healing the rift - Old Mutual Investment Group

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HEALING THE RIFT MILLS SOKO | DIRECTOR OF THE UNIVERSITY OF CAPE TOWN’S GRADUATE SCHOOL OF BUSINESS

ABOUT THE AUTHOR In addition to his role at the University of Cape Town’s Graduate School of Business, Mills is the founding director of Mthente Research and Consulting Services. His previous experience includes being a researcher at the National Council of Provinces (NCOP) before becoming Head of Policy and Legislative Research at NCOP. Prior to that, Mills worked as a researcher on parliamentary affairs at the Institute for Democracy in South Africa.

There has been a deterioration in relations between Government

While the release of Nelson Mandela and the unbanning of the

and business in South Africa, most recently witnessed in their

African National Congress (ANC) ushered in a period of closer

interaction around Government’s proposed changes to the Mining

interaction between the two, it was short-lived. During former

Charter. Conflict between these two key pillars of South African

President Thabo Mbeki’s tenure, the ANC government frequently

society is not a new phenomenon, as the tension stretches back

berated (rightly so, in some cases) the business community for

decades.

criticising its policies and publicly voicing concerns about political

As former CEO of Business Leadership South Africa Michael Spicer previously noted, South Africa’s history (most notably apartheid and race) has ensured that the kind of cultural homogeneity, shared world views and goals that underpin other successful societies have never characterised this country’s government-business relations.

risks. Despite adopting a market-friendly approach, it appeared that the Mbeki administration distrusted the overwhelmingly white business community. At the same time, business was concerned about the lack of clarity over economic policy within the Tripartite Alliance (comprising the ANC, the South African Communist Party and the Congress of South African Trade Unions).

A WIDENING TRUST DEFICIT Under the Jacob Zuma administration, relations between business

KEY TAKEOUTS:

and Government have significantly deteriorated. The #GuptaLeaks scandal suggests that a chosen few business leaders have come

• GROWING DISTRUST BETWEEN PUBLIC AND PRIVATE SECTORS

to enjoy great success due to their political affiliations, as opposed

• BUSINESS AND GOVERNMENT OFTEN OPERATE AT CROSS-PURPOSES

detriment of the country’s economic growth and poverty alleviation

• WE NEED TO BUILD A SENSE OF COMMON PURPOSE

to their standing in the business community. This has been to the measures have been limited as a result. The incident has prompted an increasing number of business leaders to speak out against the quality of leadership in Government. Trust in their ability to respect the needs of the economy and act in its best interests is at an alltime low.

Instead of engaging and allaying the fears of the business

Overall, we need to develop a tangible sense of common

sector, the Zuma administration has chosen to castigate it for

purpose that centres on the pursuit of national interest. The

a perceived lack of patriotism. Concepts like White Monopoly

current impasse between business and Government has brought

Capital and Radical Economic Transformation, which have

the country to a crossroads. There is widespread agreement

made their way into the public domain, and are thought to

that we need inclusive structural transformation of the economy.

stem from an orchestrated campaign devised by Gupta public

We can either rise to the challenge and walk the path to

relations firm Bell Pottinger, have only served to widen the

prosperity together or we can continue on the current trajectory

chasm.

where progress is stifled and creative energies are burned up in

THE BUSINESS OF ARROGANCE

the courtroom. The choice is ours to make.

Business is not blameless either. All too often its leaders have not provided a much-needed counterbalance to the Government’s policy discourse. In many instances, the business sector’s stance on policy issues – notably around calls for transformation – has been defensive. Furthermore, the business sector has tended to display an arrogant and a know-it-all attitude.

This article has been taken from our annual Tomorrow, As Invested As You Are book, which includes articles from our investment professionals and a number of external contributors on key sustainability challenges impacting our world.

None of this is helping the country to overcome the devastating effects of unemployment, poverty and inequality or to halt the decline of the economy, which is reeling from the effects of a triple credit rating downgrade. Instead of working together to

To download a copy of this book, please go to www.oldmutualinvest.com

address these problems, business and Government have opted to go it alone, often operating at cross-purposes to each other. With the country at its lowest ebb since 1994 and the threat of economic collapse a clear and present danger, both sides need to engage with the aim of healing this divide. Visionary and effective leadership from Government, coupled with strong support from the business sector, labour unions and broader civil society, is required to reverse South Africa’s economic underperformance.

BUILDING TRUST: CAN IT BE DONE? Bridging the gap between Government and business will ultimately hinge on successfully rebuilding the shattered trust between the two. This will require the cultivation of new and meaningful relationships between their respective decisionmakers based on a mutual acceptance that they have different but complementary strengths. In practical terms, a mechanism is needed to bring together business and key government departments to engage in constructive dialogue and ideasharing. This mechanism should also facilitate the strategic and systematic management of the interactions between Government and business.

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