What South Africa needs to learn from countries like India

Several business leaders have expressed cautious optimism about the new Government of National Unity (GNU); however, stressed the need for the government to create an environment that allows private businesses to do what they need to do.

They emphasised the importance of both parties consistently and actively working together to ensure that the goal of proper economic growth is achieved.

Speaking at the annual summit of the Consumer Goods Council of South Africa (CGCSA) on 9 October, co-chairman of CGCSA Gareth Ackerman presented this view and echoed other government and business leaders in the calls and commitments for closer collaboration between business and the government.

Ackerman said that a capable government open to working with the private sector would be critical to growing the economy, citing that GDP growth has been lackluster, averaging below 1% for the past decade.

“We have a long way to go, and the last decade or more we have regressed economically, and growth has averaged about 2%, yet we actually need growth of 7%,” said Ackerman.

“We need a mindset change in government and to learn from countries such as India, which has defined the role of government versus the private sector. Government should set policies and let the private sector implement them,” he added.

Ackerman expressed a sense of cautious optimism about the GNU, acknowledging that it is still early days. However, he highlighted positive strides departments like Home Affairs, where visa and permit backlogs are being addressed.

He emphasised that collaboration between the public and private sectors is crucial for tackling the country’s economic challenges.

He pointed to the uninterrupted power supply maintained for over four months as an example, which showcases the success of the partnership among Eskom, businesses, and the government. Similar efforts extend to issues like crime, job creation, and infrastructure.

“Things are coming back slowly with the GNU, and I hope it will be positive for the economy, and this will allow the consumer goods sector to grow, which is good for the economy.”

“We need to allow and enable the private sector to invest within the policy and regulatory framework,” he added.

The CGCSA co-chairman said the past year was particularly difficult not only for the sector but for the economy, mainly due to load shedding and infrastructure bottlenecks.

But, where there is a will, there is a way and he called on businesses to do what they can within the communities they operate, such as investing in repairing and maintaining infrastructure.

“We as businesses have the power to do something, and these are things businesses can fix,” Ackerman concluded.

Speaking at the same summit, Business Leadership South Africa CEO Busisiwe Mavuso stressed the need for government to demonstrate urgency to prioritise resolving structural issues facing the economy, including resolving logistics, water and energy issues.

She warned that while South Africa is not yet a failed state, it can be if these basics are not addressed.

“The country needs to turn the corner; it is about 65 million, it is about 43% unemployment when you use the expanded definition of unemployment, and it is about 65% youth unemployment, which is the biggest risk as a country,” Mavuso said.

These calls have not fallen on deaf ears.

On 1 October, President Cyril Ramaphosa, ministers and some of South Africa’s top CEOs launched Phase 2 of the Government Business Partnership.

In 2023, organised business (comprising about 150 CEOs) pledged its support to the government, offering expertise and capital to help fix the country’s problems in three key areas: electricity, transport and logistics, and crime and corruption.

This support was known as Phase 1.

During Phase 1, businesses contributed over R250 million in direct funding, deployed more than 350 experts, and engaged 57 companies in power station interventions, contributing over 9,000 hours to Eskom.

The contribution of the partnership, working alongside other stakeholders, led to the dramatic reduction in load shedding, which crippled the country’s economy, stands out as an important achievement. 

Additionally, R700 million was invested in key transport corridors, over 500 security personnel were assigned to Transnet Freight Rail, resulting in a 50% reduction in security incidents on critical coal transport lines, and R57 million was allocated to establish a forensic analysis centre.

This was also made possible through Operation Vulindlela, a joint initiative of the Presidency and National Treasury aimed at accelerating the implementation of structural reforms to modernise and transform network industries, including electricity, water, transport and digital communications.

Building on this momentum, Phase 2 will aim to scale these efforts “with increased resources and a clear set of actions to contribute to more rapid economic growth,” said the Presidency and Business For South Africa (B4SA) in a joint statement.

They said that if South Africa successfully expedites reforms, achieves operational improvements at Transnet and Eskom, and swiftly mobilises private sector investment, it could see GDP growth reach 3.3% by the end of 2025 and create millions of new jobs by 2029.

Read: The big plan to grow South Africa’s economy by at least 3%