The chief executive of Business Leadership South Africa (BLSA), Busi Mavuso, emphasised that businesses cannot operate effectively in an environment where the state is failing. She explained that while working in partnership with the government to address its shortcomings is essential, it comes with a significant financial and operational cost for the private sector.
Key Takeaways
- Private Sector Bearing the Cost of State Failures: South African businesses are stepping in to address government shortcomings, incurring significant expenses on security, backup power, logistics, and lost productivity, which reduces competitiveness in global markets.
- Warning Against Government Dependency: Business leaders caution that while corporate support is vital for reforms, it must not become a permanent substitute for state responsibilities, as this diverts resources from expansion, innovation, and job creation.
- Reform Tracker to Monitor Progress: Business Leadership South Africa is launching a reform tracker to measure the impact of government recovery efforts, aiming for measurable outcomes, clear targets, and greater accountability in addressing systemic issues.
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Indicators of State Failure
A failed state can typically be identified by several clear warning signs. These include the inability to deliver essential public services, a sustained economic downturn, the loss of control over critical functions such as policing, rising levels of social unrest, and growing political instability. Experts caution that these symptoms do not emerge in isolation but feed into each other, creating a self-reinforcing cycle of decline that becomes increasingly difficult to reverse without decisive intervention. South Africa has, in recent years, shown multiple symptoms of these issues, indicating a dangerous trajectory if decisive action is not taken.
The country’s challenges have been made visible through ongoing load shedding and water shortages, the deterioration of essential infrastructure, severe freight and logistics delays, persistently high unemployment, ineffective governance at various levels, and the collapse of several municipalities. Additional strain has come from troubling developments within the South African Police Service (SAPS), where internal disputes and damaging revelations have undermined public trust.
The combination of these failures has led to a palpable sense of frustration among citizens, with many communities resorting to self-reliance or private solutions for basic needs such as security, waste collection, and water supply.
Private Sector Stepping In
Faced with these mounting risks, many businesses have collectively chosen to contribute financially and operationally to government-led programmes aimed at reforming and revitalising the country. Mavuso noted that such initiatives are being supported despite the fact that they place additional strain on company resources, impacting profitability and diverting attention from core operations. In some cases, corporate leaders have been forced to create dedicated task teams whose sole purpose is to plug gaps in state service delivery, from maintaining power supply in industrial areas to ensuring that cargo movement does not grind to a halt at key ports.
Mavuso highlighted that the fortunes of South African businesses are closely intertwined with those of the state. If government systems fail, the economy suffers, and in turn, businesses also face decline. This reality has driven the business community to actively participate in supporting structural reforms that could create a more stable environment for investment and economic growth. She warned that the private sector cannot afford to treat this as an optional exercise, as the collapse of public systems would inevitably lead to widespread economic contraction and job losses on an unprecedented scale.
Launch of a Reform Tracker
To monitor progress and ensure that reforms lead to tangible improvements, BLSA plans to launch a government reform tracker in the coming week. This tool will track the various challenges South Africa faces and measure whether corrective measures are achieving meaningful change. The tracker will operate as both a public accountability mechanism and an early warning system, flagging areas where reform efforts are stalling before the situation deteriorates further. The central measure of success will be whether reforms create a stronger business climate that enables the economy to operate effectively and expand.
The Burden on Businesses
Because the health of the economy is closely tied to the effectiveness of government, the business sector has been willing to assist. However, when state systems fail, the costs are significant. Businesses are forced to absorb additional expenses for security, alternative power generation, substitute logistics arrangements, and the productivity losses that follow. Such conditions make South Africa less competitive in global markets, compounding the economic strain.
Some companies have reported that these operational workarounds can inflate running costs by double-digit percentages annually, leaving them with diminished margins and reduced appetite for reinvestment.
Risks of State Dependency
Mavuso cautioned against creating a scenario in which the government becomes overly reliant on private sector resources to function. She stressed that every rand allocated to fixing public sector problems is money that could otherwise have been invested in business expansion, product development, technological innovation, or the creation of new jobs. There is also a considerable opportunity cost when highly skilled employees are reassigned to assist with state functions instead of driving business growth. This redirection of talent has longer-term implications, as businesses risk losing competitive advantage when key personnel spend months or even years entrenched in government recovery projects.
Setting Boundaries on Support
Shareholders and other stakeholders have already raised concerns about why companies are effectively subsidising state failures. Mavuso stated that businesses must be selective about which government functions they support and must avoid fostering a permanent culture of dependency on private intervention. She argued that while the corporate sector can act as a partner in stabilising the nation, it must not become the default provider of basic public services, as this would absolve the state of its constitutional responsibilities.
Focus on Post-State Capture Recovery
Up to this point, much of the collaboration between the public and private sectors has been directed towards addressing the damage caused by state capture, a period spanning more than a decade in which systemic corruption within both government and certain private entities depleted national resources, enriched politically connected individuals, and weakened vital institutions tasked with oversight and accountability.
The combined efforts of business and government have achieved notable successes in certain areas. Reforms in the energy sector have been substantial, while the logistics sector has begun to follow a similar path of improvement. Progress has also been made in resolving long-standing challenges such as the visa backlog and technical service delays that have historically hindered service delivery. Incremental progress is being made almost daily as political willingness and cooperative initiatives gain traction.
The Need for Clear End Goals
Mavuso stressed that such interventions should not be treated as indefinite charitable contributions. Instead, they must be recognised as strategic investments that should yield measurable returns. Where resources are allocated, there should be a defined conclusion to the intervention. To achieve this, businesses require short-term targets, clear outcome metrics, and regular evaluations of progress.
Failure to establish such guardrails could see the private sector locked into an endless cycle of crisis management, constantly patching up state failures without ever addressing their root causes.
The upcoming BLSA Reform Tracker is expected to serve as an accountability tool, ensuring that the reforms being pursued are achieving their intended outcomes and that resources are deployed efficiently. The tracker, set to launch later this week, will provide ongoing insight into the nation’s progress in addressing systemic challenges and creating an environment conducive to sustainable economic growth. It is hoped that by making reform progress more visible and measurable, both government and business leaders will be under greater pressure to deliver on their commitments without delay.
Conclusion
South Africa’s mounting governance failures have placed a growing burden on the private sector, forcing businesses to divert resources from growth to crisis management. While public-private partnerships have achieved notable progress in areas such as energy, logistics, and visa processing, business leaders insist that these interventions must have clear objectives and defined endpoints. The launch of BLSA’s reform tracker signals a push for greater accountability, ensuring that collaborative efforts lead to tangible improvements in service delivery, economic stability, and the creation of a competitive environment that benefits both the state and the business community.
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