New government warning

Business Leadership South Africa CEO Busi Mavuso warned that the new government must present a united front or risk being seen as uncertain and unpredictable, which could harm investor confidence.

In her latest newsletter, Mavuso was optimistic about the newly formed government of national unity, which comprises 11 parties across the political spectrum.

Mavuso said the cabinet has already given the government new energy since its announcement a week ago. 

“I have been encouraged by the speed with which several new ministers have embraced their roles, engaging with staff of their departments and with the public,” she said. 

“We’ve seen important public announcements from the new ministers in the departments of trade, industry and competition, home affairs, public works, basic education and others.” 

“I’ve seen enthusiasm and an immediate focus on the right issues that are key to making a difference for the country, from visa reform to fixing basic literacy and numeracy.”

This has so far been good for business confidence, which is one key ingredient South Africa needs to grow the economy.

When President Cyril Ramaphosa unveiled his new cabinet, he said it was time to serve the people of South Africa and not to play party politics. 

“That is exactly right. Party politics must not be allowed to interfere with a focus on delivery as a coherent and effective cabinet,” Mavuso said. 

“This principle must also underpin how we in organised business work with, and expect delivery, from the cabinet. We must praise success and engage on challenges, no matter what the party colours of the minister.”

She emphasised that business can do much to support this positive energy. 

The previous ANC-led administration did well on many fronts in establishing a reform agenda to confront our most pressing economic challenges. 

“The progress made in electricity, logistics and crime, among other issues, has been helped by effective partnerships with business,” Mavuso said. 

This comes after the government and prominent business leaders partnered up last year to tackle some of South Africa’s biggest challenges in different public-private “workstreams”.

“The private sector has skills and experience that can fix blockages and help ensure delivery. The new cabinet can rely on us to always be available for meaningful dialogue,” Mavuso said. 

“We are committed to being proactive partners, bringing skills and experience to the table to help unlock challenges and ensure we achieve progress.” 

“We have many common goals, South Africa’s economic well-being being the most obvious. We are here to help find solutions to any obstacles that stand in the way of achieving those goals.”

Mavuso said she particularly looks forward to engaging with the government at a provincial level, as three out of nine provinces now have coalition governments. 

“While it is critical that the government of national unity is stable and focused on delivery at the national level, it is no less important at the provincial level,” Mavuso said. 

“Provinces are responsible for a large part of national spending. In critical areas like education and health, it is the provinces that lead delivery.”

She said business is eager to see delivery improvements and will support provincial governments where it can. 

She added that the new administration will need to navigate differing viewpoints and priorities. 

Several experts have warned that this could be a stumbling block for the new government, as it needs to navigate the often extreme opposing views of all the parties within the coalition.

“When conflicts arise on the correct course of action, the right way to work through them is by relying on the evidence,” she said. 

She said that while many parties may have opposing views on what is best for the country, they should focus on pragmatism, undertake research, test new ideas, and embrace the course of action that will best deliver for the country. 

“That is how to foster confidence, which will, in turn, lead to investment and expanded economic activity,” she said.

“We must guard against the uncertainty that may emerge if the government, at both national and provincial levels, is seen as uncertain and unpredictable.” 

“That will damage confidence and take us backwards, forcing investors and businesses to pause investment.”

She said this risk becomes more prominent when parties are not committed to a common course of action based on clear policies and reliable time frames for regulatory change. 

“Unity and pragmatism are going to be critical, based on transparency and mutual respect,” she said.