We are in for a big week with the medium-term budget policy statement on Thursday. It must pick up and progress the economic recovery plan that President Cyril Ramaphosa announced two weeks ago.
BLSA set out what it wants from the speech in an open letter to the finance minister and his team last week. The MTBPS has the potential to support a recovery in business sentiment, leading to a recovery in growth and employment.
However, this is not going to happen without the private sector making a concerted effort to support the state. Business makes a major contribution through the tax revenue it generates, both directly and through the employment it creates. But we have contributed much more, particularly since the start of the Covid-19 crisis, with an extensive voluntary effort, channelled through Business for South Africa. That has brought together all social partners to work together to support the fight against the disease and the recovery after.
We have felt during this period the loss of state capacity that arose during the state capture era. It was deep and widespread. It was not just at the level of prominent institutions like the National Prosecuting Authority and revenue services, but across the public sector from municipal engineers to finance functions. A gradual recovery of capacity has been under way in the last few years, but in confronting the immediate challenge of rebuilding post the Covid-19 crisis, the capacity limits are a problem for the reforms and effective public service delivery that we need to happen.
Through the compacting process at Nedlac, we have committed that business will assist the state during the recovery by using its capabilities and resources to fill gaps where necessary. This means companies must be willing to volunteer further people and resources. Already, many have made key personnel available to support government where temporary gaps need to be filled. Some have also directed their output toward products and services that were contributed without charge. This has helped to deal with the crisis we have faced. But the battle is not over until we have fully recovered.
BLSA, together with its members and partners, has played an important role in mobilising private sector resources to support the public good. It is critical that we continue to do so as the rebuilding effort takes hold. The recovery plan will call on all social partners to contribute to delivering it, including business. Doing so will pay off for business by helping the economy to recover faster, contributing to a better business environment.
As we continue working with the public sector and presidency on the roles social partners will play in the recovery, I will be sharing more information on how business can contribute.
There is one overarching goal for the finance minister in the MTBPS: to rebuild confidence in the economy, I wrote in Daily Maverick. Without confidence in the future, companies will not invest in growing their businesses. If they don’t, the economy will not grow sufficiently to address our unemployment crisis — regardless of any stimulus measures the state may institute. And there are two prerequisites for building such confidence: policy certainty and a clear view of the state of government finances.
The focus on tourism in the president’s economic recovery plan was vital. Income for the country’s tourist accommodation industry fell 81.2% in August, which reflects how hard the road ahead is for the sector. Furthermore, the lockdown’s devastating impact on tourism is particularly concerning as it is a significant employer of women and youth, I wrote in my Business Report column.
In an economy bludgeoned by the Covid-19 pandemic, we have to come up with solutions to the structural unemployment crisis. The first correction we should make in our collective strategy is to understand that sustainable jobs are created by business and that the state’s role is to develop a conducive environment for them to react to market forces, I wrote in Business Day.
The president’s economic recovery reflects many of the issues that BLSA has repeatedly highlighted that are constraining growth. These have now been made priorities, I wrote in Daily Maverick in a reaction piece to the plan. We all have much work to do for South Africa to regain its economic momentum that will deliver the inclusive growth to make for better lives for all. Business is ready to do its part.
This is a weekly newsletter from BLSA CEO Busi Mavuso.
BLSA is a business organisation that believes in South Africa’s future and shares the values set out in the Constitution. In 2017, BLSA signed a contract with South Africa, committing business to playing its part in creating a South Africa of increasing prosperity for all by harnessing the resources and capabilities of business in partnership with government and civil society to deliver economic growth, transformation and inclusion.
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