Some occurrences in recent weeks have boosted business confidence in South Africa but policy direction remains unnecessarily hostile to business, especially the alcohol industry, says Business Leadership South Africa (BLSA) CEO Busi Mavuso.
She lists the occurrences as improvements in vaccination rates, in that it has been expanded to include those over 35, the arrest of former President Jacob Zuma that signals a working rule of law, the in-principle agreement to sell 51% of South African Airways and positive policy moves such as increasing the licensing-exemption threshold of embedded power generation projects to 100 MW.
Nonetheless, South Africa is facing a third wave of Covid-19 infections and lockdown restrictions are dealing severe blows to the economy.
Mavuso says President Cyril Ramaphosa’s extended Level 4 lockdown announcement on July 11 is another missed opportunity where government could have engaged with business to manage the negative fallout of the lockdown.
She mentions that several industries have tried consulting with government on how unintended consequences can be managed, but they have been met with closed doors.
For example, although Ramaphosa acknowledged the vital contribution of the alcohol industry to the economy, the reality is that his government has refused to engage with the industry, Mavuso states.
This leads to unnecessary job losses and lost investment. “Protecting what we already have should be the first step in building jobs in the economy,” she points out.
Mavuso laments that it may well be that restrictions on alcohol sales are necessary, but the last alcohol ban caused a major boom in the illicit industry. She remarks that the amount of unregulated and smuggled alcohol now makes up 22% of all alcohol sold, before the latest ban.
This has long-term negative social consequences, coupled with losses in tax revenue. Last year, the illicit industry accounted for R11-billion in lost revenue for the tax collector.
“Proper engagement with the industry would have explored ways to stop this outcome,” Mavuso states, illustrating that government could have rather eased export restrictions to redirect volumes from the domestic market.
The alcohol industry is taking government to court, with arguments including that the bans and lack of engagement fail to meet the minimum requirements of rationality and fair process.
“It is unnecessary for business and government to have to face off in court when the alternative of consultation is lower cost and has such clear positive public benefit payoffs,” Mavuso notes.
She adds that there are many examples around the world where governments have faced this pandemic hand in hand with business to ensure their economies do not suffer unnecessarily.
“We already have 1.4-million fewer jobs than we had before the pandemic. We should be taking every opportunity we can to reduce that number rather than add more from the 200 000 people employed in the alcohol value chain, from formal to informal sectors.
“Business has been a willing partner to government, demonstrating utmost goodwill in fighting this pandemic. From the joint effort of the Solidarity Fund to support on accessing global vaccine supply chains, business has been there to aid the fight.
“But we need government to also be a partner in minimising the damage that businesses suffer from policy interventions to slow the spread of the virus. An open door to consult on options is the minimum we should expect,” Mavuso laments.