President Cyril Ramaphosa’s election had promised to be a watershed moment for South Africa. There was euphoria and expectation that our economy would become market- oriented and that there would be a large-scale focus on job creation.
Instead, the country’s focus has shifted to the internal struggle in the ANC with an eye on the 2019 elections. As we moved into the second quarter, the so-called “Ramaphoria” began to fade as companies were unable to use the positive sentiment to create new business and consumers started to lose confidence.
This disappointment was reflected in two important business measures. The Bureau of Economic Research Consumer Confidence Index dropped four points to 22 in the second quarter from 26 in the first quarter. The SA Chamber of Commerce and Industry’s trade activity index also dropped, sitting at 37 points in June, down from 40 in May.
President Ramaphosa faces no easy task in trying to undo a decade of mismanagement and looting. The damage caused by the previous regime is astronomical, with the latest revelations being R19,6-billion in irregular spending by Eskom. It appears that every day there is another revelation and it will only be addressed properly after the election.
Service delivery protests and labour strikes are expected to increase in the second half of the year. Hermanus, for instance, has already suffered almost R40-million in damage due to protests and in some instances demonstrations have completely brought regional economies to a standstill.
As if that were not enough, political uncertainty has all but paralysed consumers and businesses that are feeling the effects of a weak rand and rising fuel prices.
There is money for growth and expansion. According to the Centre for Competition, Regulation and Economic Activities of the University of Johannesburg, the JSE’s top 50 companies have R1.4-trillion available to spend but choose not to do so due to the ongoing economic and political uncertainty. This, despite the fact that tough times often offer the best investment opportunities.
Often organisations tend to focus too much on government and its actions instead of looking inwards and focusing on their own business’ survival and growth. This is leading to an increasing dependency on government when the focus should be on putting in the hard yards for oneself.
Obviously, perceptions and sentiment are very important but it is equally important to guard against excessive pessimism. At the end of the day, consumers determine the demand and expenditure in an economy. It is important that those in power understand this and
refrain from populist and anti-business rhetoric.
Government needs to support business by creating a climate conducive to growth and doing business. While it will not be easy, it is possible to revive the economy. There are many opportunities in the country and several reasons to be positive:
Ramaphosa meets his promises
In his State-of-the-Nation address, Ramaphposa made several commitments and an analysis shows that he has already delivered on about 70% of those promises.
Constitutional democracy is strong
The supervisory mechanisms of a constitutional democracy, such as the independence of the judicial system and media, are robust. There is public debate, like the Section 25 land reform public hearings.
State enterprises are being spring-cleaned
Executives with Gupta-links at Eskom, SAA, SA Express, Transnet and Denel have been removed and replaced with seemingly credible businessmen who have excellent qualifications and a strong work ethic.
Pragmatism at work
The landscape is changing and we are gradually finding a new, pragmatic way of doing things as we move from a free market to a more meaningful, controlled market of allocation.
Great opportunities in SA
South Africa has a lot to offer investors. We are one of the five fastest growing economies in Africa. SA is one of the most advanced developing countries in the world, but with the infrastructure of a typical industrial country. Our competitive financial sector, mineral wealth and scientific standards all contribute to making the country attractive.
Our history of willpower
South Africa has a past of “getting things done” such as the automotive industry and renewable energy sectors, which have been successfully established.
Pull up our socks
An old tale tells the story that a father once asked his son how to spell the word “money”. The boy responded by spelling m-o-n-e-y. To the son’s surprise, he received an instant reprimand from his dad, who explained that you spell money as follows: w-o-r-k. SA will do well to follow this wisdom on our journey to prosperity.