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JEREMY MAGGS: Well, let’s start with this. The South African government and organised business have agreed to urgently work together, their words, in partnership to remove obstacles to inclusive economic growth and job creation. Three immediate priority interventions have been agreed to. They are energy, transport and logistics, as well as crime and corruption. So can this initiative work. Political and economic commentator, Daniel Silke, is with us now. Daniel, have we not seen plans and commitments like this before?
DANIEL SILKE: Hello Jeremy, thanks for having me. We certainly have seen plans like this before. There have been mixed results in previous efforts at cooperation. We saw, I think, a better understanding occur during the Covid period when indeed there was a degree of cooperation between the private sector and the state in rolling out the vaccine.
I think that we can be sceptical and suspicious about the failure in the past…
But frankly, we’re at a junction in South Africa with a flatlining economic growth, unrelenting unemployment and, of course, the myriad of social and policy ills that now beset the country that something really has to be done.
One has to have some sort of leap of faith, I suppose that given the dire strait, broadly speaking, across so many measurements of South Africa’s economy, this has to be an initiative that has to be provided with some leeway, and I think that’s the sorry state we are in.
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JEREMY MAGGS: Let’s talk about that leap of faith then. You’ll agree there is a trust deficit from both sides of this equation to overcome.
DANIEL SILKE: I think there is a trust deficit, and I certainly think that even from the ANC side, there’s a substantial leap of faith to afford President (Cyril) Ramaphosa the leeway himself to negotiate with business in this way. Remember that there are large elements within the ANC that remain highly sceptical about the role of the private sector. They would still prefer to see the state as the key interlocutor of a developmental state that I’m afraid has not been particularly developmental over the last decade or two.
I think these factions within the ANC themselves will be somewhat sceptical about Ramaphosa’s movement towards the business sector to try and alleviate the crisis that we are in.
From the business sector point of view, absolutely, those that have been part of the various task teams have been very critical of the state over the course of the last few months. Increasingly so.
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They will also be suspicious about the state’s ability to provide effective co-leadership on these various work streams. They’ll be also, I think, very sceptical about the state’s policy response as well.
So there is a leap of faith here from both sides that is required. But once again, I think the urgency of the matter is really the background issue here. We are staring down an economic crisis in South Africa and from an ANC perspective, the ANC is staring down the possibility of a below 50% result at next year’s election, and nothing applies the mind more than fearing a political loss at the polls.
JEREMY MAGGS: A sign of desperation on the one side, as far as government is concerned, and I’m assuming, Daniel Silke, growing impatience on the other side from the business community?
DANIEL SILKE: I think there’s political desperation from the side of the ANC certainly, and I think the polling for the ANC is concerning. But I do think that in general, Jeremy, we should be having joint work streams between the private sector and the state. I would like to see this somehow codified into the broader policy and performance structure of governance within South Africa.
We, of course, shouldn’t just wait for crises to occur before, at least there is some comradery across these two important platforms. But having said that, I think the business sector themselves have to be quite careful in essentially perhaps throwing the ANC a lifeline as well when it comes to the ANC’s election prospects next year.
The business sector will also have to extract their pound of flesh, I suppose, in terms of providing this degree of expertise, and the pressure really has to be from the business sector towards the state as well.
They also need to pressurise the state into more market-friendly policies, into best practice policies, into a better security establishment, which ultimately undermines so much of business outcomes within South Africa. So it’s not just the ANC getting some sort of lifeline from the business community, one would hope it should also work both ways in the reverse.
JEREMY MAGGS: I wonder how much pressure the business community is willing to apply on government, though?
DANIEL SILKE: Ah, I think that’s a very key question. I don’t think the business community, and I’ve said it before, have been particularly effective at pressurising the state. Now, we’re in the state that we’re in, I think partially because the private sector has really tolerated this degree of mediocracy and decline for many, many years.
I think now is the time, frankly, that business can at last perhaps turn on the pressure taps and demand something more from the state. But the inability of the ANC itself to have any kind of cohesive ideology or broadly speaking, cohesive economic policy, really, I think is going to make it quite difficult for business to pressure the state. But this is the time for business to do it.
