Like Cyril Ramaphosa, business is playing a "long game"

Surely not? We have had the launch of a $100 billion investment drive, a stimulus package, a "job summit", and an "investment summit", yet business confidence is now lower than when Cyril Ramaphosa assumed office as president of the country in February this year.

According to the latest confidence index issued by Rand Merchant Bank and the Bureau for Economic Research at the University of Stellenbosch, business confidence in the fourth quarter of the year stood at 31 on a scale of 1 to 100, against 44 in the first quarter. Admittedly, 31 is much better than the record low of 10 in the third quarter of 1985, the time of PW Botha's calamitous "Rubicon" speech.

But it is far below the all-time high of 91 in 1980. It is also significantly below the long-term average of 44.49 over the period 1975-2018 – which included the Soweto revolt, the debt standstill, the ten-year long "people's war", and tightening international economic sanctions, not to mention the depredations of the Zuma years.

The score of 31, measuring the "levels of optimism" among 3 800 senior executives is the most comprehensive assessment so far of President Ramaphosa's performance in relation to the economy. And it is damning. According to the BER, "seven out of ten respondents remain unhappy with prevailing business conditions".

The survey was compiled before the recent rise in the repo rate and after the investment summit in Sandton at which various captains of industry queued up to announce investment commitments. Few of these were new, but Mr Ramaphosa nevertheless proclaimed that "the investment strike by businesses is over" – to be greeted by what was reported as "thunderous applause".

Business was clearly putting its best foot forward to enable Mr Ramaphosa to claim success. No doubt it also wished to lock him in to investment-friendly policies.

Earlier in the same month, another summit witnessed the announcement of a "framework agreement" to "create" 275 000 jobs a year over and above those that would have been generated anyway. And not long before that, in September, Mr Ramaphosa told us that the Cabinet had adopted a plan that would "ignite economic activity, restore investor confidence, prevent further job losses, and create new jobs". The best thing about this was that it did not involve additional government borrowing, but merely rebranded infrastructure spending already in the budget. In April, of course, Mr Ramaphosa unfurled his drive to generate "at least $100 billion in new investments over the next five years".

Coupled with his moves to clean up various public entities, these economic initiatives by the president should by now have translated into higher levels of business confidence, even if actual investment takes longer to materialise. Confidence should have been reinforced by his renunciation at the investment summit of the "white monopoly capital" narrative and his declaration that "entrepreneurs" should be treated as "heroes". The reward for these happy pronouncements was also reported to be "huge applause".

Mr Ramaphosa likes to play "a long game". Quite what that long game is, is not clear. Despite its stated enthusiasm for Mr Ramaphosa, business obviously is also playing a long game. And the name of the business game is, quite simply, "wait and see". In particular, business is waiting to see what happens with property rights. Clearly, there is little confidence in Mr Ramaphosa's repeated assurances that there will be no "land grabs", detriment to the law, or damage to the economy.

Apart from undoing the damage he himself did with his earlier statements that expropriation without compensation was going to happen come what may, Mr Ramaphosa has another problem if he is serious about growth and investment. Grand promises, charm offensives, summit conferences, social compacts, and pep talks can go only so far before the applause becomes merely polite. The period leading up to next year's national and provincial elections will no doubt give him a bit more time to play his (undisclosed) long game. After that he will have to explain how exactly he plans to "ignite" confidence, investment, and growth.  

* John Kane-Berman is a policy fellow at the IRR, a think-tank that promotes political and economic freedom. If you agree with what you have just read then click here or SMS your name to 32823. Each SMS costs R1. Ts and Cs apply.