State and business must mend rift for good of nation
The South African government and business have had a precarious relationship for years but it is now vital that this improves in an effort to recover from the effects of the Covid-19 pandemic, which has devastated an already fragile economy.
Second-quarter GDP figures recently released by Statistics SA indicate that the economy dropped by an annualised figure of 51% (16.4 not annualised or 17.1% year-on-year) in the last quarter.
All the industrial sectors declined, though the agriculture, forestry and fishing industry showed positive growth for two quarters running. Of special concern is the contraction of the manufacturing industry by a whopping annualised 74.9% and the mining and quarrying industry by an annualised 73.1%.
One of the worlds’ top futurist consultancies has predicted that South Africa, Brazil and India will have the hardest recovery of the larger economies of the world. This means things will have to change on a broad front for the economy, and the thousands of people who have been negatively affected, to recover even partially.
There is no doubt that fairly desperate measures had to be taken to contain the spread of Covid-19, especially given an inadequate public health system. However, much of this was done in an autocratic and erratic manner, with some business sectors banned for months and others, hampered by confusing regulations and bizarre decision-making at the highest levels of government.
Just over two years ago there was hope things would change fairly quickly, given that the newly appointed President Cyril Ramaphosa was seen as progressive and had a deep understanding of business.
Many business leaders still believe Ramaphosa is trying his best to encourage investment, create jobs and fight rampant corruption, a conviction encouraged by the president’s hard-hitting recent letter to ANC members calling for transgressors to step aside.
However, the deeper suspicion remains that Ramaphosa remains restricted by certain senior members in the party and the fallout of the corrosive years under then-president Jacob Zuma. Widespread Covid-19 tender corruption has increased this disillusionment.
Business is facing hurdles that have deep roots. Even before the health crisis, many companies that should have been thriving were not because of confusing and complex regulations, a general lack of trust and enablement by government, among many other issues.
Nobody can reasonably deny that apartheid was a flagrantly cruel and vile system that created intense friction, uncertainty, injustice and inequality for decades. However, we cannot continue to blame an unjust past and racial friction for a host of current political and economic failures after two decades of democracy.
This is especially true following the massive corruption that held the country in its grip throughout the years under Zuma and beyond. Members of the ruling party, businesses and professionals colluded in robbing the state, to the detriment of the poor and society as a whole — a problem worsened by the hundreds of billions of taxpayers’ money that has gone into crumbling state-owned enterprises such as Eskom and SAA.
At the same time, there is a culture in government that undermines the economic development SA so sorely needs. Companies are hampered by a myriad of strange regulations and red tape, VAT returns are often not paid back on time, and anti-business campaigns and communication breakdowns are the order of the day.
Many business people view the ANC as anti-business because of its inability to deal with powerful unions and other organisations on an equal footing, and the lack of convictions for widespread corruption.
No company likes to lose staff and streamline but those that get into difficulties and are forced to or go under losing everything — including in the timber industry — face a wall of obstacles including multiple legal battles.
These experiences hamper growth, make investors balk at committing billions, and dampen business confidence and ratings from international ratings agencies such as Moody’s. This has been worsened by the Covid-19 economic slump.
Companies are often pilloried as unpatriotic and undemocratic, but the truth is most business people commit their capital, expertise and futures to a country and its economy in a way that many others do not.
Governments are put in place by voters to run countries well. They are also expected to take responsibility for failures. In many cases the ANC does neither.
On the other hand, businesses should operate as cohesive social forces as well as make profits but many companies in the country do not do enough for their communities or concentrate sufficiently on interaction with government authorities, to improve relations.
Many investors are holding back because of the lack of business confidence and political insecurity, but it is now time for investors with more than a straight financial interest in the country to invest again on a major scale
Many investors are holding back because of the lack of business confidence and political insecurity, but it is now time for investors with more than a straight financial interest in the country to invest again on a major scale.
The situation seems dire. SA is burdened by rising debt, massive unemployment, increasing poverty and predictions of the future loss of hundreds of smaller businesses. Nevertheless, most business people are optimistic by nature and any effort by government to ease the way for entrepreneurship or appear grateful for their contribution to society would go a long way to boosting confidence and the determination to succeed, even against the heavy odds facing the country as Covid-19 takes its deadly toll.
Business people, at least those with drive and acumen, are also generally pragmatic and given more of a chance by various political powers will go a long way towards helping the country recover from its current woes, through financial investment, fair transformation or as a conduit for the spread of positive information and data to the international community.
In the end, the ANC and business should come to a better understanding soon, for the good of the nation.
Bertus Coetzee is the MD of Dolphin Bay.
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