Day: March 7, 2018

For reasons that that have to do with our past, the relationship between business and government in South Africa has taken different forms over the past few years. Following the dawn of democracy in 1994, the relationship between the two stakeholder groups has broadly taken at least three forms.

During the Mandela years, business was an enthusiastic partner which was immensely relieved that the country had made a peaceful transition from a period when South Africa was ostracized as an international pariah that had to contend with punitive economic sanctions to a democratic era. Generally, therefore, business fell all over itself to work with the Mandela government in an effort to redress some of the wrongs of the past. All Madiba had to do was to pick up the phone and dial the numbers of captains of industry of the time to get significant contributions made or pledged towards the construction of schools or clinics, for instance.

During the Thabo Mbeki presidency, strains appeared for the first time in that relationship. This followed the Mbeki government’s emphasis on transformation in general and black economic empowerment in particular, and on the adoption of a strong African – as opposed to rainbowish – identity for the country. That was the era when the first version of the Mining Charter was concluded and when various high-profile BEE transactions were concluded.

However, even as he came down hard on business when it came to transformation, nevertheless President Mbeki appreciated the strategic importance of business when it came to job creation and economic growth and surrounded himself with some of the wisest businessmen and women who served as his economic advisers.

During the Zuma presidency, a serious disconnect between business and government occurred for a variety of reasons, among them open hostility from the governing party towards business and the former’s poor management of the economy. In word and deed, business – like educated black compatriots who were labelled as “clever blacks” – was positively considered an enemy, with greater emphasis placed on the public sector, particularly State-owned companies, as strategic levers to deliver on job creation and, subsequently, on the need to create black industrialists.

It is during the Zuma presidency that organized black business walked out of Business Unity South Africa, which was formed during the Mbeki era, to form the Black Business Council.

Generally, then, business’s relationship with government evolved as follows over the years, with the former:

• Being fervent proponents, beneficiaries and enforcers of apartheid;
• struggling through the lean years of economic sanctions in the late 1980s, during which some – like Anglo American – began to review some of their policies and American companies operating in South Africa were forced by the Sullivan Principles to embrace and even nurture black talent;
• falling in love with the “rainbow nation” dispensation of Nelson Mandela and the opportunities that it heralded for it, with most of the established big companies enthusiastically partnering with Madiba in their corporate social investment initiatives;
• accepting the imperative of economic transformation by implementing BEE policies and concluding some high-profile BEE transactions during the Mbeki presidency; and
• being sidelined and becoming disillusioned with the Zuma administration and, consequently, taking the foot off the transformation pedal.

The five eras described above show that the Zuma era was very much an aberration. Throughout the period outlined above, business was acknowledged as a strategic stakeholder not only with a responsibility to obey the country’s laws, such as they were, but also with rights to articulate its own concerns to the powers that be. That much was acknowledged by the PW Botha, FW de Klerk, Nelson Mandela and Mbeki governments.

It was only during the Zuma years that business – especially “white business” – was myopically considered to be an enemy to be starved of oxygen. “White monopoly capital” was to be crushed.

Notwithstanding the unfortunate experience of the past nine years, business remains a legitimate – and strategic – stakeholder without which South Africa would not realize its true economic potential. After all, it is business that creates jobs, pays corporate taxes from the profits that it generates and employs men and women who go on to be taxpayers. The Government’s role in the economy is to create a climate conducive to growth, ensure policy certainty and coherence, and sell the country abroad as an attractive investment destination.

Therefore, even in present-day South Africa where significant portions of business are not as transformed as they should be, business has every right to make its voice heard on matters of importance to it and to lobby – transparently and not through backhanders and other such fraudulent inducements – for policies that it deems to be in business’s interests.

Perhaps more importantly, business needs to engage in a meaningful partnership with the elected government and to temper its own interests with those of the country. For instance, while some myopic business leaders may not fully appreciate the need for transformation, it is fundamentally in the country’s – and, by extension, their own – best interests that thorough-going economic transformation occurs expeditiously.

Therefore, while it is well within its right to advocate for certain policies that it considers necessary for growth, nevertheless business remains obliged to respect and observe all the country’s laws, and not only those with which it agrees.  The extent to which business can be taken seriously and, therefore, have a higher degree of success with its lobbying activities depends very much on its perceived legitimacy.

Business’s collective social and political legitimacy will be considerably enhanced by the degree to which it embraces transformation, removes vestiges of racism that may remain hidden in its crevices and works with the elected government to combat corruption – including collusion – within its ranks. To this end, the CEO Initiative was a powerful example of the kind of meaningful partnership that is required between business and government.

As a corporate citizen, business has every right to make its voice heard on important matters of the day – especially on policy incoherence, destructive policies, corruption and poor governance – that will have negative economic and social consequences for the country. Like civil society, business needs to remain alert at all times, regardless of the government or individual in power at a given moment.

However, in so doing, business will be well advised to avoid falling into the trap of backing one or the other faction within the governing party or one party versus others in our body politic. As a collective, business must be above the political fray and stand only for principles, and not for individuals or parties.

Kaizer M. Nyatsumba

Chief Executive Officer