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6 reasons SA’s future is suddenly a lot brighter

From despair to hope in just one month.

I’m not a fear-merchant or even a bear, despite what you may think. Those close to me will probably describe me as a ‘realist’ (I hope). It’s been nothing short of incredible how the mood of an entire country – and globe – has shifted from staring down the abyss of more plundering, corruption and tenderpreneurship (with a sliding currency), to one of hope. Make no mistake, this is not a cheerleading column for president-in-waiting Cyril Ramaphosa. And, sure, there are still enormous problems to overcome in the short term, chiefly that there is no more money (as I pointed out in Winter is here). But, there are a number of signs emerging daily that we have turned the corner.

  1. Scale and seriousness of the Eskom crisis is finally accepted
  2. Government (and the ANC) seem to have finally realised how serious the Eskom crisis is, and how close the utility is to collapse: its ability to raise required funding has deteriorated substantially in the past six months, it received a far smaller (and more realistic) tariff increase from the National Energy Regulator of South Africa than expected, it seems to seriously think that the CEO position can be treated as a merry-go-round, and there are reports that it is close to running out of cash. Stuart Theobald brilliantly articulated the scale of the Eskom problem in Monday’s Business Day: its balance sheet is 42 times the size of SAA and 146 times the size of the SABC. Rescuing it from collapse is Ramaphosa’s first and largest priority.

    A board of substance has finally been appointed (despite/in spite of Lynne Brown’s ‘best efforts’) and the new leadership of chairman Jabu Mabuza and highly-regarded interim CEO Phakamani Hadebe is exactly what is needed. This won’t magically solve the crisis – some tough calls remain – but it’s a solid start.

     
  3. Accountability, finally!
  4. This has been a watershed week for South Africa’s fledgling democracy. After years of corrupt politicians and executives at state-owned enterprises showing nothing but utter contempt for ordinary citizens, they are finally being held to account. The inquiry into Sassa and the social grants crisis, the Life Esidimeni tragedy and the parliamentary inquiry into Eskom are shining lights into previously dark corners. That we have officials – including sitting cabinet ministers – being held accountable is extraordinary, simply because this did not happen during most of the Zuma administration. The forthcoming commission of inquiry into state capture ought to be a watershed moment for our country (and, one hopes that there’ll soon be an inquiry into the Cape Town water crisis too).

  5. Real structural reforms are coming
  6. A statement following the meeting between the International Monetary Fund managing director Christine Lagarde and Deputy President Ramaphosa in Davos tells you all you need to know about what’s coming: “We concurred that long-standing structural challenges continue to weigh on growth in South Africa. We consequently agreed that bold and timely reforms are needed to create an environment conducive to job creation and less inequality.”

    Recent initiatives to improve governance and strengthen public institutions are steps in the right direction. These efforts need to be sustained and be complemented both by fiscal policies that stabilise debt at manageable and sustainable levels, and by the reestablishment of business confidence to make the economy more productive and competitive.”

    These reforms will take time to implement (probably most of Ramaphosa’s first term), but for the first time in a decade, these aren’t hollow words. More importantly, it’s critical that these issues are addressed or else we won’t have much of a country in a decade’s time.

  7. A stronger rand
  8. On Wednesday, the rand broke through the key psychological barrier of R12 to the dollar – the first time it had traded below this level since April 2015. This is clear evidence of foreign demand for our assets and currency (sure, a weaker dollar helps!). A stronger rand means we are all wealthier (and we all feel wealthier), this filters through into the price of practically everything, from basic commodities (maize/bread) to imported iPhones, and petrol.

  9. Mugabe is gone and Zimbabwe will boom
  10. Nothing proves the Lenin quote – ‘There are decades where nothing happens; and there are weeks where decades happen.’ – more than the events in Zimbabwe in November. Many people (myself included) believed that Robert Mugabe would only leave office upon on his death. A peaceful transition to a new leader was practically unthinkable. Yet, here we have a new president in Emmerson Mnangagwa that is focused on a single thing only: getting the economy growing again. There will be mass privatisation of most state-owned enterprises (nearly all of which are loss-making), government looks to be retreating from its near stranglehold on the mining sector. The nation is “open for business” and soon the trickle of foreign investment (which had all but dried up over the past few decades) will be a flood. A stable and growing neighbour to our north is important to South Africa – don’t discount the halo effect that a booming Zim will have on us. And, add to this the already significant opportunities for our corporates and medium-sized businesses….

  11. Foreign investors are piling in
  12. In an interview with Bloomberg Television at the World Economic Forum Annual Meeting in Davos, Reserve Bank Governor Lesetja Kganyago was blunt about the turnaround in the interest and appetite of foreign investors in the country: “… last year at this time in Davos, I was trying to look for people to talk to and convince that South Africa is worth investing in. This year, I having a lot of people come to me saying, ‘Hey, it looks like a lot of things are changing in South Africa. Where are the opportunities?” I am saying to you South Africa is reasserting itself. And not just as an investment opportunity but as a destination for investment.”

