Now’s the time for business to open its wallet
Ramaphosa’s change agenda needs concrete support, says Soko
● It is time for local business to support President Cyril Ramaphosa’s change agenda and invest in the economy, says the head of the University of Cape Town’s Graduate School of Business, Professor Mills Soko.
“South Africa is the most developed economy in Africa. There are lots of opportunities and lots of investors who are sitting on a cash pile,” he says.
Ramaphosa has appointed a high-level team of “special investment envoys” to bring in $100-billion (about R1.2-trillion) of foreign investment, but domestic business needs to lead the way, says Soko.
“They must demonstrate they are committed to South Africa and they must invest. That will lead to international investors replicating what domestic investors are doing.”
He says Ramaphosa has done enough to demonstrate he is serious about change, and the business sector must now support him.
“The business sector can’t keep waiting, they’ve got to support him now. They’ve got to show that they believe in him.”
The country cannot afford for business to wait on the sidelines any longer, he says.
“We are truly in the doldrums. Jacob Zuma destroyed this country in a way that we don’t even understand.”
Ramaphosa is trying to fix it, but he needs swift and massive support.
“Business needs to help him now,” says Soko. “Not next year.”
It needs to send a message that “we see what you’re doing, it’s significant, it’s not perfect, but we support you”.
If it doesn’t do this it will play into the hands of the anti-business lobby and reinforce the populist message that business is the enemy of economic transformation.
He agrees that the government’s support for expropriation without compensation on top of the “rhetoric” about white monopoly capital and radical economic transformation is doing nothing to fix the substantial “trust deficit” between business and the government, which he says is responsible for the lack of domestic investment.
But business needs to see where
Ramaphosa is coming from.
“Right now it’s about self-preservation, it’s about winning the 2019 election, feeling threatened by the EFF, feeling vulnerable.”
He says business leaders he has spoken to accept the need for radical change, but they need more detail.
“If the government says expropriation without compensation, to what end? Where is that going? They don’t know. There are no details. They understand the need for land reform and so on, but they want specifics.
“This empty rhetoric doesn’t help us.”
The government needs to spell out how expropriation without compensation will feed into the National Development Plan and contribute to the overall national development objectives of the country.
“What is their priority? Is it land expropriation or creating jobs? Young people living in rural areas want to live in urban areas. They are not interested in farming or land, they want jobs. So what is expropriation without compensation going to do for them? How is it going to bring them jobs?”
Business supports land reform, but expropriation without compensation will not achieve it, he says.
The business community must not wait again until there’s a crisis. They must be more proactive, they must lead the charge
He refers to a government study showing that nine out of 10 farms that were parcelled out to emerging farmers failed.
“That’s because it’s one thing to give land to people, but if you don’t give them adequate support and advice and so on, it’s not going to work.”
As important as land reform is, the priority is jobs, he says.
“Our most important priority is job creation, and business can do that.”
But its relationship with government needs to be fixed.
There need to be “honest, courageous, uncomfortable conversations” between the government and business about what is causing the trust deficit and how it should be addressed.
If any leader can do this it is Ramaphosa. “He’s been a union leader, a business leader, he knows what’s happening in the economy. He must start these uncomfortable conversations. He has the tactical language to speak to business.”
The government has to do “all the things that are required” to make South African companies globally competitive.
“There are companies that can survive without the government, but they need support from the government, they’re looking for new markets.”
Soko, 49, who has a doctorate in trade policy from the University of Warwick and recently convened a course on the political economy of doing business in Africa, believes the continental free-trade area agreement recently signed by African countries will create “tremendous opportunities” for South Africa if it happens.
He’s not holding his breath — “we’ve been here before” — but leadership changes and a new sense of urgency and realism he has detected in his African travels make him hopeful that this time could be different.
“The very fact that African countries were able to sign such an agreement is very important. If the political will can be found to reduce trade and non-tariff barriers across the continent, Africa could become globally competitive.”
Soko says he is pleased business discovered its voice at last under Zuma, and hopes it will use it with Ramaphosa.
“The business community in South Africa has enormous power which it doesn’t realise. So they must do things now, they must show they will not accept the kind of crap that has been going on.
“They must be upfront. They’ve been doing that very well but they must not stop now that Ramaphosa is in power.
“If they are unhappy about things they must speak up.”
Business finally pushed back against Zuma but by then he had all but destroyed the country.
“They must not wait again until there’s a crisis. They must be more proactive, they must lead the charge.”