Tanya Cohen – CEO, Business Unity South Africa (BUSA)
Tanya Cohen, CEO of Business Unity South Africa (BUSA), the apex association representing organized business in South Africa, discusses the mandate of her first year in office, BUSA’s core focus on economic transformation, the importance of building a sustainable energy strategy for South Africa, and her advice for potential investors looking at the huge opportunities within the country.
Tanya, you were appointed in January 2017 to lead Business Unity South Africa (BUSA) based on your excellent track record in advocating for the business community on policy matters. What mandate were you tasked with?
“It is really important to partner with local companies. The environment here is quite complex, so having a local partner would assist international companies to operate more effectively.”
The first thing I embarked upon was to review and subsequently restate our strategic priorities as an apex organization representing organized business in South Africa. BUSA has undertaken a significant amount of work in the past with important achievements, but that has not always been pulled together into a coherent strategic framework that properly captured our members’ priorities.
Hence, at the beginning of my term in office, I dedicated a significant amount of time with our members in order to understand their priorities and better define BUSA’s value proposition. As a result, we identified ten key strategic drivers – chief among which was economic transformation as a key intervention to grow the economy inclusively, create jobs, and develop society. This was the theme that emerged consistently through my discussions with all our members. Examples of other strategic drivers are: a predictable, certain and enabling regulatory environment; affordable, reliable and sustainable energy to meet current and future needs; a productive and stable labor market; education and skills development for current and future work; and a trade regime and international cooperation that enables South African business.
BUSA’s role as the apex body is to identify and address the common cross-cutting concerns of our members and partners – on issues like the sovereign ratings downgrade and government budget spending – that form the basis for common action. BUSA acts as a voice of reason within the national discourse. We want to back up our positions with evidence rather than getting mired in emotional or rhetorical engagement. We are also conscious to act as the glue that holds a unified business position together, because in challenging or uncertain times, it can be very easy for the private sector to fracture into conflicting positions. In a nutshell, we try to focus on the most pressing issues that affect our members collectively.
BUSA is a small organization – our model is to work closely with our members on our initiatives to supplement our resources.
How important would you say energy-related issues are to BUSA’s members?
Within the ten strategic drivers identified, one is the need for South Africa to have affordable, reliable and sustainable energy to meet current and future needs. Looking at some of other strategic drivers, they ultimately hinge on the issue of sustainable energy. I would say energy is the most important piece of South Africa’s infrastructure puzzle at the moment.
Looking at the Medium-Term Budget Policy Statement 2017 released last month by the Minister of Finance in Parliament, it is clear that energy issues are pivotal to our fiscal sustainability. For instance, the size of the Eskom debt is so significant that it cannot be separated from the health of the national fiscus.
As a result, BUSA has undertaken significant research and policy work in Q1 to submit input on the Integrated Energy Plan (IEP) and Integrated Resource Plan (IRP) for the country, making a submission in March 2017. Unfortunately, subsequently, there was a change in the Minister of Energy and we have not yet been formally consulted on these submissions, whether as BUSA or a constituent of the National Economic Development and Labour Council (NEDLAC), which is the formal negotiating and consulting structure for business and labor in the country. We continue to motivate for the review of the IRP, which is long overdue.
We have also done quite a bit of work in terms of different financial models with regard to the funding structures of SOEs, such as Eskom, the South African electricity public utility. For instance, there was a period recently in which Eskom was looking to obtain a tariff increase without the need to justify a rise in tariffs, to which we objected, and now there is a new proposal to raise tariffs by 19.9 percent in the next year, to which we have also objected.
Looking more generally, South Africa seems to be experiencing a period of flux and uncertainty. How would you characterize the current business atmosphere?
Honestly speaking, business confidence levels are very low at the moment. In a recently released business confidence index by the South African Chamber of Commerce and Industry (SACCI), the finding was that it was at the lowest level in 32 years! There has been a large amount of political uncertainty in recent times, which leads to regulatory and economic uncertainty. It is not a predictable climate to do business in at the moment, and in particular, certain sectors like agriculture, mining and manufacturing are really under a lot of pressure.
At the same time, there is sometimes a historical suspicion of business from the public sector in terms of whether industry is genuinely contributing to South Africa’s economy. However, South African business has built remarkable capabilities in looking at models of shared value contributing to national objectives rather than purely capitalist, inward-looking, pure profit-making models, which has increased the government’s receptiveness to business.
