Everyone, from the South African Reserve Bank (SARB) to organised labour, can see what must be done to get the country back on a growth trajectory, but little seems to change, CEO Busi Mavuso says in the latest newsletter from Business Leadership South Africa.
She welcomes SARB governor Lesetja Kganyago’s comment in a Monetary Policy Committee statement last week that a faster growth rate depends on implementing prudent macroeconomic policies and substructural reforms.
He said that monetary authorities can only do so much and that in holding the repo rate at its record low of 3.5%, the cost of borrowing is not constraining South Africa from growing, but the lack of reform is.
“Organised business has been saying this for years. If you want investment, change the policies that are choking it off,” Mavuso asserts.
She suggests that government allow network infrastructure providers access to spectrum so they can then invest in towers and other connectivity, for example. Mavuso also highlights that mining companies should be given certainty about the regulatory environment and they will start prospecting for minerals.
“Let companies have simple access to skilled people they can bring in to run complex operations with an appropriate visa regime. Allow companies to generate electricity for their own operations with minimal hassle. Even better, allow them to sell excess production to the grid,” Mavuso urges.
She believes those concrete reforms would immediately improve investment prospects and recovery.
The macroeconomic reforms needed include fixing the precarious state of the government’s finances, she adds.
Mavuso says it is difficult for companies to invest to grow the economy while there is uncertainty about whether the government will be able to meet its obligations.
That requires prudent management of State resources but also interventions to help the economy grow. Ultimately, the State’s financial position can be restored only by an economy that is growing and generating taxable revenue.
“These reforms are widely agreed. It does not matter how you analyse the country’s predicament – you inevitably conclude that these reforms are necessary. We need to seriously tackle long-term growth constraints and make deliberate interventions to change how we do things.
“President Cyril Ramaphosa has committed to delivering them. There is also a commitment to drive infrastructure investment in the economy. Yet, these commitments have not turned into reality,” Mavuso states.
Energy procurement and spectrum auctions have been delayed several times and missed many deadlines. There is no lack of agreement – the failure simply seems to be one of implementation, she adds.
Last year, organised business, together with labour and civil society, engaged with government through the National Economic Development and Labour Council to develop an economic recovery plan.
After a Cabinet process, the President released it publicly as the Economic Reconstruction and Recovery Plan. Mavuso notes that this was an achievement – it showed how everyone is aligned on what needs to be done.
It committed to reforms that are needed, such as the way infrastructure is procured in the public sector to enable greater private investment. "But it was all pointless if we are not now following through on the required changes", she states.
“Everyone can see what must be done. We say it repeatedly but little seems to change. As organised business, we remain ready and willing to help to bring reform across the finish line.
“Now that we are well into 2021, it is time for us to all put our shoulders to the wheel to make these changes happen. We are here and ready to do our part, but we need willing partners to engage with.”