Katzenellenbogen: The intricate dance of big business and government in South Africa’s crisis response

In a bold move, big business in South Africa has forged an unprecedented alliance with the government, pledging to tackle the nation’s pressing challenges in energy, transport, logistics, and crime. While the details of this partnership remain unclear, the intertwining of business and government is unmistakable. The absence of stipulations from businesses in their commitment to assist has raised concerns of potential co-option and limited space for critical discourse, says Katzenellenbogen. As the private sector offers technical aid, questions arise about the impact on policy change and the risk of stifled dissent. This unique collaboration begs exploration into why businesses embraced this initiative without prerequisites, potentially jeopardising their independence. As the nation grapples with its future, the intricate dance between business, government, and political pressures unfolds, blurring lines and creating a precarious equilibrium.

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Big business’s pledge: Co-option and a State without the will to change

By Jonathan Katzenellenbogen

Since its pledge of commitment to the country and its offer to help the State, big business has entered into a new and closer relationship with the government.

The terms of engagement for the business initiative to help the government deal with the energy, transport and logistics, and crime crises are unclear. But what is clear is that business and government are now more tightly bound.

Has business given away too much in this?

All the indications are that business did not lay down any conditions for its free help. There could be a risk of co-option by the government, and the loss of space for business to criticise our rulers without getting much in the way of policy change.

From all that the government and business have said, the initiative is all about technical help. There is no bigger deal about larger policy changes. Martin Kingston, head of Business for South Africa, which is leading the project, said last week that proposals would be made for structural reforms, but this area was one reserved for the government.

 We will be worse off if there is a loss of space for business to speak out. If the astute and critical voices of Busisiwe Mavuso, CEO of Business Leadership South Africa and Neal Froneman, the CEO of Sibanye Gold, are silenced by this new tight relationship with government, there will be reduced pressure for change.

Some in business played an important role in bringing about reform in the energy sector by seeing to it that the ceilings were lifted on independent power producers. And some have been outspoken in pointing out the risks posed by our leaning towards Russia, the country’s fast deteriorating infrastructure, the worsening business climate, and the plans for National Health Insurance.

Why did much of big business feel that they had to sign a pledge stating their commitment to building the country and addressing current challenges?

 ’We are resolutely committed to being a force for good,’ the pledge released last month reads.

Read more: WSM: Big business partners with government – can SA’s CEOs save the economy?

Begs questions

The release of the pledge begs questions about what big businesses were doing before they signed this. In what way have they not shown this commitment, and why did they feel this need to state this now?

 Have they come under new political pressure?

 And anyway, why does this all have to be stated?

If business is operating in the country, they have made a commitment to the future of the land. After all, their bottom line, shareholders, and the welfare of their employees depend on this. Why should it be up for question?

It is telling that not all South Africa’s big companies have signed up to the pledge. As of last week, there were 125 companies that had signed the pledge, well short of the 400 or so that are listed on the Johannesburg Stock Exchange’s main board and the alternative exchange. There is a great deal of reservation about the entire scheme in the wider business community. Clearly, if you are big and visible, and may need licenses and special sorts of permission from the government, there is pretty much no option but to sign the pledge.

There is no other conclusion that can be reached other than that big businesses have signed the pledge because they feel that they must help in dealing with big parts of the South African crisis. They also feel that they are under increasing political pressure. They are also worried about what they may face if, indeed, there is an ANC-EFF coalition in power after next year’s election. What they are hoping for is that their pledge and help for the state will bring political protection. There are no signs that this will happen.

What was business thinking about, in laying down no conditions for its help, not even a call to put aside plans for anti-business legislation such as that on expropriation?

The answer is probably that business knew full well that the entire project would be rejected if there were pre-conditions. They also know that they need to get over the immense distrust the cadres in the civil service have toward business.

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

Big payoffs

There is a lot in this for business. Turning around energy, national logistics under the control of the government, and making the fight against crime and corruption effective will have big payoffs for the country, and for business. So the bosses behind the initiative took the view that they had to go ahead. Business says if they get it right – there will be a 3 percentage point rise in growth.

There is a question as to whether the gains can be sustained without a fundamental reorganisation of the civil service and ensuring that the right skills are in place. So what happens when failure occurs later on? Can business say: we have tried, but have done what we can?

There would be immense negative political fallout if businesses were to say, we did our best, but it is not working. So businesses are effectively bound to continuing this on an open-ended basis.

There is also a lot in this for the government. The advice will be free, and reducing load shedding will bring electoral benefits to the ruling party. But could it mean that the criminal syndicates will have reduced scope for managing procurement to their benefit?

That means the whole exercise could run counter to some powerful vested interests. The cadres could see to it that the projects are tied up in committee.

The reality is that the private sector is rushing to help the government out of a crisis. As much as the government would not admit this, it creates a compelling case for privatisation. So the business initiative is not even a second best solution. It puts organised business in a difficult and risky political place.

New ideas and initiative

Around the world, governments often bring in management expertise from the private sector. It brings in new ideas and initiative into civil services. They also hire consultants for advice on what to do. The state-owned enterprises and government have hired masses of consultants over the years, but there is no evidence that this worked. There is a need for technical expertise, but there is also a need for political will to solve these big problems. 

The rush to help the government comes on the eve of the election, which means business is politically compromised, however much it might protest that it will help any government of the day. Yes, business will be working for the State, but since 1994 there never has been a red line between state and party. And if that is the case, it is working for a faction in the party.

There is a case that business has to try this for the economy, but there is also a case that its efforts should have come with warnings and conditions, and clear signs of political will from the government.

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

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