As leaders of business, we recognise the extent of the economic difficulties the country is confronted with, amid sluggish growth conditions and poor consumer and investor confidence.
However, we believe that there exists now – more than ever – an urgent need to bolster our efforts and work closer together to pull the economy back from the brink onto a sustainable and inclusive growth path.
We have been disappointed in the recent past that much of the work we set out to do has been hampered by a number of factors, including avoidable political and policy uncertainty.
We believe that all the negative credit ratings actions that the country has suffered so far could – and indeed should – have been avoided had the required structural reforms necessary to underpin sustained and inclusive economic growth been implemented.
It is also disappointing that key sectors for economic growth and employment creation continue to operate amid uncertain industry policy, and there are still too many regulatory impediments that hinder investment. These concerns have been strongly conveyed in the continued engagements with the government. With the much- anticipated ANC leadership changes behind us, much work now needs to be done to, amongst other things, restore confidence in our country.
We reiterate our view that it is absolutely vital that government now urgently refocuses to ensure that the reform of our key state-owned corporations (SOCs) is made a top priority, and that the February 2018 Budget contains strong measures on cost containment and structural reforms to boost growth and revenue collection to arrest the unsustainable increases in government debt and fiscal deficits.
Decisive action on these key issues is a matter of extreme urgency in order to regain our investment-grade ratings as a foundation for growing our economy and reducing unemployment especially amongst our youth.
We must be reminded – and acknowledge – that it was our lack of progress, clear direction and decisive action on key issues that resulted in our deteriorated credit worthiness, with two of the three rating agencies now rating our local currency debt as so-called ‘junk’.
We should also be acutely aware that the decision by Moody’s, the rating agency, to place us under review is nothing but a reprieve and a last chance for us to demonstrate that we are serious about implementing the measures necessary to achieve sustainable inclusive economic growth and fiscal consolidation.
The upcoming World Economic Forum (WEF) meetings present a great platform for us to demonstrate tangible change and to renew international confidence in our economy. We shouldn’t squander this opportunity. We strongly believe that the focus will be on institutional strength, fiscal discipline, regulatory and policy certainty and clear plans to reignite growth.
With this in mind, as business, we believe that for us to achieve success in the form of converting the current positive sentiment into a real opportunity to rebuild investor confidence, it is critical that our messaging as Team SA communicates clear confidence- boosting measures talking to concrete and clear action that:
- Demonstrates political intent to deal with state capture and corruption, and supports the strength and independence of critical public institutions such as the National Treasury, the Reserve Bank and the criminal justice system. The announcement of the commission of inquiry into state capture allegations is a welcome first step towards eradicating state capture. Making a credible appointment of a new leader for the NPA, as directed by the North Gauteng High Court, would be a strong signal for building a foundation for confidence, investment and improved levels of growth;
- Demonstrates urgent and credible plans to address the governance, leadership and capital structure issues in our key SOCs, particularly the stabilisation of Eskom which, if achieved, will shore up the fiscal position of the state as whole;
- Demonstrates credible solutions to our fiscal challenges – strong action on costs containment (clearly addressing the question of nuclear power and higher education funding is key to restoring the integrity of our spending decisions), structural reforms and key interventions to boost growth and create employment;
- Addresses the credibility issues relating to our revenue collection capacity which, if addressed, can unlock resources for measures that enhance growth in the long-term (including infrastructure development and education);
- Clearly sets out a few, high potential growth areas in which coherent and stable policies to support growth will be implemented; and
- Effectively addresses the misleading messages around leadership alignment which do not create the necessary confidence in achieving real momentum on key economic reforms. We believe that, as complex as the challenges we face are, with demonstrable ethical and inspirational leadership and collaboration we can send out a strong message that South Africa is open for business, thereby achieving our common vision of job creation and sustainable inclusive economic growth for the benefit of all South Africans.
The remarks were made by BLSA CEO, Bonang Mohale, on behalf of business, at the pre-Davos breakfast meeting of Team SA today.