This week is an important one in that South Africa’s Medium-Term Budget Policy Statement (MTBPS) will be presented by Finance Minister Tito Mboweni on October 28, having the potential to support a recovery in business sentiment leading to a recovery in growth and employment, says Business Leadership South Africa (BLSA) CEO Busi Mavuso.
BLSA last week set out what it expects from the MTBPS speech in an open letter to Mboweni.
However, Mavuso says business recovery will not happen without the private sector making a “concerted effort” to support the State.
“Business makes a major contribution through the tax revenue it generates, both directly and through the employment it creates. But we have contributed much more, particularly since the start of the Covid-19 crisis, with an extensive voluntary effort, channelled through Business for South Africa.”
These efforts have brought together all social partners to work together to support the fight against the disease and the recovery thereafter.
In addition, Mavuso states that, during the Covid-19 crisis, South Africa felt the loss of State capacity that arose during the State capture era. “It was deep and widespread. It was not just at the level of prominent institutions like the National Prosecuting Authority and revenue services, but across the public sector, from municipal engineers to finance functions.”
She says a gradual recovery of capacity has been under way in the last few years but, in confronting the immediate challenge of rebuilding post the Covid-19 crisis, the capacity limits are a problem for the reforms and effective public service delivery that South Africa needs to take place.
Through the compacting process at the National Economic Development and Labour Council, commitment has been made business to assist the State during the recovery by using its capabilities and resources to fill gaps where necessary.
“This means companies must be willing to volunteer more people and resources. Already, many have made key personnel available to support government where temporary gaps need to be filled.”
Further, Mavuso says some businesses have also directed their output toward products and services that were contributed without charge. “This has helped to deal with the crisis we have faced. But the battle is not over until we have fully recovered.”
As such, she points out that the BLSA, together with its members and partners, has played an important role in mobilising private sector resources to support the public good. “It is critical that we continue to do so as the rebuilding effort takes hold. The recovery plan will call on all social partners to contribute to delivering it, including business. Doing so will pay off for business by helping the economy to recover faster, contributing to a better business environment.”
Meanwhile, Mavuso says an overarching goal for Mboweni in the MTBPS is to rebuild confidence in the economy. “Without confidence in the future, companies will not invest in growing their businesses. If they do not, the economy will not grow sufficiently to address our unemployment crisis, regardless of any stimulus measures the State may institute.”
In this regard, she highlights two prerequisites for building such confidence – policy certainty and a clear view of the State of government finances.
The focus on tourism in President Cyril Ramaphosa’s Economic Reconstruction and Recovery Plan is vital, says Mavuso. “Income for the country’s tourist accommodation industry fell 81.2% in August, which reflects how hard the road ahead is for the sector. Furthermore, the lockdown’s devastating impact on tourism is particularly concerning as it is a significant employer of women and youth.”
In an economy “bludgeoned” by the Covid-19 pandemic, South Africa has to come up with solutions to the structural unemployment crisis. “The first correction we should make in our collective strategy is to understand that sustainable jobs are created by business and that the State’s role is to develop a conducive environment for them to react to market forces,” she concludes.