The economic and political lowdown for adviser-client conversations
Every so often you need to set aside concerns about how AI, regulation and technology might impact your business or household, and pay attention to the external environment. As much frustration as this causes, you need to let some of the mainstream news interrupt your social media death-scrolling and figure out how the economy, geopolitics and the upcoming local government elections will play out.
The economy and politics ‘leg’
Momentum created a platform to explore some of today’s big-picture themes through a webinar titled ‘Financial advisers at the crossroads’. The economy and politics ‘leg’ of the discussion was dominated by the Middle East conflict, South Africa and United States (US) relations and the local government elections that will take place on 4 November 2026. Author and political commentator Justice Malala was on hand to reflect on how the 28 February US and Israeli military action against Iran might impact local consumers.
“The tail of this thing will continue for some time,” Malala said. And that means that financial advisers will have to prepare for “an extended period of the world being on edge.” In fact, most macroeconomic commentators are now grappling with how an extended closure of the Strait of Hormuz will transmit through the global economy. Rising inflation is one clear consequence of the closure of a shipping lane that used to move up to 20% of the world’s oil supply. For as long as this route remains closed, you and your clients will face higher-for-longer petrol and diesel prices and the inevitable pressure across the entire CPI measurement basket.
Newly elected Democratic Alliance (DA) Deputy Federal Chairperson Cilliers Brink was asked about the drama playing out on the geopolitical stage. His first comment was that South Africa was a “taker of the consequences” insofar as energy prices and supply chain constraints consequent to the Middle East conflict were concerned. The country can do little about the conflict; but we can work on improving relations with the US. “I hope that our policymakers will uphold our national interest [by focussing on] what is good for South Africa [over] what is ideologically attractive,” Brink said.
This is not a Trump issue
The question is whether the current South African ambassador to the US, Roelf Meyer, can rebuild the relationship. Brink suggested giving Meyer some leeway to see what he might achieve, saying that he brought a lot of experience to the role. It is also worth noting that the country has long-standing issues with the US that precede President Donald Trump, and that the relationship will have to be rebuilt through the current term, and into the next, whether the new president is a Democrat or a Republican.
Commenting more broadly on SA-US relations, Malala was critical of how South African diplomats had prepared for and handled the recent White House visit. “If the relationship had been handled better by our diplomats, then perhaps it would not have descended into the absolute disaster that it became,” he said. He reminded the audience that the US was a huge investor in South Africa, and that stakeholders should work hard to ensure “a bit more respect for the South African diplomatic effort.”
The conversation turned to the upcoming local government elections, with Brink asked to explain how one municipality could prosper and another fail despite being neighbours. Gauteng’s best-performing municipality, Midvaal, has received 12 consecutive clean audits; then there is Emfuleni, which has not. “Midvaal has a professional culture where people are appointed based on their technocratic expertise, and you can see it when you visit the municipality,” Brink said. It also helps that the municipality has enjoyed two decades of single-party leadership under the DA.
Politically agnostic appointments
The key, it seems, is to make politically agnostic appointments to key portfolios responsible for electricity, roads and water. “The Midvaal mayor is able to promote and recruit folks who want to stand outside of politics; and that is what is so different from the rest of the country,” Brink said. Another clear differentiator is that Midvaal has prioritised investment in infrastructure over spending on salaries and other operational expenses.
One of the major challenges facing South Africa following the local government elections is whether the new coalition councils can make the tough decisions needed to reprioritise spending. A wonderful soundbite from this discussion came courtesy of Brink, who framed one of the country’s problems as that of “chaotic coalitions”. He argued that there was a very good case to be made for elected leaders to rise above politics. The solution is to forget about ideology and focus on service delivery.
Malala lamented the country’s abysmal investment track record, pointing to the current 14% of GDP being put back into the economy versus the 30% target proposed in the National Development Plan. An interesting comparison of the cities of Cape Town and Tshwane followed. Back in 2006, the former’s capital budget was around R2.1 billion versus Tshwane’s R1.6 billion. By 2025/26, Cape Town’s capital budget was close to R13 billion, while Tshwane’s approved capital budget was R2.4 billion, later adjusted to more than R2.7 billion. “Your capital budget is the money that you use to build infrastructure, to put stuff on the ground,” Brink said.
The Rudy Giuliani method
The upside is that you live in a democracy where you can decide who your leaders are. And there are some quick wins that councils might pursue post the 4 November elections. Brink offered one example that aligns with the Rudy Giuliani method, suggesting the repurposing of the 4 000-strong Tshwane Metro Police Department. Giuliani, who was mayor of New York City from 1994 to 2001, became known for a tough ‘law and order’ stance that was framed as quality-of-life enforcement, focussing on cleaning up the town square and fixing broken windows etc.
“Imagine using that force to make sure that people do not dump illegally and that public spaces are kept clean,” Brink said. “That is a quick win, but you have to sustain it by making changes in management.” Financial advisers and their clients were encouraged to exercise their vote in November, and ensure the councils that emerge reflect the people’s wishes. Brink offered a straightforward assessment, saying that “in a democracy, decisions are made by the members of the club that take up the option to register to vote” and vote. He closed by applauding South Africa as a wonderful place with tremendous potential.
Being good citizens
Malala also put in a word for good citizenship, saying he loved returning home to participate in local elections. “It is absolutely crucial for anyone who watches [or reads] this to go out and vote,” Malala concluded. Exercising your vote is not about getting the mayor you want; but about participating in the broader conversation about your prospects and those of future generations.
The parting message to financial advisers, and through them to their clients, is that political damage can be repaired. It will take a concerted effort, but it is possible, over time, to rebuild local municipalities and refocus their management teams on infrastructure development, infrastructure maintenance and service delivery. And at the higher level, the fragile SA-US relationship can be repaired too.
Writer’s thoughts:
The economy and politics are not always ‘top of mind’ when navigating your clients through today’s insurance and investment landscape, but it helps to keep up to date with developments. Agree or disagree? And how often does the economy or politics enter your adviser-client discussions? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].
