Many breasts have been beaten over the government’s decision to engage corporate SA’s assistance in dealing with some of the country’s most pressing problems, to wit energy provision, logistics, and crime and corruption.
Under normal conditions my background as a trade unionist, business regulator and anticorruption activist would have made me extremely wary of too close a relationship between the government and business. But, under present circumstances, we should welcome business’s offers to assist the state.
We are told by those who oppose private sector involvement in the functions of the state that business is responsible to its shareholders alone, whose interests do not necessarily coincide with those of the non-shareholding majority of the population. Ironically those who argue thus are often the same people who insist, quite correctly, that this bit of Friedmania belongs to the late, unlamented glory days of neoliberal economics.
Nowadays it is demanded of business that it accepts responsibility for the effect of its decisions and activities on the wider community, a large slice of whom are, in any event, shareholders through their pension fund holdings.
So, I, for what it’s worth, have greeted the news of business engagement in selected area of government responsibility with relief.
Though Cas Coovadia, Martin Kingston and Busisiwe Mavuso are to be commended for putting the resources and convening power of their business associations behind the initiative, I am particularly encouraged by the high-profile corporate leaders, with both their corporations’ and personal reputations at stake, who have stepped up to the plate. And this is not charity — we are in the last-chance saloon, and for business the risk of doing nothing may well outweigh the risk of getting down and dirty with the government.
One articulate, albeit cautionary, voice has expressed business’s conundrum in the following terms: “It’s in the interest of business that the government governs effectively so that, in the end, the state functions effectively and creates a conducive investment environment. Effective functioning of the state is best seen in its ability to use national resources responsibly and efficiently, independently regulate economic players, including businesses, provide basic services and infrastructure, provide security, enforce the rule of law, adopt foreign policies that promote the national interests and safeguard the territorial integrity of the country.”
Does our state demonstrate an ability “to use national resources responsibly and efficiently”? Clearly not. Our logistics monopoly seems incapable of getting our natural resources to our ports. While I may not want Neil Froneman to marry my daughter, his manifest skill in building a successful mining house and his aggressive management style may well help get our freight rail on track again.
It is a pity that one of the stiffest obstacles confronting mining investors — the appalling sclerosis in issuing mining licences — cannot be remedied by business because of its regulatory character and thus the strong possibility of interest conflicts. But surely there must somewhere be a skilled, independent technocrat who, with the requisite political backing, could get the mining licensing function operational.
Not a lot needs to be said about our government’s ability “to provide basic services and infrastructure”. Most SA households, let alone businesses, are aware of the government’s inability to provide an uninterrupted electricity supply. Many SA businesses have experienced the state’s inability to provide a freight rail service. The state clearly needs as much help as it can get, particularly that of skilled managers who have a huge stake in the delivery of these services.
Does the state “adopt foreign policies that promote the national interests”? The less said about this the better. However, foreign policy is clearly a national government function, where the prospect for non-governmental intervention is limited. But where business is negatively affected by the state’s foreign policy stances they, as with any non-governmental interest group, are entitled — indeed duty-bound — to use their lobbying resources to ensure that the state is aware of the negative economic consequences of its foreign policy.
Similar considerations apply to the state’s duty to “provide security, (and) enforce the rule of law”. The government must maintain a monopoly of the use of force. Policing, as with national defence, is the baseline function of any state, one that the government is clearly not fulfilling. The proliferation of private security services and the rise of organised crime is clear evidence that the state has ceded its monopoly of the use of force.
In the late 1990s the Mandela administration persuaded the late Meyer Kahn, an exceptionally accomplished manager, to run the SA Police Service (SAPS). It didn’t work. On the other hand, roping in SA Breweries, the company Kahn ran, to use its logistics nous to distribute ballot papers for the 1994 election was a standout success. Running a command and control operation such as the police requires that it be headed by someone who has come through the officer ranks and who understands the closed culture of a police force.
But this does not mean all policing functions and all parts of the wider criminal justice system are incapable of benefiting from private sector experience. The procurement of goods and services in the SAPS is hopelessly corrupted and incompetent — it could benefit from engagement with the private sector. Similarly, the National Prosecuting Authority (NPA) and the Hawks desperately need skilled advocates and financial forensic investigators, resources that are readily available in the private sector.
As long as potential interest conflicts are managed closely there is no reason private bar advocates and private sector investigators should not be seconded to the NPA and Hawks, or that offers from the corporates to financially support their employment should be ruled out. Moreover, in sectors plagued by organised cartels — construction, mining, trucking — experienced managers would doubtlessly be able to provide useful intelligence to the police.
My wish is that more arms of the public service be strengthened — or, more accurately, saved from collapse — by building partnerships with the private sector.
Take, for example, the Gauteng health department. We have world-class private hospitals in Gauteng. We have important Gauteng public health facilities in a state that should shame all South Africans. The difference is not the quality of the medical personnel or even of the respective budgets. It is the appalling quality of management at public hospitals, decried by the outgoing health ombud as “Mickey Mouse managers”. Imagine what a difference it would make to the lives of ordinary Gauteng residents were the Netcares or Mediclinics persuaded to second skilled managers to public health facilities.
In engaging with business the government needs to learn lessons from our experience of state capture. It needs to be extremely wary of using professional services firms — auditing firms, law firms and management consultants, enterprises where interest conflicts will most frequently present themselves.
Companies that are dependent on public sector contracts should be avoided. But the assistance of firms such as Sibanye and Sasol, whose bottom lines require effective public services and whose managers are experienced in running large, complex operations, should be welcomed, particularly in circumstances where the state has proved to be manifestly incapable of public provision.
For these partnerships to succeed they must be strongly supported at the highest level of the state. I’m hopeful. President Cyril Ramaphosa has consistently supported social compacting as a preferred mode of governance. Here’s an opportunity to put our money where his mouth is.
• Lewis, a former trade unionist, academic, policymaker, regulator and company board member, was a cofounder and director of Corruption Watch.
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