Mavuso: why is doing business even harder?
Doing business in SA is fraught with difficulties which are not made easier by the fact there is resistance in government to implementing the necessary reforms, Business Leadership SA CEO Busi Mavuso says in her latest newsletter.
Improving the business environment was critical for companies to grow and create jobs, but the difficulty for President Cyril Ramaphosa was that many in his government did not want to deliver the changes necessary, she said.
“Whether out of ideological resistance or vested interests in the status quo, resistance to implementing the necessary reforms is a problem all over government. The presidency’s Operation Vulindlela is an effective intervention to push forward reforms and make sure they actually happen, but the president’s [state of the nation] speech is often strong on imagination but then strong on stagnation when it comes to translating vision into reality.
“Ultimately the president needs a cabinet that shares his reform vision and is committed to its swift implementation.
When reforms hit delays, it is often simply because decisions aren’t being made and bureaucratic processes are not being pushed forward. There can be many reasons for that, but a lack of political will at the top of departments often seems to play a role,” Mavuso said.
Doing business had become considerably harder over the past year, she noted. Among the problems were electricity disruptions, employment regulations, getting government to pay promptly, and a poorly performing logistics system.
Yet Ramaphosa’s state of the nation speech attached very little importance to improving the business environment, which Mavuso said had “sadly” disappeared from the agenda.
This was in contrast to his speech five years earlier, which made improving the business environment a priority. At the time, Ramaphosa pledged to reduce the regulatory barriers for small business and to work with social partners to build an ecosystem that supports and nourishes entrepreneurs.
“We’ve seen little from the president’s red tape unit. Even though it was established years
ago with the intention of smoothing the experience of businesses, it did not get a mention in the speech, even though two years ago the president prominently said the unit was set to ‘improve the business environment for companies of all sizes’.
“While some regulatory reforms have eased the burden on business, particularly the ability to install solar electricity with tax incentives, and for larger companies to build their own generating capacity, it has overall been getting harder to run companies. Skills have been harder to find, thanks to the weak performance of the education system and the loss of skills overseas,” Mavuso wrote.
Because of visa difficulties, businesses that tried to hire skilled foreigners faced many months of delays. “There are backlogs of thousands of applications sitting at the department of home affairs that are simply accumulating,” she said.
She also highlighted crime and corruption as another worsening challenge for business, with construction mafias and business forums extorting businesses across the country. “These are a serious cancer spreading through the business environment that requires concerted attention between business and government.”
A substantial improvement in the performance of crime intelligence, investigations and prosecutions was urgently needed, whereas Ramaphosa, while highlighting crime and security as a key priority, only focused on boosting police numbers.
Crime is one of the work streams, along with energy supply and logistics, in which business is working with the government.