Time for SA's middle class to stop hiding from the ugly truth

09 August 2015 - 02:02 By CHRIS BARRON

The middle class needs to stand up and be counted, says the president of the South African Chamber of Commerce and Industry, Vusi Khumalo. This week, the chamber released its latest business confidence index, which shows confidence in the economy continuing its downward trend. It is couched in the unemotional, if not anodyne, terms that economists use in such reports, but Khumalo is in no mood to beat around the bush.South Africa is facing an "economic landslide", he says.story_article_left1"It is high time for the middle class of this country to stand up and express their concerns."For far too long the middle class has not said much. It is time for it to come forth, express its views and ensure that the economy of the country is put in a better state."He believes South Africa's credit rating will be downgraded to junk status and the government will have to go to the IMF for a bailout."We can't hide behind a bush and pretend that we don't see it happening."Much of what is happening amounts to self-destruction, he says.Khumalo believes the only explanation for otherwise irrational decisions, appointments and policies is that economic growth is being sacrificed on the altar of short-term political expediency."Unfortunately, one can only draw one conclusion. Policies are being driven by selfish political agendas of the day, not by economic reality."Khumalo, 58, senior manager of stakeholder relations at Transnet, believes the business community might, as a last resort, have to go to the Constitutional Court to save the country.block_quotes_start If we do not get more direct investment coming into the country... we are doomed. And it will be self-destruction block_quotes_end"One way of salvaging the situation, if all else fails, is through our constitution. I think we'll have to reach a stage where we will have to use our constitutional rights and the dictates of the constitution to challenge the present scenario."This is one of the options available to us."story_article_right2The chamber will seek a mandate from its members, he says."We need to have an indaba with our members, to ask them: 'Given where we are, what next?' The constitution is one of the tools we have."The chamber would have to be sure it had exhausted all other avenues first, he says. He concedes that there are not many avenues left for it to explore.He says the chamber may collaborate with the Afrikaanse Handelsinstituut, whose CEO, Christo van der Rheede, was the first business leader to propose such a step."I don't want to pre-empt the issue, but there is a possibility, there is a seed that has been planted, of Sacci and AHI collaborating," says Khumalo.He lists four things he believes need to be done immediately: tackling service delivery issues at municipal level; cutting down on "non-value-adding expenditure" by the government; making labour law more flexible; and reviewing policies to encourage foreign direct investment."These are key issues for our members," he says.Instead of addressing them, government policies seem hellbent on making them worse, he says.He believes there are ministers who fully understand the damage being done, but they are captive to more powerful forces.mini_story_image_hleft1Finance Minister Nhlanhla Nene warns about government expenditure but is powerless to prevent an 11.5% increase in public servant benefits costing R66-billion because "he is accountable to a political principal. If he resists this increase then his job is on the line."Khumalo finds it "very frightening" that while unemployment is rising, capital spending on infrastructure development is being cut to accommodate increasing benefits for public servants."Public sector wage levels are already far above those in the private sector."Not only that, but the output and delivery that should be concomitant with such wage levels is very minimal. This is of very grave concern, particularly as it is the taxpayer who is footing the bill."He says he finds the ongoing deterioration of municipal infrastructure "a very, very, very scary situation. Very scary."Members of the chamber are being badly affected."It affects their efficiency levels, it affects their businesses and how they are run. It is making it very difficult for them to grow."For most of them, it is not even about growth, he says. "They're just trying to survive. It is a very scary picture, and the country must wake up to that reality."block_quotes_start It is tantamount to sabotaging the interests of the country. You wonder if they realise that block_quotes_endThe business community needs to be "more upfront with government. We've got to be stronger and more vocal and talk more directly to government."Far from being irrelevant, the chamber plays an indispensable role, he says, "by highlighting the dangers of certain policies, giving them statistics, giving them the facts that are negatively impacting the economy. And making the nation aware that these are the dangers we are facing, and these are the consequences of our inactivity, if we continue the way we are."He concedes that even when these facts and statistics are laid out in the starkest possible way, government policies often take no cognisance of them. He points to its immigration and visa policies, which are damaging the tourism industry."We have been very vocal about indicating to the powers that be what the dangers of these policies are."story_article_right3Similarly, on the labour front."The whole Labour Relations Act needs to be reviewed. It is very, very stringent on employment procedures and processes in terms of labour inflexibility."He says there is clear evidence that labour regulations are keeping potential investors away. Nobody should be in any doubt as to the consequences."If we do not get more direct investment coming into the country than we're getting now, we are doomed. And it will be self-destruction."There is evidence that potential investors are opting to go somewhere else, and that those who are already inside are reconsidering the continuity of their investment."He says the chamber engages with ministers frequently, laying out all the facts, numbers and arguments.They seem to be receptive, but their policies do not reflect this."That's what depresses us. The only conclusion we can arrive at is that there is political interference, political influence, which is not in the interests of our common objective of building the economy."It is "quite apparent" that ideological clashes in the government are having a destructive effect.mini_story_image_hleft2"There are clearly divisions within government. One political grouping says this, the other political grouping says that."He points to the government's failure to move decisively to implement the National Development Plan as a good example of where these conflicting ideological approaches are taking the country."The socialistic approach to the economy is different from that of what I would call the democrats within the ANC movement. That is coming through quite succinctly."Nobody punts the socialist, anti-business line more vocally than ANC party boss and former SACP chairman Gwede Mantashe, who regularly attacks the private sector for not creating enough jobs and not investing in the economy."Gwede is a politician," says Khumalo. "He is talking to his constituency. He will always say things that his constituency will want to hear."He says the chamber does engage with Mantashe.Does it tell him the government needs to create the right environment for investors?"You'll be amazed at how much he understands that. He is very sensitive to the whole issue of corruption, to the whole process of giving jobs to pals."So why does the ANC allow the debacle at SAA, for example?story_article_right4Mention of the national carrier elicits an immediate "Oh my God" from Khumalo.He has no answer."I just give up. At a personal level I give up. You can only shake your head and say no wonder this business is losing so much money and market share."State-owned enterprises are supposed to be run on a commercial basis, but the decisions they take are contrary to that ethos."What is happening at SAA and PetroSA is totally unacceptable."It is tantamount to sabotaging the interests of the country. You just wonder if the people in the vanguard, the management team, the ministers, realise that."That's what is even more depressing," he says...

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