Organised Business in South Africa: briefing by Business South Africa

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Labour

19 May 2003
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LABOUR PORTFOLIO COMMITTEE
20 May 2003
ORGANISED BUSINESS IN SOUTH AFRICA: BRIEFING BY BUSINESS SOUTH AFRICA

Chairperson:
Mr S Manie (ANC)

Documents handed out:
Business South Africa presentation


SUMMARY
Business South Africa briefed the Committee on its primary functions as an umbrella body representing the interest of business organisations. They noted that a merger between BSA and the Black Business Council is currently being contemplated, which would accommodate all current members of BBC and BSA and would therefore be a new organisation. On the issue of black economic empowerment BSA noted that for empowerment to be sustainable, sound business principles must be in place. They argued that South Africa is at a critical economic threshold, noting that South Africa’s savings rates are not able to attract higher investment rates. The Committee heard that foreign direct investment could bring in new sources of funding and learnership programmes could alleviate the loss of skills through migration.

MINUTES
Overview of Business South Africa
Mr Ben van der Ross: Chief Executive of BSA, explained that the position of Business South Africa is found to be quite confusing by many people, especially the media and their position therefore needed to be simplified. He indicated that Business South Africa is an umbrella body, which represents the interest of businesses as a whole although it is predominantly white. BSA represents businesses internationally. BSA originated at the time when NEDLAC was formed. He indicated that an area of great confusion is the distinction between Business South Africa and the Chamber Movement. The Chamber Movement concentrates on local level service delivery and direct support to its members.

Mr van der Ross indicated that members of BSA are employer organisations and that there is no corporate membership. Mandating within BSA is complex and BSA does not give instructions to its members.

Mr van der Ross explained that BSA is made up out of two sectoral organisation: fifteen multi-sectoral chamber organisations and the South African Foundation (SFA). The Black Business Council (BBC) on the other hand consists of two multi sectoral organisations, twelve other organisations. Most members of BBC are professional organisations.

A merger between BSA and BBC is currently being contemplated. He noted that this merger will accommodate all current members of BBC and BSA and would thus be a new organisation. BSA has never accommodated professionals, unlike BBC.

Mr van der Ross referred to the Growth and Development Summit, which will be driven by the Department of Labour and implemented by NEDLAC. The Summit consists of four themes, namely:
-More jobs, better jobs – Decent work for all.
-Addressing the investment challenge.
-Advancing equity, developing skills and creating economic opportunities.
-Local action for implementation and development.

BSA was not sure what form this Summit would take as there were time constraints during the negotiations. International agreements are being negotiated by task teams. Not much time was allowed for negotiations and therefore not much attention was paid to detail. BSA and NAFCOC form 50% of the task team negotiating these agreements. He told the Committee that it is too early to predict the outcome. However, BSA does anticipate substantial consensus to be reached on issues such as learnership programmes and expanded public works programmes.

Black Economic Empowerment
Mr Cas Coovadia (BSA) said that BSA recognises that black economic empowerment is a must, as it is good for the growth of South Africa. Without black economic empowerment the growth needed in South Africa will not be achieved. In order for black economic empowerment to be sustainable, sound business principles must be in place. Mr Coovadia said that government and BSA need to decide what and who is considered the target groups, since there is no consistency. Some believe the target group to be black South Africans while others believe it to be all previously disadvantaged groups.

He noted that the Financial Sector Charter should fund black economic empowerment without restraining the ability of the sector. He suggested government funding for black economic empowerment for effective utilisation of government funds. Mechanisms need to be put in place to ensure how to best use the available resources and those funds ought to be used to improve the lives of people. The Black Economic Empowerment Advisory Council will be supported by BSA. Access to financial services is critical to South Africa and the Financial Charter will therefore put significant movement on the table.

Mechanisms have been put in place by the Mining and Petroleum Industry Charter to achieve employment equity and skills development. The Mining and Petroleum Industry Charter is working on the issue of ownership (both direct and indirect ownership). Business South Africa also supports the idea of brought based-ownership.

