Finance Minister Nhlanhla Nene has warned that current measures being used to increase the country’s competitiveness – from industrial incentives and infrastructure investment, through to cutting red tape for small businesses – will be insufficient to ensure higher economic growth and more jobs.

Government, business and labour, he told businesspeople on Tuesday, had to work more closely together to ensure the innovative and optimal mobilising of resources necessary for economic progress.

“We must find a balance between meeting the earnings expectations of shareholders, the realisation of the vision of economic transformation required by the electorate and occupying our rightful place as global corporate citizens,” Nene said at a forum organized by KPMG.

He also insisted that such a balance was possible, pointing to South Africa’s political settlement that brought about democracy in 1994 as an example of “what can be achieved if we all commit to finding such a balance”.

The speech echoed many of the themes raised by President Jacob Zuma in his recent State of the Nation address, when he announced that Deputy President Cyril Ramaphosa had been mandated to convene a “social partners dialogue”, through the National Economic Development and Labour Council, to improve relations between government, business and labour. Zuma also promised to convene a meeting of the 'Presidential Business Working Group' in a bid to find solutions to the current obstacles to doing business in South Africa and to meeting government's 5% growth target.

Both Nene and Zuma spoke against the backdrop of a slew of bad economic news. Only days prior to the address, Standard & Poor’s (S&P’s) Ratings Services cut South Africa's foreign and rand-denominated debt ratings by a notch each, to BBB- and BBB+ respectively, while Fitch Ratings cut its outlook for the country to negative, a possible precursor to a future downgrade.

However, Nene also stressed that government and business were already working together, highlighting in particular a collaboration related to the cutting of red tape.

“The director-general of the National Treasury and Mr Bobby Godsell co-chair a process that has yielded results in terms of addressing blockages to the issuing of water licences. This process is also dealing with environmental regulations relating to mining as well as bottlenecks relating to business registrations. I invite you to approach these two gentlemen with examples of red tape, but most importantly proposed solutions,” Nene said.

The Minister also appealed to business to help with the following:
• The identification of sector-specific interventions to increase productivity and innovation.
• The development of housing rental stock for workers near places of employment.
• And the identification of opportunities for growth on the continent and the furthering of regional integration.

“The National Development Plan (NDP) presents us a menu of solutions. Our joint responsibility now is to break the plan into smaller, bite-size chunks,” he said, while warning that the downside risks in the global and domestic economy could make the NDP implementation difficult and would require tradeoffs, especially in light of limited fiscal resources.

But government was committed to supporting the private sector through maintaining macroeconomic stability, addressing the country’s infrastructure deficits and improving the competitiveness of labour-absorbing industries. “The Presidency has opened the door to dialogue and joint problem solving by government and business.”

In addition, the ending of the strike in the platinum sector should have a positive impact on sentiment and ultimately economic growth.

“Of the total mining sector contraction of around 25% in the first quarter, the drop in platinum production, as a result of the strike, accounted for about 19 percentage points. To this end, the news of a settlement is most welcome.”