One of my frustrations when dealing with opponents in the public sector, labor and some civil society organizations is that they often have ideas about business as a single entity with whom they can negotiate. I understand the temptation to do this – we often think of those who play a role in our society in some coherent way, such as “labor” and “capital”. It forces us to think that we can somehow get involved with these entities to change their behavior.
But when it comes to business, that’s not right. We are all in business to some extent because we exchange our time or resources with others. Sometimes we organize ourselves into companies to do this. There are thousands of companies, many of them competing with each other. They have many different purposes – some consisting solely of their employers, others large-scale employers, some start-ups and others multinationals.
Sometimes some of these businesses organize themselves into organizations that can represent them in specific forums. BLSA is one of them – our members work together through BLSA to improve the business environment with others and how to deliver on the economic potential of the country. Together, our members have signed an agreement with South Africa to enhance prosperity. Our members make up a large part of the economy and create millions of jobs. But while we are attached to a vision of the country we want to see, we are not the only entity that can be called “business.” There are such things.
This is important because there is often an opinion that businesses should accept some kind of sacrifice in order to “come to the table” or to achieve some or other policy objective, such as investment or ‘hiring more people’. But such thinking is inconsistent – “business” cannot confine itself to such motives. Only individual agents can enter into a contract. The government can and will always contract with the company for all kinds of products and services. But you can’t expect to enter into such an agreement with the whole business – there are no such agents.
That’s why policymakers need to focus on the kind of environment their policies create – the playground – where businesses operate. That way you get what you want from the business. Social sciences, such as economics, study how different rules of play lead to different results. If you want to expand your business, hire and invest more people, you need to be profitable for them. Not all businesses are profitable but no business can survive long when money is lost. And no one, at business or outside, puts their money at risk without the reasonable possibility of generating a return.
So, the government should always ask itself, what does this environment look like for entrepreneurs who are considering putting their money at risk? What makes an entrepreneur uncertain whether investing should be a good risk? How does the cost of goods, from port access to the Internet, affect their return genre potential? Does the cost of hiring employees, not just wages but related costs such as setting up tax payments, filing returns to the labor department and other parts of the bureaucracy, affect their willingness to hire?
The answer to such a question can help the government see what it should do to get what it wants. Further, to get better quality jobs and faster poverty-reducing economic growth, you need to make it easier for businesses to invest and hire people. You need to do research to understand the impact of different policy decisions and hear and learn from coal miners about how they perceive the environment.
BLSA is committed to helping the government. We can draw the perspective of our members as major investors and employers to help other role players understand how the situation is affecting them. We also work through a variety of programs, such as Business Against Crime and Tamdev, to share our power and provide direct assistance to the public sector. I know we have good relations with many of the government and we share the same motives for what we want to happen in our country. To realize that vision, we must focus on the important things: the business environment we create.
Busy Mavuso, CEO of Business Leadership South Africa.