Busisiwe Mavuso, the CEO of Business Leadership South Africa (BLSA), has called on South Africa’s authorities to keep on pursuing economic reforms, even where this is difficult.

Writing in her weekly newsletter, Mavuso came out in support of the Reserve Bank’s recent interest rate hike – invariably an unpopular move, especially when society is under cost-of-living pressures. Containing inflation, she said, was critical.

“Price stability is critical to businesses’ ability to plan and invest. It also protects consumers, particularly the poor, who are most exposed when prices rise. Economists now expect further hikes this year. That may be uncomfortable in the short term, but it is important for long-term stability.”

She went on to say that South Africa was facing the current global turbulence with a resilience that it had lacked in previous times of crisis. Its finances are in a better position than had been the case during the COVID pandemic; this demonstrated that fiscal prudence and the structural reforms undertaken had begun to show results.

Ratings agencies were increasingly positive on South Africa and if the course could be maintained to the Medium-Term Budget Policy Statement in October, this could turn into upgrades. “The minister has shown the discipline and credibility to do so. The ratings agencies are watching. So are investors,” she said.

Mavuso issued an appeal to government to continue with its path, in conjunction with business, building on the reforms they had negotiated over the past eight years.

While South Africa would always be vulnerable to global conditions, it had within its power the choice on how to respond: “I have been consistent in BLSA’s engagements with government that the reform agenda must not slow down.”

She reiterated the priorities needed to be logistics, electricity, and reform of the public service to create a capable state. Greater private sector involvement – such as in the concessioning of ports – would be needed to give South Africa’s economy momentum.

Reform efforts would pay off in moments of crisis, as in the present moment. She concluded: “The rewards of doing so are not abstract – they show up in the rand, in bond yields, in investor confidence. We have earned that position and we must not squander it.”

Surprisingly, Mavuso did not mention extensive policy change on things such as racial empowerment policy, affirmative action, or labour legislation that has had the effect of undermining the competitiveness of South African workers. It is doubtful that the economy can be lifted onto a high-growth, high-employment track unless these are addressed.