[Opinion] Risky business

Noble intentions in government policy, for example, might centre on the alleviation of poverty, or increasing a country’s GDP growth rate. However, absent the necessary changes of ideas that underpin, the ultimate outcomes will simply be the same as before.

Signed by the CEOs of 115 of South Africa’s largest companies, a new pledge signals businesses’ commitment to helping the government solve the many issues that afflict energy, logistics and crime and security.

Where government departments have consistently failed in terms of service delivery, many of the companies represented by the CEOs have slowly but surely tried in various ways to fill the many voids being left behind by a retreating, incapacitated state.

The pledge and the engagement between businesses and government represent a great opportunity for alleviating some of the country’s most dire challenges – but the risks, too, are many and great.

There is no mention of the kind of reforms that the CEOs – and by implication their companies and employees – expect to now see. One hopes to be proven wrong in this regard. For the time being, the pledge is focused on the areas mentioned above – energy, logistics, and crime and security.

Some measure of progress could be made in these areas (especially in energy, where the bar set by Eskom becomes lower and lower with each passing day) but cosmetic improvements will not necessarily mean a departure from core ANC ideology and policy.

Points of crisis

Assisting the government to tackle these chosen points of crisis can provide short-term alleviation, but it does not in itself set the country on a substantively higher growth path over the medium to short term.

In the context of the 2024 election, public statements of this sort run the risk of adding legitimacy to the current government’s policy approach. It is no accident that South Africa is mired in multiple crises, all of which impact most negatively on lower-to-middle-income citizens and smaller businesses.

Will the pledge aim to address issues from a cosmetic level, helping the bureaucracy of the state to function more effectively? Or is the aim towards more fundamental reform, undoing the numerous policies and pieces of legislation that have over time accelerated centralised government control over ever more of the economy and society?

From the side of business, the major risk lies in assisting and ‘capacitating’ government to carry out its policy goals through a process that will, ultimately, enable government to more effectively use and leverage its powers and control, to the detriment of any business in the future.

Destructive ideas and policies

Inevitably, a more capable state that remains committed to destructive ideas and policies will unleash those against newer and smaller businesses, in an effort to keep competition to a minimum. This in turn benefits more vested interests who either have the ear of government, or have the resources required to deal with more bureaucracy and pernicious policy. 

The greater the extent to which business and government become mixed, the greater the incentive for – and likelihood of – regulations and policies being set up in such a way as to benefit those with the necessary resources and level of political influence.

It is by no means guaranteed that events will manifest in such a way, but the incentives are geared in that general direction of travel.

Article originally posted here.