South Africa

Standard Bank CEO’s message to government – ‘Get out of the way’

South Africa provides a good example of how business and the government can work together to tackle key issues and stimulate economic growth. 

However, once the government sets up the appropriate legal and regulatory framework, it must get out of the way to allow businesses to execute and grow. 

This is feedback from Standard Bank Group CEO Sim Tshabalala, who outlined the success of the partnership between business and the government in South Africa. 

Speaking to CNBC Africa on the sidelines of the World Economic Forum (WEF) in Davos, Tshabalala also repeated his call to make conducting business in South Africa easier. 

“South Africa provides an incredible example of how government and business ought to work together in a way that is properly governed and structured,” Tshabalala said. 

This is largely in reference to the partnership in South Africa between Business for South Africa (B4SA) and the government. 

B4SA comprises senior business executives, including over 160 CEOs who have pledged to support the initiatives. It provides a forum through which they can work with their counterparts in government. 

The partnership between business and government has focused on the energy crisis, logistical inefficiencies, and crime and corruption. 

In recent months, business has looked to widen the partnership to include the ongoing water crisis and issues at the local government level. 

The partnership has proven extremely successful, with load-shedding having been suspended for over 300 days and significant progress being made in reforming the country’s logistics sector. 

“We are working hammer and tongs in partnership to try to get GDP growth to above 3% for this year, and that is completely possible,” Tshabalala said. 

Tshabalala explained that the partnership was built on the understanding that government and business should focus on what they can do best in their respective spheres. 

“Respecting that business is not Caesar and that Caesar must perform the role of Caesar is important,” he said. 

“They must set up the legal and regulatory environment, but then frankly get out of the way so that business can execute and do what needs to be done.” 

This echoes Tshabalala’s previous calls on the government to make it easier to conduct business in South Africa. 

At the last WEF in Davos, Tshabalala said Standard Bank urged African countries to reduce the risk premium associated with investing on the continent. 

To do this, he advised political leaders to liberalise their economies, make it easier for goods, people, and ideas to flow across the continent, implement fiscal discipline, and make it easier to do business. 

Reducing red tape, in particular, is vital. “Make it only take a day to set up a company, not six months,” Tshabalala said. 

Standard Bank CEO Sim Tshabalala

Concerning South Africa specifically, Tshabala said the country has incredible competitive advantages but has failed to capitalise on them. He called for the state to improve its efficiency and capitalise on them. 

“Please improve the quality of our institutions. In the case of South Africa, we use the lovely phrase ‘Please capacitate the public sector’.”

“Some parts of the public sector are excellent, such as the National Treasury and the Reserve Bank. Replicate what is happening in those across the board,” Tshabalala said. 

“Please capacitate the state,” he repeated. “Please professionalise it. Please continue to make doing business easier.”

South Africa slipped to fourth in the RMB Invest in Africa regions, losing out to the Seychelles, Mauritius and Egypt. 

South Africa ranked first in only one category – forex stability and liquidity – while it lost the top spot in terms of economic output to Egypt. 

Worryingly for the future, it also came in last place on the continent regarding GDP growth forecasts, income inequality and unemployment. 

Tshbalala told Daily Investor that following the company’s latest interim results, this will impact investment in South Africa. 

“We’re absolutely focused on total shareholder, absolutely focused on it and on managing our portfolio of businesses with discipline,” Tshabalala said. 

“Clearly, the fastest-growing parts of the African continent are the countries outside of Africa and, in particular, East Africa, which is growing at an annual rate above 5%.” 

“Therefore, you want to be allocating your capital to these faster-growing parts of your business for obvious reasons – to grow lending, insurance products, and making acquisitions.” 

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