BLSA CEO’s newsletter – 13 December 2021

POSTED ON: December 13, 2021 IN by Admin

By Busi Mavuso

Make no mistake, this year has been the worst we’ve had in terms of energy availability. By November we had faced over 1,000 hours of load shedding for the first time since the crisis began.

When we look back at 2021, I think we will note it for two clear markers: it was the year the energy crisis reached its peak, and the year we began to win against the pandemic. As we look forward into the new year, both will stand us in good stead.

Make no mistake, this year has been the worst we’ve had in terms of energy availability. By November we had faced over 1,000 hours of load shedding for the first time since the crisis began. But it was also the year in which the first decisive step was taken to ending the crisis with the amendment of schedule 2 of the Electricity Supply Act to allow companies to create electricity generating facilities of up to 100MW without a licence.

We should start seeing new production going live within the next 12  to 18 months, signalling a fundamental shift in how electricity is produced to a greener, lower cost and more reliable future. Add in the future rounds of the independent power producers’ renewable energy programme and we are diversifying our power sources substantially, which is key to long-term supply stability.

It has also been the year that we took a decisive step against the Covid-19 pandemic with the rollout of our vaccine programme. As we head into the end of the year, we are going to fall far short of the 70% target we had set ourselves to vaccinate of the adult population, with just 44% done as of last week. After a late start, government did well to secure a good pipeline of vaccine supplies and set up a wide distribution programme in partnership with the private sector. But we have faced real challenges in reaching far more of the population. The reasons are complex including logistics, economics and attitudes. Too many of our population live precarious lives in which every hour of every day is a battle and taking time out for vaccines is not feasible.

Vaccine mandates from employers are becoming more frequent and right now look to be the best tool we have to drive greater uptake. But we also need more creative interventions to get vaccines closer to people so the cost to them of vaccinating is minimised and add further incentives such as vouchers.

I hope we may also one day be able to say that this year was the worst ever for employment. But I fear we are not doing enough to turn the trajectory on the shocking unemployment figures reported for the third quarter, showing almost half of the labour force was out of work on the expanded definition. The economic growth figures told the story behind the employment decline, with the economy shrinking 1.5% between the second and third quarters.

As we head into the holiday break, my ardent wish is that we return filled with energy to take on our economic crisis. I have many times in this space argued for the structural reforms we need. Some, like energy supply, have been made in part, though we still need to deliver a fully restructured Eskom including spinning out an independent system operator that can procure electricity from the lowest cost providers. But many other reforms have not yet been delivered. Spectrum auctions must be concluded in the new year. We must fix visa policies that continue to make it hard for businesses to attract the skills we need and constrain our tourism industry. We must cut red tape that constrains businesses in so many ways – from the detail of BEE regulation to exchange controls. We must continue to fix our state-owned enterprises, including Transnet, which must bring private operators in to improve port and rail efficiencies. We must kick start the major infrastructure investment programme that we need, with private sector funding mobilised to invest in well-structured and bankable public infrastructure projects.

The unemployment crisis needs a new maturity that lifts taboos about revisiting labour laws. We must be serious about the potential for reforms to make the labour market work better and deliver greater employment. We must confront the negative incentives that employers face in expanding employment. We must also fix the structure of bargaining processes, including the compulsory extension of agreements to employers who haven’t even participated in negotiations.

As ever, we take steps forwards as well as backwards. I believe 2021 has seen some very solid steps forward. Next year will be the time to capitalise on them as we finally quell the pandemic and energy crisis. Further reforms must be tackled with energy to ensure that 2022 marks a decisive point in the economic recovery. I look forward to working with counterparts in government, labour and civil society to make that happen. Until then I wish all our members and counterparts a restful break and happy new year.

It is astounding that there were 660,000 fewer people employed in the third quarter of this year than a year earlier, considering that a year ago we were in a lockdown, I wrote in my Business Day column. This reflects a collapse in business confidence beyond the effects of Covid and unrest in July. Our businesses just don’t believe it is profitable to invest and expand. The tragedy is that the solutions have been recognised and largely acknowledged as such for a long time but, for various reasons, implementation of reforms to accelerate economic growth and create jobs has been long-delayed.

Last year the Department of Tourism instituted the Tourism Relief Fund in response to the initial devastation caused to tourism businesses by the hard lockdowns. Sadly, it seems to have been shut down but it’s critical that this fund be revived or replaced, I wrote in fin24. The Covid pandemic has devastated the December season for two consecutive years which is all the more concerning as tourism is a significant employer of women and youth.

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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