Business Leadership SA in conjunction with the World Economic Forum hosted a workshop to determine the factors that big business believes are most critical to SA’s economic recovery.
The findings have been incorporated into the WEF’s Strategic Intelligence Platform to prioritise high-potential areas for the South African business community to drive “a South African Great Reset”.
The WEF’s Strategic Intelligence Platform maps key issues for different countries with summaries and links to latest research and analysis of factors related to each issue.
The workshop format involved a series of polls of BLSA members to determine priorities in different areas. The list below is not in order of importance but are the factors that received the most votes in each category:
- Education & innovation
- Poverty & inequality
- Educational disparities
- Job creation & entrepreneurship
- Inclusive growth
- Quality basic education
- Productivity & competitiveness
- Governance – in public and private sectors
Members in breakaway groups discussed ways in which business could drive progress and provided feedback for the WEF to incorporate into the Strategic Intelligence Platform.
BLSA CEO Busi Mavuso reported back on three issues discussed in her group.
First, she highlighted a “strategic constraint” that business was not being allowed to take on an administrative role “to try and shift the dial, to move things along”. This, she said, had to do with the politics of the country. “We can’t play the role that we know we can play because we have expertise – so there is much frustration around that.”
Second was dependence on government. “When you look at the key things that need to be fixed – reforms we’ve been speaking about for years – to allow investment (internal and external), they all require some form of government intervention.
The third factor was limitations placed on businesses because of a lack of key skills. “We need a skilled workforce – because that will increase the competitiveness of the country.” Two developments were required to address this: education; and regulatory changes to the visa regime to make it easer for skilled immigrants to enter the country.
Cumesh Moodliar, head of Investec Private Bank, emphasised the importance of business speaking with one voice on key issues of national importance. “Everyone must be part of the solutions so there will be trade-offs.”
He said business had a key role to play in helping the state to build capacity. “You can’t fix a plan while its airbone – so its important for government to provide regulatory certainty and an enabling environment. Business needs to develop a representative voice.”
BLSA chairperson Nonkululeko Nyembezi, providing feedback on the topic of big businesses supporting SMMEs, said this “has a big potential impact” and was an area “where business can do quite a lot”. Already, BLSA members had committed to paying SME suppliers within 30 days, which was very important for their sustainability.
“We also felt strongly that, given the dynamics of the SMME sector, guidance or mentoring for small businesses would go a long way.” Big businesses, she said, could “adopt” a small business.
The big company could use its experience and expertise to play a mentoring role, advising the small business on how to gain new customers, improve its processes and systems and expand in other markets. Another area were big businesses could help take smaller businesses forward was in opening up networks for them.
Big businesses needed to look at areas where they could promote SMME involvement and her group identified four. First was in the supply chain. While there was much SMME involvement already, “we can deepen that involvement”.
Nyembezi said the second area was in the informal sector – which is very large in SA. “How can formal businesses partner with informal businesses – not to disrupt the SMMEs or their markets but to maximise their potential in a mutually beneficial way.” For example, big businesses could gain with knowledge of how to access informal markets while informal businesses could be guided in accessing formal markets.
The third area was in opportunities presented by the high-growth cannabis industry. Legalisation held massive potential for informal, smaller players. Big businesses could help them formalise and scale up the value chain.
Finally, numerous opportunities presented itself in the innovation chain. “Big business has been successful in partnering with smaller businesses to tap into new innovations.” Formal businesses could also assist with providing capital to develop innovations into profitable businesses and with the development of apps, for example, which would “help these guys scale up”.
Professor Michael Katz, chairperson of law firm ENSAfrica, emphasised that such guidance and assistance from big businesses would make “a big, immediate impact and requires no government intervention”.
Exxaro CEO Mxolisi Mgojo, whose group discussed job creation and entrepreneurship, focused on inclusive growth for SMMEs.
“Given that government has decided on an infrastructure-led recovery,” he said, “there are opportunities for the private sector as the state simply doesn’t have capacity. Government will create the environment and the private sector will lead.
“The question is, how do we do this in an inclusive way? How are we going to leverage the infrastructure drive to develop SMMEs?”
Energy supply was also a focal point of the group’s discussions because “there is no economy without electricity”. The liberalisation of SA’s energy sector also opened up opportunities for small business participation and for big business to contribute to energy supply stabilisation.
An important element of this was enabling businesses to generate their own power and distribute excess energy into a “trading platform”. This would enable mining companies as well as property developers and others to become energy players while new industries that developed from the liberalisation could support SMME supplier businesses.
Mgojo emphasised that while this required government enablement, “we do have a Minister who is proactive in terms of enabling that environment”.
Mgojo’s group also discussed the importance to the economy of food security and here he proposed the development of an entirely new food-producing industry using land owned by mining and other companies. “We need to be imaginative in how we use this land – especially when mines close and sometimes leave the communities stranded. How can we use that land to create new economies that will be sustainable – both during the mine’s operating period but also post that?
“We are miners not agriculture people, but we can partner around value chains. This could grow to create an export market for new food players while, during the development of the new value chains, the focus would be on SME promotion, job creation and localised food security.”