What big business wants to see from South Africa’s new government – and the thing they fear most
Business leaders are emphasising the urgent need for political parties to immediately prioritise national interests over political agendas, advocating for broad cooperation to enhance business confidence and ensure lasting government stability.
They are urging the new government to focus on adhering to the Constitution, fostering a free-market economy, continuing and expanding on previous economic reforms, and enhancing public-private collaboration to stimulate economic growth and tackle key challenges.
These urgent calls from the likes of business interest groups Business Leadership South Africa (BLSA) and Business Unity South Africa (BUSA) come as South Africa is heading for quite the shake-up in the nature of its governance come the seventh administration, with multi-party governance set to be the order of play.
Businesses in South Africa have their eyes glued on the negotiations that are taking place, which are poised to result in a ‘Government of National Unity (GNU)’ consisting of a diverse array of political parties.
“A coalition will require sacrifices – not every party can get everything it wants [but] that is the outcome of this election: South Africans have expressed support for many different parties,” said BLSA.
What business wants to see
To instil business confidence, “parties must now put narrow interests aside and work together to deliver on that mandate… [and] find a way to agree that will shore up confidence” in lasting government stability, said BLSA.
This was echoed and furthered by Chief Economist of the Efficient Group Dawie Roodt, who said that what business in South Africa both wants and needs (among other pressing indicators) is stability, clarity, good administration, and a friendly and secure environment in which to do business in.
BUSA CEO Cas Coovadia said their preference is for a GNU to be constituted “that promotes a free-market economy and recognises the importance of partnerships between the private sector and government.”
Both BLSA CEO Busiswe Mavuso and Coovadia said that the seventh administration needs to commit themselves to respecting the Constitution, and their priorities need to be the continuation of economic reforms that have begun under the previous administration to address the issues facing economy.
To do this, “the partnership between business and government on Energy, Logistics and Law and Order must continue,” said Coovadia.
- Permanent end to load shedding;
To fix load shedding and reduce the cost of electricity, Mavuso says that the new administration “must conclude vital reforms to the electricity sector, including the unbundling of an independent systems operator from Eskom and the establishment of an open market for electricity supply.”
Mavuso argues that the Electricity Regulation Act Amendment Bill “was rushed through parliament,” before the election and is now on the president’s desk waiting for assent.
“In the rush, some elements have found their way into the bill that are unhelpful, including discretion granted to the minister on certain matters,” said the BLSA CEO.
“In the first 100 days these issues must be resolved, and the legislation signed,” she added.
- Turn-around the underperformance of ports and railways;
“There must be material progress on the freight logistics roadmap that has been set out by the National Logistics Crisis Committee,” said Mavuso.
Mavuso said that this has already had some success in rapid interventions in key corridors through the collaboration between business and government, but “deeper reforms must be accelerated, leading to the concessioning of ports and rail to enable the private sector to invest and operate these on a competitive basis.”
The Freight Logistics System roadmap demands strict adherence to timelines from government agencies, with Mavuso saying that there must be a focus on enabling Transnet to start concessioning within the first 100 days.
- Rebuilding the criminal justice system;
“Business critically depends on the rule of law, without which it cannot commit substantial investment,” said Mavuso.
The lack of effective prosecution for corruption is one of the reasons South Africa is grey listed by the global Financial Action Task Force, which places a burden on the country’s business environment.
Shortly before the election, legislation was passed to permanently establish an investigating unit in the National Prosecuting Authority, which Mavuso says was a crucial step forward.
“The new administration must commit to bolstering the rest of the system, particularly the police and its investigating and intelligence units,” said Mavuso.
“The [abovementioned] structural reforms underway to address these and other challenges are critical to turn the tide on unemployment and restart economic growth,” said BLSA.
This was echoed by Coovadia, who said that “all necessary decisions must be taken, and implanted with urgency, to address ongoing energy issues, sort out problems at Transnet and the logistics issues and a concerted effort between government and all stakeholders to address law and order must be initiated.”
To do this, BLSA said that it is essential to form a “stable GNU that will assure all South Africans as well as businesses and investors… that government will be committed to our constitutional democracy and the institutions that it rests on, including a well-managed National Treasury and the rule of law.”
BLSA has subsequently urged that the upcoming agreements “must be capable of holding for the full term of the administration and parties must genuinely commit to doing so,” in order to deliver confidence and stability needed for a conducive business environment.
The big fear: instability
Coovadia says that “lack of policy, political certainty and cohesion is the most critical threat,” to the country’s economy going forward.
Roodt says another major threat is government instability, which he thinks will ultimately occur given some stark ideological and policy differences among co-governing partners.
“I am afraid that the reality is that we are in an unstable political environment that is likely to go on for quite some time… for some years, in fact,” said Roodt.
The economist believes that this instability could happen in any coalition pairing.
Roodt said even a more “business-friendly coalition” [a term touted by some economists for a coalition involving parties with more free-market economic policies] will likely prove unstable in the short term, given the growing pains of some parties with starkly opposing economic ideologies and policy positions within the co-governing agreements.
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