Programme Director, Hon Ministers,
Business Leaders, Members of the Diplomatic Corps,
Distinguished Guests, Ladies and Gentlemen,
I on behalf of BUSA warmly welcome you. We are most grateful that you heeded our call to join this important forum that is intended to re-affirm our commitment to partner with government and to generate ideas that will transform our economy and achieve the illusive inclusive growth.
This inaugural Business Economic Indaba follows my promise to the President, after the Jobs Summit, on your behalf as the business community, that we will gather thus in order to reflect on a litany of promises we’ve made in the course of the year to ensure we deliver our side of the bargain, identify additional ideas and contributions to advance our partnership.
As President Ramaphosa said at the World Economic Forum in Davos, we must all bemoan the fact that South Africa has essentially lost nine years of its life under his predecessor. If we use this opportunity wisely, those years will be a forgotten past. While we will never get back the lost years – we must be spurred on, to make up for the lost time, and to ensure that we get our economy, our democracy and our wonderful country back on track.
The Economic Backdrop
The transformation of our economy into an inclusive one is a key imperative for all of us gathered here. There can be no higher priority.
This is more so given the prognosis that South Africa’s economic growth will remain tepid this year, with high unemployment, while sluggish credit growth, which accounts for roughly two thirds of our GDP, will weigh on private consumption.
Weak economic growth will act as a headwind to fiscal revenues, thereby limiting the Government’s ability to render adequate public services, particularly in the education, health and social welfare areas.
All these factors and our poor rating on the ease of doing business as well as our decoupling from our emerging market peers, are set to act as continued headwinds to investment.
Disconcerting too is the prospect that the trade war between the US and China accelerates, or a harmful Brexit. With SOE debt remaining a continued challenge, economic growth would be constrained even more.
Given that the private sector accounts for more than 70% of economic activity, investment and employment in the South African economy; these economic challenges can only be resolved when Business, a critical stakeholder in any society, is clear about its role and intended contribution.
That, fellow South Africans, is the reason we are gathered here today: to clearly define our role and contribution to our economic repositioning, and for our nation’s success.
As the apex entity representing South African business, we as BUSA – with your help — must come up with the apex blueprint for how business will assist in driving the process of ensuring inclusive high economic growth.
We should therefore use this Indaba to identify pressing challenges and set the tone and narrative of how we can play our part.
President Ramaphosa has made a concerted effort to maintain sufficiently business-friendly policy to encourage foreign investment. Similarly, the President’s economic stimulus and recovery plan includes measures to improve the regulatory environment in critical sectors of the economy.
Over the past year, we have made huge progress in restoring the spirit of purposeful partnership among the key role players in the economy. Working alongside our partners in government, labour and the community sector, we have:
- Rescued our economy from the brink of collapse;
- Staved off further sovereign ratings downgrades;
- Pledged tangible investment undertakings; and
- Reached an accord to wherever possible preserve and stimulate job creation across our key economic sectors.
We should, without being complacent, take enormous pride in these achievements and the difference they are making for many families and businesses in our country.
But at the same time, we must also recognise that despite our GDP more than doubling from $139 billion in 1994 to $315 billion currently, millions of our economically active population remain on the margins of the economy, with no prospects in sight.
For me it is not enough to see growth in the national economy if your local economy is shrinking. It is not ambitious enough to have record jobs growth, unless those jobs are secure and delivering real growth in wages. And we are not fulfilling South Africa’s potential if, despite having world class and renowned learning institutions, we cannot turn their ideas into the products and services on which the industries of the future will be built.
Framework for Growth
Our country needs a new framework for growth. Given the waves of discontent pulsing through our country, exemplified through violent service delivery protests, it is clear that a substantial part of our society has, understandably, become embittered not only with the excesses in our political system, but also with those who hold economic power. If unchecked, this rumbling resentment and the feeling of despair could trigger populism that may reverse all our democratic gains.
In short, the level of inequality in our country is now an economic risk.
The answer is not to close ranks and protect each other at all costs. Rather, we should foster a genuine partnership that sets us on the path to transformed and inclusive growth.
Our genuine desire for partnership will be tested by our commitment to walk the journey, not only with Government, but our social partners in securing economic justice, particularly for the marginalised and the discontented.
If the notion of partnership is only about the creation of a conducive environment for business to thrive, important though that may be, we might be perceived as opportunistic, self-serving and indifferent to the real challenges of the day.
In short, when government and business sit down to talk, our conversation should be more than about business contracts — more importantly it should be about social contract. Business must define itself as a reliable partner with Government in delivering economic justice.
