Ina Opperman

By Ina Opperman

Business Journalist

Time to consolidate coalition government and make it work – BLSA

While political parties are still hammering out how to work together, it is time for government to start working.

It is time to consolidate a coalition government and get to work. It is now urgent that parties strike an agreement that South Africans can be confident will underpin an effective government.

Busisiwe Mavuso, CEO of Business Leadership South Africa (BLSA), says in her weekly newsletter that BLSA welcomes the ANC’s call to act in the interests of the country and safeguard the constitutional democracy.

“We trust that it will find those parties it can align with and that those parties show similar magnanimity in engaging. A great deal rests on an effective partnership and the world is watching.”

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Mavuso emphasises that we cannot waste time. “Last week, data showed the economy shrank in the first quarter of this year by 0.1%. The decline covered many parts of the economy including manufacturing, construction and mining. Investment was also sharply negative, with private investment at the lowest rate since 2016. This shows a clear lack of confidence in the outlook for the economy.”

She says the coalition partners now have an opportunity to re-establish confidence and to do that, they must move decisively to commit to structural reforms that are crucial to get the economy moving.

What government must do in the first 100 days

In thinking about the first 100 days of the new administration, she says we must focus on these priorities to get the country back on track:

  • fix load shedding and reduce the cost of electricity
  • fix the crumbling logistics system and
  • fix the criminal justice system.

“Firstly, to fix load shedding and reduce the cost of electricity, we must conclude vital reforms in the electricity sector, including the unbundling of an independent systems operator from Eskom and the establishment of an open market for electricity supply.”

She points out that the Electricity Regulation Act Amendment Bill was rushed through parliament before the election and is now on the president’s desk for signature. “In the rush, some elements found their way into the bill that are unhelpful, including discretion granted to the minister on certain matters.

“In the first 100 days, these issues must be resolved and the legislation signed. Significant progress must be made in the unbundling of transmission from Eskom.”

Secondly, she says, to fix the crumbling logistics system, there must be material progress on the freight logistics roadmap that has been set out by the National Logistics Crisis Committee.

“This already had some success in rapid interventions in key corridors through the collaboration between business and government. Deeper reforms must be accelerated, leading to the concessioning of ports and rail to enable the private sector to invest and operate these on a competitive basis.”

The road map sets out a tight set of timelines that government agencies must adhere to. In the first 100 days, Mavuso says, there can be a recommitment to this timeline with government agencies aligned to deliver on it. “In particular, concrete strides can be taken to enable Transnet to deliver on concessioning.”

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Important for government to fix criminal justice system

Thirdly, we must progress efforts to fix the criminal justice system, she says. “There are many important reasons to get on top of crime and corruption and shoring up business confidence is only one of them.

“Business critically depends on the rule of law, without which it cannot commit substantial investment. The lack of effective prosecution for corruption is one of the reasons South Africa is grey-listed by the global Financial Action Task Force, which places a burden on all of us.”

Mavuso says shortly before the election legislation was passed to permanently establish an investigating unit in the National Prosecuting Authority, which was an important step forward. “The new administration must commit to bolstering the rest of the system, particularly the police and its investigating and intelligence units.”

She says on all three of these fronts, business has mobilised significant resources through Business for South Africa to support the government to deliver.

“We have drawn on the skills in the private sector to fill gaps in public resourcing to enable progress. A highly positive relationship has grown, demonstrated through successes such as the Electricity Action Plan that is now paying off through reduced load shedding, with billions in private sector investment put into generation. The new government should engage and reinforce this partnership which can enable rapid progress.”

New administration must actively back Operation Vulindlela

The reform successes of the recent past had much to do with Operation Vulindlela, the delivery unit set up between National Treasury and the Presidency to focus on getting policy reforms implemented. “The new administration should actively back Operation Vulindlela and I have been encouraged to see some political parties making it clear they will do this should they join a coalition.”

Mavuso says the new administration could also make a highly positive impact by committing to economic policy formation, rationalising the confusing spread of responsibilities in the previous administration.

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For example, she says, while much has been done to stimulate investment through partnerships between business and government, this has not translated into shovels in the ground. She believes a consolidated planning function, ideally within or closely aligned to National Treasury, would help align policy and fiscal spending in a way that maximises its impact and crowds in the private sector.

“As has been said many times, the interventions we need are well known. The challenge has always been delivery. While the last administration can count some successes on this front, the new administration could fundamentally depart from this legacy. South Africans need a government that can commit itself to delivery and get straight to work.”