In this final newsletter of 2018, we reflect on a year filled to the brim with events and developments.
A year ago the leadership of the country and ruling party was not yet in the hands of President Cyril Ramaphosa. Our sovereign debt had been downgraded by two of the top three international credit rating agencies and the full impact of Steinhoff’s fall from grace was not yet clear.
Twelve months on, and it appears that in true South African style, local investors refused to be derailed by world events, economics or politics. Not even the pending legalisation of land expropriation could detract from the growing local investment market.
This sentiment is supported by statistics of collective investments for the third quarter, issued by the Association for Savings and Investments in South Africa (Asisa). South African equity portfolios recorded a robust net inflow of R16 billion for the year ended September 2018 and a net outflow of R20 billion from foreign portfolios.
This could also be an indication of renewed investor confidence in South Africa as seen during the successful South African Investment Conference and the Jobs Summit which followed in October 2018. Add to this the recently published GDP growth numbers which lifted the country out of recession and the silver lining shines even brighter.
Supporting the perception of growing optimism is a recent report by auditing firm PwC, entitled “Why South Africa, and why now? Forward-looking scenarios for the Ramaphosa presidency (2018 – 2022)”. It predicts a 75% probability of improved economic growth (exceeding the population growth rate) over the next five years.
The report argues that since President Ramaphosa took over leadership of the party and government, the time is right for investing in South Africa, for both domestic and international investors. It also assigns a high probability that the South African economy will be in a much healthier position by 2022, compared to the start of 2018.
Moreover, the A.T. Kearney FDI Confidence Index 2017 included South Africa on their list of 25 economies most likely to attract foreign investment during 2018–2020. It was the first time since 2014 that an African country appeared in the report, based on C-level executives from companies with annual revenues of $500 million or more.
As part of his New Deal revealed prior to his election, President Ramaphosa signalled that restoring confidence amongst investors was his immediate priority.
He indicated that this restoration required urgent measures to:
- achieve policy certainty,
- improve institutional stability,
- restore the credibility of the criminal justice system, and
- demonstrate the political will to turn around the economy.
The Investment Conference was also a necessary public relations exercise to reset investor sentiment in respect of South Africa after years of negativity. To a degree this was achieved, not only because of the pledges made, but also the fact that business and government came together to endorse South Africa as a desirable investment destination.
The Jobs Summit was held under the theme “United we create jobs” and brought government, business, labour and communities together to advance job creation. The different social role-players signed a framework agreement, designed to create an additional
275 000 job opportunities per year. This is over and above the jobs which would have been created in the economy without these interventions — on average about 300 000 a year.
These events were partner initiatives to the economic stimulus package and recovery plan recently unveiled by President Ramaphosa to ignite economic activity, restore investor confidence, prevent further job losses and create jobs.
As a South African company, Ecsponent passionately supports these sentiments and we will continue to play our role in achieving growth in our country and the rest of the continent. We shared this with attendees at our most recent national roadshow and we believe there are opportunities everywhere. All we need to do, is to apply some “out of the box” and creative thinking to unlock these opportunities.