Bloemfontein - Business leaders attending the ANC national conference in Mangaung have warned that if there was continued talk of nationalisation “on the wings of government”, an inability to implement the National Development Plan (NDP) and the dismissal of ratings agency downgrades, South Africa could risk turning into an economic basket case like Greece.
The strong warnings to the government were led by Investec chief executive Stephen Koseff, who sponsored a business breakfast arranged by the ANC’s business lobbying organisation, the Progressive Business Forum, on the sidelines of the conference on Monday.
Koseff warned that South Africa “can’t live for too long with what we have seen for the last six to nine months”, with the relationship between business, labour and the government “not where it should be”.
He was referring to the recent strikes and violence in the mining sector at Marikana in North West, and in the agricultural sector at De Doorns in the Western Cape.
Noting that Investec was an international specialist bank that continually dealt with other banks, government agencies and investors, the talk of nationalisation had not done investment sentiment any good. Leaders were concerned about the lack of policy clarity on economic issues. Significantly, foreign direct investment was only about 1 percent of gross domestic product (GDP).
Although very clear policies had been forged in the National Planning Commission’s report on national development, Koseff said it was time to get on the road of implementation while drawing on private sector skills.
He noted that in terms of the Global Competitiveness Report, South Africa’s banking and financial services sector scored in the top 20 of 144 countries examined. Yet South Africa was at the bottom of the rung as far as health care, labour relations and education were concerned.
Things started to go pear-shaped after a highly successful and well-organised World Cup in 2010. Koseff urged the government to keep a check on government spending and to ensure that state debt levels – at 37 percent of GDP – did not slip to the levels of basket case economies at 60 percent of GDP or more. “It doesn’t take too long for South Africa to become a Greece,” Koseff charged.
Strong collaboration between the government, business and labour needed to be restored to focus on economic growth and development and to foster job creation, he said.
Stanley Wayland, the managing director of Virtual Investment Group, said he was pleased that Koseff had raised the issue of South Africa slipping into a crisis like Greece.
Deputy Finance Minister Nhlanhla Nene said: “We are nowhere near where Greece is… we are far from there.” South Africa was making sure that all its policy decisions “are aimed at making sure we stay out of (a) crisis situation”.
Pressed by Koseff on the contradictions between the NDP and the New Growth Path – with the one being business friendly and the other supportive of state intervention – Nene said the state needed to play a developmental role. He did not see obvious contradictions between the two plans.
Nene agreed there were hiccups in the relationship between the government, business and labour, which was put under stress during the mining and agricultural crises.
Pressed by AngloGold Ashanti spokesman Alan Fine on whether new taxes would be imposed on the mining sector, Nene said: “We have never taken tax policy decisions on the hoof.” Whatever emerged from the conference would be thoroughly canvassed through the normal process of parliamentary hearings. “We will not be reckless,” he promised.
Business Report