Business Must Brace For The Future - Rational Standard

17 June 2020 - As so often happens in South Africa, questions around the lockdown are ending up in court. Government has been stung by some important legal reversals recently, and in the coming days, a significant theme will be the sale of tobacco products – a legal challenge to the continued ban being in the works.

Terence Corrigan

As so often happens in South Africa, questions around the lockdown are ending up in court. Government has been stung by some important legal reversals recently, and in the coming days, a significant theme will be the sale of tobacco products – a legal challenge to the continued ban being in the works.

The challenge is being spearheaded by British American Tobacco South Africa (BATSA), in conjunction with a number of other bodies and individuals.

Interestingly, a previous legal challenge was abandoned in early May, after the tobacco industry apparently received signals from the National Coronavirus Command Council that further engagement might be fruitful. This in turn followed the government’s abrupt change of stance on tobacco sales, with President Ramaphosa announcing that Level 4 would bring permission for them, and minister for Cooperative Governance and Traditional Affairs Nkosazana Dlamini-Zuma subsequently saying that it would remain.

A frustrated BATSA has decried what actually transpired. It had hoped that engagement with the government would lead to the ban being revoked when the country moved to Level 3 – but that attempts to be included in consultation processes were fruitless.

Spokesman Johnny Moloto said that the company’s submissions had not even been acknowledged beyond automated emails. No one had been in touch, ‘not even an official to say your letter is receiving the minister’s attention’ – and that this left them with no option but to turn to the courts.

It was, he added, ‘very difficult to believe anything we hear from government now’.

It’s unclear when the ban on the tobacco trade will be lifted again. Minister in the Presidency Jackson Mthembu said that ‘I don’t see the ban on the sale of cigarettes continuing’ into Level 2. That appears nothing more than a personal, off-the-cuff interpretation. President Ramaphosa has said that ‘it is difficult to determine when the ban on the sale of tobacco and related products will be lifted’. Given the direction this has taken, there is nothing to guarantee that the ban won’t be extended as long as any lockdown restrictions last.

This should raise concerns beyond the tobacco industry and its customers. It is a familiar pattern.

When the African National Congress (ANC) determined at its national conference at the end of 2017 that land reform would be driven by expropriation without compensation (EWC), it was a message profoundly concerning to potential investors, local and foreign.

The line from government and the ANC – and particularly from Ramaphosa, then riding a wave of popular and business acclaim, as a break with the fetid decade that had passed and as a herald of ‘reform’ – responded by promising consultation and deliberation. All views would be considered, and a uniquely South African solution would result.

South Africa had a robust constitutional framework and a respected legal system. Whatever transpired, it would be within the constitution and the law. This would protect people’s legitimate interests. Nothing to fear.

Besides, the ANC’s conference resolution had tried to reassure the country: ‘In determining the mechanisms of implementation [of EWC], we must ensure that we do not undermine future investment in the economy, or damage agricultural production and food security. Furthermore, our interventions must not cause harm to other sectors of the economy.’

For a long time, at least, this was welcomed by business; and accepted (if somewhat uneasily) by many in organised agriculture. The manifest irrationality of these ideas and the damage that they would do would make it a non-starter. Surely, their response went, Ramaphosa recognised this, and would not allow it.

Piece by piece, this thinking has become ever less convincing. President Ramaphosa showed that the consultation process – where all would have their say – was of limited influence when he announced at the end of July 2018 that the ANC would push through a change to the constitution. Public hearings were at the time still ongoing.

In other words, whatever constitutional protections existed were clearly not to be relied on in future. It was remarkable how many observers seemed to struggle to grasp this.

That the weight of submissions in the process was opposed to an amendment (rejection was reportedly in the order of 60%, although there was a reliance on a tiny ‘sample’ of the submissions to evaluate public sentiment) was irrelevant. ANC Secretary General Ace Magashule explained, without the slightest justification, that oral submissions made at public hearings ‘outweighed’ those made in writing. Thus, he said, ‘we have seen throughout the country, without any doubt, that the majority of South Africans have actually called for the Constitution to be amended.’

But ‘alarmism’ was still to be avoided. Ongoing engagement could still produce a mutually acceptable policy outcome. And in any event, there was a sense that a constitutional change would only ‘make what was implicit, explicit.’

Unfortunately, as time wore on, it became clear that the implications of all this were altogether more serious that many had been willing to accept earlier. By early 2020, the ANC’s position was to reject published drafts of the amendments, indicating that decisions on compensation should be handed to the executive, rather than the courts.

This was but one of the developments which had been under way over the past three years. To name a few: new draft expropriation legislation, the proposed National Health Insurance scheme, prescribed assets, and the sad case of David Rakgase, the black farmer whose efforts to buy the state-land he worked was opposed doggedly in court by the government.

All of this has the strong odour of ideology about it. A trajectory based on deep conviction within the ruling party that is not obviously susceptible to discussion and compromise. Absent ideology, and with a real understanding of the utility of partnership, these matters would be resolved across a table, not in a courtroom.

The BATSA case is merely another instructive instance, even for those who might welcome the demise of the tobacco industry and smoking culture. For better or worse, the government has chosen a course of action that it is not willing to relinquish. Not up for negotiation. Minister Dlamini-Zuma has made the point that even if the court challenge strikes down the ban, it might in some form be retained.

Both past and present give us some illumination of the future. The pandemic was greeted with hopes that it would provide a reset of policy, and a renewed appreciation of the contribution of business. We at the Institute of Race Relations were attacked for not celebrating this. It is no longer an argument that can seriously be sustained. The president has spoken in terms of Radical Economic Transformation, and Minister Dlamini-Zuma of ‘class suicide’. (Those who attribute the government’s current actions largely to the enhanced presence of the minister are misunderstanding reality.) The ANC’s proposed plans for the economy envisage a state in command; its communist allies have seen in the current malaise an opportunity to ‘discipline capital and the private sector’.

This is not be taken lightly, nor to be seen as wild talk in an extraordinary time. It represents something with a long pedigree and with deep foundations. Business would do well to acknowledge it and prepare itself accordingly.

Terence Corrigan is a project manager at the Institute of Race Relations. Readers are invited to join the IRR by sending an SMS to 32823 (SMSes cost R1, Ts and Cs apply).

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