He concluded that if South African does not ensure that the majority has a share in the economy, the economy will not grow. Mr Coovadia stated that stakeholders need to be clearly committed. He stressed the importance of sound business practices.

Breaking through the economic growth barrier in South Africa
Mr Roger Baxter indicated that South Africa has made significant progress towards share division. In terms of South Africa’s strengths and advantages, South Africa’s financial market is stronger than that of Brazil and many opportunities are opening up in Brazil.

South Africa is at a critical economic threshold. South Africa’s savings rates are not able to attract higher investment rates. He looked at the investment of business; South Africa’s economy can create jobs. Skills have been lost with South African’s leaving the country, which are now benefiting the economy of other countries and that this is a serious concern.

Mr Baxter referred to President Mbeki’s 2001 State of the Nation address to Parliament, where the President stated the following: “…the reality remains that our rate of growth is still too low as are the aggregate savings and investment rates. Similarly, the levels of poverty, unemployment and underdevelopment in some parts of our country are too high…To improve our competitiveness, we must lower input costs throughout the economy.”
He concluded by saying that business understands its priorities.

Discussion
Mr S Mshudulu (ANC) asked how sustainable the public works programme is.

Mr G Olifant (ANC) said that BSA has had years to deal with these challenging issues but now they have excuses. He noted that black economic empowerment is only benefiting a few people. What is BSA doing to achieve black economic empowerment? Mr Olifant asked for details on local investment, as Mr Baxter only concentrated on foreign investment. He stated that he does not believe labour cost to be high in South Africa.

Mr R Moropa (ANC) stated that the presentation of BSA was similar to those at he public hearings on 13 and 14 May 2003. Mr Moropa said that South Africa has a very complex history and thus cannot be compared to other countries. South Africa does not have a normal society due to apartheid.

Ms E Thabethe (ANC) stated that it is difficult for women in South Africa to start their own businesses and asked how BSA intends to intervene to ensure funding for women to start their own businesses.

The Chairperson asked Mr van der Ross how it was possible that BSA could not instruct its members. There is a great deal to be learned from COSATU. Mr Manie said that it is crucial to have the right relationship with labour. He further asked what mechanism BSA has put in place to ensure transformation. He addressed Mr Baxter and said that unemployment is not going to disappear unless jobs are created and asked what BSA is doing with regard to creating jobs in the manufacturing sector.

Response from Business South Africa
Mr van der Ross hoped that should growth arise, it would be synonymous with profit. All business people want to make a profit and profit is the reason for many people going into business. There is a need for people to commit to transformation. People in business understand that if they do not change they will injure themselves.

Mr van der Ross agreed with Mr Moropa that South Africa is creating a new society but stated that one must understand that the rest of the world does not care about South Africa’s problems; South Africa needs to compete with other countries. Mr van der Ross pointed out that BSA does not have a budget, like government, and is therefore limited in its activities.

Mr Baxter said that progress in the area of transformation varies from sector to sector. Mr Baxter further recognised South Africa’s involvement in investment but stated that it is crucial to get domestic investment right in order to get foreign investment.

Mr Baxter noted that foreign direct investment can bring in new sources of funding. Most countries suffer from migration problems and therefore the availability of people could be built up through learnership programmes. Mr Baxter agreed with Mr Manie that the manufacturing sector could be a growth sector. He said that South Africa has undergone significant changes and that it is difficult for business to keep up with these changes.

Mr Coovadia said that the government needs to accept that an umbrella body, such as BSA, will not be able to speak for the banking sector but will try to clarify its role. The Department of Labour suggested a learnership programme. He addressed Mr Olifant and said that the financial sector needs specialised skills. He concluded by saying that the Charters are long term programmes of between ten and fifteen years.

The Chairperson thanked BSA for their contribution.

The meeting was adjourned.

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