Big Business joins forces with SA Government to tackle national crises – Katzenellenbogen relays the Ts & Cs

In a bid to address critical bottlenecks to national growth, big business is partnering with SA government in an open-ended commitment. Their plans involve turning around power stations, improving infrastructure, and combating crime and corruption. However, concerns arise over the private sector seemingly rescuing a failing state and the lack of conditions for reform in exchange for support. Jonathan Katzenellenbogen questions whether business will have enough authority to ensure success and highlights the potential challenges faced in implementing the initiatives. The involvement of crisis committees and limited oversight further complicates the path to achieving meaningful change, leaving big business vulnerable to a “De Ruyter moment” of powerlessness.


Big Business and the State: What are the conditions and the job description?

By Jonathan Katzenellenbogen*

Big business has plans to help the government solve some of the country’s critical bottlenecks to growth. It is going to try to turn around four power stations, work at improving roads, rails, and ports, and help the fight against high-priority crime and corruption.

Government is sensitive about the initiative coming across as a case of the private sector rushing to the rescue of a failing state. Instead, the talk from government and business is all about working alongside each other to solve these problems. The reality is that helping ease power cuts, averting the collapse of the transport infrastructure, and improving law and order could be throwing a lifeline to this government and the ruling party.

The elections next year mean that there is a new urgency on these matters for the ANC. And for businesses, things are now so bad that they are desperate that something should be done.

Read more: Can the ANC and DA forge an unlikely alliance? – Katzenellenbogen on SA’s grand coalition debate

Commitment

Business has signalled an open-ended commitment to help the government and has said it will come up with the funds and expertise for the initiative. It has already contributed R100 million into a Resource Mobilisation Fund and has signalled there will be more. Apart from the money, big bosses will be spending valuable time on various government crises and other committees as well as reporting to the Presidency every six weeks. So, this is a large commitment by big business.

Both business and government say the initiative is based on the success of the Covid-19 vaccine rollout and the support measures around the shutdown. That was a more straightforward task than the one business will be undertaking. Moreover, it was not as though there was a large looting of funds meant for personal protective equipment.

If the aim of business is to get a foot in the door to discuss big reform issues and turn around the State, it shows their utter desperation over our predicament. That is understandable, but it does not mean it will work.

With such a large commitment, what will business get out of this, and will it have enough authority to ensure success?

The deal should give business substantial leverage over the government. If business has not laid down conditions for its support, it has lost an enormous chance to ensure a big upside and positive change to turn the economy round.

Read more: Cyril Ramaphosa: The Emperor is naked and afraid – Eugene Brink

Reform

An open-ended offer of support is a fool’s errand, without conditions for reform of the plethora of laws and regulations that get in the way of managing and growing businesses. Indeed, business should lay down conditions for the scrapping of the plethora of regulations that impact the process of procurement, hiring, and decision-making. That means much empowerment legislation should have been up for negotiations in this deal.

It might also have laid down as a condition of continued support, that the ANC does not enter a coalition with the EFF after next year’s election. For business, the list of conditions could also include a privatisation programme, the scrapping of key pieces of legislation such as that on expropriation without compensation, and the recently passed law which brought in more stringent race quotas for hiring.

If there are no conditions of support, business might meet its De Ruyter moment when it confronts a hostile environment in doing its work for the government. André de Ruyter, the former CEO of Eskom, found himself powerless to deal with crime and corruption, and sabotage at Eskom power stations. Due to regulation and corruption, it was impossible for him to control procurement, hiring, and firing. In addition to this, there was the stultifying political interference from two of the ministers to whom he reported.

Busi Mavuso, the CEO of Business Leadership South Africa, which represents the largest companies, is quoted in the Sunday Times as saying that in her experience at Eskom, engineers, the board and the CEO had both arms, “tied behind [their] back.”

In the public statements issued by organized business and bosses, expressions are used about working “alongside” in “co-operation” and “dovetailing” with government. Martin Kingston, the chair of Business for South Africa, is quoted by Business Day as saying, “we are not trying to micromanage or take over the role of the State, but support the State”. Clearly business will not be allowed to just get on with the job.

Read more: Truth to Power: A harsh wake up call – Katzenellenbogen on de Ruyter

Crisis committees

The initiative is to be carried out through the crisis committees – the National Energy Crisis Committee and the National Logistics Crisis Committee, and in the case of law-and-order issues, the Joint Initiative to Fight Crime and Corruption.

Committees will identify projects, and then joint government and business “intervention teams”, will be sent out to do jobs. In energy the priority is turning around Matla, Kriel, Majuba, and Kendal power stations. In the logistics area, teams will be sent to improve rail corridors and finalise private-sector framework in the rail sector. To help fight crime, the aim is to build capacity in the National Prosecution Authority, Hawks, and the Investigative Directorate

Business will provide staff and resources, but it will not oversee implementation. That means big trouble will lie ahead.

The best way to manage business involvement in turning around government functions would be to allow the private sector to take charge of implementation and be judged against objective performance criteria.

With all the oversight by crisis committees and work in cooperation with the government, there appears to be little scope for business simply to go ahead with the tasks it has agreed upon. Business has chosen three areas for involvement where the problems of mismanagement, corruption, and sabotage are possibly the highest in the country.

Turning around power stations and managing diesel supplies are areas smothered by red tape and crime. Change will in some way affect the criminal interests to which De Ruyter pointed and the deep financial interests in the State.

In its project to turn around transport infrastructure, how will Transnet respond to an erosion of its responsibilities and a plan to enlarge private involvement in the rail sector? Union and government interests are combined against these initiatives.

Read more: Stand-off between government and corporate SA as business sphere deteriorates – Katzenellenbogen

Most difficult

The most difficult project for business will be to boost the effectiveness of key law enforcement agencies – the National Prosecuting Authority, the Hawks, and the Investigating Directorate. There will also be business support for projects on intelligence gathering and improving the forensic service. It is here that political interference might most forcefully oppose business’s  attempts to help.

In the end, big business can criticise and try and impose conditions for its support, but if asked to help it must help and is likely to be used and abused. And if, in the upcoming campaign, the ANC refers to business as “white monopoly capital”, it will continue to provide support without conditions. But what does business do when it reaches its De Ruyter moment and says it cannot do more?

Read also:

*Jonathan Katzenellenbogen is a Johannesburg-based freelance financial journalist.

This article was first published by Daily Friend and is republished with permission