Business Maverick

ELECTIONS AFTERMATH

Business urges cool heads and pro-reform attitude as SA embraces new era of coalitions

Business urges cool heads and pro-reform attitude as SA embraces new era of coalitions
South Africa is on the cusp of a new political era in which a new government will be shaped under a coalition agreement. (Source: parliament.gov.za | Rope | Photo: iStock)

Over the coming days, political parties will negotiate to form a coalition government. Business leaders have urged politicians to prioritise the ‘interests of the entire country over their own parties and personal interests’.

Prominent business leaders have called on politicians to put South Africa first and flesh out a coalition government agreement that paves the way for pro-growth, investment and employment reforms after years of economic regression. 

Read more in Daily Maverick: Elections dashboard

South Africa is on the cusp of a new political era in which a new government will be shaped under a coalition agreement after the ANC and other political parties failed to secure an outright mandate to govern.

In the coming days, the ANC will have to negotiate with smaller political parties the formation of a government after its electoral support fell by 17 percentage points to 40%.

Cas Coovadia, the CEO of Business Unity South Africa, the country’s biggest business organisation, said voting patterns from the 16.2 million votes cast indicate that South Africans “do not trust any single political party to govern alone”. This is why the country has descended into the uncharted territory of coalitions at national government level.

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CEO of Business Unity South Africa Cas Coovadia. (Photo: Flickr / World Economic Forum / Benedikt von Loebell)

As political parties negotiate to form coalition governments, Coovadia said organised business was urging the “importance of prioritising the interests of the entire country over their own parties and personal interests.

“Our country is once again at a crossroads. One path [if a coalition is done right] leads to investment, inclusive growth, job creation and the resolution of our socioeconomic crises. The other path will deepen our crises and hamper the much-needed recovery, with the most vulnerable bearing the burden. We urge the parties that the majority of our people voted for to choose the first road,” he said. 

Over the past 15 years, South Africa’s economy, managed under an ANC majority, has suffered (no longer seeing annual growth rates of between 4% and 6%), in part because of poor policy decisions and crippling Eskom blackouts. 

The country’s joblessness crisis has worsened, with the official unemployment rate growing from about 20% in 2009 to 33% now. The country’s underperforming economy, unfriendly investment climate and lack of competitiveness are reflected in the currency, with the rand-to-dollar exchange rate weakening from less than R10/$ in 2009 to more than R18/$ currently. 

Over the past 15 years, state institutions were broken and are now on the path of recovery, albeit at a glacial pace. Public finances have weakened, with the country’s debt-to-GDP ratio ballooning due to ongoing bailouts for state-owned enterprises, a growing public sector wage bill and lower-than-expected tax revenues.

The crisis has alarmed business, the labour movement and the public. 

Stable government

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Business Leadership South Africa CEO Busisiwe Mavuso. (Photo: Masi Losi / Sunday Times)

Busisiwe Mavuso, the  CEO of Business Leadership South Africa (BLSA), another business lobby group, has called for a coalition agreement that promotes a stable government and the rule of law while enabling investments and business-friendly policies.

“We need a stable government that will continue the vital work that has already been done to put our economy on the right track to create jobs and tax revenue. We cannot afford any disruption to this momentum.

“We need jobs, we need the economy to grow and we need to generate revenue that can be taxed. To have that, we need a stable and reliable government committed to the rule of law and economic reform,” Mavuso wrote in her regular BLSA newsletter. 

Like Busa’s Coovadia, Mavuso has called on politicians to put the country and its people first by striking a coalition agreement that prioritises the implementation of reforms, makes institutions work effectively and promotes the professionalisation of the public sector. 

“The negotiations from now on must put these objectives front and centre. That is what putting South Africa first means. This is what South Africans deserve. We do not want the spectacle of parties putting their narrow ambitions first, even less so individual personalities doing so. We certainly do not need a government that will reverse the progress made,” Mavuso said.

She said the next government should continue rebuilding institutions, (particularly the criminal justice system), returning to fiscal prudence, reforming Eskom and Transnet and getting South Africa off the Financial Action Task Force’s “grey list”. 

Read more in Daily Maverick: SA faces another year on the Financial Action Task Force grey list

Alan Mukoki, the CEO of the South African Chamber of Commerce and Industry, a business body that tracks economic trends such as investor confidence and foreign investment into the country, says an incoming government should focus on “the alleviation of high levels of unemployment, building a meritocracy and sustainable and inclusive economic growth, and ridding the state and the private sector of corruption. 

“Political stability and policy certainty are the fundamental hallmarks that will drive business and investor sentiment.” DM

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