Why transformation and tending to business is vital for a brighter future

As the country emerges from the Zuma era, the private sector remains the engine that can drive growth

For reasons that have to do with our past, the relationship between business and government in SA has broadly taken three different forms since the dawn of democracy in 1994. During the Nelson Mandela years, business was an enthusiastic partner that was immensely relieved that the country had made a peaceful transition from the period when SA was ostracised as an international pariah and had to contend with punitive economic sanctions.

Generally, therefore, business fell over itself to work with the Mandela government in an effort to redress some of the wrongs of the past.

All Madiba had to do was pick up the phone and dial the numbers of the captains of industry to get significant contributions made or pledged towards the construction of schools and clinics, for instance.

During the Thabo Mbeki presidency, strains appeared in the relationship for the first time. This followed the Mbeki government’s emphasis on transformation in general and black economic empowerment (BEE) in particular, and on the adoption of a strong African — as opposed to rainbowish — identity for the country. That was the era when the first version of the Mining Charter was concluded and various high-profile BEE transactions were completed.

However, even as he came down hard on business when it came to transformation, Mbeki appreciated the strategic importance of business when it came to job creation and economic growth and surrounded himself with some of the wisest businessmen and women, who served as his economic advisers.

Then, during the Jacob Zuma presidency a serious disconnect between business and government occurred for a variety of reasons, among them open hostility from the governing party towards business and the Zuma’s administration’s poor management of the economy.

In word and deed, business — such as educated black compatriots, who were labelled as “clever blacks” — was considered an enemy. Far greater emphasis was placed by the government on the public sector, particularly state-owned enterprises, as strategic levers to deliver on job creation and, subsequently, the creation of new black industrialists.

It was during the Zuma presidency that organised black business walked out of Business Unity SA, which had been formed during the Mbeki era, and established the Black Business Council.

Generally, then, business’s historic relationship with the government in SA has evolved as follows:

● from being fervent proponents, beneficiaries and enforcers of apartheid;

● to struggling through the lean years of economic sanctions in the late 1980s, during which some, such as Anglo American, began to review some of their policies and American companies operating in SA were forced by the Sullivan principles to embrace and even nurture black talent;

● falling in love with the “rainbow nation” dispensation of Nelson Mandela and the opportunities that it heralded, with most of the established big companies enthusiastically partnering with Madiba in their corporate social investment initiatives;

● accepting the imperative of economic transformation by implementing BEE policies and concluding some high-profile BEE transactions during the Mbeki presidency; and

● being sidelined and becoming disillusioned with the Zuma administration and, consequently, taking the foot off the transformation pedal.

The five periods show that the Zuma era was very much an aberration. Throughout the rest of the period outlined above, business was acknowledged as a strategic stakeholder, with not only a responsibility to obey the country’s laws, such as they were, but also with rights to articulate its concerns to the powers that were. That much was acknowledged by the PW Botha, FW De Klerk, Mandela and Mbeki governments.

ECONOMIC POTENTIAL

It was only during the Zuma years that business, especially “white business”, was myopically considered to be an enemy that should be starved of oxygen. There were calls for “white monopoly capital” to be crushed.

Notwithstanding the unfortunate experience of the past nine years, business remains a legitimate – and strategic – stakeholder without which SA cannot realise its true economic potential. After all, it is business that creates jobs, pays corporate taxes from the profits that it generates and employs men and women who go on to be taxpayers.

The government’s role in the economy is to create a climate conducive to growth, ensure policy certainty and coherence, and sell the country abroad as an attractive investment destination. Therefore, even in present-day SA, where significant portions of business are not as transformed as they should be, business has every right to make its voice heard on matters of importance to it and to lobby — transparently, not through backhanders and other such fraudulent inducements – for policies it deems to be in its best interests.

Perhaps more importantly, business needs to engage in a meaningful partnership with the elected government and to align its own interests with those of the country.

For instance, while some myopic business leaders may not fully appreciate the need for transformation, it is fundamentally in the country’s – and, by extension, their own – best interests that thorough-going economic transformation occurs expeditiously.

Therefore, while it is well within its right to advocate for certain policies it considers necessary for growth, business remains obliged to respect and observe all the country’s laws, not only those with which it agrees. The extent to which business can be taken seriously and, therefore, have a higher degree of success with its lobbying activities, depends very much on its perceived legitimacy.

Business’s collective social and political legitimacy will be considerably enhanced by the degree to which it embraces transformation, removes vestiges of racism that may remain hidden in its crevices and works with the elected government to combat corruption — including collusion — within its ranks. To this end, the CEO Initiative was a powerful example of the kind of meaningful partnership that is required between business and government.

As a corporate citizen, business has every right to make its voice heard on important matters of the day, especially policy incoherence, destructive policies, corruption and poor governance, which have negative economic and social consequences for the country. Like civil society, business needs to remain alert at all times, regardless of the government or individual in power at a given moment.

However, in so doing business will be well advised to avoid falling into the trap of backing one or another faction of the governing party, or one party over any other in our body politic. As a collective, business must be above the political fray and stand only for principles, not for individuals or parties.