The private sector is becoming increasingly nervous about the troubled relationship between government, labour and business. This was the message conveyed at a business breakfast hosted by the ANC’s fund raising organisation, the Progressive Business Forum (PBF) at the party’s 53rd national conference in Mangaung.
The breakfast is part of a series of get-togethers where PBF delegates have the opportunity to mingle with key ministers in the economic cluster. Deputy finance minister Nhlanhla Nene was this morning’s guest speaker.
Stephen Koseff, CEO of Investec Group, who hosted this morning’s event said in his opening address the relationship between business, labour and government is not where it should be and a significant effort has to be made to mend it.
Government doesn’t seem to grasp the impact its utterances have on the broader investment community, Koseff said. “Investec as an international specialist bank comes across different sectors of society — investors, other banks and government agencies – and we’ve come to realise the one big problem in South Africa is the lack of policy clarity from government,” he said. “Talks about nationalisation didn’t help either. You put investors off.”
Koseff lamented the fact that foreign direct investment in the country only amounts to 1% of GDP. “This is not nearly enough. We also don’t see enough private sector investment and again – the private sector isn’t investing because there’s a lack of policy clarity. We need to get these things right.”
Like many other businessmen, Koseff urged government to urgently implement the National Development Plan (NDP) drafted under the leadership of planning minister Trevor Manuel. He also cautioned that South Africa could soon be on a very slippery slope if government doesn’t watch its spending. “We can’t rely on government spending alone,” he said, “because it doesn’t take too long for South Africa to become a Greece. Once you get to 60% of GDP (of government spending) you start seeing negative ratings which have an impact on your ability to raise capital.”
In response to Koseff’s concerns Nene said the ANC-led government has managed the country’s finances “impeccably”. “But we do recognise we must control our debt and not put undue pressure on future generations.”
During the questions and answer session, Koseff wanted to know if government takes the recent nationals sovereign downgrade of South Africa by global rating agencies seriously. “Are you comfortable that government will pay a lot more attention to rating agencies?” he asked. “I know none of us like them, but their existence is a reality of life but they’re still highly recognised by the people listen to them. South Africa can’t afford to slip further down the ladder.”
Nene believed there has been “some degree of unfairness” when South Africa was downgraded. “If you look at the ratings, the agencies seemed to have tried to influence the outcome of this (Mangaung) conference. We are nowhere near where Greece is.” He did however concede that it’s easy to go down Greece’s route if the wrong decisions are being made. “All our policy directions are aimed at making sure we stay out of the crisis situation and making sure we have a sustainable economic growth,” he said.