No racial equality without growth
SA’s biggest companies believe they have the solution to the racial inequality that has riven the country since the end of apartheid a quartercentury ago: grow the economy.
SAs ’ biggest companies believe they have the solution to the race inequality that has riven the country since the end of apartheid a quartercentury ago: grow the economy.
The debate about integrating more black South Africans into one of the world’s most unequal societies is being thrust into the open amid antiracism protests sparked by the Black Lives Matter movement.
It also comes as the coronavirus pandemic exposes the divide between rich and poor in a country where white households earn five times more than their black counterparts, according to government data.
Lobby group Business for SA (B4SA) has urged President Cyril Ramaphosa’s government to prioritise a limited number of key projects in industries, such as in renewable energy, transportation, technology, agriculture, manufacturing and financial services, that will revive growth, create jobs and boost tax revenue.
Talks include the need to address ailing state-owned entities (SOEs) and shortcomings in the state’s capacity to deliver on its plans, according to Martin Kingston, executive chair of Rothschild & Co, who heads the business grouping.
“Inclusive growth requires an acknowledgment of what contributes to continued and sustainable growth. We believe that business is a primary driver of economic activity,” he said.
“We have to work in partnership with the government, acknowledging that its role is to oversee the economy and regulate, as well as to create the right policy environment and ensure that all social partners act together to achieve our economic potential.”
BEE has been the fulcrum of ANC policy since the movement came to power in 1994. It includes the transfer of company stakes to people from previously disadvantaged backgrounds and awarding contracts to businesses that meet black employment and ownership targets.
However, scorecard-led policies had led to a tick-box approach, said Lerato Ratsoma, MD of Empowerdex, an adviser on transformation.
“The impact has not been entrenched nor sustainable. The need to reimagine what transformational success would look like into the future is now.”
The Association for Savings and Investment SA (Asisa), which represents an industry overseeing R6.6-trillion in assets, is building a pipeline of future money managers by training more analysts who can develop into portfolio managers, according to a June report.
The number of black portfolio managers — which by Asisa’s definition includes coloured people, those of a mixed race, and of Indian descent — has increased to 29% from 26%, while 63% of investment analysts are now black from 51% in 2015.
The association was also helping small, black-owned businesses through a supplychain development programme, said Leon Campher, its CEO.
Power shortages, an education system ranked among the worst in the world, unreliable water supplies, crime and corruption, and a track record of poor service delivery hampered the progress that businesses can make, said Gwen Ngwenya, head of policy for the DA.
The economy, which has contracted for three quarters, has not expanded more than 2% a year since 2013.
Unemployment among black South Africans was 33.8% in the first quarter of 2020, compared with 8.1% for white people and an overall jobless rate of 30.1%. Inequality worsened since 2000, even as SA’s emergingmarket peers improved their income gap, according to the International Monetary Fund.
Drained by bailouts for SOEs, finance minister Tito Mboweni has had to redirect spending to cope with the Covid-19 pandemic. While he has often mooted the need for structural reforms to reboot the economy, he is faced with opposition from rival factions within the ANC and unions that oppose job cuts, the restructuring of SOEs and privatisation.
“It requires political courage and conviction,” said B4SA’s Kingston.
“Business does need to go further, but can only do that if we have a thriving economy.
“If all we’re doing is redistributing a diminishing economic pie, that will get us nowhere. We now need to kick-start and sustain high levels of inclusive growth,” he said.