PMB is inhospitable to business

2009-06-05 00:00

BUSINESS Retention and Expansion (BR&E) is an international concept based on the principle that there is more value (some may argue that it is equal) in taking good care of existing investments rather than trying to seek new ones. Unfortunately, despite the strong evidence to support this thesis, South African towns and cities often confine their efforts to luring new investors from foreign countries. Countless delegations to the Far East, in particular, have returned empty handed, notwithstanding great expectations and even undertakings. We have read of mammoth development projects at the Point in Durban and in Zululand, and more recently there is a buzz about a new 400-job furniture factory in Mshwati. Experience suggests that we should believe it when we see it.

At the very heart of BR&E is a relationship of trust and respect. Of course, as a strategic programme it is a great deal more than just a cosy warm feeling, but it is difficult to implement the elements of a strategy without this being present.

Business people, and industrialists in particular, have to perceive that their value, as local economic cornerstones and employers, is recognised by the city’s civic leaders and the community at large. Once this kind of relationship has been secured, then the objective of the BR&E practitioner is to know the local businesses and their executives well enough to learn, and understand, their needs and translate these to the decision makers who should take steps to meet them. At a higher level of strategic intervention, a BR&E programme may also involve pro-active guidance to companies as to how they, with the assistance and support of local government, may achieve even greater success. It is clear that the local chamber of commerce has a critical role in all these activities.

What is also unrecognised by many is the fact that business people are both the best and the worst ambassadors for any city. They are the people who engage with others in the business world; they are the people who comment on the suitability of the city as a likely location for a new or expanded operation. Just as the local government leaders should know and understand the nature of the business community, the business leaders should have equal insights into the management and operation of the city itself. Where local economic development is a common goal — if it isn’t, we have a very serious problem — it is difficult to understand why there is any element of aloofness or distrust. In discussions with members of the Chamber of Commerce from other towns and cities, I have learnt that a truly constructive and harmonious relationship between the public and private sectors is not at all common.

Our city is inhospitable to business. Currently, and in view of a municipal budget which is not at all in touch with the challenges of manufacturing and the threats of retrenchments, this perception is as deep as it ever has been. The principle element, but not the only one, of this inhospitability is the unreasonably high cost of energy, the consequence of years of milking the cash cow of high-energy users. It has been reported before that the city’s so-called demand or kVA charge is 435% higher than the Eskom tariff for this. A large manufacturer discovered, following analysis, that if the company was located in Ekurhuleni, for example, the energy costs would be more than 30% lower. The recent budget having exacerbated this operational difficulty, companies are being forced to consider relocation, even if it’s to an area where they can become direct Eskom customers and pay a good deal less. Indifference to the plight of existing industry is quite the worst way in which to assume responsibility for economic development and progress. What is worse in the South African context, is that indifference to the needs of the industrial and commercial sectors results in job losses. Unless the government at all levels is enthusiastic and positively disposed towards the retention and expansion of companies (of all sizes) and has the political will to take constructive steps to be as hospitable as possible, no number of plans, projects, blueprints and consultants will dispel the perception of indifference.

• Andrew Layman is a former headmaster and now the CEO of the Pietermaritzburg Chamber of Business.

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