The economic recovery plan announced by President Cyril Ramaphosa last week does a good job of setting out the issues that are constraining the economy, from a lack of infrastructure to visa rules, says business organisation Business Leadership South Africa (BLSA) CEO Busi Mavuso.
“This is good progress and represents alignment between business and government, at least in describing what the problem is. For many years, we have not even been able to do that. But diagnosing the illness is not the same as curing it. And that's where our challenge now lies.
"We need a far more functional State than the one we have, degraded as it is by years of corruption and mismanagement. The process of repairing the State has been under way since Ramaphosa took office but it is a long and difficult one,” she notes in a weekly newsletter, published on October 19.
Mavuso posits that, if South Africa is going to deliver on the economic recovery plans, it will need to draw on business's skills and capacity.
To deliver the infrastructure programme, for example, will require engineers and legal experts who can create the right contracting frameworks.
“We are lucky in South Africa that we have a deep pool of skills in the private sector that can be accessed and this is likely to be the route we must take in the short term. In responding to the crisis, business has volunteered people while putting money and production into solving the immediate challenges we have faced. But we mustn't be naive about this – we need to ensure that any private sector input is done on the right basis to ensure alignment of interests.
"It is important that the right framework be in place to do so – volunteering is not sustainable in the long term. There must be clear agreements with providers, even when they are volunteering, that aligns interests.
"There should be a proper procurement framework so there is legal accountability on any private sector supplier. Without the right framework for drawing on the private sector, there is a risk that other agendas interfere in the process of delivering the recovery programme,” she emphasises.
Mavuso says the issue is about how to mobilise resources, while also ensuring accountability.
“The economic recovery plan sets out much that has to be achieved, including many regulatory changes, the procurement of energy, the auction of digital spectrum and so on. Much must also be done by the private sector, including mobilising billions in investment to fund infrastructure while also building it. And where government lacks capacity, business is ready to provide support,” she notes.
Mavuso avers that accountability from the private sector can be assured through formal legal engagement mechanisms, provided that these are done correctly.
“Missed deadlines and similar infractions can have financial penalties tied to them. But we also need a clear accountability mechanism for the public sector. We need the private sector to have enough confidence in public delivery that we can make multibillion-rand investment decisions with savers’ money that we have been entrusted with to look after,” she explains.
Mavuso also references Ramaphosa’s State of the Nation Address from February, wherein he said he would be signing performance agreements with all Ministers before the end of that month.
Mavuso notes that while nothing has materialised from this as yet, given that the pandemic hit shortly after, as part of the recovery plan, the country needs to go back to those performance agreements and include delivering on the recovery plan.
“Accountability – both from the private sector that must be drawn on to provide skills and needed resources, and from the public sector that must deliver new policy – is critical to ensuring that our economic illness can be cured,” she says.
BLSA published its response to the economic recovery plan on the day it was announced. While generally supportive of the plan, among other issues, the organisation pointed to the temporary nature of the President’s mass employment plan.
“It is important in providing rapid, temporary relief, to those left unemployed by the Covid-19 crisis as well as others who have been unable to find work before it. But it is only through economic growth and policies to stimulate employment in the private sector that sustainable jobs can be created.
"We are concerned that a public works programme can become a substitute for the policies that stimulate employment in the private sector. Sustainable employment comes from a productive business sector that is competitive,” the organisation emphasises.