Economic growth crucial at this venture, says BLSA CEO

1st February 2021 By: Tasneem Bulbulia - Senior Contributing Editor Online

The imperative of economic growth is now even more obvious than at the start of the pandemic, which government had reacted to rapidly, Business Leadership South Africa (BLSA) CEO Busi Mavuso said in a weekly newsletter.

She noted that, in March 2020, a state of disaster was declared and many emergency regulations were fast-tracked.

“As a result, a lockdown was introduced rapidly and President Cyril Ramaphosa won praise domestically and abroad for decisive action. It was a brief glimpse of what a decisive and active government can achieve,” Mavuso acclaimed.

However, almost a year later, it feels as if that period was far too brief, she noted.

Ramaphosa will this month present his State of the Nation Address (SoNA), but Mavuso said that he would be able to report little progress from the one he gave last year.

“Certainly, the pandemic has disrupted many reform plans, but it has also made them more urgent. He noted then that our economy has 'not grown at any meaningful rate for over a decade'. It has since plunged.

"The President’s interventions, ranging from infrastructure investment to improving the ease of doing business, could all help in the effort. It will need the spirit of decisiveness and action that characterised the start of the pandemic,” she emphasised.

With regard to the pandemic, Mavuso posited that the interventions by government now continue to miss the mark.

She mentioned that government needed to clarify when the ban on alcohol sales would end or under what conditions.

“If we were serious about protecting the economy, government would be focused on helping the alcohol industry through the sales ban, providing clear guidance on when it will end and supporting the industry in making contingency arrangements,” she noted.

Moreover, she mentioned that last week also saw Musica shut down and Ster Kinekor enter into business rescue.

“Of course, both of these mall staples have had their business models rocked by the digital era. Ster Kinekor was adapting and was profitable until the Covid-19 pandemic hit, slowing the release of block busters while bans on gatherings kept cinemas empty. The struggles of these businesses are multiplied across the economy. They illustrate how large the task will be to recover, requiring decisive leadership to do so,” she noted.

Mavuso mentioned that, in last year’s SoNA, Ramaphosa said the Independent Communications Authority of South Africa (Icasa) would auction new spectrum by the end of 2020; however, this had still not been done.

“Now, Icasa is being taken to court over the auction by several companies, including Telkom and MTN which both argue for different reasons that the process is flawed. While we hope the legal issues can be resolved quickly for this important auction to happen, it does not reflect well on the process that it is so vulnerable to legal challenge,” she said.

Mavuso said some of Ramaphosa’s commitments on the energy front have happened, particularly the Ministerial determination that gives effect to the Integrated Resource Plan 2019.

However, she indicated that the country was still waiting for Bid Window 5 of the Renewable Energy Independent Power Producer Procurement Programme, as well as the results of the emergency power purchase round.

“More should also be done to make it easier for companies to generate their own electricity,” she emphasised.

“Of course, I respect that the pandemic has sapped up a lot of energy and delayed much of the reform agenda. But it has also illustrated what we can do when we are really focused. The state of the economy is now a national emergency and requires all of that focus. Many, many jobs have been lost.

"Now is the time to show a return to the resolve to confront these challenges head on and rapidly implement the reforms that will finally turn our economic trajectory,” Mavuso said.