An ac­tion plan needed to restore cred­i­bil­ity

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW - Pa­trick Bracher

The des­per­ate need to cre­ate jobs is be­ing frus­trated by the bur­dens of over-reg­u­la­tion

BUSI­NESS Day’s front page re­port of the June 6 speech by Re­serve Bank Gover­nor Gill Mar­cus, high­lighted an im­por­tant point. We are fac­ing, she said, chal­lenges of cri­sis pro­por­tions that re­quire a co-or­di­nated and co­her­ent range of pol­icy re­sponses that are largely be­yond the scope of mone­tary and macro­pru­den­tial poli­cies alone to deal with. It needs strong and fo­cused lead­er­ship from the top.

News re­ports on the same day il­lus­trate the point. In the face of the need for what she called “clear ac­tions to sta­bilise the labour re­la­tions en­vi­ron­ment”, the govern­ment an­nounced an ir­ra­tional ban on all labour broking, which is likely to have a se­ri­ous ef­fect on un­em­ploy­ment. At the same time the fin­ger-point­ing Marikana in­quiry is un­likely to solve any­thing. The le­gal costs in­curred on this in­ef­fi­cient process would keep the fam­i­lies of the de­ceased min­ers in lux­ury for the rest of their lives.

The so­cial ben­e­fits of the lat­est plan to re­open the right to make land claims would be eas­ier to un­der­stand if the ex­ist­ing process had been an un­qual­i­fied suc­cess. More than 15 years af­ter the process be­gan the lack of per­son­nel and fi­nan­cial re­sources and the ab­sence of a ra­tio­nal, co­or­di­nated plan have seen many land claims un­re­solved, with lit­tle hope of the govern­ment find­ing the money to fin­ish what has been started.

The des­per­ate need to cre­ate jobs by pro­mot­ing com­pe­ti­tion and en­cour­ag­ing busi­ness is be­ing frus­trated by the bur­dens of over- reg­u­la­tion. In the in­sur­ance in­dus­try the new sol­vency re­quire­ments that are on the ta­ble will in­evitably lead to less com­pe­ti­tion in the mar­ket­place. The re­quire­ments are struc­tured in such a way that smaller in­sur­ers and mono-line in­sur­ers (for in­stance an in­surer pro­vid­ing a sin­gle line of in­sur­ance) will find it dif­fi­cult to main­tain their in­de­pen­dent ex­is­tence.

The mar­ket has al­ready seen one an­nounce­ment of a merger in the in­dus­try and there are many more to come. At the same time, in­de­pen­dent bro­kers are choos­ing to rep­re­sent a sin­gle in­sur­ance com­pany. The bur­den of reams of com­pli­ance laws is fast over­tak­ing the in­ter­ests of the in­sur­ing pub­lic.

The per­ceived fail­ure of the ex­ist­ing credit laws has led to a call for yet more laws cou­pled with the age-old cry for debt for­give­ness and ex­pung­ing bad credit records, as if mak­ing it eas­ier to in­cur more debt will some­how help. At the same time, pro­pos­als to make it more dif­fi­cult to bor­row money will not drive the des­per­ate to a new­found fru­gal­ity. It is more likely to drive them to un­reg­u­lated lenders or to des­per­a­tion and so­cial un­rest.

There is no doubt that reg­u­la­tions are needed, that cus­tomers need to be treated fairly and ex­ploita­tion of the pub­lic needs to be stopped. But it needs, again in the words of Gill Mar­cus, a co-or­di­nated plan of ac­tion be­cause this will go a long way to restor­ing com­pe­tence, cred­i­bil­ity and trust in the South African econ­omy.

Pa­trick Bracher is a di­rec­tor at Nor­ton Rose Ful­bright.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.