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SA government hearts Big Business; Big Business hearts SA government

SA government hearts Big Business; Big Business hearts SA government
Stephen Grootes
By Stephen Grootes
6 Oct 2024
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One of the features of the time after the formation of the national coalition government has been the increasingly close relationship between the government and organised business. The two have formed a partnership and are cooperating constructively. It was not always thus, and the way the two have become closer reveals much about our society and how it has changed.

Last week, President Cyril Ramaphosa was in Sandton, a short trip from his personal residence, to launch the second phase of the business and government partnership.

Ramaphosa and several business leaders used the opportunity to trumpet the successes which this partnership has achieved. For most people, the biggest achievement has been what appears to be the end of load shedding (but not for those living in areas affected by load reduction).

Ramaphosa is ambitious about Phase Two of the partnership.

One of the most important features of this situation has been the fact that government and business leaders are not just working together, but also getting on  at a personal level, making it likely the two sides will work together for at least the next few years.

It has been a long journey to get here, one that shows how much has changed.

In any discussion about business, it needs to be recognised that “business” in South Africa is not homogenous: there is a myriad enterprises run by people from different parts of our society. They belong to groups that often have their own, specific interests.

During the transition to democracy, the then President, Nelson Mandela, had personal relationships with several business leaders. During his transition from politician to global icon, white leaders who might have referred to him as a “terrorist” in the 1980s would compete to be photographed with him.

As our political process moved from transition to transformation, the President at the time, Thabo Mbeki, took a much harder line.

In 2004, he sharply criticised the then CEO of Anglo American, Tony Trahar, for a comment he made in an interview with the Financial Times.

Trahar had said, “I think the South African political-risk issue is starting to diminish — although I am not saying it has gone.” 

This led to huge anger from Mbeki and the ANC.

In 2016, Michael Spicer (who has since died), a very close observer of these relationships through his role as a former CEO of Business Leadership SA, summed up his view of this period: 

“Although some government ministers, particularly Finance Minister Trevor Manuel, challenged business to be more honest and open, on the occasions when business essayed a more frank approach it was brutally rebuffed. President Mbeki’s temperament and authoritarian style did not easily brook criticism and neither did many of his colleagues.”

Of course, this relationship was largely defined by race.

Formal business groups and businesses were almost all led by white men. The people in government were almost all black men and women. The class differences between them were huge — one group had been deliberately excluded from the white economy, while the other group led that economy.

As time progressed, it appeared that some formal business groups decided to almost mute themselves.

A disquieting silence


In 2011, this journalist felt compelled to write an open letter to Bobby Godsell, the then chair of Business Leadership SA, about the silence of organised business on the big issues of the day. It was sparked by the observation, during a press conference, by the correspondent for The Economist that in their experience, business in South Africa was much quieter than its counterparts in other societies.

Read more: A capitalist’s letter to Bobby Godsell 

In the meantime, other changes were happening.

A group of leaders from business groups lobbied the ANC for the formation of a Department of Small Business.

One of the key movers was Sandile Zungu, a business leader in his own right and then president of the Black Business Council (BBC).

This group scored an important victory in 2014 when the then President, Jacob Zuma, formed what is now the Department of Small Business Development.

It was probably the first time any business group publicly won a political contest with the ANC, and a sign of how “business” in South Africa is made up of different groups, who have different ways of asserting themselves.

However, it was over the following three years that the relationship between government and business changed fundamentally.

This was entirely because of Zuma. 

His removal of Nhlanhla Nene as finance minister in December 2015, the intense market reaction to that and the ANC’s ability to force Zuma to reappoint Pravin Gordhan as finance minister changed everything.

First, organised business realised that their interests were now directly threatened and they had no choice but to act.

Second, the ANC was intensely divided over Zuma. As a result, sections of its leadership could publicly oppose him with the legitimacy that other ANC members gave them.

Perhaps the most public illustration of this was a strange day in 2016. An event led by the group Save SA saw business leaders publicly calling for Zuma to go. What allowed them to do this was the attendance of Paul Mashatile, the then leader of the Gauteng ANC.

This was a reflection of how formal business had found its voice.

Crucial to this was the fact that the older white guard had departed and black people were now leading organised business groups.

Jabu Mabuza, the then president of Business Unity SA and chair of Business Leadership SA, was crucial to this. He publicly opposed Zuma and represented most of organised business while doing so.

A game-changer


In the end, the Zuma faction lost at the ANC’s Nasrec conference in 2017 and a long-time resident of Sandton was elected leader in his place. 

This changed the game.

In what was the first public sign that Ramaphosa was going to take over as President, he appointed a new board to Eskom, with Mabuza as its chair.

An important sign of how influential business would be, the CEO of Business Leadership SA, Busisiwe Mavuso, was a member of the new board.

This showed that the government needed a relationship with Big Business — and, particularly, it needed banks to continue lending to Eskom and other state-owned enterprises.

Then came the pandemic, which sped up this change.

The government realised it lacked the capacity to fulfil all of its functions and the only way to get that capacity was to involve business.

This led to the formation of Business for SA, a body that allowed business leaders to speak directly to the government.

One of the outcomes of that was the formation of Operation Vulindlela, which sees business groups directly helping the government, particularly Eskom and Transnet.

Along with this came a complete change of attitude about the role of the private sector. 

As has been noted many times, there is now a bigger role for the private sector in our society than at any previous time. Debates about the role of the private sector at Durban Harbour’s Pier 2, on our railways and in our electricity sector have changed fundamentally.

Spectacular failures


This is mainly because the government and the ANC have failed so spectacularly to manage these services.

It is because of the ANC’s poor governance that business is playing this role now.

In the meantime, something else shifted.

Because of Zuma and corruption, the legitimacy of the ANC weakened. When the government failed to provide proper services and business continued to fulfil some of its functions, the balance of trust — and thus power — changed.

While the majority of voters trusted the ANC and distrusted business during the Mbeki era, by 2022 things had changed.

The outcome of this was this year’s elections, where the ANC fell to just over 40% of the vote. That led to the inclusion of the DA in the coalition government and thus a greater voice for the role of business in government.

This reveals how our society has transformed and how important identity still is. The changing identity of business leaders has played a role in the changing relationship between business and government.

Business groups act in their interests — no matter who leads them — and because businesses need the state to function, they have no choice but to ensure that it does.

This relationship is not set in stone. While the ANC is likely to continue to lose support, business could well misstep. The MK and EFF parties will use this relationship to argue the ANC has “sold out”. If the government fails to provide basic services, they could gain votes.

Business itself could agree to goals (such as fixing water provision in municipalities) that turn out to be unattainable. That could result in a blame game that damages the relationship.

For the moment, organised business and the government will continue to work together — their interests are too tightly aligned for anything else. DM

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