TAMRA VELEY: Business must stand firm and stop appeasing government

More than 3,500 workers are about to lose their jobs with the closure of ArcelorMittal’s long steel operations. The company says it can no longer withstand high logistical and transportation costs, ruinous energy prices and incessant load-shedding.

Dwindling infrastructure expenditure means SA’s steel consumption has declined 20% over the past seven years, and new government policies have given scrap metal traders that recycle steel an advantage over steel manufacturers. “These structural market issues are beyond ArcelorMittal SA’s control and do not appear capable of being resolved in the foreseeable future,” the company says. 

Steel & Engineering Industries Federation of Southern Africa president Elias Monage says the organisation has made numerous formal requests to discuss these matters with trade & industry minister Ebrahim Patel. “Disappointingly, the meetings have not materialised and our requests have fallen on deaf ears.” 

The CEO of Volkswagen Passenger Cars, which employs 3,500 South Africans, says load-shedding, rising labour costs and Transnet’s problems, aggravated by poor governance and sluggish regulatory reforms on electric vehicles, are making the country an undesirable location to manufacture cars. “We’re not in the business of charity,” he says. 

President Cyril Ramaphosa says: “Our love for this country is much more important than the negativity, so therefore we must be positive about SA.” Ramaphosa wants a new social compact — a partnership between government, organised business, labour and communities — to agree on a plan of action to grow the economy, create jobs and tackle crime and corruption. In February 2022 he said it would start work within 100 days. More than 660 days later, we’re still waiting. 

The National Union of Mineworkers (NUM) says retrenchment notices issued by mining houses could mean 10,000 job losses by January. Glencore, Seriti, Sibanye-Stillwater, Impala Platinum and Bakubung Platinum Mine have issued Section 189 notices, and NUM says most blame load-shedding and the high price of electricity. The union says Transnet’s inability to transport minerals is another factor. The latest quarterly labour force survey revealed that the mining sector shed 35,000 jobs in the third quarter of 2023.

Ramaphosa says ANC policies have transformed the economy “so that [it] can serve the people of SA ... the economy was structured around colonial rule and apartheid rule in a way where it was never designed to include the majority of our people. What we have sought to do for 30 years is to transfer that economy”. 

One of the world’s biggest shipping lines, Maersk, stopped calling at the Port of Cape Town because of the delays its vessels encounter there. Instead, it is offloading cargo destined for SA in Mauritius for transshipment. Durban and Gqeberha have joined a list of the top seven most congested ports in the world.

After a helicopter flight over the constipated Richards Bay port, Ramaphosa blamed incompetence and lethargy and says port employees who fail an assessment of their capabilities “must be dealt with, with immediate effect”. Days later, the presidency said performance assessments of cabinet ministers will remain confidential because Ramaphosa doesn’t want them used to make his colleagues look bad. 

Energy minister Gwede Mantashe said Eskom was “actively agitating for the overthrow of the state” via load-shedding, precipitating the resignation of CEO André de Ruyter. Twelve months later, after the worst year of load-shedding yet, the CEO’s office remains empty.

Speaking at the UN Climate Change Summit (COP28) in Dubai last week, Ramaphosa said the appointment of a CEO and other senior officials must be addressed to bring stability to Eskom. 

A day earlier, a full bench of the high court in Pretoria said the government’s failures are to blame for load-shedding and it is guilty of breaching the constitution and a collection of rights ranging from human dignity to access to healthcare. 

The judges ordered electricity minister Kgosientsho Ramokgopa to ensure that by the end of January public health facilities, state schools and police stations are protected from load-shedding. 

In Dubai, Ramaphosa said: “The judgment really speaks to what we want to see done ... for us it’s a confirmation of our government programme.” 

After 11 years of planning in which the government failed to produce a feasibility study or a workable funding model for its National Health Insurance (NHI) scheme, it took an 11th-hour plea to delay a National Council of Provinces vote on the enabling legislation.

The plea comes from organised business and is one of the rare occasions we have seen it stand up to a government that feels secure enough in its relationship with the private sector to be able to accuse it of having “no interest in the development of this country” and of wanting “to ensure the government collapses”, as minister in the presidency Khumbudzo Ntshavheni put it. 

Instead, we see senior business leaders ensconced in the government’s tent on task teams attempting to deal with crises in energy, transport and logistics, and crime and corruption. So, how is this collaboration going? Significant progress, says Ramaphosa. Not quite, says Business Unity SA president Adrian Gore. 

In a joint communique on November 29, Gore said: “The pace of delivery across the initiative seems to be plateauing, mainly as a result of delays in regulatory and other approvals, as well as slippage on the implementation of strategic plans, and the alignment of these to workable funding solutions.

“We’ve agreed with the president that delays will be given urgent attention and we will all ensure that momentum is maintained, key decisions are made, and policies implemented in line with agreed timelines. We need to act with a greater sense of urgency and determination to confront these challenges given their severe impact on the economy as a whole. We have made strides in implementing reforms that will set our economy on a higher growth trajectory going forward.” 

The frustration is clear, but so is the approach that has defined business’s relationship with the government over almost a generation of national decline: appeasement, even in the face of lethargy and transparent contempt. It persists with this approach even though 62% of South Africans trust business while only 22% trust government. 

This trust gap, identified in the 2023 Edelman Trust Barometer, is the largest among 28 countries surveyed and an indication that business has little to fear if it decides, for once, to prioritise SA, its customers and its shareholders instead of vanishing into the vortex of inevitable failure at the heart of government. 

It’s time for business to reclaim lost territory, and a barrage of class-action lawsuits would be a good place to start. Claim for the losses caused by load-shedding, not to mention the unavoidable spending on diesel and renewable energy; insist on being repaid the R1bn being lost every day thanks to Transnet’s collapse; call the government to account for the explosion in crime and insist on the implementation of the Zondo commission recommendations. In short, do to government what it has done to the country. 

The alternative is to continue co-operating and collaborating with a group of incompetent ideologues who have no interest in fixing the problems they created. Make that choice, and the high level of trust business enjoys will evaporate faster than a Ramapromise. 

• Veley is MD of reputation management agency Corporate Image. She writes in her personal capacity.