Business warns ANC: Be clear!
Lack of clarity could result in a dip in business confidence.
Business leaders attending the ANC’s policy conference this week appealed for certainty and warned that lack of clarity could lead to a plunge in business confidence and lack of investment in the economy.
As the pool of R1.2 trillion private-sector deposits rises and the ANC policy conference defers concrete policy details to its Mangaung conference in December, South African business is calling for certainty.
This happened against the backdrop of much horse-trading on the tone, nature and naming of the ruling party’s much touted “second transition” document.
By the end of the conference on Friday, consensus was apparently arrived at and symbolised by the renaming of the contentious document, which will now be called The Second Phase of the Transition document.
On the fringes of the often heated debate, business leaders warned that corporate deposits are large and stand at almost R1.2 trillion – with households contributing R568 billion, corporations R154 billion, and insurers and pensions yielding R152 billion to these retained earnings.
Business leaders said that for these amounts of money to find their way into the economy, there needed to be clear policies, programmes and projects in which to invest.
Corporate leaders stressed the need for urgency, as investment funds could find themselves avenues for growth elsewhere on the African continent otherwise.
These views echoed concerns expressed earlier this year by all three of the ratings agencies involved in the international credit rating of South Africa – Moody’s, Fitch and Standard & Poor’s.
These have all revised South Africa’s credit rating downwards, citing low growth, unemployment and policy uncertainty.
Black Business Council leader Sandile Zungu said that his constituency welcomed the general recognition that the state needs to play a part in the economy.
He said that the private sector should increase its investment levels and assist the state to meet its
“The cautious approach of the private sector is understandable. Government needs to provide clarity and announce an implementation plan. It must announce a slew of projects that offer reasonable returns to private-sector investors,” said Zungu.
“These must not be wishy-washy plans but well thought through projects that have been subjected to rigorous research and planning,” he said.
Bheki Sibiya, the chief executive of the South African Chamber of Mines, told City Press the chamber would soon be sitting down with the ANC to gain a deeper understanding of the exact implications of the resolutions of the policy conference.
He said: “We will be going into bilateral discussions about the resolutions so we can digest the meaning of these for businesses.”
According to Sibiya, business represented by the chamber understood the need for change.
“There is a need for change and transformation in the economy but this must not be at the expense of jobs or growth,”he said.
Leaders of South African banks, telecoms companies and mining companies were highly visible at the conference in Midrand, Gauteng, this week.
They indicated that the private sector would only partner government in its planned R845-billion infrastructure spending when government provides clarity on its approach to South Africa’s key economic challenges.
This week, business representatives complained that the ANC discussion document on economic transformation was not yet concrete, but a discussion of the economic growth options the country faces.
They said clarity was sorely needed and pointed to examples of regulatory clarity provided by Malaysia, Singapore and Botswana in their economic transformation programmes.
An often-cited example is that of Malaysia, which specifically targets a gross national income of $523 billion (R4.2 trillion) by 2020 – and has planned for a per capita income rise from $6 700 in 2010 to at least $15 000 in the same time period.
This is concretely explained in their economic transformation plan, which specifically explains what the private sector must achieve. Malaysia has announced 19 key projects earmarked for private-sector investment.
This week, debate at the ANC conference pivoted around the discussion document titled The Second Transition – Building a National Democratic Society and the Balance of Forces in 2012.
This document was prepared by the ANC policy unit and endorsed by the party’s national executive committee.
The document was submitted as a discussion document at the national policy conference this week.
It was drafted by leading ANC figures, Gauteng provincial secretary David Makhura, Northern Cape secretary Zamani Saul and ANC head of political education Tony Yengeni, under the supervision of Jeff Radebe, the ANC’s head of policy.
This committee then distributed the document to ANC branches nationwide for discussion and debate.
The document contains suggestions about boosting job creation through infrastructure development and the improvement of South Africa’s manufacturing base.
It envisages increasing investment levels throughout the economy by inducing more private-sector participation in joint public-private sector projects.
The document asserts that through localising the manufacturing of products in the mining industry, South Africa will increase productivity, boost GDP and reduce unemployment.
But business people assert that the proposals are vague and have expressed concern that the discussions on the direction of the economy were being linked to President Jacob Zuma’s bid for a second term in office.
At a press conference on Thursday, Radebe said the document had been considered on its own merits and that it was not related to Zuma’s re-election bid.