Business has invested heavily in supporting government reforms because company success depends on a functioning state, but this diverts resources from business’s own investment and expansion.
The new BLSA Reform Tracker launching this week will monitor hundreds of government reforms online to assess progress and highlight blockages.
Recent progress includes clearing visa backlogs and largely ending load shedding through public-private collaboration, and we hope to support success on multiple reform fronts.
Eskom’s legal challenge to electricity trading licences threatens reform momentum, but Minister Ramokgopa has shown the leadership necessary to keep reform on track by urging the SOE to suspend its litigation.
Our fortunes as businesses are tied to those of government. If government fails, the country fails. If the country fails, business fails. This is not sentiment, it is economic reality.
That is why organised business, including Business Leadership South Africa, expends substantial resources on supporting government to deliver reforms that improve the business environment, enabling economic growth and employment. Let me be clear about what we are confronting.
Youth unemployment affects two out of three young people in this country, which is a ticking time bomb. The July 2021 unrest was not just a rule-of-law crisis but a poverty and exclusion problem. When millions of people are standing on the sidelines watching others participate in the economy, it creates a foundation for instability that no amount of private security can contain.
Business cannot operate effectively in a failing state. We’ve seen this over the past decade – load shedding costing us billions, port inefficiencies limiting export potential, and crime driving up operational costs.
The test of economic reforms must be whether they actually change things. Do they make it easier and cheaper to do business? When government systems fail, business carries the cost through higher security expenses, backup power generation, alternative logistics arrangements and lost productivity. Ultimately, that renders us uncompetitive as an economy, compounding our problems by leaving us unable to compete in global markets.
However, by working with government, we have seen tangible progress. The GNU has cleared visa backlogs that were costing us tourism revenue and skilled workers. We’ve largely ended load shedding through collaborative efforts between the public and private sectors. Our efforts were not charitable endeavours, they are investments with measurable returns.
But every rand we spend supporting government and reform is a rand not invested in core business operations, expansion, or innovation. Our shareholders and stakeholders rightly question why business should subsidise government failures.
There’s an opportunity cost to deploying our best people on fixing state problems rather than growing our businesses. We must also be clear that we do not desire a permanent state of dependency. Our interventions have been focused on dealing with the legacy of state capture, which destroyed so much of our institutional capacity in government and set us back many years. Our efforts must have an endpoint.
So, we must ensure that where we deploy resources there is a clear pathway to conclusion. And later this week, you will be hearing about a major new initiative BLSA is launching called BLSA Reform Tracker. This is a new public resource, an online tool that tracks hundreds of different government reforms and assesses progress, noting successes and highlighting blockages.
We will share much more about this initiative at the launches being held with members and the media on Thursday in Johannesburg and on Friday in Cape Town.
Available to everyone, the tool will enable both the public and private sectors to quickly track the progress of reforms and empower all of us to better work together to deliver an improved business environment. It will track many reforms – not only those that business has partnered government on, and will, I hope, help accelerate progress to ensure that reforms conclude.
Business is ready to invest in infrastructure and skills, but we need a government equally committed to reform and delivery. This partnership must be properly structured with clear objectives, timelines and accountability mechanisms. We need sprint targets, measurable outcomes and regular evaluation of progress. The BLSA Reform Tracker will support that effort.
One critical area of reform is the electricity system in South Africa. We have already made much progress, but recently the licensing of electricity traders has faced legal challenges by Eskom. The litigation can undermine the reform process, and last week, BLSA and BUSA published a joint statement strongly condemning Eskom’s efforts to undermine the reform effort.
I want to commend the electricity minister, Kgosientsho Ramokgopa, for his swift response. On Friday, he published a statement urging Eskom to drop its legal challenge. The minister acknowledged Eskom’s concerns that an electricity market must be rules-based and fair to all.
Nersa is engaged in an accelerated three-month process to establish the framework, and the minister has urged Eskom to delay any legal action pending that process. The minister has demonstrated his commitment to the reforms and is providing the leadership needed to ensure they stay on track.
The reform process that government is leading is clear and positive. Business has strongly supported the plan, which has already led to private investments in new electricity capacity worth billions of rands.
Eskom must align itself with the reform momentum. We need to focus on urgently concluding the reforms, not trying to stymie progress through litigation.
The planned reforms will enable electricity trading in South Africa with multiple generators supplying electricity to multiple customers across the grid. This is vital to ensure electricity security, but also to start bringing down electricity prices in the country after so many years of dramatic increases.
Eskom was the first entity to receive a trading licence, and subsequently five further licences have been granted to private sector operators.
Eskom’s transmission subsidiary is going to become an independent systems operator that will manage the grid to connect generators to customers. This should be the focus – providing the grid capacity to support the competitive electricity market that is being developed.
