A pledge signed by leading CEOs this week to assist the government with its challenges was a critical intervention that could boost economic growth, says Martin Kingston, chair of Business for South Africa (B4SA) and former CEO of Rothschild & Co.
Kingston told Business Times there was “absolutely no doubt” that the challenges South Africa faced, including energy availability, logistics constraints and crime and corruption undermined confidence and presented a “very direct threat” to the survival of its businesses.
“If you are a business that is bedevilled by logistical challenges, it is going to have an impact. There’s not a single major company that is announcing its results — this week it’s Kumba — that doesn’t refer to these factors. And by the way, not just in the private sector, [but] in the public sector, Transnet makes the same observations.
“So [it is] both a narrow interest in terms of protecting their own interest, but also a national interest because if we don’t all prosper … If the challenges result in increasing levels of poverty, inequality and unemployment, then we know that companies here are operating in an increasingly uncertain and unstable set of circumstances, which further undermines confidence and their prospects of survival and growth,” he said.
Kingston said some of the issues were a result of geopolitics and the pandemic. But others arose because of the lack of political will to take decisions timeously and “an inability to follow through on positive interventions in a decisive manner”.
On Thursday, CEOs representing more than 115 companies signed the pledge to address the country’s crippling logistics constraints and crime wave, hoping to replicate the successful private sector contributions to dealing with the electricity crisis — through the National Energy Crisis Committee (Necom) — and to making the mass Covid vaccination drive possible.
Kingston said both the government and business acknowledged the success of these initiatives.
Companies that signed the logistics pledge include BP, Naspers, Vodacom, Remgro, Toyota, PwC, Sibanye-Stillwater, Anglo American and Massmart. Signatories are estimated to have a combined 1.2-million employees in sectors such as health care, mining, banking and telecommunications.
Kingston said the work envisaged by the undertaking could see South Africa lifting its GDP by up to three percent, but this could only happen if everything came together in a co-ordinated manner.
He said the latest initiative would channel business resources to bolster the capacity of government-run committees charged with tackling the crises in energy, logistics and crime and corruption.
“The Presidency approached us on behalf of Necom and we established the R100m resource mobilisation fund. It was used to recruit expertise. That is the direct provision of resources to the Presidency,” the B4SA chair said.
“We are assembling a number of teams for each committee in a range of workstreams. In Necom there are 10 workstreams working to address load-shedding by the end of 2024 and business is participating actively in the majority of [them].”
If you are a business bedevilled by logistical challenges, it is going to have an impact. There’s not a single major company announcing its results – this week it’s Kumba – that doesn’t refer to these factors
— Martin Kingston
Since it was established last year, Necom has assisted the government with a plan to add and recover a total of 8,800MW of electricity capacity in 2023.
Business Unity South Africa CEO Cas Coovadia said: “Business has consistently said that long-term meaningful investment is a precursor to sustainable, inclusive growth which in turn is fundamental to addressing socioeconomic improvement.”
Discovery Group CEO Adrian Gore said the pledge was “a concrete commitment” to drive much-needed change in key sectors that were essential to South Africa’s economic recovery.
“By translating these partnerships into a collective action plan, the transformative power of these actions can extend beyond mere statistics. It can profoundly impact our nation, our communities, and each individual citizen,” said Gore.
Kingston described GDP growth as “extremely tepid”. The private sector was a major potential driver of growth, but it needed reliable energy supplies. He said the number of companies that had signed onto the pledge was growing, and “as many as possible” should come on board.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.