SA needs a business code of conduct to guide its expansion on the African continent.
Three-and-a-half years after the ANC’s 52nd national conference in Polokwane, the South African government’s commitment to draft a code of business conduct to guide the engagement of South African businesses abroad has not produced any tangible results.
At the same time, concerns and controversies related to the unbecoming conduct of some South African companies operating in Africa continue to surface.
The Institute for Global Dialogue, in partnership with the University of Cape Town’s Graduate School of Business, recently convened a roundtable to explore the concept of a code of business conduct and debate possible alternatives that could serve to guide South Africa’s future business engagements on the continent.
Mills Soko, associate professor at the school, emphasised the need to distinguish between fact and fiction when considering what has, in truth, been a mixed picture of South Africa’s expansion into the continent since 1994. Perceptions of the role of the country’s businesses on the continent vary widely, ranging from being seen as partners in economic growth to being viewed as new-age colonisers.
To be sure, the latter is not without foundation, and Soko was quick to point out that the actions of certain South African firms in a number of African countries have left much to be desired and drawn deserved indignation. Nevertheless, Soko stated that many accusations made against South African firms in Africa were unfounded and unfair.
“Empirical research shows that malpractices by South African companies have been the exception rather than the norm. On the whole, South African firms have been a force for good in Africa and contributed significantly towards economic development on the continent,” he said.
South African companies have, among other things, provided foreign investment, created jobs, contributed to skills development, grown the tax revenues of host economies, provided access to loans and credit, facilitated technology transfer, driven intra regional trade, contributed to industrialisation and promoted corporate social responsibility.
But Soko conceded that, although most companies were engaged in good business practice and subscribed to international standards, there was merit in developing a code for South African firms operating abroad. He warned, however, that a code of conduct would be meaningless if it were implemented in a vacuum—outside a wider economic diplomacy strategy framework.
Soko said the situation in Africa today was markedly different from that in 1994. Most significantly, South African firms were rapidly losing market share in several African economies in the face of growing domestic and international competition.
The proposed business code would need to take into account these changing circumstances and function as a framework of support to South African businesses on the continent, rather than impeding them. “The code ought to be an enabler of, not a constraint on, South Africa’s economic engagement on the continent,” said Soko.
His views were echoed by others on the panel, which comprised Clive Tasker, Thamsanqa Ngwenya and Viola Manuel. Tasker, Standard Bank Africa’s chief executive, raised concerns about a code of conduct that placed extra regulatory burdens on South African companies operating in Africa.
“As a bank we are heavily regulated to behave in a certain way, so we would be in favour of a better regulatory environment that improves the behaviour and ethics of all players. But it should not put us on the back foot competitively,” he said.
Tasker also asked whether such a code would be enforceable in practice.
Ngwenya, acting chief director of the department of trade and industry’s Africa bilateral economic relations, questioned how the code would complement existing corporate governance codes to which many South African businesses already subscribe. He noted that the discussion would have been more appropriate in the immediate aftermath of South Africa’s democratic transition in 1994, which heralded its reintegration into the global economy.
Since then, South Africa’s foreign policy and commercial engagement on the continent have evolved and undergone significant refinement. According to Ngwenya, the code cannot be implemented in isolation and “one of the challenges is that one needs a national team of companies to spearhead it”. He also stated that, in understanding the role of South African firms on the continent, it was important to differentiate between large firms and the smaller traders.
Manuel, chief executive of the Cape Chamber of Commerce, called for a “practical” code of conduct and cautioned against regulatory overlaps that could hamper growth. The chamber aims to be the pan-African driver of good business governance and Manuel proposed taking the code of conduct to the correct platform—which, according to her, is the African Union.
“The code of conduct should reside with organised business, although it should be informed by academia and the government,” said Manuel. There needed to be stronger positive thinking in all debates and portfolio committees had to be pushed to produce well-considered critiques and proposals.
Like Ngwenya, she also pointed out that smaller businesses needed to be consulted as well. It is clear that there is a need for careful consideration of the potential implications of creating a code to guide the operations of South African businesses on the African continent—not least, the possible impact that such a code would have on the competitiveness of South African firms in increasingly contested African markets.
Moreover, there is a pressing need to develop greater clarity around South Africa’s foreign policy objectives and ensure that these are more closely aligned to the country’s economic diplomacy efforts. In the context of a fiercely contested global marketplace, any measures to regulate the conduct of South African businesses on the continent must form part of a broader strategy to assist them to compete effectively in Africa and in other strategic markets.
Gareth Coetzee writes for the University of Cape Town’s Graduate School of Business