In a weekly newsletter, Business Leadership South Africa (BLSA) CEO Busi Mavuso has commented on various prevailing issues in South Africa, including the legal action that government is facing around lockdown regulations and the tobacco ban, as well as still-struggling State-owned enterprises (SOEs).

She believes the social solidarity that is essential to the Covid-19 fight is fracturing, despite the cases and death toll related to the virus continuing to rise.

An example of this is the court action that government is facing on several fronts. In the first week of June, the High Court declared various lockdown regulations unconstitutional, stating that government had not property considered the impact of the regulations on people’s constitutional rights.

Government is in the process of appealing the decision but, for a frustrated public, the court finding currently gives legitimacy to their grievances over the lockdown.

Mavuso explains that although government considered the constitutional right to life in their decisions during the lockdown, the High Court’s criticism focused on rationality, asking how, for example, it can be rational for 50 people to attend a funeral, but not for close family to be able to visit each other for comfort during their last days.

“In protecting lives, government  cannot trample on other rights for no good reason,” she points out.

In the meantime, Mavuso says business leaders and society at large cannot afford to lose focus in the fight against Covid-19. She notes that whatever courts find on lockdown details, there is no doubt that physical distancing and health protocols work and must be in place.

SMOKING A HOT TOPIC

Government’s ban on the sale of tobacco products will be tested in court in mid-June. Government will have to demonstrate that the ban was well motivated in that it reflects the best scientific thinking on how smoking affects Covid-19 outcomes.

It will also have to demonstrate that the ban is effective in actually reducing smoking and not instead creating a thriving illicit tobacco industry that will create greater harm to the public – in the form of lost tax revenue, increased criminality, increased risk of infection and a loss in earnings for legitimate companies.

Mavuso has argued that the ban is doing more harm than good.

STATE-OWNED CHAOS

BLSA late in May hosted Public Enterprises Minister Pravin Gordhan on a webcast to discuss government’s plans for the economic recovery of SOEs.

Mavuso explains that the overhauling of SOEs involves evaluating the relevance of each, assessing its business model, recognising its fault lines and modernising and restructuring, while tackling the corruption issue.

She points out that the politics of the governing political party changed ten years ago when the financial sector crisis called for an increased role of government in the State. Government wanted to drive a developmental agenda through control of SOEs.

However, South Africa’s report card since then has not been kind on the State, with Eskom and South African Airways riddled with debt and many other SOEs dysfunctional.

“Recently published African National Congress economic proposals show that, in at least one aspect, we could expect some welcome change – it is now open to some degree of private ownership of SOEs.

“However, offering only a small stake in any entity will not appeal to investors if they do not gain any say over the running of the company,” Mavuso notes.

She adds that, at the very least, the State will need to offer controlling stakes, which will enable investors to ensure that they can fix what is broken and set them on a path to recovery, or offer minority stakes with very stringent management contracts granted to those investors.