Private sector: Shape up or ship out!

The foundation of a prosperous economy relies heavily on the unwavering trust between the private sector and the government. With this interdependent alliance, the fate of each entity is inseparably intertwined with the other.

That is the theory, at least.

In South Africa, this critical relationship is teetering on the brink of disaster, strained beyond measure and reaching an all-time low.

Read/listen: SA’s most senior business people now part of the government’s ‘crisis committees’

Cast your mind back to 2018 when President Cyril Ramaphosa, in his State of the Nation Address (Sona), promised to formalise a “social compact” between the state, the private sector, and various stakeholders.

Despite these lofty words, nothing has come to fruition. In subsequent Sonas, Ramaphosa continued to tout this elusive compact, even going so far as to pledge its completion within 100 days in 2022. Yet again, no such agreement materialised.

In the 2023 Sona, Ramaphosa admitted his inability to facilitate such a social compact, citing “new circumstances” that hindered social partners from buying in.

Since that Sona, the situation worsened.

The ruling party’s brown-nosing of Russia and its policymakers’ incompetence in comprehending the economic ramifications of their decisions have harmed the relationship even more.

Alarming

This reality is reflected in the North-West University Business School Policy Uncertainty Index (PUI), which indicates that policy uncertainty during the first quarter of the year is at its most alarming level since its launch during the Zuma era in 2016.

The private sector is not always as honourable as it pretends to be. Still, many businesses, including major corporations, are often looking for shareholder returns rather than the principles of inclusive growth.

This is the nature of capitalism – but it also makes the private sector predictable, and the sector could be used to fix complicated problems.

The government’s understanding of this predictability seems to be growing, and many state functions are privatised through stealth. It will work as long as this involvement and financial benefactors remain transparent.

I am one of the people who believe the ANC’s support will drop to below 50% during next year’s general election.

It remains to be seen if subsequent coalition government structures could offer policy stability and improved service delivery.

But be prepared – the rollercoaster ride will continue.