Members of the South African business community, including economists and banking representatives, attended a discussion forum facilitated by Brand South Africa to find solutions and develop strategies that would positively enhance South Africa’s economic reputation in light of recent credit agency downgrades.
A variety of stakeholders and business experts attended a Brand South Africa Competitiveness Forum held in Johannesburg on 28 June 2017 with the aim of gathering insight and advice on how best to manage the impact the downgrades have had on the reputational profile of South Africa, with the discussion focusing on developing strategies towards economic recovery.
Attendees were welcomed by Brand South Africa CEO Dr Kingsley Makhubela, who said unequivocally that those involved in the discussion had a vital role to play in finding the answers to challenges faced not only by the South African nation brand, but more importantly by the people of South Africa. “We need to talk to each other honestly about how to solve the issues,” he said.
Invoking the Chatham House Rule for group discussions — which states that contributors can speak freely in a forum without concerns that their identity or affiliation will be revealed in the reporting of the discussion — Makhubela told attendees that the Brand South Africa organisation would listen to the worries of South African business as well as be a facilitator in finding solutions to challenges.
Mpho Makwana, Brand South Africa board trustee and chair of the organisation’s marketing committee, reiterated Brand South Africa’s dedication to encouraging thought leadership through opportunities such as the Competitiveness Forum. He said that the organisation would use its partner relationships in political, economic and cultural arenas to make sure the issues raised would be heard.
The primary points of order raised in the forum included:
- The need to develop deeper insight into the drivers, qualitative and quantitative factors that led to credit ratings downgrades;
- An honest and comprehensive analysis of the reputational impact of ratings downgrades; and,
- Stakeholder input and perspectives on appropriate steps towards restoring investment grade credit rating as well as suggested short, medium and long-term interventions.
The open discussion was led by Brand South Africa general manager for research Dr Petrus de Kock, who began by contextualising how credit ratings downgrades worked globally and how South Africa could learn from countries that had survived similar situations.
When the floor was opened to an extended discussion, attendees brought up the following perspectives:
While the fundamental economic strengths of the country were healthy, with stable mechanisms such as financial auditing, business standardisation, banking laws, corporate board law and a dynamic stock exchange, it was vital to keep an eye on any attempts to erode the reputations of these cornerstones.
It was important that the reputations of these institutions were kept in place and running healthily.
Overall, attendees agreed that strong political leadership was crucial in tackling the effects of economic downturns, beginning with the important tripartite relationship between business, labour and the government.
Business and the government needed to find a common path in solving economic challenges. The relationship had to become less confrontational and more mutual.
The government needed to understand the complexities of how business worked and how it affected the economy. An injection of economic experience was needed in government institutions such as the Treasury and the Department of Trade and Industry to improve that relationship.
The subject of radical economic transformation — a hot topic in South Africa’s sociopolitical sphere for a number of years now — was raised regularly. For the most part, delegates agreed that, while it was an important conversation to have as a country, business needed to remain pragmatic about how it would be implemented.
The real economic repercussions of a quick fix to challenges needed to be carefully considered, in light of continuing attention from ratings agencies. The idea of radical transformation had to be beneficial to all South Africans, and not merely a cosmetic quick fix or an electioneering tool.
Regarding the 2019 national elections, contributors to the forum understood that things would be said that often were not accurate or actionable. Parties on both sides of the political spectrum had to be responsible for what they communicated to voters concerning economic growth.
An important point raised by an attendee was that South African business, government and, indeed, society at large, were all good at talking about change and talking about solving problems, but reputationally were bad at putting those ideas into action.
While changes in philosophy were essential to building economic confidence, the country needed “quick wins” to show the world it was prepared to do and not simply talk about doing. New, effective, well-planned projects that stimulated growth, particularly focused on SMMEs, and improved employment opportunities, especially youth employment, needed to be undertaken quickly and correctly by public and private enterprises to improve South Africa’s economic status.
In addition to its relationship with the government, the South African business environment needed to work harder at its relationship with the media. An issue presented at the forum was that the overall message of what credit agency downgrades meant to the person on the street was not being communicated effectively. A simplification of the language used and a more compassionate approach to relaying these messages was needed for ordinary South Africans to fully understand the impact of what the economic ups and downs meant to the bottom line and to their pockets.
Often big business was considered faceless, distant and not addressing the concerns of the voiceless population. The relationship between business and media included essential government communication that had an obligation not to dilute or divert the messaging. That government message, delegates felt, needed to be more hopeful and less confrontational. A “good news” story, but a truthful one.
Avoiding further downgrades
The ultimate question remained: could South Africa avoid further downgrades? Participants in the Brand South Africa forum agreed that it was possible to reverse the effects of an economic downturn through hard work, solid project management and a strong relationship between the private and public sectors.
Business and the government needed to seek a common path, finding a realistic compromise between aiding economic transformation while understanding the economic repercussions if handled badly.
All agreed that South Africa was good at running businesses, especially at a macro level, however, a bold, dynamic way to enhance microeconomics was needed.
Tackling economic challenges, especially downgrades, was a long-term investment, one in which all parties involved, from the government, corporations and the media, to ordinary citizens, had to have a good look at themselves and ask honest questions about where the country wanted to stand and succeed in the world, on the continent and within itself.
Watch a CNBC Africa interview with Brand South Africa’s Dr Petrus de Kock on the outcomes of the forum
Source: Brand South Africa, CNBC Africa
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