Could CEOs be transformation saviours?

It was just over a year ago in a snowy Davos street that a group of South African CEOs had a chat with Finance Minister Pravin Gordhan about the possibility of working together to ward off the threat of a ratings downgrade.

They were at the World Economic Forum and in their separate meetings had been trying to reassure investors, many of whom were so appalled at the 9/12 “Nenegate” debacle that they were no longer interested in talking to SA at all.

Nedbank CEO Mike Brown and the bank’s chairman, Vassi Naidoo, were part of that small group, which is how it happened that Nedbank provided the venue for the January 29 meeting at which about 60 leading CEOs met Gordhan and his team.

What they discussed — contrary to the Guptas’ allegation that they conspired to cut off the brothers’ bank accounts — was a joint initiative to save SA from junk status and find ways to unlock investment and boost growth.

One year on, the CEO Initiative remains an informal network, but it has more than doubled its original membership and has consolidated into four work streams in which an extraordinary amount of senior business brain, time and money has been invested.

The ratings team, working with labour and the government, helped to maintain SA’s investment grade ratings in June and again in November/ December. A new small and medium enterprise fund has been established, with big business putting in R1.5bn to fund potential job creators.

A new Youth Employment Scheme is being set up which aims to create 300,000 new internships a year, funded jointly by business and the government. The fourth workstream is looking at how to stimulate investment in eight key sectors.

There was talk of a fifth stream in higher education, where big business is already partnering with the government to solve national problems, but the feeling was that project was doing fine on its own.

But one year on, there is a strong sense among the CEOs, with some aided and abetted by Gordhan, that they need to shift focus from merely preventing a downgrade to actively improving SA’s ratings via inclusive growth — and economic transformation.

In the context of the Gupta-inspired narrative about “white monopoly capital” and the Zuma faction’s push for “radical economic transformation”, the CEO Initiative, which had a quarterly update with the minister this week, is clearly trying to reappropriate the language of economic transformation to make it about transforming the economy so everyone can share in the benefits, rather than about transferring wealth from one elite to another.

Business Unity SA, which is a broader business church than the CEO Initiative, is doing the same, talking about its pivotal role in broad economic transformation and pointing out that this is about inclusive growth that tackles poverty and unemployment.

This is all quite odd, in a way. Big business is the last interest group you might expect to be talking transformation — and aspiring to act on it. But in SA’s increasingly poisonous political context, with the economic damage that’s being done, someone has to.

Nor is South African business alone: this year’s refocus is very much in line with the 2017 Davos narrative. CEOs everywhere are worrying about the rise of populism and the growing sense of exclusion many people feel as the inequality gap widens.

But there is a recognition in the CEO Initiative that the new focus is not just a matter of language but is about big business showing its commitment to inclusive growth through its work.

Achieving that will be just one of the initiative’s big challenges this year. It will not only have to get the small business fund and youth employment schemes up and running, along with one or two investment projects, but will have to show these can have a meaningful impact on jobs and growth.

It will have to do that in a context in which President Jacob Zuma and his cabal have accused Gordhan and the Treasury of blocking “radical economic transformation” — a context in which government departments can’t exactly be relied on to go along with more inclusive notions of transformation espoused by the CEOs and Gordhan.

There have been some delicate negotiations to get some of the initiatives to happen, and more often than not it’s the private sector that is driving, and paying for, these partnerships.

But perhaps the biggest immediate challenge for the CEO Initiative is simply ensuring it doesn’t get sidelined by a president who makes the right noises about business and investment from time to time, but is fundamentally hostile.

The CEOs, rightly, are looking to build for the longer term. But the immediate ratings threat they came together to fight has by no means gone away. Nor will it, as long as some of Gordhan’s Cabinet colleagues keep blocking investor-friendly reforms in areas such as mining, or visas or state-owned enterprises.

ONE YEAR ON, THE INITIATIVE REMAINS AN INFORMAL NETWORK, BUT IT HAS MORE THAN DOUBLED ITS ORIGINAL MEMBERSHIP