The global crisis has narrowed South Africa’s economic policy options considerably, and business will have to engage with the new government as soon as possible on the prospects for economic growth, said Business Unity of South Africa (Busa) deputy CEO Prof Raymond Parsons.

Speaking at Steel and Engineering Industries Federation of South Africa (Seifsa) annual conference, Parsons stated that the country had to remain committed to growth, job creation, and poverty alleviation during the period ahead.

He added that the newly elected government, led by President Jacob Zuma, would also have to address the constraints that limited the country’s economic performance.

“Business should, therefore, encourage a policy direction that creates a favourable environment for investment and job creation. The private sector remains the biggest single employer in South Africa, and needs the maximum number of jobs at any given growth rate.”

Parsons reasoned that if business wanted to have a greater influence on the future direction of economic policy within South Africa, it had to recognise that the current policy debate was partly an intellectual one, and that it needed to participate in generating new ideas if it was to support the belief that expansion of the private sector was critical in meeting South Africa’s social and economic challenges.

“It is not enough to simply fall back on the ideology of markets. It is necessary to mobilise empirical evidence of how markets can work successfully, and in what circumstances to achieve key socio-economic goals. If a system can be demonstrated to deliver where others have failed, ideology will be less important to the general public. This is a challenge to business.”

Business also needed to avoid creating the impression that narrow-vested interest dominate the national economic agenda, by pushing their own business interest to the exclusion of broader considerations of public policy, said Parsons.

He added that business had to be supportive of stronger competition as well as stiffer penalties for any anti-competitive behaviour in its ranks. “When markets go bad, they have to be made to work better in the interest both of consumers and the broader interest of increased growth.”

Organised business also had to take up the cudgels on behalf of broad business interest and the development of a strong entrepreneurial culture, especially for small business.

“The greatest potential for creation lies with small business. South Africa needs an enterprise-driven economy. Successful businesses are engines of growth and advocacy on behalf of the market economy and overall business interest needs to be backed with empirical research and persuasive arguments. Inevitably, it requires also a creative tension between business and government to arrive at the best answers,” said Parsons.

He added that it would therefore be a high priority for business to engage with new government as soon as possible on the prospects on the prospects for renewed growth in the economy.

“President Zuma has referred repeatedly to consultation and negotiation as the basis for moving ahead. Business at the provincial level should also do likewise with the new provincial governments that are being formed. An effective partnership needs to be forged with the new political leadership at different levels to assist in successfully tackling South Africa’s socio-economic challenges, especially in the areas of job creation and delivery.”

Parsons noted that there was a school of thought that argued that the focus of the Zuma presidency would be around delivery. As current policies were not generally viewed as obstacles to delivery, it has been suggested that the changes in key personnel and composition of the Cabinet reflected the change of focus, and on stricter measurements of policy outcomes to drive the delivery agenda within the current political framework.

“This appears to have been the main thrust of President Zuma’s announcement of his new Cabinet, with the emphasis on competency and delivery. Given the competing needs and diverse interest, the Cabinet comes across as a carefully balanced team.”

He added that whatever the critical evaluations of the recent official announcements and appointments, and despite the present economic difficulties, the fact remained that in many ways, at policy level, it was gearing up to be an interesting year for South Africa.

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