How to grow and also to transform
Gordhan has pointed the way, now all the role players need to follow
SOUTH Africa is at a crucial junction. The collaborative efforts of business, government and labour in 2016 helped the country preserve its crucial investment-grade credit rating. Yet we remain stuck in a low-growth phase that makes it difficult to lift millions of people out of poverty.
The South African economy needs to grow. It also needs to transform.
The transformation agenda must simultaneously seek to further deracialise the economy, enable the economy and businesses to thrive and ensure that the economy can create employment for the 6 million people looking for work today.
It is in all our interests that we have a growing and deracialised economy. In my work with Business Unity South Africa, Business Leadership South Africa and the CEO Initiative, I can vouch that leading businesses understand this imperative and that they are committed to an economy that works for all South Africans.
This is why we support Finance Minister Pravin Gordhan’s balanced budget and his clear and uncompromising articulation of inclusive growth and transformation as inseparable and mutually dependent.
Deputy Finance Minster Mcebisi Jonas put this in context when he asserted that “growth without transformation will exacerbate inequality, leading to increasing social tensions and providing fertile ground for the rise of populism”.
“Transformation without growth will be accompanied by disinvestment, rising unemployment, less wealth and fewer assets to redistribute,” he said.
We agree that sound public finances, the strength of our financial institutions and investment-grade credit ratings are vital for an inclusive, transformed and thriving economy. This will build confidence, make our debt manageable and enable businesses to employ more people and pay more taxes. In turn, the government will be in a better position to extend and improve services to the poor, build infrastructure and create more opportunities for black entrepreneurs, making black economic empowerment more sustainable.
Business is serious about this inclusive economic vision. Last year, through the CEO Initiative, business leaders launched a R1.5-billion fund to support small and medium enterprises whose growth will increase employment.
Business leaders are also working with the government and other stakeholders on the Youth Employment Service (YES) programme, which is designed to provide job experience to a million economically marginalised young people by the end of 2020.
There are also strategic interventions supporting black participation in agriculture and other sectors.
We are encouraged by the government’s intentions to build on the successful dialogue with business and labour to map a path for inclusive growth and transformation.
The partnership has had tangible wins on difficult issues like the national minimum wage and labour reforms. Thanks to the partnership, Team South Africa has held the centre as seen in the currency strengthening from a high of close to R17/$ in 2016 to current levels of around R13/$, maintaining our investment-grade rating and ensuring fiscal consolidation.
We welcome the Treasury’s attempts to reduce debt servicing, which, unless stemmed, will erode the state’s ability to deliver more services. We cannot have more revenue diverted to paying interest, with less available for education, housing and healthcare.
Unless we are able to kick-start economic growth, our ability to deliver a better life will be hampered. We cannot look to the national budget to solve our economic difficulties.
For economic transformation to succeed, we must create investor certainty, ease the regulatory burden on small businesses, accelerate private investment in the energy sector and introduce bolder actions to improve education and skills development.
We welcome the call by the government to increase private-sector participation in areas dominated by public enterprises. We also welcome the call for a more open and competitive economy, and look forward to engaging with our partners in labour and the government on how best to achieve this.
The governance and balance sheets of state-owned enterprises (SOEs) must be addressed. Of concern are the “systemic SOEs”, which include Eskom, Transnet, the South African National Roads Agency and Airports Company South Africa.
Poor governance and weak balance sheets of entities at the core of our economy result in contingent liabilities. Experienced, strong and independent boards with a clear mandate are vital.
We need political stability and a focus on restoring the credibility of state institutions such as SARS, the Hawks and the National Prosecuting Authority.
We must maintain the rule of law and uphold the constitution. We must stop introducing opaque laws and shifting the regulatory goal posts. This discourages investment. This lack of predictability has weakened mining, caused thousands of job losses and stifled investment.
We need to build a professional, capable public service that prioritises delivery.
South Africa has shown since democracy that it is capable of rising to the occasion — we tripled the size of our economy, delivered millions out of poverty and created a strong black middle class.
We must rededicate our commitment to conditions for inclusive growth. That requires will and creating the conditions for investors to have faith that South Africa represents a great place to invest.
This is not possible if influential elements of society remain openly hostile to business.
The government, labour and business must build on our success in the CEO Initiative and Nedlac. We must build a social compact on the Charter of Economic Rights described by Gordhan.
Mabuza is president of Business Unity South Africa, chairman of Business Leadership South Africa and co-convenes the CEO Initiative
[Growth] is not possible if influential elements of society remain openly hostile to business