Balance sheets not abnormal: Business create six times more jobs than govt

This is BLSA’s right of reply to an article published in CitiBusiness on October 25 entitled: ‘Private sector also to blame.’

Recently mining and labour analyst Mamokgethi Molopyane painted a very misleading picture of business, which requires a response.

Her central claims involved questioning business’s contribution to solving youth unemployment; suggesting that business and government are equally complicit in corruption; accusations of an investment strike, with business allegedly sitting on a pile of cash; claiming government had created a business-friendly environment; criticising business for lack of solutions.

Starting with the claim that government has succeeded in creating a business-friendly environment, with business confidence at a 30-year low how can this claim be taken seriously? The debacle of the revised Mining Charter is instructive. There, a Minister in thrall to ideology and ignorant of business is quickly destroying the prospects of one of the few industries where SA ought to be able to outperform.

While the specifics of the mining industry have certainly conspired against investment, the broader claim that there is an investment strike fails scrutiny. Certainly, a measure of caution is only to be expected when uncertainty is high, as it is at present. But a recent Intellidex report shows that the cash on corporate balance sheets is in no way out of the normal range. Not to mention that these figures are significantly distorted by the inclusion in JSE indices of very large companies whose activities in SA are very modest compared to their overall size and market values.

When it comes to corruption, Molopyane draws a spurious symmetry between business and government. Corruption and state capture are systemic within government, where there is zero accountability and a culture of impunity. Instances of malfeasance in business, by contrast, are rare and when they emerge, are swiftly dealt with using procedures of probity and accountability. There is no equivalence between these two houses.

Molopyane also asks what business in SA is doing to help solve youth unemployment? Nobody, including Business Leadership South Africa (BLSA), can view youth unemployment in the country as anything other than a social disaster. But the blame for this can hardly be laid at the door of business. To the contrary, business in SA creates six times more jobs than government, and is the critical engine for job creation. If anyone is going to solve the jobs crisis it is business. But this will only happen when the government creates a policy environment that fosters the confidence necessary to support growth.

Finally, the suggestion that the private sector has failed to put forward suggestions on how SA can be bettered is also false. Particularly because my own organisation, BLSA, which represents some of the largest businesses in SA, recently launched our Contract with South Africa, which pledged our commitment to the future of the country and outlined our priorities.

There is no credible vision for the country that can be both pro-poor and anti- business. Business is a national asset. We believe in the future of the country and stand ready to play our part. But we cannot do this alone. Government must also step up and create the conditions necessary for our country to succeed.

Published in The Citizen – Business (06 November 2017)