One of the main reasons the SA economy doesn’t grow is the state’s failure to make SA a welcoming place to run a business. Too many people in the governing party fail to appreciate how the market economy works and why a stable, enabling business environment is vital for economic growth.
If they did, President Cyril Ramaphosa would not have had to backtrack on his recent assertion that firms, not governments, create jobs. So it is that, almost five years after the election of arguably SA’s most business-friendly ANC president, the weakness in business confidence and fixed investment has become one of the main impediments to growth.
Business is not investing because the hurdle rate that must be overcome is so high given SA’s ageing port and rail infrastructure, the skills and energy shortage, a rigid labour market, complex industry regulations, policy uncertainty, fiscal risk, corruption and state inefficiency.
This despite organised business having contributed endless hours in consultative forums with government on how best to revitalise the economy. These have resulted in joint plans and promises from government to reform, but little follow-through.
That business confidence and private fixed investment remain so weak reveals the private sector’s growing frustration. It is clear to all that tweaking the policy environment through partial or delayed reforms will not get SA out of its economic or employment crisis.
Someone who realised this long before many of his contemporaries was the late Michael Spicer, who headed Business Leadership SA from 2005 to 2012. The former Anglo American executive died on March 9 aged 69.
Speaking at the height of state capture in 2016, Spicer lamented — in a way that resonates deeply today — that “business failed to grasp that SA’s problems are political and require a political strategy. They are never going to be solved only by the generation of technical projects and plans.”
From 2009, when then president Jacob Zuma effectively shut the door on business until the axing of former finance minister Nhlanhla Nene in December 2015, organised business was trapped in a mode of being passive and reactive, Spicer felt. Its general stance was all about “going along to get along”.
Spicer threw in the towel in 2012. He described sitting in Nedlac as “soul destroying” — a place where big business, big government and big labour agreed to policies and regulations that were “life threatening” for small business and “destructive” for the economy as a whole. The problem was not just labour laws and BEE, he said, “but the whole intrusive, intensive regulatory environment that has grown up over the last 20 years”.
After Nene’s axing, business participated in various working groups with the government under the auspices of the Presidential CEO initiative. These lent credibility to Zuma’s promises of economic reform, and even staved off further ratings downgrades for a time. But while business was preoccupied with the sideshow of developing technical plans, state capture continued unimpeded.
Not only had business been politically naive in believing Zuma was capable of real reform, it had allowed itself to be neutered by its desire to work with the government in the hope that it was rebuilding trust.
Spicer was exasperated. “If Zuma remains, business will remain co-opted and reform stillborn,” he told the Financial Mail. “Business will have paid a very high price and will have sleepwalked into it without giving any strategic thought to what it has done.”
I’m sorry I never got to ask Spicer what he thought of business’s failure to make more headway under the Ramaphosa administration. For all its much-vaunted investment conferences, working groups and social pacts, SA’s fixed investment ratio has now fallen to a disastrous 14.2% of GDP from a peak of 21.6% before the global financial crisis.
This past summer Spicer posted wonderful pictures of his early-morning cycles around the Cape Peninsula where he marvelled at the natural beauty. He looked so happy. RIP Michael. Your deep institutional memory was a treasure, as was your unflinching take on SA.
• Bisseker is a Financial Mail assistant editor.
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