Busisiwe Mavuso, CEO of Business Leadership South Africa (BLSA) has welcomed the commitment of Parks Tau, Minister of the Trade, Industry and Competition to engage with the private sector to identify priority areas to accelerate economic growth and implement coherent industrial policy.
According to Mavuso, following his appointment into office, Tau had contacted the BLSA and its members to ask them what are the issues that big business is facing.
In response, BLSA highlighted stagnant economic growth and alarming de-industrialisation as major issues as well as offered sensible, practical recommendations.
This commitment is an opportunity to build on the successful collaboration to date — and to foster business confidence, which is one of the key ingredients needed to get South Africa’s economy growing again.
According to Mavuso, the current 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 address this and, as been suggested by some of our members, a one-stop regulatory body could be established to simplify compliance processes,” Mavuso said.
In terms of industrial policy and sector support, there have been arguments that the focus to date has been too broad which has limited its effectiveness.
Therefore, it would be better to to concentrate on fewer sector priorities and revitalise the industrial policy action plans for targeted sectors, starting with the green economy.
In the process of revitalising the sector master plans, 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, according to Mavuso.
Incentives should be coordinated with other programmes, while instruments run by the Department of Trade, Industry and Competition (DTIC) should be more evenly applied, and be made more visible to the foreign investors, export market players, future tenants who 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, she said.
BLSA said that several issues have been widely acknowledged as causing unnecessary friction and increasing the cost of doing business in South Africa including:
– exchange control regulations
– crime
– skills shortages
– unnecessary regulatory red tape
– the need to broaden internet connectivity
– well-documented challenges related to energy security, reliable electricity and water supply, and the ports, rail networks and logistics hubs.
“We acknowledge that many of these factors engage with mandates of other government departments. However, the work conducted by the DTIC has wide influence, impacting 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 globally competitiveness and inclusive growth,” Mavuso said.
There is logic in the DTIC 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 aspect of SA’s value proposition to global investors and trading partners.
The DTIC could lead this process as part of the “Invest SA” mandate and as an implementation thrust of the draft Country Investment Strategy which was tabled in 2022.
The AGOA (African Growth and Opportunity Act) trade access negotiations are an opportunity to harmonise US market access with industrial policy instruments from the US that play to South African strengths.
Another opportunity is industry-government strategic alignment on positioning with the EU on CBAM (Carbon Border Adjustment Mechanism).
The rate at which carbon-intensity is to be taxed should be in line with SA’s carbon tax regime. It should also be commercially literate in both design and application to maximise both low carbon outcomes and developmental objectives.
The African Continental Free Trade Area (AfCFTA) is an opportunity for SA exporters which can drive increased traffic of goods through our ports and airports.
There is consensus on the need for greater transparency and accountability between the DTIC and the private sector.
“Our 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.
“We look forward to an integrated and outcomes-based approach from the DTIC, which can form a sturdy cornerstone of South Africa’s broader economic strategy,” Mavuso said.
IOL Business