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South Africa’s business leaders face a tricky balancing act

By Sam Rolland, Sub-Saharan Africa director

The mid-point of 2023 has allowed us to reflect on the year that has been so far. Without doubt, the continuing war in Ukraine, stubbornly high inflation and our own domestic challenges have made doing business in South Africa significantly more complex than in prior years. This has placed additional demands on South Africa’s C-suite, requiring greater resilience and fortitude than before. With this in mind, it was exciting to read earlier this week that around 115 CEOs (many of them our EICN members) had signed a pledge to commit to assist the South African government with technical expertise and funding, while also collaborating in the form of partnerships with key stakeholders with the aim of assisting the country.

Over the past 12 months, we have been crafting a consistent message with our membership base around the need for business to take the lead in policy discussions with the South Africa government. As the country has faced worsening bouts of load shedding, crime and corruption, and deteriorating efficiency in our transport infrastructure, we have suggested that with business leaders taking a greater lead in advancing policy discussions, the country will be able more efficiently to resolve new challenges, while ensuring that new innovations and technologies are adopted in the country at a more rapid pace.

A recent and excellent article in The Economist appeared this week titled “The overstretched CEO”, which showed that it is not just South African business leaders who are enduring the challenge of working with their government. The authors explain how the relationship between business and government has changed since the 1970s. Under the previous status quo, businesses would limit their activities to maximising shareholder value, and with that came prosperity, efficiency and jobs. For its part, the government would set tax rates and create policy but otherwise leave business alone. 

In the world of 2023, spurred on the challenges of disrupted supply chains, China’s ever-growing presence in the global economy, and more frequent occurrences of extreme weather events brought about by climate change, the business leader is now required to take a stance on political issues, environmental, social and governance (ESG) matters, and other causes important to a wide range of stakeholders. The risks are suddenly higher too. Bob Chapek, the former CEO of Disney, was a boardroom casualty in the battle for gay rights. Just recently, Natwest head Alison Rose resigned after it came to light that the bank had cancelled the bank account of Nigel Farage, one of the prominent proponents for Brexit, based on political disagreements. 

The problem, the article highlights, is that governments are looking to solve every problem at once. Trade offs no longer exist, as governments now seek to bring back manufacturing, while enhancing national security to protect key sectors. This is all while fighting climate change by speeding up decarbonisation. South Africa has seen its own example in the Just Energy Transition. The government wants to commit to a greater proportion of renewable energy in the total energy mix, while at the same time supporting and investing in coal fired power plants to support employment. 

It often feels like the South African business leader is overburdened.There is the onus to drive shareholder wealth, justify investment in the case of multinational companies, contribute toward socio-economic growth in South Africa while also solving many of the self-inflicted problems caused by the country’s government. But the recent CEO pledge shows that there is at least enough consensus to work collectively on solving the country’s current challenges. It is important that business leaders continue to drive the policy debate, while ensuring that sufficient focus is given to the advanced technologies of the future, such as AI and renewable energy.