THE BLOG

'On The Brink' -- An Extract

"Up until the axing of Nene in December 2015, organised business seemed trapped in a mode of being passive or reactive."

04/10/2017 03:56 SAST
On The Brink/ Claire Bisseker
On The Brink: South Africa's Political And Fiscal Cliff-Hanger

From 2009, when Zuma shut the door on business and disbanded the Big Business Working group, up until the axing of Nene in December 2015, organised business seemed trapped in a mode of being passive or reactive.

Spicer explained this paralysis mode of business: "It can never be proactive and say what it requires to make profits. It must never provoke, always be on the back foot, always be measured. This is a mode where business got so used to one way of operating where it's constantly giving away more, never tackling the core issues affecting the economy".

Part of the problem was that, during Zuma's first term, organised business became fractured and weakened by increasing internal divides between black and white business interests. At the same time, business organisations were starved of resources by the big corporates, who became less willing to devote high-level time and energy to policy advocacy, and increasingly reluctant to speak out critically against the government for fear of being publicly vilified or harming their profitability.

Chamber of Mines CEO Roger Baxter conceded that in the public space, the organised business had not stepped up to the plate despite the fact that South Africa's microeconomic policies were failing to take the country forward. But he still feels that business has achieved compromises on some legislation that could have been a lot worse without business's engagement.

"I do have a few regrets but sometimes playing a more assertive role could have been more damaging," he said. "We haven't sat on our hands. We have expressed concern behind the scenes. Being more obstreperous could have made things worse in some instances."

But it seems fair to argue that for a long time the big business had been too ready to make compromises, often at the expense of small business and employment. For example, within a few months of business digging in its heels over the four new labour laws, they were back on the table at Nedlac. In the end, they were promulgated in 2014 in only a slightly diluted form.

Sitting in Nedlac is soul-destroying. Nothing is being achieved. It's all redistributive bargaining -- very far from the idea of let's all pull together for the sake of the economy.

Nedlac, Spicer asserted, had been "suicidal" for the country -- a forum where big business, big government and big labour met to strike deals that big business knew it could mitigate by reducing headcounts or manage through compliance departments. But, in the longer term, the legislative amendments and regulatory provisions agreed to in Nedlac proved highly onerous for small business and destructive for the economy as a whole.

"Business agreed to a whole lot of regulations, which were life-threatening for small business -- and not just labour laws and BEE but the whole intrusive, intensive regulatory environment that has grown up over the last 20 years," said Spicer. "Nedlac confirms all the bad biases of the economy and exacerbates unemployment, but it buys you the appearance of stability. So, for short-term peace, you end up undermining the long-term stability of the economy."

Baxter agreed that Nedlac, as construed then, was a total waste of time. "It entrenches the positions of big business, big government, big labour and one has to ask, as Pravin Gordhan did in Nedlac in discussions on the February [2016] budget, whether, by each constituency continuing to hammer on about the same issues from the same narrow perspective year after year, we are really making any progress?"

As the head of BLSA from 2005 until 2012, and for much of that period vice-president of BUSA, Spicer finally threw in the towel in 2012. "Sitting in Nedlac is soul-destroying," he said. "You know nothing is being achieved. It's all redistributive bargaining -- very far from the idea of let's all pull together for the sake of the economy."

Spicer was tired of dealing with the Zuma administration and frustrated with his business colleagues "who kept on flogging the same old corporatist model". He cited, for example, the way business leaders participated in and lent credibility to initiatives that were inimical to market forces, such as the "idealistic" social compacts on skills development and job retention promoted by Economic Development Minister Ebrahim Patel in response to the global financial crisis.

Business would commit to these pacts in a spirit of cooperation but they were impossible to implement because business organisations had no real ability to direct the behaviour of their members -- lots of heterogeneous, independent firms that were answerable first and foremost to their private shareholders.

On The Brink: South Africa's Political And Fiscal Cliff-Hanger

Spicer had regrets -- mainly that he should have got tougher earlier. For example, he felt he was wrong to have persuaded then FirstRand CEO Paul Harris to pull First National Bank's anticrime advertisement after David Rattray, the noted Anglo-Zulu War historian, was killed during a robbery on his farm in January 2007.

"We had just spent 18 months to two years getting the government to agree to reinvigorate Business Against Crime [BAC] and were just putting the final touches on the agreement. FNB hadn't consulted with us in placing the ad and we said it would blow all our work out of the water," Spicer recalled. "As it happened, all the high-level agreement around BAC came to little. I should have [expected as much]."

But when Spicer and BLSA's chairman Bobby Godsell did start to be more outspoken in 2011/2012, they immediately received push-back from the government. "It was too little, too late," said Spicer, "and organised business hadn't signed up for that. Its preferred model was smoke-filled rooms and behind closed doors."

This was only too apparent in BLSA's limp-wristed response to Nene's axing. With the markets in free fall, BLSA noted in the Sunday Times that "the replacement of an effective and trusted finance minister just 18 months into his term of office has raised doubts about our ability to maintain prudent macroeconomic policies."

So incensed was BDFM editor-in-chief Peter Bruce with this "absolutely wretched" statement, that he declared that, henceforth, "BLSA [had] forfeited its right to speak for anyone". Granted, BLSA subsequently emailed a tougher statement to the media, but for many, the moment had been lost. "The first instinct, the one that reveals you, was to apologise for perhaps having just a teensy little point to make," wrote Bruce. "I have spent years trying to make the case for business in SA. Both these gentlemen [BLSA chairman Bobby Godsell and CEO Thero Setiloane] should pack up and leave."

Clearly, the business sector's unerring instinct for self-preservation did not lend itself to selfless acts of heroism. But, fortunately, a few brave souls did raise their voices in protest.

** Edited extracts from On The Brink by Claire Bisseker, published by Tafelberg.