As BUSA, while continuing to focus on our priority areas, we also need to deal with emerging issues. A recent one has been corruption. We consulted with our members and released a position paper on integrity in business, detailing what we expected from the private sector in the face of corruption. In particular, we came up with guiding principles based on three prongs: firstly, having leaders take accountability for integrity at every level of the organization; secondly, taking a transparent and zero tolerance approach to corruption; and thirdly, strengthening systems and processes to detect and combat corruption. Moving forward, the next step is to take concrete steps to reinforce these principles, particularly as we have not seen much action from the government and state institutions when it comes to the comprehensive investigation and consequences for acts of corruption.
With all that being said, South Africans are often extremely self-critical. Our confidence levels are often lower than our true circumstances – and it happens that when foreign investors look at South Africa, they see more opportunities here than we do ourselves! After all, we are one of the largest economic powers on the continent and the world is generally experiencing instability and change.
What else can BUSA do to advocate for an improvement within the broader business environment?
A significant role is for BUSA to advocate for policies that enable growth and employment. Anything that is not conducive to business is not conducive for employment – recognizing, of course, that we want to have labor-intensive and inclusive growth.
As an example, one area we have identified as key to employment and economic growth is the concerning low-density contribution of small businesses to the economy. One of the statistics that we often look at is our employment and GDP contribution from small businesses. Employment contribution by small business is estimated between 55 to 65 percent whereas the global average is 95 percent, and the GDP contribution figures are similar. Similarly, our ten-year survival rate for small businesses survival is very low. This shows that there is massive opportunity here in terms of enterprise development, while at the same time, serious structural challenges prevent the establishment and development of small businesses.
Through the Southern Africa Development Community (SADC) Private Sector Forum (SPSF), we developed a labor guide for the SADC countries to provide companies of all sizes with information on labor requirements, work visa requirements, social security requirements. This is shortly to be launched and will enable businesses of all sizes to have easy access to labor standards and requirements. We hope to expand this tool to other areas to ease doing business in the region.
Taking a more international perspective, what role should South Africa as a country be playing as an economic powerhouse on the continent and a BRICS member?
Certainly, I believe there is a multitude of opportunities for us to leverage our BRICS membership more systematically than is currently being done, for instance, through the financing opportunities available from the BRICS Development Bank. We have not yet built the systems or processes to take advantage of such opportunities. As an association, BUSA does participate in many international structures, such as the SPSF, as mentioned, Business Africa, the B20, the International Labor Organization; the BRICS Business Council, and the International Organization of Employers (IOE).
It is indisputably helpful to see South Africa as part of BRICS, because these countries are more comparable for us than our traditional trading partners, particularly when it comes to development challenges. For instance, Russian strategic agencies have done a wonderful job in terms on fostering capabilities and identifying skills for future jobs in the labor force. Brazil has had significant experience on how business and labor concerns can be addressed inclusively through various interventions, incentives and processes. India has introduced many initiatives targeting the informal sector, including, for instance, simple savings mechanisms to deliver social security. We have lots to learn from them.
At the same time, I think these countries can learn from South Africa’s diversity management capabilities. The ability to operate within diverse groups and under unpredictable circumstances is proving to be more and more relevant. After all, the ability to adapt and adjust is what will be required in the future working world.
Regionally, South Africa also plays a leadership role in key economic and infrastructure development issues.
Would you have any advice for potential investors looking at South Africa?
Once our energy policy environment is clearer, the opportunities for participation in the sector and in renewable energy will be significant. We have one of the most advanced levels of industrial capabilities on the continent.
It is really important to partner with local companies. The environment here is quite complex, so having a local partner would assist international companies to operate more effectively.
We do have large numbers of work-ready people, especially youth, that are motivated and eager to learn. Potential investors must be ready to transfer skills and train them. Companies should be ready to factor skills development into their business plans and processes.
On a more personal note, having worked for a major retailer previously, what motivated you to take up your current role?
Simply put, I wanted to make a difference. Having seen, with the labor negotiations on the national minimum wage and labor relations stability, the huge potential that exists to form a workable consensus that reconciles complex issues and the competing interests of business, labor, government and community, I was extremely inspired to continue such work. I think when one is able to act as a constituent in the broad national interest and find solutions that all stakeholders can live with, that is how real progress is made.