Business Day LIVE

IT WAS in Davos, Switzerland where Telkom chairperson Jabulani Mabuza stood up and challenged President Jacob Zuma over government’s attitude to business.

Bobby Godsell, a national planning commissioner and chairperson of Business Leadership South Africa (Busa), tells the story when asked about government’s commitment to the National Development Plan (NDP) and progress in implementing it.

At a meeting during the World Economic Forum in January this year, Mabuza accused Zuma himself of not consulting business in his policy making. Mabuza used Zuma’s state of the nation address as an example, saying that in its preparation Zuma consulted labour and other sectors of civil society, but not business. “Zuma said that was a fair point,” Godsell says. “Two weeks later we held a big meeting with government, convened by Zuma. Three-quarters of the Cabinet was there and about 100 business leaders including both Busa and the Black Business Council (BBC).

“Zuma said to Mabuza: ‘You wanted to talk. We’re listening.’” Godsell says business leaders made 17 presentations, with Zuma listening attentively, and ministers responded. “Mabuza indicated that if the goals of the NDP were to be achieved, the South African economy had to grow by three times its current size by 2030. Logically, the private sector would also have to triple in size.

“Business wanted to identify the key constraints to the private sector achieving that growth, and how to overcome them. That included what actions were needed by both government and business.”

The meeting ended with an agreement to give business time to crystallise the constraints and a second meeting took place in August, with business listing five key constraints: infrastructure, regulatory uncertainty, inclusive growth, education & skills and labour relations. Five joint working groups were formed, one to tackle each challenge and each jointly led by a senior government official and a senior business leader.

Godsell’s group is tackling the issue of regulatory uncertainty. “All the groups are meeting often and putting in lots of work – it’s very encouraging,” he says. “This is the first time in my 40 years in business dealing with government — and that’s 20 years of National Party and 20 years of ANC government — that I’ve witnessed government and business talking so concretely and so constructively. They are working together to achieve common objectives.”

And while there is “some public tension” between Busa and the BBC — who Godsell says still have some road to walk before achieving a non-racial umbrella body for business — “in this process they are co-operating effectively”.

Private sector role

What is heartening, says Busa vice-president Michael Spicer, is that the NDP gives a central role to the private sector and articulates government responsibilities. “Economic growth is necessary but is not sufficient to meet the goals of South Africa’s social development. But without economic growth, as has been proven again and again since the Second World War, you cannot achieve a nation’s goals.” The NDP recognises that a flourishing business sector is required for a healthy, growing economy.

He says given its long-term, forward-looking nature, the NDP was never going to be a plan to satisfy everyone, and was always going to need more work. “The NDP outlines challenges but it is a framework. Business has to develop steps to meet those challenges.” The working groups are doing just that.

Spicer says that in its approach to addressing challenges, business generally likes to work by setting one or two short- to medium-term goals, then executing steps to meet those. “So there is difficulty for business in seeing such a comprehensive analysis. But where and when to start?

“The NDP is good at saying, ‘make choices within the framework,’ and it has about 119 action points. That’s great, but government cannot implement 119 priorities. And as soon as there are more than two or three challenges, it comes to the age-old issue: which are the key ones, given limited resources?”

He says the medium-term budget policy statement make it clear that there is no more new money. The challenge for business is thus to prioritise one or two action points, then assess the implications for the priorities lower down.

In that context, business has prioritised two challenges: infrastructure development and improving regulation.

Infrastructure development

The NDP and the business sector agree that a new round of infrastructure to develop ports, roads, rail networks, airports and housing is needed to trigger a higher level of economic growth.

Spicer says it is also important to get the existing infrastructure running efficiently. “At the moment, we’re constrained. We can’t export all our resources, particularly coal, and our ports are among the most expensive in the world. So it’s not just a funding issue, it’s the efficient functioning of what exists and ensuring new projects are maintained and managed to run efficiently.”

In terms of funding, business is pushing for more private-public partnerships. “PPPs are the right way to do things that are practically difficult. But you need clearly defined objectives as well as agreement and commitment from all parties.”

Improving regulation

The second priority identified by business is regulatory certainty. A focal point is the introduction of regulatory impact assessments (RIAs) to ensure regulations are cost-effective, that they achieve their defined goals and are checked for unintended consequences.

Spicer says business is pushing for two outcomes: to reduce the quantity of regulation; and increase the capacity of institutions to oversee and enforce regulation, particularly over state-owned enterprises. “Bodies such as the Independent Communications Authority of SA need to be strengthened in capacity and independence. Politicians and business interests, whether public or private sector, should not be able to interfere.”

In terms of the push for less regulation, Spicer says there is almost always existing legislation covering an issue but it is not being implemented. “We should rather interrogate why it’s not working before just passing new laws.” Often it is the capacity of institutions to enforce the existing legal framework that is the problem, rather than the legal framework itself.

Perspective is also needed. “If it’s true, as the NDP states, that small-and medium-sized enterprises, and their interaction with large businesses, have the potential to create the most jobs, then the government really has to create an environment for SMEs to flourish.”

Spicer says the NDP sets out objectives against which every legislative move can be tested to see if it takes the country closer or further from those objectives.

Mobilising agent

The NDP has served a secondary, but very important function, says Godsell, and that is to act as a mobilising agent. A good example is the “first 1,000 days” call.

Research has shown that the first 1,000 days in a child’s life are incredibly important for cognitive and emotional development. Thus, a lack of adequate nutrition, shelter, family support and general emotional and cognitive richness can cause critical problems — and once past the 1,000 days, improved nutrition and a better environment do not act as corrective forces.

Tackling this issue raises problems, says Godsell, because some social goals straddle government departments. For example, the Department of Social Development is responsible for early childhood development and health, but the Department of Basic Education oversees education and provincial and local governments have various other responsibilities in this area. There is also a huge number of civil society organisations involved in childhood development as well as crèches and informal caregivers.

“So there is now a major attempt to form a coalition involving civil society organisations, all three spheres of government as well as different national government departments, and businesses, which will tackle the issue through their corporate social responsibility initiatives. The 1,000-day issue is bringing all those groupings together under a common goal.”

A similar coalition has been formed under FirstRand’s Sizwe Nxasana to improve the quality of education. The National Education Collaboration Trust has received R300m from government and is hoping to raise R5bn from business, says Godsell. It is targeting 4,000 schools involving about 2-million learners. Again, it is bringing together national and provincial government departments, civil society organisations and business’s corporate social investments. “They agree on a common set of objectives and will improve things school by school.”

Godsell emphasises that for both coalitions — and indeed, in numerous other aspects of the NDP where similar initiatives are occurring — it will be a long process. “But it’s exciting. It’s the first national set of priorities in which all spheres of government, civil society and business are co-operating. And the areas they’re tackling are areas among the most important aspects of the NDP.

“It’s also exciting because we’re moving beyond the rhetoric and finger-pointing to achieve a long-term, common vision.”