Let’s make use of the pos­i­tive sen­ti­ment

The Star Late Edition - - OPINION & ANALYSIS - Bo­nang Mo­hale

WHAT A DIF­FER­ENCE a year – and the choice of lead­ers – makes in the life of a na­tion! This time last year, our coun­try was on the brink of an­other self-in­flicted disas­ter: a series of credit rat­ing down­grades, pol­icy un­cer­tainty and our econ­omy slip­ping into a re­ces­sion.

Hav­ing pre­sented a good Bud­get, Pravin Gord­han, then fi­nance min­is­ter, was weeks away from los­ing his job, 18 months into his sec­ond stint as fi­nance min­is­ter. To­gether with his deputy, Mce­bisi Jonas, he was about to un­der­take a cru­cial post-Bud­get in­vestor road­show with busi­ness and labour lead­ers to try and pull our econ­omy back from the brink. Then the un­think­able hap­pened: hav­ing been called home via an SMS, he and Jonas were sum­mar­ily sacked late on the evening of March 31, 2017.

We’ve come full cir­cle. Gord­han is back in the cab­i­net as a wor­thy ad­di­tion to the eco­nomic clus­ter as pub­lic en­ter­prises min­is­ter and, im­por­tantly, Nh­lanhla Nene, who was fired on De­cem­ber 9, 2015, is back as po­lit­i­cal head of the Na­tional Trea­sury.

Iron­i­cally, as you read this, Nene is lead­ing a SA del­e­ga­tion of busi­ness, labour and gov­ern­ment lead­ers on an in­ter­na­tional post-Bud­get road­show to con­vince the in­vest­ment com­mu­nity, in­clud­ing rat­ing agen­cies, that last year was our prover­bial hour be­fore dawn – the dark­est – and that a new dawn is now upon us. Our coun­try de­serves a ben­e­fit of doubt.

In the short space of a mere three months, we have made con­sid­er­able progress that re­quires ac­knowl­edge­ment. On the po­lit­i­cal front, we’ve had a con­sti­tu­tional po­lit­i­cal lead­er­ship tran­si­tion, a broadly cred­i­ble cab­i­net reshuf­fle and a dif­fi­cult but cred­i­ble Bud­get.

Un­sur­pris­ingly, our coun­try is ex­pe­ri­enc­ing an un­usual bout of pos­i­tive sen­ti­ment. Par­lia­ment is func­tional again and do­ing its work in­stead of fo­cus­ing on di­ver­sion­ary the­atrics, and Eskom has a new board of com­pe­tent and cred­i­ble South Africans who are have been given the task of sta­bil­is­ing the com­pany’s fi­nances, and ad­dress­ing its se­ri­ous lead­er­ship and gov­er­nance crises. All the prob­lem­atic ex­ec­u­tives have left the em­ploy of the com­pany, al­low­ing the new board to ap­point a cred­i­ble chief ex­ec­u­tive and chief fi­nan­cial of­fi­cer.

At Denel the con­tro­ver­sial chair­per­son has stepped down, paving the way for the ap­point­ment of a com­pe­tent in­di­vid­ual to lead the re­ju­ve­na­tion of the board.

In due course, Pres­i­dent Cyril Ramaphosa will an­nounce terms and ref­er­ences of a ju­di­cial com­mis­sion of in­quiry to look into the gov­er­nance and tax ad­min­is­tra­tion con­cerns at the SA Rev­enue Ser­vice, a move that should see the cred­i­bil­ity of Sars be­ing re­stored, es­pe­cially at a crit­i­cal time when per­sonal and cor­po­rate taxes are be­ing raised in our coun­try.

Last week, Deputy Chief Jus­tice Ray­mond Zondo named the team that will as­sist him in in­ves­ti­gat­ing se­ri­ous al­le­ga­tions of state cap­ture. We ex­pect that the gov­ern­ment will ad­e­quately fund the com­mis­sion, as di­rected by the North Gaut­eng High Court when it up­held the reme­dies of the for­mer pub­lic pro­tec­tor.

