Business must win friends and influence state
— Richard Calland and Lawson Naidoo
WAS it an illusion, a brief new dawn or a mirage in a desert of disillusionment? After the catalytic, if otherwise catastrophic calamity of “9/12” and the reckless and short-lived appointment of Des van Rooyen as finance minister, the government began the new year with a concerted drive to engage business and social stakeholders.
Led by a determined, experienced and pragmatic Pravin Gordhan, a series of meetings were held with business. For the first time in years, corporate SA felt its concerns were actually being heard and taken seriously by senior members of the Zuma administration.
Necessity is, they say, the mother of all invention. There is little doubt that the furious reaction of business leaders in December — echoing the disbelief of the nation, coupled with the recognition by Gordhan and a few key colleagues in Cabinet and in the African National Congress leadership of the damage done to the currency and the economic prospects of the country — was the main driver of the apparent new rapprochement between the government and private sector.
Let us be clear at the outset: it takes two to tango. The responsibility for managing the relationship well — so key to any working, modern economy — is a joint one. The private sector must be willing to take its share of the blame for the dysfunctional state of the relationship in the past seven years. In that time, the relationship between business and organised labour also deteriorated. The National Economic Development and Labour Council has become a pale shadow of what it once was.
This is not to say things were always entirely congenial prior to the Zuma years. Clearly, they were not. But business at least usually knew more or less where it stood with the Mbeki administration. Perhaps even more important, it knew who to talk to and how to organise its side of the conversation. Of course, there were flare-ups and flashpoints, but there were processes within which they could be managed.
As an apt example of this, it should not be forgotten that it was the Mbeki administration that in 2002 unilaterally, and with very little consultation, announced a black economic empowerment framework for mining companies wherein 52% of shares were to be black-owned. It was the equivalent of pushing a fox into an Nkandla chicken coop. The hens ran around without heads for a short period before the realisation dawned that this was, in fact, merely an opening offer.
A couple of months later, the government settled on a figure half as big: 26%. Since then, the mining sector — still an important prism through which SA’s economy is seen by international investor and emerging market analysts — has operated on the assumption that this figure of 26% was a one-off deal; that “once-empowered, is always empowered”.
The matter is now before the courts for a declaratory order with respect to this Min- ing Charter aspect. Nevertheless, and despite the new entente cordiale in the private and public sectors relations, that was the backdrop to the state of the nation address and the budget speech in February, Mineral Resources Minister Mosebenzi Zwane has again upset the applecart.
On April 15, he decided that the eve of the spring meetings of the International Monetary Fund and World Bank was the perfect moment to table a unilateral amendment of the Mining Charter that would vanquish unequivocally the “once empowered, always empowered” principle.
At the time, Gordhan was in Washington to promote his fiscal consolidation and structural reform initiatives. In the current climate, it is hard not to smell a rat. Was it not a deliberate attempt by some of his Cabinet colleagues, or their backers, to undermine Gordhan yet again? Let’s not forget that the Hawks dispatched their 27 questions relating to the “SARS probe” days before the February budget speech.
This is a recurring problem with the Zuma administration: the incoherence of its Cabinet. Because of a lack of decisive leadership, or a kitchen cabinet with the requisite skills and capacity to fill the void around the president, Cabinet ministers are invariably free to pursue their own agendas. Often, the left hand does not know what the right hand is doing, sending confused signals to business and potential investors. Rent-seekers have a largely open field too.
Despite these setbacks, the opportunity provided by the consultations this year have been promising: there were serious discussions about the need to remove regulatory obstacles, develop partnerships for infrastructural projects and harmonise labour relations. Task teams were set up and they are due to report back soon.
Dealing with the government is not without its pitfalls. It can be very tricky. But few businesses seem to understand that, in fact, many government ministers and their directors-general and key advisers are eager to talk to corporate leaders who are willing to do more than just whinge about the state of the country’s economy and the failings of the government.
The private sector needs to understand the environment in which the government operates, so that it can articulate realistically what it wants and needs from the government, and why, and how, in return, the private sector can offer something practical that can assist the government in achieving its goals and objectives. Corporate leaders need to be able to offer a convincing case to show that while they are entitled to expect government assistance in developing their businesses as a part of a growing economy, they also need to be able to show how their businesses will contribute to attending to the urgent social priorities facing the nation, especially unemployment. In short, they need to be able to articulate a clear “social purpose narrative”.
The current phase of South African politics — complex and erratic, and increasingly full of risk — requires dexterity as well as a fundamental commitment by business to engage and be prepared to accept legitimate outcomes. Most businesses are not willing to invest in the skills and the time commitment needed to build durable longterm government relations with different bits of government, and at different levels, and to develop a sufficiently deep grasp of the political environment.
The government’s propensity for sending out mixed messages must be understood in context; business needs to learn how to “read the tea leaves” and so decipher the true meaning. Businesses should not lose heart. On the contrary, the dynamic character of the political scene means there are many opportunities to reboot relations with the government.
Yet, like a marriage that is not only in trouble, but in which the two partners have lost the ability to use the language necessary to have a coherent, constructive conversation, both sides need metaphorical counselling to prepare them for a new phase. They need to recognise that they need professional help in refashioning a crucial, symbiotic relationship.
The early promise of the first part of the year must be maintained despite the faux pas of the Mining Charter announcement and similar setbacks. Things are going to get even more complex. It is in everyone’s interest that the government and the private sector keep talking and listening, and searching for solutions.
They need to … show how their businesses will contribute to attending to the urgent social priorities