Unemployment of 27% an indictment of us all – Investec CEO

South Africa needs a clear policy framework and stable political environment in order to boost business confidence and create a positive sentiment, says Stephen Koseff, chief executive of Investec.

Speaking to Moneyweb after the launch of the financial services group’s half-year results, he said the country needed more business friendly policies to attract investment, stimulate economic growth and reduce unemployment.

“Business creates jobs. Government can’t create jobs but it can create an enabling environment … We cannot grow at around 0.6% when unemployment is at 27%. It is an indictment on us all,” he said.

As per the medium-term budget policy statement, National Treasury expects the economy to grow by 0.5% this year, down from a previous estimate of 0.9%. Statistics South Africa’s latest Quarterly Labour Force Survey put the employment rate at 26.6% in the second quarter while the expanded unemployment rate, which includes those who are able to work but have given up looking for work, was at 36.4%.

He said that big businesses had defence mechanisms to navigate the volatility associated with policy and political uncertainty whereas poor people, including some 17 million South Africans dependent on welfare, suffered the most.

Investec, the South African specialist bank and asset manager that reports in pounds sterling, shrugged off a 3.4% depreciation in the rand to post a 0.7% increase in statutory operating profit to £281.4 million for the six months ended September 30 2016.

Koseff also said that many positives had come out of the “political noise” in South Africa in recent months. Among these positives was seeing the democratic process at work as well as greater participation by civil society and business in the political arena.

He said the local government elections in August, which resulted in a change of power in three major municipalities, showed democracy at work, with some people starting to vote with their heads and not their hearts.

Another positive, in his opinion, was seeing the strength of South Africa’s institutions through landmark court rulings.

Earlier this year, the Constitutional Court found President Jacob Zuma failed to uphold, defend and respect the constitution, and ordered him to repay a reasonable amount of the money (as determined by the National Treasury) used for nonsecurity upgrades to his private Nkandla residence. In November, the High Court in Pretoria ordered the new Public Protector to publish the report on state capture, compiled by her predecessor, after the president withdrew his application to interdict the report.

He said that South Africans must defend the strong pillars of our democracy, democratic institutions and strong private sector with “everything that we have”.

“We can make a difference,” he said in reference to members of civil society questioning and challenging issues close to their hearts.

He also labelled coordinated efforts by government, business and labour to revive the economy and attempts to avert a sovereign ratings downgrade as positive. Through the work of the Presidential Task Team he said that there was a greater understanding among politicians of the positive role that business can play in transforming society.

Koseff was among the 81 CEOs who pledged their support for Finance Minister Pravin Gordhan shortly before he was due to appear in court on trumped-up fraud charges. The National Prosecuting Authority withdrew the charges against Gordhan and his co-accused shortly thereafter.

“When there is potential massive damage to the fabric of society, it is incumbent on business not to sit on the fence,” he said.

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