DTIC and organised business can improve the business environment – BLSA

The Department of Trade, Industry and Competition (DTIC) and organised business can improve the business environment. The new minister’s quick action after he was appointed to engage with business is good news for the private sector.

Busisiwe Mavuso, CEO of Business Leadership South Africa, says in her weekly newsletter the DTIC could have a dramatic impact on the quality of the business environment.

As parliament’s select committee on economic development and trade put it back in July, “Government needs to create a conducive business environment while creating appropriate regulation to direct investments in the economy,” she says.

“The DTIC should be at the centre of those efforts, yet for many years the department often frustrated business rather than supported it. However, I must hasten to say that I am very encouraged by new minister Parks Tau who was quick to engage with business to ensure open channels of communication. We have had numerous interactions with him, most recently on Friday as the Business Unity South Africa (BUSA) leadership team.

“The minister really gets it. He has highlighted the importance of industrial policy that supports export-led growth and highlighted the need to revisit the Economic Recovery and Reconstruction Plan developed by B4SA during the COVID-19 pandemic to identify implementable strategies.”

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DTIC clear on importance of collaboration

Mavuso says he is very clear about the importance of collaborative efforts, emphasising the need to work together in crafting solutions and synchronising initiatives. “These are all positive sentiments. However, many of the institutions and regulations overseen by the department need reform to be effective in delivering the improvements in the business environment that we all desire.”

She says she was therefore pleased to read of the minister’s intentions to sort out the leadership of the department and many of the entities it oversees. “The departmental leadership has had people in acting positions for years, while there have been many vacancies in entities it oversees.

“Reform can enable these entities to be very positive for the business environment if they are run effectively. Institutions like the SA Bureau of Standards support quality in the industry, while the special economic zones can support industrialisation. Business Day reported that the minister has said he will overhaul the boards of 11 of the 18 entities the DTIC oversees.”

Among those the minister named for review are important regulators like the Competition Commission and Takeover Regulation Panel, as well as funders like the Industrial Development Corporation, National Empowerment Fund and Export Credit Insurance Corporation, all of which have the potential to be important drivers of economic activity if they function optimally, Mavuso says.

“The funding institutions should aim to crowd in private sector participation. There is an opportunity to mobilise significant investment across the economy if these institutions can catalyse wider investment in the economy from the private sector.”

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DTIC must be careful when reviewing board members

Mavuso says in the process of his review, the minister should be careful to support and encourage effective leaders at these institutions. “While the organisations may not perform perfectly, the wholesale replacement of boards creates major risks through the loss of institutional memory and experience. Many boards do have effective leaders within them, who may be frustrated by others.

“In reviewing performance, he must be careful to ensure the right people remain in their roles. The boards must get clear mandates and be empowered to deliver on them. Leadership must be given political cover to focus on delivering.

“There should be no micromanagement and meddling from politicians, although they must ensure accountability from those in leadership roles. There is enough evidence from the state-owned corporations of how boards and management teams are rendered ineffective by political meddling.”

Historically, the relationship between the DTIC and organised business has not been as active as it could be, she says. “I am pleased to observe that this dynamic has shifted and a more active and engaged partnership has emerged. Together, we can do many things to deliver an improved business environment. I look forward to collaborating with those new leaders when they are appointed.”