Private Sector Collective Action

The recent remarks by the Minister in the Presidency, Khumbudzo Ntshaveni, asserting that the private sector has no interest in developing the country and is actively involved in trying to collapse the government, were met with strong protest by various business associations.

Minister Ntshaveni’s remarks were prompted by the news that the UK-headquartered Standard Chartered (not be confused with Standard Bank South Africa) acknowledged its involvement in the manipulation of the South African Rand from 2007 to 2013. In acknowledgment of complicity, the bank paid a fine of R42.7 million and agreed to testify against other banks that were accused of participating in the manipulation of currency exchange rates.

Various South African banks, including Standard Bank South Africa, as well as business associations like the Banking Association of South Africa (BASA)Business Unity South Africa (BUSA)Business Leadership South Africa (BLSA)Business for South Africa (B4SA), and others, strongly objected to the Minister’s critique. They highlighted several initiatives where the private sector is collaborating with the government on national priorities, such as restoring energy security, fixing the logistics mess, and strengthening crime and corruption prevention.

Amidst the public furore following the Minister’s remarks, Standard Bank South Africa CEO, Lungisa Fuzilie, in a radio interview, went to great lengths to clarify that the private sector has no interest in a failing government or economy.  He stressed that the private sector would also stand to fail if the national government and economy were to fail. He emphasised the symbiotic relationship between the well-being of business and the overall health of the political, social, and economic context in which they operate.

This saga once more emphasised the role that business can play in the public sphere. A recent report from the International Monetary Fund (IMF), once again highlights that business in South Africa must often play a disproportionate role in the public sphere. This is attributed to the government’s failure to provide services that one would typically expect from a government.

This is not a new insight. During the Apartheid era, certain businesses provided opportunities to the vast majority of citizens who were disadvantaged under the Apartheid government. After 1994, when the Mbeki government neglected the medical treatment for individuals with HIV/AIDS, business had to step in to fill the gap. More recently, during the COVID-19 pandemic, the business community also played a significant role in assisting the government in combating the pandemic.

It is, therefore, understandable that organised business felt offended by the Minister’s remarks, and they made no secret of their feelings of offense.

This raises the question regarding the best way for business to become involved in the public and political sphere.

The notion of ‘Collective Action’ has gained considerable traction in recent years as a way for businesses to address various societal or environmental challenges that might impact them.

Collective action involves multiple organisations uniting their efforts or resources to achieve a shared goal.

In numerous industries, such collective action initiatives have emerged over the last two decades, particularly aimed at combatting corruption in a specific industry. The purpose of such initiatives is often to either rectify corruption in an industry or to create a level playing field for industry players.

Prominent examples of such anti-corruption collective action initiatives include the following: The Extractive Industries Transparency Initiative (EITI) in the mining sector, CoST in the infrastructure construction sector, the Fisheries Transparency Initiative (FiTI) in the fishing industry, and the Banknote Ethics Initiative (BnEI) in the banknote production industry.

Some of these initiatives follow a multi-stakeholder approach involving participation from the private sector, government, and civil society organisations. A prime example of such an approach is the Extractive Industries Transparency Initiative (EITI), where both businesses in the industry disclose payments to governments, and governments disclose payments received from companies operating in the extractive industry – thus providing transparency on payments made and received in the industry.

Other initiatives only involve private sector players. The Banknote Ethics Initiative (BnEI) serves as a good example of an industry proactively addressing its image by developing a standard focused on curbing corruption and anti-competitive behaviour in the industry. Members of the banknote industry can voluntarily sign up to this standard of ethical conduct. However, upon enrolment, they must go through a rigorous audit process on a triennial basis conducted by reputable external auditors to uphold their membership of BnEI.

Both multi-stakeholder and industry-specific collective action approaches have been successfully employed in South Africa.

Collective action, where only private sector players collaborate to set ethical standards for a particular industry or across various sectors, should not only be welcomed but is often a precondition for engaging with other sectors of society, including government and civil society. It is often a case of the business sector first getting its own house in order before there could be meaningful engagement with government or civil society on matters such as corruption or anti-competitive behaviour. Failing to take this step can easily lead to engagements with non-business sectors on ethics-related matters deteriorating into an endless and fruitless exercise of the pot calling the kettle black and vice versa.

The recent pledge signed by 115 CEOs of South Africa’s most influential companies to collaborate with the government in finding solutions for problems related to energy security, logistics, and crime is a good demonstration of meaningful collective action by multiple stakeholders. The issues confronting South Africa are significant and debilitating and can probably not be solved by any sector of society on its own. It requires solutions that cut across the divide between business and government, necessitating collective action by all sectors of society adversely affected by these challenges.

Sustaining multi-stakeholder collective action initiatives demands resources, hard work, and perseverance. The recent accusation by Minister Ntshaveni, claiming that the private sector has no interest in developing South Africa and is actively working to undermine the government, contradicts the collaborative efforts between the private sector and government currently underway.

As long as the role-players in this collective action remain focused on the best interests of the country, it is highly probable that the minister’s comments will not derail the ongoing collaborative efforts. There is simply too much at stake to allow this distraction to derail the collective effort aimed at enhancing conditions for both business and government in South Africa.

Prof Deon Rossouw is the CEO of The Ethics Institute and an Extraordinary Professor in Philosophy at Stellenbosch University. He is also the Chairperson of the Banknote Ethics Initiative.