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SA’s future not as bleak as you think, but we need growth over redistribution

27 January 2021 PSG

South Africans often forget how resilient we are, what depths of despair we have been through, and how well we still live relatively speaking, said Jakkie Cilliers, Head of African Futures & Innovation at the Institute for Security Studies, speaking at the latest PSG Think Big webinar.

2021 is hardly off to an optimistic start, and for many feels more like a continuation of 2020 than a brand new year, but Cilliers believes there are some hopeful themes emerging. There are signs of an agreement on a way forward for civil servant and government wages. There are positive indicators at Eskom, despite loadshedding. Things are moving in the right direction with the Zondo Enquiry and the National Prosecuting Authority.

How can we grow the economy?

“Whether you like it or not, right now only the private sector can make the South African economy grow,” said Cilliers.

“In the past, government has consistently prioritised redistribution over growth, and given our country’s history of apartheid, redistribution is really important. We have a massive social grant system, which does a huge amount of good for SA, but unfortunately redistribution cannot get us out of the hole we are in from Covid-19. Only economic growth can do that.”

Cilliers believes that primarily, we need an agreement on the future of SA; a social compact, or a common vision that all stakeholders are committed to. Sounds simple enough but it is something we have not yet been able to achieve, except perhaps during Thabo Mbeki’s GEAR programme.

“Government and business are often at odds, though President Ramaphosa is better at working with the private sector. He has to undo the damage that was done by Jacob Zuma though, and that is a long process,” said Cilliers.

Cilliers believes that the devastating impact of Covid-19 may be the catalyst South Africa needs to bring about the coherent vision and commitment we need for growth.

“The reason why South Africa worked during the GEAR programme was because Thabo Mbeki didn’t have a list of 20 priorities, he had three or four. And that’s what we need now. We need to get the fiscal situation under control and move forward on that basis. If we can do that then in 20 or 30 years we could double our GDP per capita,” said Cilliers.

Confidence can make a difference

Cilliers believes that a bit of confidence buy-in from South Africans themselves is absolutely critical if we hope to turn things around for the future.

“Without confidence from the South African community and businesses, we will never be able to attract the level of foreign direct investment we need,” said Cilliers, adding that the international community will invest in South Africa when South Africa invests in itself first.

He also believes it is crucial that we turn around the trend of skilled outward migration and investment.

“Every South African I meet who has money or skills is trying to emigrate. We have to turn that around and start enticing South Africans with skills and capital who are living abroad to return to SA. We also need to turn around the trend of local businesses investing abroad and get them investing in South Africa instead,” said Cilliers.

This will require a fundamental mindset change in government departments such as Home Affairs and Dirco, and will require far greater coherence between government and the private sector.

African continent holds huge potential

The African Continental Free Trade Agreement holds the most potential for growth we’ve ever seen, and that is where our future lies.

“South Africa needs to grow into Africa and benefit from one of the largest markets internationally and the only one where we have a competitive advantage,” said Cilliers.

“We need to become the engine of Southern Africa. We are the industrial hub. We have the money, we have the technology, and we have the high end services that can help the rest of the continent. If we can build on that successfully then SA in 10 or 20 years will be a very different place.”

“We need to change the negative narrative around Africa, and we can change that by changing our own narratives,” said Cilliers. “Those negative storylines that we share with each other about how bad it is and how bad crime is aren’t helpful. We need to get behind a vision that says South Africa can be remarkable place 10, 20, 30 years from now.”

PSG’s Vilola Gounden, who hosted the webinar, concluded that even though current times seem very uncertain, the outlook for South Africa and Africa as a whole looks bright if we are able to successfully implement the necessary initiatives and a spirit of Ubuntu across the continent.

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