Quite cor­rectly, Ramaphosa has placed the econ­omy, es­pe­cially in­clu­sive growth and trans­for­ma­tion, at the cen­tre of his ad­min­is­tra­tion’s agenda.

As part of the new dawn, the dis­as­trous min­ing char­ter has been taken off the ta­ble, and par­ties have been asked to give ne­go­ti­a­tions an­other chance.

With Mosebenzi Zwane, the for­mer min­ing re­sources min­is­ter, now a back­bencher along­side nine other com­pro­mised col­leagues, his suc­ces­sor, Gwede Man­tashe, has an op­por­tu­nity to ne­go­ti­ate a pro­gres­sive, but work­able, char­ter that will po­si­tion this still-im­por­tant in­dus­try to take ad­van­tage of the im­prov­ing global com­mod­ity cy­cle.

The era of pol­icy flip-flops ap­pears to be mak­ing way for clear, con­sis­tent pol­icy and reg­u­la­tory frame­work – a key in­gre­di­ent to at­tract­ing long-range di­rect in­vest­ment.

The pos­i­tive sen­ti­ment is re­ver­ber­at­ing across the rest of the econ­omy. Our cur­rency, a barom­e­ter of sen­ti­ment, has re­sponded pos­i­tively.

The sea­son­ally ad­justed man­u­fac­tur­ing Pur­chas­ing Man­agers’ In­dex (PMI) com­piled by the Bureau for Eco­nomic Re­search and spon­sored by Absa, as well as the pri­vate sec­tor PMI com­piled by Markit and spon­sored by Stan­dard Bank, both showed a move above the 50-point break-even level last month in re­ac­tion to the re­cent pos­i­tive events on the po­lit­i­cal front.

The Absa PMI moved above 50 points, or pos­i­tive ter­ri­tory, for the first time since May 2017. The in­dex rose to 50.8 in­dex points from 49.9 points in Jan­uary. The rise in the PMI was driven by solid im­prove­ments in the busi­ness ac­tiv­ity and new sales or­ders.

The most en­cour­ag­ing read­ing from the Fe­bru­ary PMI sur­vey was the in­dex track­ing ex­pected busi­ness con­di­tions in six months’ time, which jumped to the high­est level since 2001.

Add to these read­ings the news that, in the last quar­ter of last year, GDP growth came in at a higher-than-ex­pected 3.1 per­cent is cause for more op­ti­mism, and if sus­tained into the new year, there is no rea­son for the growth fore­cast not to be re­vised up­wards.

The chal­lenge now is to at­tain and sus­tain eco­nomic growth through de­lib­er­ate and fo­cused ac­tion by the gov­ern­ment, busi­ness and labour to re­duce the costs of do­ing busi­ness, im­prove ef­fi­ciency and pro­duc­tiv­ity across value chains and re­move pol­icy un­cer­tainty in many ar­eas of the econ­omy. Also we need to en­sure the cur­rent pos­i­tive sen­ti­ment is sus­tained.

Sim­ply pray­ing for good rains is not enough; we have to take our destiny into our own hands and seize the op­por­tu­nity pre­sented by favourable global eco­nomic con­di­tions as well as the pos­i­tive sen­ti­ments pre­vail­ing in our coun­try.

While much has been done, more has yet to be done for our coun­try to be con­sid­ered an in­vest­ment grade des­ti­na­tion. Among oth­ers, we need to as­sure – in words and deeds – that the pro­posed con­sti­tu­tional amend­ment to ad­dress the emo­tive but crit­i­cal is­sue of land will not re­sult in smash and grabs or un­der­mine food se­cu­rity and the rule of law.

In busi­ness, the new ad­min­is­tra­tion has a will­ing, ca­pa­ble part­ner to help make our coun­try an at­trac­tive in­vest­ment des­ti­na­tion free of state cap­ture, cor­rup­tion and pol­icy un­cer­tainty. Bo­nang Mo­hale is the chief ex­ec­u­tive of Busi­ness Lead­er­ship South Africa (BLSA).


Pres­i­dent Ramaphosa has placed the econ­omy, es­pe­cially growth and trans­for­ma­tion, at the cen­tre of his ad­min­is­tra­tion’s agenda.

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