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We can keep South Africa in the Premier League

22 May 2009 Gareth Stokes
Gareth Stokes, FAnews Online Editor

Gareth Stokes, FAnews Online Editor

It’s extremely difficult to predict the future. Try as we might we can only come up with three certainties: death, taxes and change. If you want to know what South Africa’s future looks like you’ll have to dabble in probabilities and scenarios. And the be

In the early 1980s Clem established a scenario planning department at Anglo American. This department formulated the extremely popular ‘High Road’ and ‘Low Road’ scenarios for South Africa through the 1990s. Clem has authored more than 14 books since 1987 and makes regular appearances on the corporate speaking circuit. In 2006 he was “voted by leading South African CEOs as the speaker who has made the most significant contribution to, and impact on, best practice and business in South Africa!” Clem is still deeply involved in scenario planning in South Africa and abroad. So we were delighted to attend his 14 May 2009 presentation at a Futuregrowth Asset Management function held at Melrose Place, Johannesburg.

Do you know where you’re going to?

Although Clem dedicated a significant portion of his talk to the unfolding global economic crisis, we were more interested in his recent paper (co-authored with one of South Africa’s leading strategists, Chantell Ilbury) and titled: The world and South Africa in the 2010s. Clem says there are three scenarios the country might progress through. And he uses the World Competitiveness Survey as one method to assess where the country finds itself at any given time.

The first scenario is called the Premier League ‘U-Turn’. South Africa has been in the Premier League of world economies since emerging from its first democratic elections in 1994. The aforementioned survey ranks us among the top 55 countries in the world. Clem describes South Africa as a ‘middle of the league’ country. But we suffered a bit of a performance shock in 2007 (when we fell 13 places from 37th to 50th) and 2008 (when we dropped two further places to the brink of relegation). Anyone living in the country is familiar with the reasons for this decline. Our rankings dropped over concerns about increasing mortality rates, crime induced emigration, crumbling infrastructure and uncompetitive industry. It’s a nasty list for any country to deal with. We’ve got HIV Aids, high levels of violent crime, Eskom’s 2008 load-shedding debacle and a number of industries on the rocks. Halting the slide is the ‘U-Turn’ Clem is holding thumbs for.

If the country fails to address these shortcomings, then the second scenario gets a look in. Clem calls this scenario “Relegation – the Second Division.” Countries in this zone are best described as “poor but peaceful,” says Clem. But it’s not a good place to be considering the ruling party’s commendable social agenda. Relegation would be a real blow to the ANC’s poverty alleviation goals because inward investment dries up and raising capital becomes increasingly difficult.

The worst scenario – which Clem assigns a very low probability to – is the so-called “Failed State.” This scenario plays out if violence enters the equation. There are a number of countries that already carry this terrible burden. One example is Somalia – a country ravaged by years of internal strife. Iraq and Pakistan can be lumped in the same category too.

The way forward

It shouldn’t be too difficult for South Africa to complete the ‘U-Turn’ described in the first scenario, says Clem. His advice to government is to focus on three areas. First they need to ensure that the new leadership is truly inclusive. Government must be at pains to accommodate the needs of the both the wealthy and the poor masses that voted it into power. The second step is to correct the weaknesses that have pushed the country to the brink of relegation. The best way to do this is to push management over ideology. We should strive to duplicate pockets of excellence (like SARS) across all public sector organisations and government departments across the country. And third, the country needs to build a dual economy, both inward and outward looking.

Clem assigns a 70% probability on the Premier League ‘U-Turn’ scenario and 30% to the Relegation scenario. The Failed State scenario hardly ranks due to the violence free elections held in South Africa in April. And he believes we can do more to ‘up’ our chances of making a comeback. “We should put small business right at the centre of government policy,” says Clem. He reckons the thousands of entrepreneurs and entrepreneurs-in-waiting are just as important as the giant corporations. Stimulating the economy could be as easy as providing easier access to capital to small business with potential. If we “create a continuous stairway from the informal sector to the formal sector,” says Clem, we’ll be well on the way to making a dent in the country’s massive unemployment number.

Editor’s thoughts:
The trouble with listening to Clem Sunter is he makes it all sound so easy. But if every person active in business in South Africa takes steps to boost economic activity we can make our country the jewel of the emerging world. Do you think South Africa has what it takes to play in the premier league? Add your comments below, or send them to gareth@fanews.co.za

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