Development, after all, is nothing more than an economy-wide process of unlocking and adding value, and is manifested in the expansion of commerce, trade, investment and employment. Development is the expansion and intensification of business activities.
That some politicians and parties have such profoundly negative views of business is therefore a major constraint on SA’s development. This is because of the (legitimate) fear of firms and investors that such views will translate into antibusiness policies.
Such policies include badly conceived and often badly implemented, unnecessary regulations that increase the costs, risks and frustrations of running a business. These kinds of actions affect all businesses but are especially serious for small business owners, whose firms do not have the resources to hire personnel dedicated to navigating these complex regulatory realities.
Worse than excessive regulation, other anti-business policies introduce even greater risk and uncertainty about returns. If politicians act to weaken property rights, or even if they threaten to do so, the owners of business assets cannot be certain they will be able to reap the rewards of their success even if they are able to overcome all the other obstacles to success (including competition from other businesses).
If politicians run the country’s finances into the ground, they increase the probability that corporate taxes will rise. If politicians choose to focus their regulatory powers on the distribution of ownership of existing firms, rather than on facilitating the emergence of new firms, then the costs of doing business will go up.
Inevitably, these actions reduce investment in new assets, deter maintenance of existing assets and encourage businesses to begin to liquidate assets or transfer them to safer jurisdictions. The result, at best, is that society accumulates productive capabilities more slowly; at worst, a country loses them altogether.
If SA is to prosper and if we are to see more rapid development, policymakers are going to have to get over their anti-business attitudes. This is a critical first step. Beyond that, they need to build growth coalitions, at national and local level, in which business and the government can engage each other constructively in the interests of creating more open, competitive business environments in which regulatory constraints are minimised.
We will need new approaches to supporting business growth and, critically, new business formation. As Ricardo Hausmann has put it: “SA’s problems do not stem from the businesses that exist, they stem from the businesses that do not exist.”
In light of this, and in light of the May 8 election, voters need to challenge those who are looking for their support about their attitude to business. They should be asking political parties how they intend to protect property rights, how they will reduce the difficulties associated with starting a business, and how, if elected, they intend to reach out to business (big, medium and small) to foster the conditions for faster, more labour-intensive growth.
But perhaps the single best question voters should ask of parties arises from something President Cyril Ramaphosa said in 2018. Speaking at the national investment conference, he said: “We should treat our entrepreneurs as heroes and move away from what we have been fed, where we treated our business people like enemies, called them white monopoly capital and all that. That must end today. Let us see our business people as heroes.”
Voters should ask whether the political party they support agrees.
• Bernstein is CDE executive director. This article is based on a new CDE report, Agenda 2019: Business and Development.