CEO of Business Leadership South Africa, Busisiwe Mavuso. Picture: Gallo Images
The report card for the first 100 days of the Government of National Unity (GNU) is positive as it has triggered a marked improvement in the relationship between business and government.
Busisiwe Mavuso, CEO of Business Leadership South Africa (BLSA), says the report card for the GNU is broadly positive. “The new government notched up several successes and helped embed a sense of optimism that we may be able to achieve meaningful economic reform.”
Financial markets clearly signalled this optimism, she says, pointing out that the rand is now 7.5% stronger, the bond market 11% and the JSE’s main index up over 10% after the GNU’s first 100 days. “That really helps business confidence as it makes it easier and cheaper for government to raise debt and for companies to raise funding for new investment.
“While it is too early to see this in figures for investment by companies into new capacity, it should help momentum and that should translate into growth.”
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Mavuso says many people were concerned about the sustainability of the GNU, given the experience of unstable coalitions we had (and continue to have) at local government level. She warns it would be highly damaging if the GNU fell apart, reversing the tentative confidence that has begun to take hold.
“Yet, so far, when tensions arose, they were dealt with maturely in a way that puts the country first. Long may it last.”
From a business perspective, she says the changes that made the most difference so far are the rapid improvements in the performance of the Department of Home Affairs. “Visa backlogs directly constrained business growth by making it extremely frustrating for companies to bring in the skills they need to operate.
“I heard many tales of woe from CEOs who cannot open a new factory line or new IT system because the person appointed to run it is stuck overseas waiting for a visa to come through. Under new minister Leon Schreiber backlog has been reduced by 30%, although there is still some way to go to resolve it completely.
“However, the anecdotes I get from company leadership is that there has been an improvement, including with the pioneering trusted employer scheme that is making it easier for companies to access the skills they need.
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“We also noted positive signals for trade and industrial policy, particularly the shift in emphasis to focus on export competitiveness. I wrote last week in Business Day how this can contribute to putting South Africa on a high-growth, job-creating trajectory.”
Mavuso says the fact that we now had six months of no load shedding is another positive for the business environment, although it is an achievement of policy that was in gear before the GNU. “However, the GNU helped to build confidence that the profound changes to the electricity system that were committed to before it, will continue to be implemented.
“While electricity stability is essential and substantially achieved, we should now turn our attention to its cost. Eskom may well need to charge more for electricity to ensure its sustainability, but last week’s news that Eskom requested a 36% hike for its next financial year is still a shock.”
She says it reinforces how important it is that we consolidate reforms that will lead to a competitive electricity supply market that should drive prices down.
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Other reforms to enable key infrastructure must similarly follow through to effectiveness, Mavuso says. “Water is another obvious area. On 1 October, the Lesotho Highlands Water Project’s main water pipe will close for six months for planned maintenance. The work has been planned for years and is timed for the rainy season when dams are full, but it is a reminder of how dependent we are on limited infrastructure.
“The South African National Water Resources Infrastructure Agency was developed by the previous government, but its enabling legislation was signed into law by President Cyril Ramaphosa in August. The agency needs to be fully set up and operationalised. It will drive investment in new bulk water infrastructure, including through public-private partnerships.”
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According to Mavuso, logistics is the other crucial area for the business environment. “Transport minister Barbara Creecy has indicated that she takes private sector participation seriously in resolving the challenges.
“I welcome the sentiment, but we have yet to see it translate into meaningful change. Transnet has taken very tentative steps to limited engagement with the private sector, but we should see large-scale concessioning of port and rail capacity to drive competition between ports and rail corridors.”
She says South African businesses should be spoilt for choice to decide which ports and rail routes to use, but we remain far from achieving that vision.
“In general, the relationship between business and government has seen marked improvement with the GNU and there are many productive areas of cooperation that contribute solutions to our challenges as a country.”
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