Business and govt must work together on socioeconomic issues

16th October 2009 By: Chanel de Bruyn - Creamer Media Senior Deputy Editor Online

Business had to genuinely ask itself how it could work with government to deal with the socioeconomic challenges the country was facing, Banking Association of South Africa MD Cas Coovadia said on Friday.

He said that it was imperative for business to work with government to deal with some of the critical socioeconomic issues it was facing, warning that if the current service delivery protests that were being held in some areas spread across the country, the environment for doing sustainable business would be gone.

Speaking at the South African Chamber of Commerce and Industry (Sacci) annual convention in Johannesburg, he urged business to provide government with additional resources, in terms of human capital, to deal with some of the issues the government was facing.

Solidarity deputy general secretary Dr Dirk Hermann said that it was important to question how any policies to deal with socioeconomic and service delivery challenges can be implemented with the civil service capacity the country currently had.

If the capacity challenges in the public sector could not be dealt with, very little would change, he said.

Hermann said that government had to move away from policy debate to focusing on debates around capacity.

President Jacob Zuma had, so far sidestepped the policy debates and focused on the capacity challenges, he commented.

Department of Trade and Industry DG Tshediso Matona, meanwhile, said that it was correct for government to focus on capacity and implementation challenges, saying that the country had already missed out on some opportunities and would continue to lose out on further opportunities if it did not focus on the priorities of implementation.

Implementation failures, however, were not only confined to government, but also in the way that government and the private sector worked together, he said.

Matona noted that there were currently a lot of important conversations going on between government and the private sector, which would afford government and business the opportunity to relate with each other as it faces common challenges, such as the global downturn.


Sanlam's Elias Masilela, meanwhile, pointed out that no matter which administration was in power, the challenges the country was faced with remained the same. The country had focus on the structural changes it could make.

A big aspect was how the country could regulate itself to ensure the productivity of the economy. If the South Africa's productivity was boosted, this would go a long way in dealing with many of the other issues the country was facing.

Masilela stated that there was currently a total divorce between productivity and pricing in the South African economy.

He proposed that sound incentive frameworks had to be implemented in order to ensure the country's productivity.


Department of Public Enterprises special projects adviser Edwin Ritchken told delegates at the convention that enterprises, whether State-owned or private, played a central role in the success or failure of an economy and could play a pivotal role in moving a country forward.

There had to be, at a policy level, a recognition of what government wanted from the State owned enterprises, which it should then also support with resources, he said.

Further, government could also support private enterprises, such as in the distressed automotive sector, by taking into consideration how much of a product is locally produced, when procuring, for example, a vehicle.

Ritchken said that business often complained about State-owned enterprises procuring from abroad, while many companies did the same.

There was no commitment by business in South Africa to behave patriotically and to develop supply chains themselves, he stated.

Meanwhile, National Treasury chief director Keith Engel said that small and medium-sized enterprises (SMEs) were underrepresented in the dealings between the public and private sector.

In terms of tax policy, large companies had a big disproportionate domination over SMEs, and as they had the money and the resources, policy was skewed towards the requirements of these companies.

When tax incentives were approved, these companies did not reinvest those funds in job growth, but to the benefit of shareholders.

Business had to ensure that these resources are shared and that more jobs are created, said Engel.