Economic Risk Mitigation
This moment of crisis can be used to build bridges and catalyse cohesion, to drive sustainable economic outcomes for all, through a public-private cooperation framework. This should be a framework that builds on the business sector and frees the markets as a force for sustained economic growth, yet always striving for the public good of environmental sustainability and social inclusiveness.
Equally, this framework must recognise that we are living in an innovation and artificial intelligence driven economy. Given our low ranking in digital skills, it is no exaggeration that we are unprepared for the magnitude of change that is required.
The 4th Industrial Revolution is upon us, and it will not wait for us to find our way. We must therefore plan, and plan properly, for the fundamental changes it will bring to how we live and work. With the unprecedented pace of technological change, it is apparent that our systems of education, transport, communication, health and manufacturing, to name a few, will be completely transformed from what they are today. This will require policy certainty on this front, in addition to the urgent need for developing new skills and rethinking our methods and models of education and work.
Together we must ensure a just transition to a low carbon, high-tech economy. And in doing so, we must cushion the vulnerable in our midst through income and redeployment support and access to retraining opportunities. It should be clear to all our leaders by now, that lifelong learning is going to be central, as technology advancements create a continuous need to upgrade skills.
Our new partnership framework must ensure that nobody is left behind. And it should be anchored on political maturity and ethical conduct. In developing our framework, and with a view to ensure integration with the global world, we must draw on the Sustainable Development Goals and the Paris Climate Agreement, which provide a roadmap for a zero-poverty and zero-carbon world.
What do we bring to the Partnership?
In articulating the key tenets of our partnership, I’d like to touch on five critical areas, our starting point being people and underpinned by Ideas, Infrastructure, Ease of Doing Business and Communities.
We must strive to equip people with the means to earn a decent living. What is going to be our contribution as Business on this score? Beyond offering bursaries, we must develop pathways for graduates to earn experience in our respective businesses. For a country with low levels of educational outcomes, we can ill afford unemployed graduates or lose others to overseas markets.
We have inspiring examples on our doorstep. Our construction companies worked with the Government to create courses in construction skills in the run-up to the 2010 World Cup.
Our ability to develop new ideas and deploy them requires both the Government and the private sector to invest more in Research and Development. We need to do better in turning exciting ideas into strong commercial products and services and this requires investment in skilling our people. We must strive to build a South Africa that lives on the digital frontier.
What sacrifices are we going to make as Business to raise our R&D levels to 25% of GDP from the current 17%? What R&D tax credits are we willing to settle on with the Government?
What are we going to contribute to ensure a world-class higher education system?
How many artisans are we willing to produce in the next 3 to 5 years to stem the tide of youth unemployment? Among the graduates we’ve financed, how many are we willing to employ?
I am raising all these questions because we must bring tangibles to the Partnership with Government in line with our commitments to our social partners. If Government picks up the Shovel, we must be willing to shoulder the Pick.
The third area of intervention is around infrastructure, which is a critical underpinning of our lives and work. Having a modern and accessible infrastructure throughout our country is crucial to our high-growth ambitions.
Our infrastructure choices should not only provide the basics for our economy; it must support long-term productivity and link up people and markets to attract investment, while taking into account mega global trends. Providing the right infrastructure in the right places boosts the earning power of people, communities and businesses.
- Ease of Doing Business
With the right people, ideas and fit-for-purpose infrastructure, and working with our partners, we need to ensure that our country is the best place to start and grow a business. This requires competitive tax and regulatory regime and we should be welcoming to global talent and disruptive start-ups.
Lastly, and while most South Africans are moving to cities to seek opportunities, we must ensure that development is evenly spread across our cities, towns and rural areas. This calls for more connected infrastructure and ensuring that land is available for recreation, residential and business purposes.
Ladies and Gentlemen, the time for moaning is well past. Now, we must focus on meaningful partnerships for change.
We must be clear about the role that, we as Business, will play in ensuring that our compatriots are ready for the opportunities of 4IR, while helping to mitigate its risks.
When millions of people are condemned to poverty; when thousands of graduates roam our streets with no job prospects; when our cities’ infrastructure is bursting at the seams due to rapid urbanisation fuelled by the paucity of opportunities on the countryside; when SME’s are driven out of business by monopolies and unfair business practices; when some businesses are paraded at the Zondo Commission for their active roles in corruption and the state capture project, it is clear that the current model must change.
To rebuild trust and restore confidence in our economy among both domestic and foreign investors, the challenge of building a Transformed and Inclusive Economy with strong ethical foundation, must be met.
I hereby declare this inaugural Business Economic Indaba open. We look forward to exciting ideas that would be up for vigorous debate and discussion.