Business is not an adversary to be subdued

Last week the Financial Mail referred to 10 pieces of legislation that parliament has passed or is about to pass that have a negative bearing on investor confidence.

keep calm

Taken collectively, they constitute a serious impediment to doing business in SA, and are clearly aimed at scoring cheap political points prior to the election.

But the significance of the legislation will extend long beyond May 7 and will hurt business and therefore job creation for years to come.

Among other things, they introduce tougher affirmative action and black economic empowerment rules, and legislation affecting land, mining, oil, the security industry and investors in general.

These measures will weaken property rights, reduce private sector autonomy, threaten business with harsh penalties, heighten policy uncertainty and undermine investor confidence. They represent what is arguably the biggest assault on business since the ANC came into power in 1994.

Many aspects of the legislation actually run counter to the National Development Plan (NDP), SA’s economic blueprint. Business responded enthusiastically to President Jacob Zuma’s promise that the NDP would “trump all other plans” and that all policy and laws would be consistent with it.

Zuma appeared to stand firm against trade union opposition to the NDP as he insisted that implementing the plan was SA’s only hope of achieving the 5,4% economic growth rate required to deal with SA’s developmental and social challenges.

However, since cabinet adopted the NDP, government has pushed forward bills that greatly increase the state’s interventionist powers and put the redistribution of the existing economic pie well before any plan to expand it.

The legislation reflects a government that is out of touch with what it takes to build a modern economy, the key to which is understanding that business is a partner to be nurtured, not an adversary to be subdued.

Source: Financial Mail

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