BUSISIWE MAVUSO: What business wants from Parks Tau’s department

I was heartened by trade, industry & competition minister Parks Tau’s commitment to engage the private sector in identifying priority areas to accelerate economic growth and implement coherent industrial policy. Business Leadership SA (BLSA) and the government have many common goals, SA’s economic wellbeing being the most obvious.

In the spirit of collaborating for growth, shortly after his appointment the minister reached out to BLSA and its members, among others, requesting that we share high-level issues faced by big business. There were few surprises: the challenges and frustrations that have accumulated over years of stagnant economic growth and alarming deindustrialisation have been repeatedly highlighted by BLSA.

However, our members, including some of SA’s biggest employers, have also made sensible, practical recommendations, and it was encouraging to see the alignment coming through in the minister’s budget vote speech, and those of his deputies. This commitment is an opportunity to build on the successful collaboration to date — and it fosters business confidence, which is one of the key ingredients needed to get SA’s economy growing again.

Complex and inconsistent regulatory requirements deter business operations and foreign investment, while frequent changes in legislation increase the cost of doing business and the compliance burden. Streamlining regulations to ensure they are clear and consistent will go a long way to addressing this and, as has been suggested by some of our members, a one-stop regulatory body could be established to simplify compliance processes. Involving universities and deploying artificial intelligence (AI) and research capabilities could assist with large-scale policy modernisation.

In terms of industrial policy and sector support, it has been argued that the focus to date has been too broad, thus limiting its effectiveness. It makes sense to concentrate on fewer sector priorities and revitalise the industrial policy action plans (or master plans) for targeted sectors, starting with the green economy.

In the process of revitalising the master plans — the often complex industrial and trade strategies to promote local industry and improve competitiveness — the focus should be on designing the framework to be adaptable to allow for ongoing monitoring and course correction as conditions change. 

There is a powerful opportunity for industry-government collaboration in the evolution of the special economic zone (SEZ) programme, which lacks both the required investment and a nationally integrated work programme. Incentives should be co-ordinated with other programmes/instruments run by the department, be more evenly applied, and be made visible to the foreign investors and export market players and future tenants that are the prospective users of the SEZ system. 

The master plan approach has the potential to be an effective industrial policy tool, but its success depends on addressing the challenges identified around evidence-based decision-making, balancing objectives, resourcing, and cross-stakeholder alignment. Securing alignment and buy-in for the master plans across different government agencies and the broader business community will be key. 

BLSA has previously highlighted the need for greater economic policy co-ordination. Several issues have been widely acknowledged as causing unnecessary friction and increasing the cost of doing business in SA. These include, but are not limited to, exchange-control regulations, crime, skills shortages, unnecessary regulatory red tape, the need to broaden internet connectivity, and the well-documented challenges related to energy security, reliable electricity and water supply, and the ports, rail networks and logistics hubs.

BLSA acknowledges that many of these factors engage with mandates of other government departments. However, the work conducted by the trade, industry & competition department has wide influence, affecting about one in eight formal private sector jobs in the country. The department also plays a critical role in promoting investment, facilitating trade, stimulating industry and supporting global competitiveness and inclusive growth. There is logic in the department leading a whole-of-government approach to these matters as the lead interface with industry and organised business.

Harmonising policies between departments and sectors would establish regulatory certainty as a key element of SA’s value proposition to global investors and trading partners. The department could lead this process as part of its “Invest SA” mandate and as an implementation thrust of the draft Country Investment Strategy tabled in 2022.

Some specific areas of focus here are: cross-government/industry collaboration to lower perceived sovereign lending risk to SA projects; constructive, growth-accelerating approaches on empowerment standards and practices for foreign direct investment in priority sectors; and addressing uncertainty around master plans and their interaction with other national instruments.   

In addition, the country needs trade instruments, globally and regionally, to be harmonised and optimised. The African Growth and Opportunity Act (Agoa) trade access negotiations are an opportunity to harmonise US market access with industrial policy instruments from the US that play to SA strengths (for example, in the low-carbon industries).

Another opportunity is industry-government strategic alignment on positioning with the EU on the carbon border adjustment mechanism. The rate at which carbon intensity is to be taxed should be paced and aligned with SA’s carbon tax regime and should be commercially literate in both design and application to maximise both low-carbon outcomes and developmental objectives.

The African Continental Free Trade Area (AfCFTA) presents yet another excellent opportunity for SA exporters, and should also drive the increased traffic of goods through our ports and airports. With some sectors/industries unable to make the business case for investment due to the market size in SA, extending the market into the African continent would be a game-changer.

There is consensus on the need for greater transparency and accountability between the department and the private sector. BLSA’s suggestion is to develop a public accountability system that tracks and publishes progress on key initiatives. A publicly accessible dashboard could be implemented that highlights the status of projects and government commitments.

For too long, SA has battled with low growth, high unemployment, widening inequality and poor and failing infrastructure. While impressive policies have been crafted to reignite the economy, all too often implementation has failed, thus damning one of Africa’s largest and most industrialised economies.     

Tau can rely on business to be available for meaningful dialogue. More than that, the private sector has skills, experience and the will to work with the government and civil society to fix blockages and help ensure delivery. What matters now is pragmatism, undertaking research, testing new ideas and embracing the course of action that will best deliver for the country.

That is how to foster confidence, which will in turn lead to investment and expanded economic activity. I am optimistic about what we can achieve together.

• Mavuso is CEO of Business Leadership SA.