Johannesburg – The trust deficit between government and business started long before the Zuma administration, said Themba Godi, chairperson of the Standing Committee on Public Accounts (Scopa).
He was speaking alongside former finance minister Nhlanhla Nene during a panel discussion at the Institute of Internal Auditors South Africa 2017 conference on Monday.
“We do know that the business community have been voting with their profits,” he said. Businesses are keeping R1.4trn worth of profits in banks, not reinvesting it in the productive economy to create employment, said Godi.
“This has been a problem right from the beginning, not just under the Zuma administration.”
Godi recalled that business did not trust government even during the years of former president Thabo Mbeki.
Before apartheid came to an end, Godi highlighted that those with capital in the country, mainly the white population, kept the country going through their investments.
“When white people lost political power in ’94, I could not imagine their enthusiasm to invest money in a black government and make it succeed in the way they sustained the apartheid government.
“Under tremendous international sanctions they were there hand in hand with government to ensure it succeeded.”
There is a fundamental issue that needs to be considered.
Nene said that building trust does not happen overnight and that stakeholders need to come together. There had been progress on this front, until President Jacob Zuma removed former finance minister Pravin Gordhan earlier this year.
The state needs to create an environment conducive for the private sector to put money into programmes, he said. “The private sector wants to be sure there will be returns and that their resources and investments are safe.”
He added that investors are wary that policies would change. Without certainty, the private sector will not be pouring money into the main stream.
Previously, Nedbank CEO Mike Brown defended business’s decision to limit investment.
He explained that given the political environment, businesses are reluctant to invest, but money is still making its way into the economy through the banking system. Banks are converting this money into assets in the form of government bonds which are bought and in turn finance the fiscal deficit.
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