New Hope From Big Business In South Africa And A Message – That It’s Keen To Build The Country

Published 6 months ago
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“It’s not just a knowledge-sharing initiative,” Business Unity South Africa (BUSA) CEO, Cas Coovadia, tells FORBES AFRICA of its collaboration with government. This is following a pledge by CEOs from over 115 of the country’s leading corporations to contribute to addressing challenges around energy, logistics, crime and corruption.

With CEOs from over 115 of South Africa’s leading companies signing a pledge recently, stating their firm belief in the potential of the country and their aim to achieve sustainable, inclusive economic growth, there is new hope from Big Business and a message – that it’s keen to work with government and build the country.

The companies span a range of sectors and include the likes of Anglo American, Sasol, SAB, RCL Foods, Coca-Cola, Unilever, Arcelor Mittal, PPC, Mondi, Hollard, Allan Gray, Deloitte, KPMG, Naspers, EOH, Growthpoint, Fidelity, and more.

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The reported market cap of the 115+ entities exceed R11 trillion ($598 billion) and they together employ more than 1.2 million people.

“Through strategic partnerships and focused interventions, we have the power to make a significant and positive impact on our nation, creating hope for all South Africans. We are resolutely committed to being a force for good,” the pledge concludes.

Business Unity South Africa (BUSA) has said, in a statement on this pledge, that through the Business for South Africa (B4SA) structure, it is collaborating with government to implement key interventions in energy, logistics and transport, and crime and corruption.

BUSA CEO Cas Coovadia says following their dialogue with President Cyril Ramaphosa, which resumed earlier this year, they are collectively working on a structure to tackle these issues.

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“We don’t want to reinvent the wheel in trying to determine what the problems are. We’re actually giving three pages on each of these – so these are the interventions you need to make and if you make those interventions, this will be the impact on investment, growth and jobs.

“We briefed a broad range of CEOs on this and what we suggested is that if they can sign a pledge along the lines of the one you’ve seen, which basically backs up this work we are doing.”

He adds that this move reinforces the message that business is keen on working with government.

“We will put in the resources and capacity to make all of this happen, provided we have a structured relationship with government, with clear outcomes, with clear timeframes and their people are sitting with us in a real partnership – that’s what the pledge is all about.”

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President Ramaphosa had a follow-up meeting with business leaders on Tuesday, continuing their collaborative efforts.

South Africa’s energy challenges have been well-documented. According to an International Monetary Fund (IMF) country focus, published in June, the economy grew by 0.4% between January and March this year, with power cuts, volatile commodity prices and a challenging external environment the main contributions to the weak growth.

The fund adds that it projects that, by year-end, real GDP growth will fall sharply from last year.

“The country has faced rolling blackouts after years of mismanagement of the state-owned utility, Eskom, prompting the authorities to ease the registration process and licensing requirements for energy production to encourage private sector investment,” cites the report.

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“Additional far-reaching reforms are needed to achieve job-rich, inclusive, and greener growth. These include improving the country’s energy and logistical constraints, reducing barriers to private sector investment, addressing structural rigidities in the labor market, and tackling crime and corruption.”

Encouragingly, Coovadia says that energy is actually where government and business have made the most progress.

“[The President] put together a National Energy Crisis Committee (NECOM) in his office. He then realized he doesn’t have the expertise to implement the plan and approached us. We discussed this – we were happy with the plan on the basis that there were some good people at NECOM under very difficult circumstances, trying to actively get the plan implemented,” he says.

This is where the Resource Mobilization Fund (RMF) came in. The Presidency reported in March that the fund had raised R100 million ($5.4 million) from businesses and philanthropies.

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“We put together a light touch, not for profit, called the Resource Mobilization Fund to do two things – raise the money and procure the expertise. We raised half the money from our global foundation, the rest from South African business. We put together a procurement team made up of procurement people from five corporates. On the basis of the expertise NECOM needed, we went through an open RFP (request for proposal) process.

“As of three weeks ago, expertise have been donated to NECOM and they started working with NECOM to implement the plan as a matter of urgency. We’ve put engineers into four power stations to increase the energy factor in those power stations so we’re working well with them on energy. There’s good progress.”

While South Africa’s challenges in energy do clearly impact the economy, Coovadia says progress in logistics is equally, if not more, crucial.

“Logistics is probably a bigger problem than energy in the sense that the opportunity costs on our ports degrading, our rail system degrading, as a result of goods being transferred by road – our road system degrading – the cost to business, of that, are severe,” he says.

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“We believe if we get that right, we will have a significant impact on instilling confidence in the country, on investors coming in and on actually reducing the cost of doing business, and the cost of production and businesses operating efficiently. To us, that’s a big issue.”

Coovadia reiterates that the massive problem with crime and corruption is that it has a direct impact on business, the confidence of investors and in the lives of the country’s people. But the focus on these three areas does not mean they are the only areas of concern.

“Let’s get to a stage where we can show results on these and then we can look at other stuff.”

He also mentions the importance of impacting more than just the country’s major companies.

“One of the pieces of work we’ve done in addition to this is looking at what are the factors that can lead to employment, looking at the informal sector, the SME sector and so on. As part of this, we would want to see one, from a regulatory point of view, what needs to be done, but secondly, how does bigger business relate to SMEs and the informal sector,” says Coovadia.

“Firstly, in the SME sector, to try and get SMEs in the value chains, to support SMEs, to look at why so many SMEs are failing and what we can do about that. From an informal trading point of view – to see what light touch regulation [and] management that can actually get those informal traders into more impactful situations, and how points and supermarkets in townships can work with informal traders. As soon as we’re ready to release that, we will do so.”

Coovadia concludes that the business sector is going into this collaboration with their eyes open and will assess and review their stance in the next four or five months if there’s no traction or progress being made.