SUNDAY TIMES - Ramaphosa hits out at ‘a government at war with itself’
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Sunday Times Business By ASHA SPECKMAN, 2016-09-11 00:03:00.0

Ramaphosa hits out at ‘a government at war with itself’

Deputy President Cyril Ramaphosa
Image: KEVIN SUTHERLAND

Mere weeks before business and government leaders embark on yet another international investor roadshow and Finance Minister Pravin Gordhan delivers the medium-term budget review, Deputy President Cyril Ramaphosa has moved to calm fears that his government is at war with itself.

Ramaphosa gave a hard-hitting address at the 21st Nedlac annual summit on Friday, calling on government leaders to "act with decorum and a measure of ensuring that stability in the economy is maintained".

He said the government was aware of concern on the part of its social partners - business and labour - and the public about recent events in which state organs have been pitted against each other.

Last week, the National Treasury and Eskom indulged in public mud-slinging over allegations that the power utility had misrepresented information.

"We call upon the state machinery, if not to have a ceasefire, at least to act in a way that will not disturb the stability that our people call for ... It is unfair to expect our social partners to achieve what we've been asked to do - stability in the labour environment - when we appear unable to maintain a stable state ourselves," Ramaphosa said.

"A well-functioning government is a government that is not at war with itself."

The government has come under the scrutiny of ratings agencies and international investors who have raised concerns about political tensions.

The rand has weakened over 7% against the US dollar over the past month. The JSE has also under-performed its emerging-market peers.

The ongoing pursuit of Gordhan by the Hawks has sparked fears of an invisible hand planning to remove the minister and change fiscal policy.

Gordhan has so far refused to meet the Hawks, and in parliament this week said the body should arrest him if it wanted.

Ramaphosa said discussions were under way among government leaders on the issue of maintaining stability. He called on the state to avoid creating the impression that its actions were being influenced by any consideration other than the advancement of the public interest.

"Because if we create such impressions, those impressions become perceptions and they become reality."

Ramaphosa did not elaborate.

The Gupta family, who are friends of Zuma, have been accused of attempts to "capture" government departments and ministers.

Mineral Resources Minister Mosebenzi Zwane this week again called for an inquiry into the refusal by major South African banks to do business with the family. He has also suggested that licensing of the banks be transferred from the Reserve Bank - an independent institution - to the minister of finance.

The cabinet has distanced itself from Zwane's call.

At least one asset manager, Futuregrowth, has withdrawn loans to state-owned companies over concerns about stability.

Ramaphosa said: "Much as it appears that things are rickety and the wheels are coming off [in state-owned enterprises], there is work being done on a consistent basis and when the announcements are made, people will be amazed and surprised regarding the good work that is being done."

But he acknowledged that improving growth remained a major stumbling block despite progress on new initiatives that were launched this year in collaboration with business and the government; these initiatives are credited with averting a sovereign rating downgrade in June.

Business should never think that excessive pay rises for executives go unnoticed by labour

He said the labour environment had stabilised and an agreement was being drafted to seal protocol and rules of engagement between social partners. An advisory panel was also reviewing proposals to introduce a national minimum wage to reduce wage inequality.

Ramaphosa said he was confident the panel would meet a deadline to report back to the committee of principals under Nedlac next month.

A jobs summit would be convened later this year, which would, he said, enable Nedlac partners to hold frank discussions about the labour market and impediments to job creation.

The National Development Plan, which envisages the creation of 11 million new jobs by 2030 and a rise in labour force participation from 54% to 65%, was "not a pipe dream".

Ramaphosa said that an improvement in GDP for the second quarter of this year, which showed a rise of 3.3% compared with a contraction of 1.2% in the first quarter of the year, "gave us a vision for the future we desire".

He said a year ago the energy sector was battling serious challenges but now factory wheels were turning and mines operating because they had a consistent electricity supply.

"Things like load-shedding are things of the past."

He said initiatives such as Invest SA had recently managed to attract significant investment. A Chinese firm will invest up to R11-billion to establish a vehicle manufacturing plant in the Coega Industrial Development Zone in Port Elizabeth.

Initiatives were under way to grow small businesses and focus on youth employment by the private sector, including co-investment in infrastructure build.

He also called on the business sector to reduce excessive executive pay. "Business should never think that excessive pay rises for executives go unnoticed by labour."

Business confidence in the economy recovered during the third quarter, according to the Rand Merchant Bank/Bureau for Economic Research Business Confidence Index published this week. Confidence rose by 10 points to 42. But the authors warned this did not yet reflect a turnaround in the business cycle.

Jabu Mabuza, the Telkom chairman who is leading the business working group alongside the government, said on the sidelines at the Nedlac summit: "Some of the signals that are coming out of government, particularly at ministerial level in the area of land, in the area of the mining industry, the conflicting messages that we're getting on renewable energy, are not helpful."

Khanyisile Kweyama, CEO of Business Unity SA, said: "We're very, very worried, but it doesn't deter us from doing the work we need to do and ensuring stability remains. We are quite confident that the process the CEOs have been undertaking was not short-term [in its outlook]."

speckmana@sundaytimes.co.za