorised as “war”, provocation of war. How can the government do this in a sensitive manner without too many people losing their jobs, especially because we know that in the public sector we actually need more people, we need more teachers, more doctors, and so on and so forth – getting that balance right.

SANDILE ZUNGU: We need more of everything, but cannot afford more. What we as the Black Business Council, quite frankly, do not support, is government reneging on a three-year deal, on the last year of the three-year deal. But the government’s commitment was to taming the wage bill for the two years beyond that, something that enjoys our support.

Whether they will achieve all of the R300-plus billion in terms of savings, in two years – let’s wait and see. But the commitment towards managing that wage bill is something that is noble, that is worthy of our support, and we do support it.

NOMPU SIZIBA: You touched on the SME sector, and often people who represent the SME sector talk about how they’re overlooked. But of course we do have triple-BEE legislation, which speaks to procurement from SMEs and other issues. In your mind, is the legal framework sufficient – or is that not the problem but more the implementation thereof?

SANDILE ZUNGU: Well, in the case of SMME support, we think both implementation and the legislative framework are inadequate. Take, for example, the PPPFA [Preferential Procurement Policy Framework Act]. As black business and SMMEs in general, we lament the fact that the PPPFA – which is the reigning legislation if you want to do things with the state – gives very little weight to empowerment considerations. It’s very heavy on price.

What that really means is that, if you are a multinational, or if a foreigner wanting to dump your products in South Africa, because we are using capital in your country of domicilium which has been written off, or basically depreciated over years, you can compete in South Africa with locals who are battling all the ills that you know about, and who want to create local employment, who are committed to industrialising the economy. It’s an irony that you want to create jobs locally, but you are using your own legislation of South Africa, exporting the very same jobs.

So, from a legislative point of view we’re very supportive of government doing away with PPPFA. And there is now a public procurement bill, which is open for public debate. We as the Black Business Council are very excited about that. So, when it comes to implementation it’s simple. The regulations are there – pay SMMEs on time, but they don’t. Why? They want to solicit bribes from SMMEs before they can settle their invoices. It is wrong, ethically and morally wrong. So SMME support in South Africa is inadequate on both fronts.

NOMPU SIZIBA: I wanted to ask you – the issue around skills. Do you think there’s a level of myth that there aren’t the skills in South Africa, because we often hear that? And on top of that we’re also hearing that it’s not just white skilled professionals who are leaving South Africa because of the economic situation here, but black ones as well.

SANDILE ZUNGU: Well, when it comes to skills there’s a mismatch between what industry needs, and what institutions of higher learning are producing. It is an established fact. That’s why when Doctor Nzimande, the Minister of Higher Education, Science and Technology, came to talk to us, he said he wants to work much more closely with the Black Business Council so that we can also serve on the governance structures of those institutions of higher learning, to see how we can assist them in choosing the curriculum that talks to our needs as industry.

NOMPU SIZIBA: Yes.

SANDILE ZUNGU: And when it comes to the flight of skills from South Africa, it is common cause that many people are worried about the direction we are taking. Many black professionals who are members of the BBC all pledged to be part of the solution. They pledged to be the last to switch off the lights if it means just that. So we are not in any hurry to leave South Africa. We will sort this thing out while we remain here. Those that want to leave, we will persuade them to come back at some stage.

NOMPU SIZIBA: It is home, after all. Thanks so much. Mr Zungu, for your time.

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We are one South Africa. There should be no BEE and no Black Business Council or White Business Council. Scrap the thing and work with one flag.

You are competing with the world and not each other. Its madness!

Yip. I wonder what would happen if someone starts a White Business Council.

I remain perplexed at how a certain race group has no problem congregating based on race (e.g. Black Business Council) yet flies off the wall when any else dares to do the same. There is a lack of self-awareness in this country that borders on the bizarre. I say all race-based groups be banned with immediate effect or the Non-Black Business Council that supports minorities starts tomorrow.

End of comments.

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