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Big business outlines interventions for restoring confidence

7th October 2016

By: Terence Creamer

Creamer Media Editor

  

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Business Leadership South Africa (BLSA), which is an association of the biggest domestic and multinational businesses in the country, urged government last month to take three urgent steps to demonstrate its commitment to delivering on its promise to support the economy and restore investor confidence.

In a statement issued following a board meeting and signed by president Saki Macozoma, chairperson Bobby Godsell and CEO Thero Setiloane, BLSA called for government to ensure that:

  • Government policy on electricity generation from independent power producers (IPPs) is unchanged and both existing and further requested contracts are honoured.
  • The new board of South African Airways (SAA) produces a credible plan for financial sustainability within a specified time.
  • And that President Jacob Zuma expeditiously signs into law the new Financial Intelligence Centre (FIC) Act passed by Parliament.

The IPP sector has been thrown into deep uncertainty following revelations of Eskom’s unwillingness to sign further power purchase agreements beyond projects selected during the fourth bid window of the Renewable Energy Independent Power Producer Procurement Programme.

There is deep societal concern about the state of SAA in light of a decision to extend further guarantees of nearly R5-billion to a national carrier that reported a loss of R5.6-billion in 2014/15 and where questions persist about governance standards under chairperson Dudu Myeni.

The failure of Zuma to sign the FIC amendments, which will bring the county into line with global efforts to combat money laundering and tightens rules around politically exposed people, could have serious consequences for the global standing of domestic banks.

“We are seeking further meetings with the President and senior members of government and the ruling party to address these issues,” BLSA said.

The organisation also reiterated its earlier “grave concerns” about actions taken by the South African Police Service’s the priority crime unit, the Hawks, which targeted Finance Minister Pravin Gordhan. BLSA said the actions created further uncertainty about the management of the economy.

“To date, nothing has been done to allay our concerns. Instead the announcement, by Minister of Mineral Resources Mosebenzi Zwane, of a proposed Commission of Inquiry into the four major banks, followed by its repudiation by the Presidency, have just added to concerns about attempts to undermine the Minister and the National Treasury.”

The Hawks recently demanded that Gordhan provide it with a statement relating to its ongoing investigation into the legality of an investigative unit set up when he was commissioner of the South African Revenue Service (Sars). Gordhan refused to meet with the unit, noting that he had responded to earlier questions posed and had been told by the Hawks that he was not a suspect.

BLSA called on government to deal with threats to the National Treasury and the financial sector, by ensuring that the enquiry relating to Sars was conducted by a credible and appropriate institution such as the Public Protector, whose mandate it is to investigate maladministration and abuse of power in State affairs.

“In stark contrast to what is playing out live in the public sphere, we have seen some signs behind the scenes of a glimmer of light. Business and government, led by the President and the Minister of Finance, have been working together to put in place measures to prevent a credit ratings downgrade, restore investor confidence, and increase inclusive growth for our economy. We believe that there are signs that both parties are starting to make the necessary commitments and sacrifices to address our national challenges.”

Nevertheless, it urged government to more actively demonstrate its focus on delivering on its promises to support the economic environment, improve the governance of State-owned enterprises, and be purposeful in uprooting corruption.

It added that the “crisis” South Africa faced was severe and that stability in the country’s economic governance institutions was necessary to “turn the corner and build an inclusive economy that benefits all South Africans”.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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