JEREMY MAGGS: Those three priority interventions or work streams, as you call them, energy, transport and logistics, and crime and corruption, of those three, energy is the one that needs the most focus, surely?
DANIEL SILKE: Well, I think so, just from an immediate point of view, we know that you can’t do much when the lights go out and we know the mounting losses in the private sector, reporting on a daily basis from South Africa’s big retailers, in just about every aspect of South African business it contributes to unemployment and, of course, to a lack of foreign direct investment and negative perception. So it is the basis of it all.
But, of course, it goes beyond energy, transport and logistics clearly require policy shifts, a much greater public-private participation, which we’ve seen government be a little willing to engage in, certainly with relations to Transnet. I think that part and parcel of these three work streams will be to move towards greater public-private participation across any number of different aspects.
So all of these three, crime and corruption all work in tandem with one another. One could argue they’re all critically important parts of the same puzzle, but getting the lights on for more sustainable periods is, to me, the fundamental, at least in terms of the first aspect we should be looking at.
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JEREMY MAGGS: Daniel Silke, critical to this process is how it is directed, managed, facilitated, overseen, you call the description anyway you want, because as you’ve rightly said, there’s not always unanimity between these two important parties. There’s got to be a very clear set of guidelines, objectives, and I guess a way in which this process can be measured.
DANIEL SILKE: I get the impression from the business leaders who’ve engaged in this conversation that they seem to regard government as a lot more serious, or certainly the commitments made in the meeting with President Ramaphosa, a lot more serious about managing the process, being outcomes oriented, providing sort of six-weekly updates.
So, I think there’s a seriousness and there’s an urgency now, certainly from government’s side.
But I think the same issue really applies is, does President Ramaphosa have the full buy-in from within his own Cabinet, from within his own party.
The scepticism for business, the scepticism for Ramaphosa within the ANC, can that be somehow put aside so that those who are going to cooperate with business from the side of the state are given unfettered leeway in order to engage in that cooperation.
We’ve spoken a lot in South Africa about sabotage over the course of the last year or two, especially with relation to our energy grid. One would hope also that internally this kind of rapprochement with business isn’t sabotaged by elements within the governing party who are so sceptical about the private sector.
JEREMY MAGGS: Do you think there is more consensus on the business side in terms of what the plan should be?
DANIEL SILKE: Well, I think that there’s more consensus simply because of the deteriorating economic position in South Africa, which now affects businesses’ bottom line and very substantially so. I think the consensus certainly will be to offer the state whatever help the state is willing to take. I don’t think business has hugely high expectations of its dealings with the state.
I think the frustrations with policy, with performance, with ethical governance, with the security cluster and the inability of them to police so many critical aspects, I don’t think there’s great belief that this is going to be fundamentally changed in the next six weeks or in the following six months of six-week meetings.
But I think that at least the positivity and the urgency of the matter now can, in fact, bring us to a greater point of understanding and cooperation between these two important parts of our society.
On the basis of that, I don’t think we should have too high expectations. I certainly think that this is worth a shot. It’s worth another shot, given past experience and I think the urgency from both sides now is the common link that can, in fact, show some signs of improvement over the next six to nine months.
JEREMY MAGGS: What signifies a short-term win then?
DANIEL SILKE: Well, I think the short-term win hopefully will be better joint management within these work streams of aspects relating to certainly the management, certainly on the logistics side of the Transnet debacle that we’ve seen. Again, the management from private sector engineers and the implanting of private sector officials and engineers into the energy sector and into Eskom in particular, which has already started.
I think by at least broadening the skills base to tackle many of the state-owned enterprises’ ailments, I think that is the initial win, the injection of private sector skills and knowledge which perhaps wasn’t there before, coming in from the outside, managed on a six-weekly report back basis, I think will perhaps set us on a better course, at least in the short term.
JEREMY MAGGS: Daniel Silke, thank you very much for joining us.
