SA businesses the lungs of the economy

Back in August, Business Leadership SA (BLSA) launched its #Business Believes campaign in Alexandra, just outside Sandton.

We published our contract with South Africa, where business pledged to do all that it could to further various social objectives which link business and society, including job creation, investment in people, communities and small business, promoting black leaders and combating corruption.

This week, we published research that quantifies the economic footprint of BLSA’s members in SA. It is not a definitive assessment of business’s contribution to the economy as it only focuses on BLSA members (57 out of 73 participated in the survey) and does not include the many thousands of small, medium and micro-enterprises and informal businesses which play a critical role in the daily life of the economy and society.

Nonetheless, it provides an important reminder of how large businesses are the lungs of the economy, the critical drivers of economic activity which determines the standard of living people enjoy in the country.

Some of the key figures show that in 2016, BLSA members:

Were the largest direct

● contributor to the South African economy, creating output of R1.9trillion, 1.2 times budgeted government expenditure;

Contributed 36%, or R431-billion,

● of total taxes collected in SA;

Employed directly and in their

● supply chain around 3.3 million people or 23.5% of total private sector employment;

Spent 67% of their total

● expenditure, or over R1-trillion, on goods and services from suppliers;

Contributed 39% of the country’s

● fixed capital formation, which is the investment that underpins future production.

These are very important figures. They tell a story of a significant business sector. They describe a

‘ ‘ The country has generated many firms that compete successfully on the world stage

business community which is a critical national asset and an answer, not an enemy, to South Africa’s development aspirations.

And they remind us that the main contribution of business to helping the country develop lies in capably performing its core roles of paying taxes, providing employment and promoting inclusive economic growth as enshrined in the National Development Plan – the economic vision of the country.

Business performs this role by developing products and services that meet consumer needs in a manner that generates a profit, the critical ingredient of sustainability.

SA’s aptitude for business is proven by the fact that the country has generated many companies that compete successfully on the world stage. Examples include SABMiller, Mondi, Sasol, Discovery and Investec. You cannot say the same of many economies that are much more developed and larger than South Africa’s.

In recognising the strength of the business community, we must also accept that the country is not capitalising on this strength as it should. The country grows poorer as the economy continues to grow below the rate of population growth. That is why it is so critical that business works with the government to create a policy environment that develops confidence and encourages investment through legislative and regulatory certainty.