SA is for the daring and the brave

Glacier by Sanlam and TIME recently held the fifth of their successful thought-leadership forums, [THE INSIDERS], at the Hilton Hotel in Durban. The panel - comprised of Sasfin director and deputy chairman David Shapiro, J&J Group co-founder and executive chairman Jayendra Naidoo, and Alec Hogg, founder and publisher of BizNews.com - debated and discussed key issues around the state of the nation, as well as the economic and political issues currently impacting the country. Despite the challenges facing us, the panel was unanimously upbeat about South Africa’s future.

Strike action and labour relations

Strikes in the platinum and manufacturing industries have taken their toll. Placing this in context though, Naidoo stated that although strike action is disruptive and a sign of declining relations, it is also part of normality. Wage negotiations take place every few years and are part of collective bargaining. According to Naidoo, the peace in management-worker relations during the period 1994 – 2004 is something not seen since 1922. We’re now experiencing something similar to the unrest of the 1980s.

Commenting on the effect on the markets, Shapiro said that investors today can invest anywhere in the world – and they have to decide on the best region to place their investments. There are some troubling factors on the JSE and we’re also seeing a weakening of the mining and manufacturing sectors. More and more companies on the JSE are seeking growth outside of South Africa – Invicta and Woolworths being just two examples.

The panel was in agreement that our country needs more flexibility in its labour laws and an increase in productivity. Naidoo stated that we haven’t seen much change in the labour laws over the last 20 years.

Interest rates, inflation and growth

Inflation is not demand-driven and can’t be contained. Shapiro stated that growth will be more difficult if we see a rise in interest rates. He stated that, globally, rates will remain low for longer. “It’s tough for fixed interest investors, but those in the markets will still make money,” he said.

“Our business sector punches above its weight globally,” he said. “Entrepreneurs ignore the headlines.”

Unemployment

Income inequality and unemployment are global themes and by no means unique to South Africa. But, we need to create 11 million jobs by 2030 to sustain a growing emerging middle class. “We’re not giving people hope,” said Hogg. “Previously, young employees would get an apprenticeship and learn a trade. But now, we’re not letting people into the market. A large part of the problem is that entrepreneurs are too scared to employ people,” he said. Shapiro agreed, stating that we need to adapt our situation to the coming trends and create fluid labour laws.

The coming decade

According to Hogg, something we can be proud of is that we’ve gone through the process of change. “Most countries and people don’t know how to change,” he said.

Shapiro agreed, but said that unfortunately we’ve lost a lot of investment ground and many investors have lost confidence in South Africa. “Political stability, anti-corruption laws, and a stable labour force – these are the issues that investors look at. We’re the best in terms of global corporate governance, but we’ve got work to do in other areas.”

Although our social issues cannot be avoided, Naidoo stated that South Africa has good businesses and long-term possibilities – but we need to manage risk well. “SA is for the daring and the brave,” he said.

Hogg was also optimistic about SA’s future, stating that “we’ll be surprised at the success of entrepreneurs in the future. South Africa will rise on the international wave.”

In closing, Shapiro declared himself a “raging bull”, believing that the bull market has only just begun. “The world is beginning to repair,” he said. “I have confidence in businessmen and their ability to create value. With the IT revolution worldwide, there are just so many opportunities for businesses to make money.”

For more information on Glacier by Sanlam’s panel discussions, hosted together with TIME, please visit www.glacier-events.co.za/insiders or follow us on Twitter: @GlacierBySanlam, #timeglacier