BLSA CEO Letter – 15 August 2022
POSTED ON: August 15, 2022 IN by Admin
I spend a lot of time in engagements with other social partners about how business can best work with government and others. I have learned there are effective ways of getting positive outcomes but there are also ineffective ways that disappoint everyone. Let me explain by way of two examples.
The first is how we are dealing with our energy crisis. Obviously, business is concerned about electricity supply – loadshedding makes doing business expensive if not impossible. So, we have been at the forefront of engagements with key role players like Eskom and government.
Two weeks ago Eskom CEO Andre de Ruyter asked business to help. What made it easy for us to do is that he set out clear and specific ways: companies can lease land they own to independent power producers; they can sign power purchase agreements with producers so that they can take their projects to banks and other funders to raise finance; he wants support in promoting energy efficiency and reducing demand; he wants help in protecting Eskom’s equipment from sabotage and theft.
On Friday business convened to discuss how to take forward the requests. We are engaging with the agriculture business chambers to look at suitable land that can be made available to IPPs. Multichoice has agreed in principle to support an energy saving marketing campaign to the public. We are working with several business partners to work out how we can support safety and security of Eskom’s infrastructure. These will lead to practical and positive outcomes.
The second example is how we are supporting the criminal justice system. The rule of law is essential to business – it ensures counterparts can be trusted and it enables us to be part of the global business community. We are very conscious of the exceptional damage done to the criminal justice system by state capture. We have long worked to fight crime through our subsidiary Business Against Crime, and now we are working with the National Prosecuting Authority to ensure it can access the skills it needs from the private sector to support prosecutions, from forensic accountants to advocates. We have signed a memorandum of understanding to ensure any support is appropriate and protects the NPA’s independence. Again, we have clear and specific ways to help that align with our overall objectives.
These are just two examples among many in which organised business is working to support the public sector to deliver positive outcomes for all South Africans.
In contrast, the requests that we can do nothing about are generally vague and open-ended asks of business. For example, we are often told that business should invest more or employ more people. Such requests, on their own, are not helpful.
The conditions under which business will invest or hire more people are no mystery. There must be a change in the opportunities for business in the economy, opportunities that make it feasible to expand without taking undue risks. This is why we often talk about structural reforms, which are changes to the way the economy works to improve its effectiveness and shift the risk/return outlook for business. A good example is the change to the Electricity Regulation Act to allow businesses to generate electricity without a licence, which has triggered billions of rands of investment and simultaneously helped to solve the energy crisis. This change is working because it shifts the outlook for business and enables it to put capital at risk to build and expand. But requests in which there is no change to the outlook on offer, merely the request to expand, are meaningless.
We would be able to do more together if these fundamental principles were more widely understood. I am more than happy to engage with government to point out problems that constrain companies and prevent them from investing and expanding. Together we can work on solutions that will result in more investment and employment. But investment and employment cannot be a starting point, it must be an outcome.
The memorandum of understanding BLSA signed with the NPA last week enables organised business to mobilise skills from the private sector to assist with complex cases, I write in Fin24. Building a capable state is one of organised business’ primary goals. Business is also working with government to improve capacity through Operation Vulindlela and numerous other initiatives.
There is no magic elixir for our unemployment crisis, I write in Business Day. The plight of the poor is worsening month by month as inflation rises. The state can invest in its people and in the economy in many ways to provide short-term upliftment.
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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