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VUSLAT BAYOGLU: STATE, BUSINESS AND NGOS ALL HAVE A ROLE IN ENSURING SOCIAL STABILITY

Vuslat Bayoglu | 24 July 2023


The frequency of scandals and policy missteps in SA can be exhausting and numbing to any investor who follows the daily news bulletins.


So much so that for those who are not paying attention to the details, the manifestation of various crises may seem unconnected to previous ones.


Take, for example, the July 2021 unrest that left infrastructure damaged, a chunk of the country’s growth shaved off, public confidence in the state undermined and investors frightened. If you aren’t paying attention, you would think the causes of the unrest have abated, the sad events of the July unrest belong to some distant past.


But you’d be wrong. There are indications that unless drastic steps are taken urgently, we may experience variations of social unrest at any time.


Many social commentators and state officials focused on the topical political trigger of July 2021 and how it was exploited: the incarceration of former president Jacob Zuma. They also focused on law enforcement failures, rebuilding of damaged infrastructure and insurance claims amounting to R30bn.


While all this was correct, it is worth stating that Zuma’s situation wasn’t the main factor. If anything, his case only served as an igniting factor to an existing powder keg which hasn’t gone away. It is waiting for another high-profile politician or any figure with a public following to trigger it.


Let me illustrate the point. During the unrest, none of our more than 3,000 employees in all our businesses in KwaZulu-Natal, Gauteng, Mpumalanga, and Northern Cape participated in the looting or rioting. In KwaZulu-Natal, the province that suffered most of the damage, our business operations, which employ about 1,000 people, continued normally.


The reason was simple: they were not “sitting and idling” at home. But of course, social standing does not guarantee respect for the law: the notorious Mercedes-Benz looter is a good example.


But overall, people who work to provide for their families are unlikely to be hoodwinked into the politics of unrest. Yet, we have, broadly defined, an unemployment rate of 42%. The majority of the unemployed, well above 60%, are youth.


I share the concern expressed by Mpumi Tyikwe, CEO of SA Special Risk Insurance Association (Sasria) in Business Day (“Unemployment crisis could spark a ‘revolution’ in SA, warns Sasria boss”, July 7). His comments should worry all of us who are concerned about the country’s stability. He said: “The biggest worry is youth unemployment. The youth are sitting and idling.”


As each day passes without a prospect for a job, due to some of the factors I discuss here that undermine investment, young people see their futures disappear, leaving them in despair and without any idea of what it means to work. Some participate in mini unrests in their local communities when local populists recruit them usually for selfish political and/or business interests.


Youth employment


The state alone cannot — and shouldn’t be — the biggest employer. It should create an environment for private businesses to employ young people.


If we do not open new businesses, existing businesses and the state will have to shoulder the despair of the youth. And there will be more pressure on the state to come up with unsustainable public employment schemes. So, enabling the willing and capable investors to create jobs is in the national interest.


Putting people to work in private companies is the best insurance for the country’s social, economic, and political stability. There is no better hedge against instability.


It is within this context that we should be wary of foreign and local elements who use their financial muscles not to invest and create jobs, but to discourage investments and destroy jobs.


While the modus operandi of the foreign-funded and anti-mining non-governmental organisations is to use legally permissible methods to pursue their goals, the results of their actions are not different to those spawned by the illegal activities of the construction mafias around the country. Bluntly put, they are chasing investors away at the time we desperately need them.


They are directly challenging the state’s role to create a conducive investment environment. Investors who are not prepared to give up on SA — and I count myself on the list — must increase their political risk appetite. Given the country’s stage of economic development — the best indicator being the worsening unemployment rate — no-one should have a right to block investment with the potential to create jobs and generate taxes for the state.


Funders of NGOs who specialise in anti-mining and anti-gas exploration activities are invariably based in developed countries. Their activism would be best suited for developed countries where “42% unemployed” and socioeconomic instability is unheard of.


Red tape


Some state officials with the authority to regulate economic activities are also frustrating investment projects by delaying the issuing of licences. By acting against President Cyril Ramaphosa’s clearly articulated policy to cut bureaucratic red tape and fast-track business licences, some (not all) state officials are adding to the negative perception of investors.


Part of a country’s competitiveness is the ability of regulatory officials to be efficient and innovative in addressing investor concerns and processing licence applications while adhering to the laws of the country. Responding to the negative perception on SA as reported by the Fraser Institute, which interviewed mining executives, mineral resources & energy minister Gwede Mantashe accused CEOs of “badmouthing” the country.


He may or may not have a valid point. But he should be aware that he and the president’s enthusiasm about mining investment is not entirely shared throughout the regulatory value chain of the state. This is negatively impacting on Mantashe’s otherwise stated intention to increase mining’s share of the GDP.


If we hope to tame the conditions that make people vulnerable to populist mobilisation, we must practically deal with all the blockages to investment — both real and perceived. We need a constructive engagement with the NGO sector — both local and international — so that investment that brings about growth and diffuses social tension takes precedence over other considerations.


But if we allow Standard Bank or any bank to be attacked, as was the case recently in a protest by some NGOs, for the “crime” of investing in sectors they disagree with, it means we are not serious about growing the economy. Similarly, if we allow NGOs to block the mining of anthracite in KwaZulu-Natal as has happened with mining company Tendele — preventing more than a thousand people from getting jobs — then we are not serious about stability.


• Bayoglu is MD of Menar, a private investment company.


‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’.




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