Business backs Ramaphosa reforms but urges implementation

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JEREMY MAGGS: Two takes on last night’s State of the Nation Address (Sona), and President Ramaphosa laying out an ambitious plan to tackle organised crime, deepening water outages, dysfunctional municipalities and also giving some fresh momentum to the restructuring at Eskom.

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By and large, business leaders, I think have welcomed aspects of the speech, particularly the focus on stability and enforcement, but many obviously watching closely to see whether these commitments translate into real, sustained action that underpins investor confidence.

Let’s begin our coverage with Martin Kingston, who is chair of Business for South Africa (B4SA). Martin, a very warm welcome. Many in the private sector have long been frustrated by slow infrastructure delivery. Is there anything in the Sona from last night that gives you more confidence or new confidence about implementation, and perhaps it could be faster this time than in the past?

MARTIN KINGSTON: My own assessment actually is that this was a very honest, albeit, as you say, ambitious State of the Nation Address, perhaps the most honest that we’ve heard for many years. The president undoubtedly articulated not only what progress has been made, but the challenges that confront the country if we’re going to achieve our objectives, inter alia, by investments in infrastructure.

We know that although we’ve had our growth projections revised up to 1.2%, 1.4%, it’s woefully inadequate. We actually need to be well in excess of 3%, 3.5%, more like 5% …

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You’ll remember the targets of the National Development Plan (NDP), if we’re going to create real and sustainable inclusive growth, which of course is the hallmark of how we deal with poverty.

So two of the key legs, and that investment is driven first and foremost by the private sector, and that requires levels of confidence to spur that investment forward. As you’ve said, we need to ensure that we can convert those ambitions into action. What we’ve seen with the partnership between government and business, it’s now entering its third phase, has been certainly in the areas of energy, transport and logistics and even in crime and corruption, which we’re now moving to centre stage.

If we can harness all of the resources that are available at the nation’s disposal, if we can create an environment for the private sector to invest, appropriately regulated, then certainly we can start to see a rollout not only of investment but of infrastructure, which will spur the growth you were talking about.

JEREMY MAGGS: Martin, let me pick you up on energy, if I can. The president saying that South Africa is still on track to set up this independent power-transmission company, and I think he was countering assertions maybe that the state could be revising the plan. You did express some concern, though, at the SA Reit (Real Estate Investment Trust) conference [earlier on Thursday] about Eskom independence, and you were also concerned about the water crisis. Are your fears in any way mollified?

MARTIN KINGSTON: Absolutely so. We met with the president some two-and-a-half weeks ago for our quarterly review of the partnership progress. One of the issues that was raised very clearly and starkly was the need to progress at speed, with a clean delineation of responsibility between Eskom and the National Transmission Company of South Africa (NTCSA), including where the assets should lie.

The president has clarified that as a consequence of those discussions; he has said that he’s assembling a committee that’s going to work out the modalities. But we’re clear that if we’re going to be able to move forward in the next phase – and of course, seeing the cessation of load shedding has been a huge achievement for the country, we need to congratulate government and Eskom in particular, aided and abetted, I’d like to think, by the private sector – if we’re going to achieve that trajectory that you’re talking about, then we need to have the separation, as the president has articulated.

In the case of water, that’s a very real crisis that we’re all dealing with every day. We welcome the fact that the president has established a National Water Crisis Committee.

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We worked with government in support of both the National Energy Crisis Committee and the National Logistics Crisis Committee, and having an all of government integrated approach is the only way that we can ensure that we have a holistic and aligned approach and where we can appropriately source support and skills from the private sector, that’s what, of course, we must do.

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The last point that you raised, which is municipalities. At the conference yesterday, we did indeed discuss the plight of the city of Johannesburg. It is perhaps the most stark and obvious example of a city that is failing, with 60% to 70% of the GDP attached to it, and actually, there is no reason why it shouldn’t be a flywheel for economic growth rather than the fundamental break.

Once again, we have said that over and above the many initiatives that are already underway, involving both the public and the private sector, in the case of the private sector, for example, Jozi My Jozi, the pothole initiative, the 44 Main Street initiative, or in the case of the public sector, the Presidential Johannesburg Working Group.

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I’d make two observations, Jeremy, the first is that oftentimes we’re finding that there’s duplication and replication, rather than leveraging a clearly structured and focused approach on key interventions that make a difference.

Secondly, we need to have a city that functions as a democratic counterparty and where we can be confident – and you have yet to come to this – that the rule of law is observed and that crime, corruption and maladministration is rooted out and is prevented going forward.

JEREMY MAGGS: Let me pick you up on that. This consolidation, then, of intelligence and so-called multidisciplinary teams. Martin, do you think it will meaningfully reduce business risk? Again, I’m thinking of high crime areas like Johannesburg and Cape Town.

MARTIN KINGSTON: Yeah, there’s no doubt, not just in a business context but at a societal level that perception is not reality, and I think it’s the same actually, of the levels of crime and corruption are very high, and the president specifically and explicitly articulated concerns about the role and the rise of organised crime. We are fully committed to that, as I said.

As business, we have moved with the government in the partnership structure, crime and corruption and the joint initiative on crime and corruption at the centre stage is an absolute priority.

We need to be able to demonstrate that we’re dealing with it in a very visible and tangible way, and having multidisciplinary teams accessing the latest technology, making sure that business stays within its lane but can avail its skills and expertise to government is part of that.

We’re using Business Against Crime as our primary interface. But the whole of business is behind that because we know unless we dispel those concerns, exactly as you say, there will be a reluctance to invest for the short, let alone for the long term, in both Johannesburg and South Africa.

JEREMY MAGGS: Martin Kingston, chair, Business for South Africa. Thank you very much.

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