Business can do more to boost empowerment
The IQbusiness business contribution index shows that the pursuit of profit and investing in the future are not mutually exclusive
In times of deep social and economic distress it is tempting to only focus on the negative aspects of our environment. Over the past six months the SA public has been bombarded with news of negative economic growth, rampant crime, untenable unemployment figures and has been exposed to governance failure on an unthinkable level. But in the midst of this awfulness millions of positive contributions are also being made to our economy every day presenting a huge opportunity to those who are willing to take notice.
The IQbusiness business contribution index to be released this month is the first report of its type in SA to measure and track the contribution of the private sector to the economy and society across a wide range of categories. The results are remarkable, highlighting that it is business, not government, that is collectively the single most important contributor to economic growth and prosperity in SA.
To the more cynical among us this may not come as a surprise, but the value of the index lies in knowing where and how the private sector has the greatest effect on the economy. By understanding the essential role business plays in generating economic opportunity we can leverage that role and amplify its effects for the benefit of the wider economy and ourselves. In other words, the index provides business with both agency and the opportunity to change the direction of this country.
For example, in four of the 10 categories tracked by the index business makes a clear, positive contribution to the growth and development of sectors — finance, safety & security, employment, and health care & education. It is in these categories that the private sector generates positive externalities in excess of their profits.
The findings show that overall the changes and contributions made by business to society are positive, and in many regards unrecognised. From food and shelter to transport and mobile communications, the research found that business provides most of the essential goods and services used by SA’s 56-million citizens every day. Private enterprise is also the single largest employer, and through direct and indirect tax contributions enables the government to fund social services, build infrastructure and employ police officers, teachers and doctors.
It would be foolish not to recognise the role business plays in building a better SA, and for this reason we wanted to understand and quantify how, where, and why these businesses contribute to the growth of our economy. More importantly, by understanding the essential role business plays in generating economic opportunity in SA we can leverage that role and amplify its effects.
We believe it is in the categories where business has a neutral or weakly positive effect that there is the greatest potential for business to step up and drive growth. When it comes to the categories of empowerment, infrastructure development, investing in the future and creating prosperity, the private sector carries its weight but does little more. This is particularly apparent when it comes to empowerment.
Although business is obliged to comply with broad-based black economic empowerment legislation, and a large number of skilled black professionals and entrepreneurs have entered the labour market, the proportion of black executives remains relatively low. Although there are several valid reasons why this may be the case (most notably that senior executives often have more than 20 years of professional experience) this is an area where both business and society will benefit from increased development and investment, both immediately and in the long run.
Regrettably, not all contributions made by business to the economy are positive. When it comes to promoting competitiveness and improving overall living conditions, the index shows that the private sector is reinforcing existing trends. The economy is characterised by high levels of concentration in some sectors as well as vast income inequality, and the two are not unrelated.
Make no mistake, business is primarily driven by profit, and that is nothing to be ashamed of, but what the index shows is that the pursuit of profit and investing in the future are not mutually exclusive. In some sectors, such as health care & education, business has already had a positive effect on the economy. This must now be scaled and replicated, with the research highlighting the improvement opportunity in business contribution to developing infrastructure.
This aligns with the economic stimulus package outlined by President Cyril Ramaphosa, in which proposals have been made to establish an infrastructure development initiative that draws in private sector funding and delivery expertise. This holds the greatest opportunity for business to deliver on both shareholder value and economic development objectives.
With this in mind everyone in our business community can and should make changes to create everyday opportunities for the development of more growth — no matter how big or small their business or what sector they operate in. Despite all odds, business can continue to make a positive impact and take significant steps towards realising the vision of a more prosperous and economically free society.
• Craker is CEO of IQbusiness.