The success of Operation Vulindlela – launched by the Presidency in partnership with National Treasury to implement structural reforms and support economic growth − shows how much can be achieved when government joins forces with the private sector. This raises the question: what is the role of business in South Africa’s economy? And how will it evolve?
These issues were recently debated by Business Unity South Africa CEO Khulekani Mathe and Phumzile Langeni, Deputy Chairman of Imperial Logistics, Executive Chairman of the Afropulse Group and, perhaps most importantly in this context, one of President Ramaphosa’s Special Investment Envoys, as part of a panel discussion. Chaired by renowned journalist Mandy Weiner, the panel was a highlight of the SAICA iN-FOR-Sight Summit.
In a keynote address which preceded the discussion, Mathe pointed out that South Africa’s narrative is so much more than crumbling infrastructure, logistics and transport. Indeed, the country is turning the corner, and since the introduction of Operation Vulindlela has seen improvements in energy, in the rail system and in its ports. What’s more, South Africa is currently on track to exit the grey list this year, and further advances are imminent.
One of the fact, it is equally important to acknowledge the steps taken to address them. This is one of the reasons international investors are hesitant to support our country, she informs: they want to know what solutions we propose to problems like loadshedding, the loss of institutions like the National Prosecuting Authority, and policy. ‘We have shown that we are capable of achieving great things when we appoint the right people to positions; but, equally, we don’t do this very often − we don’t support a meritocracy. Inconsistency is our Achille’s heel,’ Langeni maintains.
As much as foreign investment can help to grow the economy, the contribution of South Africa’s own private sector should not be underestimated: the sector pays more than R340 billion in taxes, and its support of legislation like BBBEE has resulted in material change, like the sustainable development of Black- and woman-owned companies. The sector also contributes significantly to talent development, without which there can be no economic growth.
There are also many instances where the private sector has facilitated transformation in its most real sense: fostering an economy that includes all South Africans. Langeni cites the telecommunications sector as case in point, noting that it has granted access to telephony for all South Africans, so that all feel they are part of society instead of hovering at its margins, while also nurturing innovation through services like ‘Please Call Me’ and mobile money. Government may have played a pivotal role in creating enabling policy and environment – ‘but business remained the bastion of innovation’.
In spite of such successes, Mathe admits that business’s role has not always been exemplary, and there are instances of corruption in the private sector, as well as in government, which have undermined its accountability. During the panel, he called for business to take a moment of self-reflection and to insist on proper governance.
Similarly, Mathe says that business has a duty to call out government when it suspects wrongdoing – even though this has earned the sector a reputation as unpatriotic. Mathe maintains that this is not the case at all, indicating that the private sector is eager to support South Africa’s positive narrative (especially if it may net foreign investment), but adds that its relationship with government does not preclude calling each other out when necessary.
He admits that the relationship between the two sectors is sometimes ‘antagonistic’ – but adds that this is not entirely fair. ‘Let’s use farming as an analogy: we are able to eat because of farmers’ activities, but farmers don’t produce food out of altruism. They want to make a profit, and food is the by-product.’
In the same way, business exists to make a profit – and the fact that this ultimately benefits the country and its economy is not entirely appreciated, as reflected by restrictive policies. ‘The majority of us just want to get on with making a living, but in South Africa we tend to legislate for extremes,’ Mathe comments.
Langeni, meanwhile, holds the view that South Africa is struggling to embrace capitalism as a form of economic progression that serves us. ‘Our bodies and entities should be enablers, not gatekeepers. You don’t build up a small man by tearing down a big man – you build them up by extending a helping hand. If someone is doing well, let us celebrate them rather than tearing them down, because this creates capacity for them to assist others on their way up.’
To ensure that the policies in place support this view, Langeni says that we need to make sure that the people holding the pen are the right ones. ‘It seems that the policy direction we take is sometimes about vanity, not doing what our society needs.’
She maintains that stakeholder engagement is critical, noting that in big economies, policy is typically drafted by government working with business – and when this happens, it becomes possible to address the real issues.
One of these issues, says Mathe, is the support of small businesses – because while big business in South Africa employs comparatively more people than its counterparts overseas, the real growth in this country will come from the informal sector.
The bottom line? Business may not always get it right – but without this sector, South Africa’s growth is likely to stagnate and stutter.
Author
Lisa Witepski
