Johannesburg - The ANC has jilted its long-standing labour union allies and is courting business leaders to help it rescue South Africa's economy, which is teetering on the brink of a recession and a downgrade of the nation's credit rating to junk.
Union leaders were conspicuous by their absence at meetings convened since late January by President Jacob Zuma and Finance Minister Pravin Gordhan with chief executive officers to discuss ways to shore up investor confidence and revive growth.
Zuma then drew the unions’ ire when he announced plans in his Februaty 11 State of the Nation address to trim state spending and review several laws to make it easier to do business. Gordhan met again on Monday with CEOs to discuss how to stimulate the economy.
Business and government “are certainly talking in a very real and candid way,” Ralph Mupita, CEO of Old Mutual Plc’s emerging markets business, said by phone on Monday. “We are very heartened by what we heard in the State of the Nation address.”
Since it took power with Nelson Mandela’s presidency in 1994, the ANC has been torn between trying to appease investors and unions, while giving the black majority that was discriminated against under apartheid a bigger stake in the economy and better access to health, education and welfare grants. Business leaders have long complained that the resultant policy mix has eroded SA’s competitiveness, pushed up costs and fomented uncertainty.
Disenchantment among executives with Zuma’s stewardship peaked in December last year, when he named little-known lawmaker David van Rooyen as his finance minister and drove the rand to a record low. After business leaders met with senior ANC officials, the president backtracked four days later and appointed Gordhan to the post, which he had held from 2009 to 2014.
While it’s too soon to tell whether companies will secure major policy concessions in return for investing more and creating jobs, the CEOs’ recent dialogue with the government has been the most constructive in years, according to Cas Coovadia, head of the Banking Association of South Africa, whose members include Standard Bank Group and the local unit of Barclays.
“Developments forced us to focus our mind,” he said. “If we keep the momentum and force each other to be accountable, it can work.”