What changes in SA mean for business in the medium-term

Predicting the future is impossible. Forecasting plausible alternative scenarios is possible and can be useful in fostering strategic foresight.

Using the so-called “three-horizons model”, South Africa can be seen to be moving from a status quo (horizon 1) marked by; negotiated settlement, ANC hegemony, post-Apartheid economic resurgence and consolidation and rainbow optimism, to a new normal (horizon 3) where forced re-settlement is the product of competing nationalisms, redistributive socialism and kaleidoscope pragmatism in the social dimension.

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This means that the centre, as we’ve known it since the democratic dawn, is coming undone and a new centre must be found and hopefully anchored in the principles that underpin our constitution; human rights, equality and the rule of law. This will require courageous leadership.

Whereas the 1st horizon was marked by a marriage of convenience between free market capitalism at the economic centre and liberation socialism at the political centre, the 3rd horizon will be marked by a fundamental rearrangement of the economic rules of the game to accommodate the failure of liberation politics to deliver upward mobility in real terms to many, especially the youth. While the democrats among the middle class are already rejecting horizon 3 as an option in the major metros, they do not have the voter base to capture provincial and national structures in the medium term. This implies a future where Mashaba-style city states navigate an increasingly stormy sea of aggressive socialism at the policy level.

These changes are demonstrated by the early signals of;
– Capturing of the state owned enterprises by the leftist oligopoly in the Presidency.
– Rising prominence of the issue of land redistribution and identity politics along racial lines.
– Pressure on old monopolies with cartel-like behaviours in favour of so-called black owned entrepreneurs.
– The resurgence of racial profiling as a legitimate point of departure for discourses about institutional transformation.

What does this mean strategically for business in the medium term?

As we know the fight for control of Treasury centred on Minister Pravin Gordhan is a proxy battle for control of the levers that are required to advance rapid redistributive socialism. This does not discount the propensity for grant corruption and new forms of state capture by private interests. However, it appears to be the current hegemonic faction in the ANC’s most obvious yet unfortunate tactical response to the Julius Malema’s EFF alternative of black nationalist socialism and on the other hand their differentiator over against the Mmusi Mainae’s DA meritocratic liberalism.

Public affairs on the part of business will need to be engaged at three levels and on two fronts:
1. Locally, particularly in major metros, business will be in a strong position to partner with local authorities that find themselves under pressure to deliver on social infrastructure, jobs and solutions for city-level competitiveness.
2. Provincially, business will need to take a nuanced approach to engaging gatekeepers of diverse political orientations. This opens up both opportunities and pitfalls as political actors increasingly consider themselves, thought paradoxically and ironically, the drivers as opposed to obstacles of economic progress.
3. Nationally, big business needs to expand their set of stakeholders to include not only current power holders but future and unconventional actors at the current political periphery.
4. Business will need to manage with a forward posture both the internal and external core business front, where shareholders, labour and transactional stakeholders will clamour for attention and appeasement amid the resultant turbulence, while at the same time engaging thoughtfully with the broader social front where their licence to operate will be under threat.

Business leaders will need to be diplomats, strategists and developmental economists to sustain returns in South Africa between 2017 and 2027.

This means that the moment we find ourselves in as a country is not only one of reckoning for political leaders (since the very nature of politics and its relation to power implies a measure of self-interest on their part), but instead is moment where the capacity for the business community to take responsibility for the country will be the defining factor. If business opts out citing the local “complications” the consequence will be an acceleration of a decline led by an incapacitated state. If business provides leadership, both principally and by investing in key projects that stimulate long term growth, the constitutional centre can hold as I believe the majority of South Africans would want it to.

These observations amount to a medium-term (horizon 2) where a shifting landscape results in many key institutions having to choose between evolutionary versus revolutionary change as a consequence of what is at its core an economic tug of war. I do not agree with RW Johnson that “South Africa has two years left”. No, but we have critical choices to make in the coming years that will set the trajectory for our children’s long term future.

There may not be another opportunity for a long time for the business community to demonstrate to itself and others that the sum of cooperation and collaboration is greater than the mere distribution of the spoils. Perhaps the post-Brexit uncertainty in Europe and dwindling growth in key African geographies on the back of low oil prices will be opportune challenges that make our domestic conundrums seem more palatable to the capital critical to unlocking the growth that can sustain the democratic project in the Rainbow Nation.