ANC foolish not to heed decline in business confidence

The state of the economy is a direct reflection on the state of the relationship between the government and business. A good relationship between the two is SA’s only hope to navigate the negative effect of the recession and multiple downgrades.

Maybe this is exactly what prompted Finance Minister Malusi Gigaba to say that he wanted to meet business urgently. He started off on a bad footing by rushing to the US on his own and leaving business behind.

A majority of business leaders have ceased to be diplomatic and have now put it in writing that they believe the government is mismanaging the economy.

The combination of reckless decision-making fuelled by state capture; policy uncertainty exaggerated by a policy-on-the-go tendency; and mixed messages about radical economic transformation and inclusive growth have birthed a total loss of business confidence.

You can’t really seriously talk of growth in the current negative trajectory represented by the recession and other terrible economic indicators announced by Statistics SA last week.

This situation will eventually be resolved by a change in the government, one way or another. Business’ attitude points investors in this direction because nothing they have uttered so far gives the global community confidence that the government— which does not even enjoy the confidence of all of the ANC’s leadership — will improve and stabilise the economy.

Even the best of optimists are baffled by how the high echelons of the ANC’s leadership are clueless about what running a sophisticated economy means, evidenced by the careless manner in which some reacted to the downgrades by ratings agencies. To his credit, Gigaba distanced himself from banal utterances by the likes of Water and Sanitation Minister Nomvula Mokonyane.

The suspicion that the Treasury is under the influence of the Gupta family can’t be solved by a charm offensive by Gigaba to white or even black business. Business has made it clear that, given the recent allegations of wide-scale corruption and state capture, only a commission of inquiry can clear the air.

But President Jacob Zuma is not in a hurry to have such a commission. This is delaying tactics by someone who is the prime suspect in state capture; the allegations are splashed all over the newspapers; it is in the South African Council of Churches unburdening report and in the state of capture report by the public protector.

This represents a deadlock. Business will remain sceptical despite being polite in a meeting with Gigaba. While the government will pretty much keep its heads in the sand, business wants a judicial commission of inquiry.

To add salt to the wound, the ANC leadership says such an inquiry must date back to God-knows-when. Another signal of its lack of seriousness to get to the bottom of allegations that suggest the governing party has lost control over its deployees in government.

This cocktail of happenstance means that there is political instability — always a red flag for investors. Even if you are not alarmist, you can’t ignore a double downgrade, a weak rand, a recession and corruption allegations on the front page of almost every newspaper.

By not taking the loss of business confidence seriously, the ANC is ignoring these disasters and no amount of sloganeering in an attempt to spin the narrative of radical economic transformation will set SA on the correct path. After 23 years of policy inertia, you cannot solve much by introducing a new slogan.

The ANC will have to face this sociopolitical reality at its policy and elective conferences. If it emerges from them with a business as usual outcome instead of dramatic action, the economy is set to take a further beating and the triple ills of inequality unemployment and poverty will only get worse.

THIS COCKTAIL OF HAPPENSTANCE MEANS THAT THERE IS POLITICAL INSTABILITY — A RED FLAG FOR INVESTORS