How SA business can help government fix the economy

What business is willing to say to itself is as important, as what it says to government. Which is why the document, a contract with society, released by an organisation representing big business, Business Leadership SA’s Contract with South Africa may be setting a new tone not only on how business deals with government but also how major economic actors deal with the economy’s problems.

When most commentators are asked how South African business should respond to government, the common response is that it should complain, loudly and in public. This view has no doubt firmed since the March cabinet reshuffle damaged the economy and denouncing “white monopoly capital” became a refrain of the ANC’s patronage faction. Business, as the argument goes, should stand up for itself even if that means offending government.

But, while this approach makes great headlines and makes many people feel better, it does little or nothing to advance business interests or fix the economy.

Those who want business to shout at government seem to assume that this country has no history. But it does, and it is a history in which business is associated – and not only in the minds of patronage politicians – with the minority privilege which apartheid ensured. No one would use the phrase “white monopoly capital” if it did not seem to describe the world in which many black business and professional people feel that they live.

This makes the relationship between business and government more difficult than in most other countries. It also means that politicians cannot afford to be seen to be ordered about, by business. After all, what better way to confirm that “white monopoly capital” rules us all than to insist that business people tell politicians off in public?

Yelling is not the solution

Yelling at government is not helpful to the economy because it keeps alive the myth that its difficulties are caused by government alone. But, as very mainstream figures such as International Monetary Fund deputy MD David Lipton have pointed out, the fault is not government’s alone. Other economic actors, including business, have also contributed to the problem.

If businesses want a healthier economy, they need to look at what they can change as well as what the government can fix. This will undermine the “white monopoly capital” claim by showing that businesses are willing to change what they do as well as asking the government and other interests to change.

This is precisely what Business Leadership SA’s contract seeks to do. It feels as strongly about the “white monopoly capital” slur as others. It’s chief executive officer, Bonang Mohale, said at the contract’s launch that it hoped to undo the legacy “of the ugly and deceitful white monopoly capital campaign (which) sought to blame business for all the problems that beset this country”. He said the campaign was “dishonest”; it “tried to deflect from the real issues of state capture”. It had severely damaged business’s reputation.

All of this is music to the ears of the “give government a proper scolding” school. The key difference is that the organisation seeks to counter the campaign not simply by denouncing it but by taking responsibility for fixing the problems which made the campaign possible in the first place.

Problem is not just government

The contract recognises that corruption is a two-way process. It vows to root out corruption in the private sector too and wants companies to sign an integrity pledge, to fight corruption.

It also commits to fighting economic exclusion by creating jobs, encouraging and empowering senior black leadership, building skills, investing in communities and supporting small businesses.

Only after making these commitments does the organisation’s document say something about government. It says it cannot achieve these goals on its own. The government “must also step up” and create the conditions necessary for the country and economy to succeed.

This approach is more likely to dispel the “white monopoly capital” campaign than one which yells at the government. While those who coined the slogan will not be impressed, it’s not them to whom businesses are talking. Their audience is the tens of thousands of South Africans who have no axe to grind but want the economy to offer opportunities to more people.

The contract recognises the problem that undermines the image of large businesses as arrogant vehicles of power. By showing that they are sensitive to economic exclusion and those who suffer it offers to do something to solve the problem.

Conversation is the key

The document also creates opportunities for mending the economy by opening the way to a bargain between government, business and other economic interests. This is the essential route to change because none of the economic interests are strong enough to impose their favoured solution on the others.

By spelling out in broad terms a willingness to change, the contract enables politicians and government officials who do want to negotiate change to begin a discussion on the specifics. This promises to restart the conversation between government and business which was beginning to blossom during the later days of Pravin Gordhan (former finance minister) and Mcebisi Jonas (former deputy finance minister) at National Treasury.

It also makes negotiation possible by taking the three steps all the parties need to take to create a negotiation climate:

• it acknowledges that the economy needs to change,
• spells out what business is willing to do to change it, and
• what it expects in return.

This opens the way for the other parties to do the same – if they do, the negotiations will have effectively begun and a way out of the economy’s dead end will be possible.

Business Leadership SA’s contract is hardly guaranteed to succeed. In the past, initiatives which depended on business and other economic interests making changes ran aground because business leaders, like the other negotiators, lacked the muscle to take those they represent with them.

It is not at all clear how many businesses are willing to follow Business Leadership SA’s approach. Nor is it clear if government and labour, whose participation is crucial, are willing and able to respond with their own bargaining positions.

What is clear is that the economy’s revival depends on the business strategy for change.

Steven Friedman, Professor of Political Studies, University of Johannesburg

This article was originally published on The Conversation. Read the original article.