It is the business community’s new buzz phrase: “responsible capitalism”. It reflects the realisation by business that it can do more to tackle the big structural challenges that undermine SA’s future.
Stung by accusations that it was slow to react to state capture and emasculated itself in its desire to build trust with the Zuma administration, SA’s business leadership is trying hard to improve its image.
But it goes far beyond image building. At a time when business and capitalism are being made scapegoats for the economy’s failure to grow, it has become essential for corporate SA to explain how it serves the national interest.
Business understands it cannot thrive in a society in which poverty and inequality are on the rise. It also understands it must prove to a population in thrall to populist politicians that the free market is the best way to deliver growth and transformation.
There is also the need to step into the vacuum created by a failing state and to play a constructive role in the creation of the broad social coalition that is trying to unite South Africans behind a new vision for the country.
There are three things business should be doing to fulfil its responsibility to shareholders and South Africans. First, accept that short-term profit maximisation in a country with SA’s deep-seated structural problems is unsustainable and, frankly, unhelpful. Second, be prepared to clash loudly and publicly with the government in making the case for market-friendly reforms. Third, recognise — as it is now doing — that business is capable of tackling some of the country’s big problems in a far more proactive way.
In recent weeks, SA’s manufacturing industry has set out a road map that could lead to 1-million more jobs; South African Breweries has launched an entrepreneurial project to create 10,000 new jobs; and the CEO Initiative has revived its plan to create 1-million youth internships.
Funding for higher education is also on the rise. Corporate donations to the University of the Witwatersrand have spiked in the past two years despite the fact that violent campus disruptions have harmed its image as a place of learning.
While business stepping up its social contribution is to be welcomed, it is being forced to become more proactive partly because of the erosion of state capacity and public finances, and the inability of the economy to grow. The country is heading deeper into an economic and fiscal crisis. Growth has evaporated along with business and investor confidence.
In this context, the focus of the debate shouldn’t be on the state of business or what more it should do. Business is not the problem.
The real issue, explains Centre for Development and Enterprise executive director Ann Bernstein, is that state-led development is failing, state-owned enterprises are bankrupting the country and the government lacks economic leadership or a growth plan.
“The focus has to be on how to get rid of crony capitalism and build a state that functions properly in the national interest rather than accepting this argument that business must continually do more, more, more,” she says.
Only much faster, more labour-intensive growth is going to tackle employment and only a restoration of confidence in the state is going to reignite growth.
Clearly, the most important project SA could be engaged in is to multiply the number of sustainably profitable firms, especially small, black-owned firms. Apart from wholesale leadership renewal in the government, nothing will do more for transformation, jobs or growth.