Investec has become the latest bank to join the growing chorus call from SA financial institutions for government to fast track structural reforms to jump-start the economy.
CEO Fani Titi and Richard Wainwright, who heads up Investec’s local banking operations and is also chairman of the Banking Association SA, have provided a list of urgent issues they believe government needs to address to boost economic growth. Titi and Wainwright made the comments in an interview with Business Day on Thursday after the private bank and wealth manager announced that earnings had more than doubled in the year to end-March.
“We’ve been quite clear that we do see growth in the SA market,” said Titi. “But if the government does not implement structural reforms the overall macroeconomy will not grow at a significant degree in the long-term, so that could be a limiting factor.”
Investec joins a growing list of banking executives ranging from FirstRand CEO Alan Pullinger to Nedbank boss Mike Brown who have in recent months called on government to prioritise the implementation of structural reforms to address sub-par economic growth and record unemployment. Among the laundry list of issues the two Investec bosses believe government should tackle with urgency are overregulation of business, the Eskom crisis, Transnet’s failing rail infrastructure and the general malaise plaguing state-owned entities.
“We have to stop this unbelievable avalanche of regulations, particularly for small and medium-sized businesses,” said Wainwright. “As a first step just stop — don’t even take anything away — just stop this ongoing regulation. The amount of regulation that our entrepreneurs have to comply with is just strangling everybody.”
Apart from over-regulation, Wainwright says government should put “every bit of effort” into sorting out Eskom’s power generating woes and the general shortage of electricity capacity in SA. One possible solution he mentions would be to further increase the threshold for embedded self-generation by private producers beyond the current 100MW.
Though President Cyril Ramaphosa was widely hailed when he made the surprise announcement in June 2021 that companies would be permitted to generate up to 100MW of power without a licence, from a previous limit of just 1MW, Wainwright says this could be increased further to as much as 500MW to address what he repeatedly referred to as the “energy crisis” facing the country. He also called on government to be bolder in dealing with the numerous issues facing Eskom and urged it to accelerate the split of the utility into three units — generation, transmission and distribution — while bringing in the private sector to help the power and energy sector get “back on track.”
Wainwright also questioned the continued delays in government’s so-called emergency plan to procure up 2,000MW of power from independent power producers to ease the burden on Eskom, whose ageing infrastructure and apparent sabotage from within the utility are preventing it from providing reliable power. The emergency plan was reportedly first floated in late 2019 when Ramaphosa had to rush back home from a trip to Egypt after the country was plunged into stage 6 load-shedding, while further details began emerging in his state of the nation address that followed in early 2020.
“We launched an emergency power programme two years ago ...not a single project has even started in terms of emergency power,” Wainwright said of the project, which has been mired in controversy and delays.
Though Wainwright acknowledged that government has made some progress on reforms such as the long-delayed spectrum auction that was concluded in March he said government needed to accelerate its efforts, particularly with regard to including the private sector in its solutions mix.
Titi went further by saying government should consider “breaking up the monopolies” enjoyed by many SOEs and specifically mentioned Transnet, which he said was acting as a constraint on the economy. Transnet has lost millions of tonnes in freight volumes in the last year as maintenance backlogs, cable and rail theft and port backlogs have cost the country billions of rand in lost commodity exports.
“At the moment there’s a commodity boom but miners have not been able to get the levels of support they need from Transnet,” said Titi, who added that government needed to urgently look at easing the constraints around doing business in SA.
“We are not competitive — and its basic things as opposed to rocket science,” he said. “We’re not trying to land men on the moon or go to Mars. Just get electricity that works that isn’t a constraint on the economy. Just get goods from one point to another so the economy can function properly. Just allow businesses to do what they need to do without overburdening them. It’s simple things.”
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