IAN KILBRIDE: How business can partner effectively with the state

The success or failure of SA hinges to a considerable degree on state-business relations. Currently they are poor and we are failing as a state.

We cannot afford to fail, but reversing our national decline will require a new configuration of the relationship between the public and private sectors. De facto, this is already happening, with the private sector taking on greater responsibility for the delivery of the basic services the state sector has simply abrogated and abandoned.

Education, security, transport and health are four cardinal pillars of responsibility of any functioning state, and yet the SA private sector is delivering these services to more citizens. The provision of clean energy will be the next private sector deliverable.

While trade union and left-wing ideologues view the privatisation of the state as anathema, their free market nemeses see opportunity and justifiable reward for their investment risk. Yet the simple fact is that if the public sector would do what it is mandated to do, namely deliver basic services reliably at an affordable price, there would be no need or opportunity for business to get involved, other than as suppliers and subcontractors to the state.

The state sector is being privatised not as a principle or policy, but rather as a consequence of meeting the needs and demands of people failed by the state. Stated differently, the private sector in SA is an important bulwark against state failure.

But this is neither a desirable nor a sustainable solution. While private sector provision of state services is likely to deliver cost-effective efficiencies to some, it can only do so within the constraints of affordability. Most South Africans simply cannot afford private sector services, and it is this dichotomy between serviced and unserviced citizens that is a defining feature of our country’s catastrophic inequality.

It is this unserviced majority who are at risk from failure, and yet it is they who have the electoral power to overturn the political order. Concomitantly, the justifiable clamour for radical economic transformation is likely to intensify in the absence of any improvement in service delivery to the majority.

What is required to avoid state failure is radical economic transformation of a different type. If the basic point of departure is that the burgeoning state sector in SA has failed in its core mandate, it follows that more state intervention cannot be the solution. Rather, the inflection point we are hurtling towards demands a radical rethink by both the state and business regarding their roles and relationship.

The declaration by President Cyril Ramaphosa of the publication of a social compact within 100 days of the state of the nation address in February says much about the government’s thinking. The unilateral nature of the declaration (where was business in all this?), the belief that economies can be grown and sustained by compacts, and the failure to even publish the document all speak to a profound misreading of how economies work, and particularly how business operates.

Rather than delivering declarations, plans and blueprints, the government would do far better by adopting a more modest programme of consultation and listening. Axiomatically, a failed state is not in the interests of business, so why not seek out its opinions and proposals for its avoidance and for setting the economy onto a sustainable growth path?

Equally, while social compacts merely set up their naive proponents for failure in the long term, corporate arrogance, disengagement and wilful Schadenfreude all contribute to fractured state-business relations. Too often, good corporate citizenship is seen as business shorthand for just doing enough to make decent profits while keeping stakeholders placated. This is no longer good enough. The threat of state failure necessitates that business engages actively, robustly and publicly on all issues that threaten the future of our country.

The tepid timidity of corporate compliance and silent acquiescence is in nobody’s interests other than the political vultures circling the dying economy. There is, of course, a place for business people railing against the government on popular podcasts. It is their right to do so, and such freedoms are protected in the constitution, but this behaviour doesn’t take us forward.

Rather, as a first step business itself needs to convene a national dialogue across all sectors and establish a clear, legitimate and representative mandate to engage directly and constructively with the government on all key areas that require urgent policy reform. In short, only a recast state-business relationship can lead SA towards a path of recovery and avoid state failure.

• Kilbride chairs financial services group Spirit Invest.