On 16 March, FirstRand Group CEO Sizwe Nxasana gave a thought provoking and relevant presentation at the SBL’s first Thought Leaders’ Seminar for 2011, on the role of business and government in growing the economy and creating jobs to Unisa SBL alumni, students and business community.
He opened his presentation by outlining the structural challenges faced by South Africa and these included poverty, unemployment, education, dependence on grants, governments wage bill and budget deficit. Regarding the dependence on grants he emphasised that the projected spend on grants for 2011/2012 is around 16% of total government spending. He questioned the sustainability of 5.4 million tax payers supporting 13.4 million people who receive grants. “Not receiving incentives to work ultimately promotes a culture of dependency”, he added.
He says with all these challenges, the role of government in the market should be that of an enabler, allowing the private sector to generate growth and create jobs. “The state should be involved in certain strategic industries where national interest is important and by national interest meaning state security, social efficiency and equity. Where the state is involved in the economy through the control of SOEs, it needs to ensure that those SOEs are properly and efficiently run and are researching the latest trends and driving innovation”, he continued.
When asked how he thought growth should be increased, he elaborated, “to grow faster and to increase annual job growth, South Africa needs to increase exports and attract more FDI. The whole world is looking for new export markets and FDI helps boost productivity, as knowledge and technology transfers often accompany foreign investment projects. Another key is through the manufacturing industries and the retail and wholesale trade sector as they are the more labour-intensive parts of the economy.
On SMMEs Nxasana emphasised that government needed to look at doing more to support them. “South Africa has an estimated 5 million SMMES and if red tape was removed, financing made available, incentives to support introduced and more flexible and less onerous and inflexible labour legislation introduced, each SMME in the country could afford to employ at least one extra person, and this country could easily create 5 million jobs”, he explained.
On the role of the private sector, business should have a key role in skills development. They can focus on innovation, research and development. He indicated that ultimately, the role of business and government in growing the economy and creating jobs will be through close relations between the two institutions as this will result in increased flow of accurate, reliable information, which in turn can improve the information base that officials use to evaluate policy options.
“Government, by its conduct does not regard business as an important partner in addressing the challenges facing the country. Business is tolerated rather than embraced. On the other hand, business, especially established business, also views government with suspicion and negatively. The relationship between business and government cannot simply develop spontaneously. Leadership which recognises that the fortunes of business and government are inextricably linked is required. In South Africa, more than any other country, business cannot simply exist to deliver profits to its shareholders, products and services to its customers, suppliers with access to markets, government with taxes. It has a much bigger role to play which is to ensure that it can contribute to the broader agenda of creating a cohesive and sustainable society. Business has an obligation and responsibility to transform, create jobs, and be involved in corporate social responsibility programmes particularly in areas of skills development, training and education. To build trust in any relationship requires, parties to value the importance of the relationship, get together and develop a shared and common vision and invest in the relationship focusing more on those things that bind them together”, he concluded.
The seminar ended with quite an interactive session on questions and answers.
The Thought Leaders’ seminars were successfully introduced in 2010 with the aim to create a platform to provide opportunities for its stakeholders to engage in local and international debates on leadership related issues. Previous speakers include Archbishop Ndungane, Dr Allan Knott-Craig and Prof. Mervyn King.
