BY offering a partnering hand to the government after delivering a polite yet stern message to President Cyril Ramaphosa that the country is in crisis, captains of industry are calculating that it is still in their interests to back an ANC government. If this initiative fails because of a lack of urgency on the government's part, however, all bets are off. History has taught us that business can be a powerful force for change.
Last week’s meeting with Ramaphosa is unprecedented because of the warning South Africa's most powerful business leaders delivered: the country has run out of time and the crisis has arrived.
The fact that the meeting took place at all is a clear sign of the calamity we face. In the era of ANC dominance, South Africans have become accustomed to seeing a deferential business community complying with even the most hostile policies. Taking on the government is not normally good for business, is the mantra. Businesses tend to insulate themselves to protect the bottom line while leaving the government to run the country.
The ANC government has also taken business support for granted. In the past, business played it safe and gave the government the benefit of the doubt, despite growing signs that the country was heading in the wrong direction. Ramaphosa is a businessperson, after all, and the expectation was that he was playing a long game and would eventually deliver the desired results. Growing unease about the state of the nation was discussed in hushed tones at cocktail parties, and that was the extent of open business discontent.
Recent South African history reminds us that business can be a powerful force for change. During the 1980s, and especially after President PW Botha's disastrous “Rubicon" speech in 1985 and the resultant imposition of US sanctions and complete isolation, captains of industry became pivotal in ending apartheid.
After coming to power, the ANC government enjoyed the solid support of big business. It also benefited from international prestige and influence with an unprecedented number of countries around the world. We had no adversaries on the international stage. This benefited business, and investment and trade expanded rapidly.
Existential crisis
However, due to rampant mismanagement of state institutions leading to a collapse of essential services, violent crime and vigilantism, endemic corruption, and the loss of public confidence in state institutions and democracy itself, South Africa now faces an existential crisis, similar to the 1980s. The final straw is the reckless mismanagement of our relations with the US. We are again confronted with growing unrest at home and mounting pressure from abroad.
A bipartisan letter by four Democratic and Republican senators and congressmen, sent to the administration of President Joe Biden on 9 June, illustrates the pressure being brought to bear on South Africa that could severely affect trade and investment flows.
The letter raises concerns about South Africa’s naval exercises with China and Russia, the clandestine visit of a Russian cargo vessel to the naval dockyard in Simon's Town, covert Russian military flights in and out of South Africa, and South Africa’s decision to host President Vladimir Putin despite an outstanding International Criminal Court arrest warrant. These actions, the letter’s authors argued, negate South Africa’s official position of neutrality and violate US sanctions laws. Moreover, they amount to “activities that undermine United States national security and foreign policy interests”.
The letter, coupled with recent pronouncements by the US ambassador to South Africa accusing the country of providing arms to Russia, are clear warning signals that South Africa could lose its preferential trading status under the African Growth & Opportunities Act. This will be devastating for a country already close to economic collapse and with one of the highest unemployment rates in the world.
Trade with Nato countries came to R1.2-trillion in 2022, compared to R15.7bn with Russia. Our economy is so integrated with and dependent on trade with the West that the country cannot afford the ANC’s nostalgic dalliance with the old Soviet Union and its successor. It does not serve our interests and belongs in the past.
Devastating consequences for economy
On the other hand, we also should not be forced into a binary choice between the superpowers, and a truly neutral policy position between China and the West is in our national interest. Alienating the US, however, will have devastating consequences for our economy.
The question as to whether the ANC is fit to govern is therefore looming ever larger with the 2024 elections around the corner. And it is becoming a refrain with a growing number of ordinary South African voters, black and white, and rippling out to the think-tanks, foreign policy experts and policy pundits in Washington, London, Tokyo and Berlin.
The opposition Democratic Alliance has opportunistically sought to limit South Africa’s potential diplomatic isolation. Party leader John Steenhuisen met senior officials in Washington to plead with them to distinguish between the ANC and South Africa, and not to punish South Africans for the missteps of the governing party. The premier of the Western Cape, Alan Winde, has also encouraged US institutions and investors to focus on well-run opposition-controlled metros and his well-run province.
Good governance and ethical leadership
Civil society has ramped up its criticism of the government and organisations such as the Defend our Democracy Campaign are mobilising civil society to insist on a return to good governance and ethical leadership.
For now, business has decided to defer the question of whether the ANC is fit to govern. Instead, with the crisis meeting at the Union Buildings, it has decided to extend a partnering hand to the ANC. An unprecedented number of business leaders, representing the very heartbeat of our economy, were involved. The delegation that met Ramaphosa included Martin Kingston of B4SA, Discovery’s Adrian Gore and representatives of Business Leadership South Africa, Business Unity South Africa and the Public Private Growth Initiative.
The president agreed to meetings every six weeks, and the government and business will contribute money and expertise to workstreams focusing on crime and corruption, transport and logistics, energy, and job creation. To form part of the workstreams, business has put forward the names of heavy hitters: Sasol boss Fleetwood Grobler, Sanlam CEO Paul Hanratty, Sibanye’s Neal Froneman, Anglo American chair Nolitha Fakude, former Exxaro boss Mxolisi Mgojo, Toyota CEO Andrew Kirby, and Remgro head Jannie Durand.
Commentators who believe it is time for change say the ANC has been thrown another lifeline by big business. By developing a joint agenda so close to the next election, the government is being given yet another chance to turn things around. Big business has calculated that it should still back the ANC horse.
However, my information that althouth business is willing to give it a try, it is sceptical of the outcomes. The message to Ramaphosa was crystal clear: if the government yet again demonstrates a lack of urgency and allows the initiative to fail, business will keep all its options open. Will Ramaphosa deliver on his promise to work with business in the spirit of partnership? The jury is out.
♦ VWB ♦
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