Business Leaders Says Partnership Avoided South Africa’s Failure
(Bloomberg) -- Leaders from some of South Africa’s biggest companies said a partnership with the country’s government has helped the economy avoid “potential failure.”
The partnership between the business grouping known as B4SA and the state, now in its third year, has helped improve the performance of state companies providing electricity, rail and port services and near the exiting of a dirty money list, they said.
In 2022 and early 2023 there was concern not about “economic growth or lack of growth, but real decline and potential failure and that was a real concern of business,” said Adrian Gore, chief executive officer of South Africa’s biggest health insurer, Discovery Ltd., in a virtual briefing on Thursday. “Our strong belief is that collectively we’ve been very successful.”
The partnership involves the seconding of staff from the private sector to bolster the capacity for poorly performing government departments, pushing for economic reforms as well as some funding. It’s credited with helping end once regular power outages, improving port and rail performance and boosting private participation in sectors that were once state monopolies.
Gore, together with business leaders including the CEOs of Sasol Ltd. and the local unit of Toyota Motor Co., touted a range of what they termed as successes that they expect to eventually boost the growth rate of the near stagnant economy.
Those, they said in a presentation, include adding 6,000 megawatts of electricity generation capacity, reversing a steady decline in freight rail volumes and helping fulfill all 40 requirements put in place by the Paris-based Financial Action Task Force for the country to potentially exit its so-called gray list status.
Since 2014 there were “10 years of decline where pretty much every year things got a bit worse than they were the previous year,” Adrian Enthoven, the chairman of Yellowwoods, his family’s investment group that has stakes in insurers, safari groups and the Nando’s global restaurant chain. “In our mind 2024 was the turning point.”
Since mid-2023, handling times at ports have fallen 90% and annual freight rail volumes are expected to climb 15% to 171 million tons in the current financial year, B4SA said in the presentation.
Still, the country’s growth rate has barely budged, and is well short of the 3% target set by the group and the government. The leaders also said they’ve been disappointed by the slow pace of economic reforms and said that Transnet SOC Ltd., the state ports and rail company, missed most of its targets last year.
“There’s nothing easy about this, and it’s really hard,” Enthoven said. “This is a marathon and we’ve got a long way to go.”
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