    This didn’t suddenly start in Davos this week (although the 180 in how government is widely publicising every interview, every photo opportunity, every TV appearance on social media and in the press is noticeable from the previously ultra low-key delegations ‘led’ by Zuma). Foreigners have come roaring back into our market since the outcome of the ANC’s National Conference in December. Bloomberg reports that “average daily flows into Johannesburg-traded shares are running at the highest rate since at least 1997”.

    Goldman’s recent report identifying South Africa as the “big emerging market story” of 2018 adds fuel to the fire. Confidence breeds confidence. This is not the end though, if market and currency movements in Brazil over the past few years are any indication (not to mention the boost if a more ‘experienced’ and slimmed-down cabinet is appointed)…

— eNCA (@eNCA) January 25, 2018

All of these factors together boil down to confidence. The end of our lost decade under Jacob Zuma is near. It’s beginning to look likely that we will avoid a full downgrade of our sovereign debt by the skin of our teeth.

Every single person I interact with, from large corporates down to small businesses, is positive and confident; a complete about-turn from just over a month ago. Our best days are ahead of us.

 Hilton Tarrant works at immedia. He can still be contacted at hilton@moneyweb.co.za.

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Here are 3 reasons why SA’s future is still not bright enough:

1) The ANC is still in power
2) The ANC is still the corruption party that put Zuma in power and keeps him there
3) The cancer is still deeply rooted in the SOE’s and financial systems

Yes indeed Hilton. We would all love to feel the warmth of the “winds of change”- BUT

A few more stark facts of why this is premature;

1. A huge Fiscal and Budget deficit.
2. 90 % of Municipalities are bankrupt – and have huge debts to service.
3. Eskom’s debt – which has to be serviced by the taxpayer.
4. The political opposition to the ANC are in disarray – the DA cant agree on anything and the EFF are a circus! They are almost as bad as the ANC.
5. Cyril may or may not deliver SONA. Ace says Jacob will – this will be a telling moment as to whether Cyril has any real power within the ruling party. As it is his inner circle is littered with liabilities – Ace, Jessie, David ? ? ?

You’ll note the Hawks have raided the office of the Free State Premier a short while ago…

As Hilton reports “the office of the Free State Premier” was raided this morning and I think that if anything is going to be the mouse that pushes the rock over the edge of the hill which starts a landslide then this is it – provided the investigation is rigorously handled with absolutely no pandering to the friends of friends.

The connection between the Guptas, the Vrede Dairy Farm project and the funds from the “Free State’s agricultural department – under then MEC Mosebenzi Zwane – paid R220 million to the Guptas in what the AFU calls a “scheme designed to defraud and steal monies from the department” is the paper trail which should without doubt put these players behind bars and from then on the dominos will begin to fall.
https://www.news24.com/SouthAfrica/News/breaking-npa-freezes-r220m-land-linked-to-gupta-farm-20180120

Al Capone was finally jailed not for murder but for tax evasion.

It’s definitely a positive sign, but lets be realistic…all this suggests that the RATE of getting worse MIGHT BE lessening. If things go well, maybe we’ll stop getting worse, and start getting better. But its still a long way from being “good”.

That said, it has to start somewhere.

Excellent; gtech has hit the nail on the head.

At best a small, small step in the right direction. Even if the many billions are recovered where will they be allocated?

Bailout Eskom, SABC, SAA then:

FREE education

FREE medical

FREE housing

FREE water

FREE electricity

FREE land

FREE entitlement forever.

Oops, all the above are not sustainable and once the recovered billions are spent what then?

All the above will continue the death spiral albeit at a slower pace. There is zero evidence that the forever disadvantaged have any meaningful capacity to do anything of consequence. 60 years of uhuru have proved this plus more. They are now escaping to Europe and the UK and Israel.

So what will trigger the beginning of a very, very slow and painful recovery?

A meaningful change in SA fortunes will only occur with the 100% dismantling of ALL race based legislation. When the outstretched, cupped hands of Africa realise that they will have to have a radical change of heart, then and only then a light at the end of the tunnel.

For now, there has only been talks besides the normal and expected changes in political stand-offs.

I shall return from my realm of scepticism, once I see ALL parties taking responsibility for what they’ve been employed for and at the same time talk less and do more.

…agree, IMPLEMENTATION always seems to be the main challenge. (Sadly, I’ve now witnessed enough since ’94 to draw my own conclusions)

Thanks Hilton

I share your optimism – albeit very cautious – positive feedback in London as well. It is as if the world wants SA to succeed – but I can just imagine what this positive article will do to the gentleman down under who loves to see SA flounder.

Will reserve my other comment until he has commented – but perhaps he is drowning his sorrows in some cheap AUS wine.

Six reasons? Nah….!!

The REAL reason things are now BRIGHTER in SA, is that we’re in our SUMMER-season cycle: the sun rises earlier & sets later in the eve, i.e. there’s longer daily hours of “brightness”!

(Other reasons fails me. The mentality of the majority voter has not changed, and politicians will continue to succumb to populist pressure in this country. Rand-hedge while the ZAR is stronger.)

I will say this: 2018 certainly looks a lot better than 2017! I was watching the BBC interviewing Emmerson Mnangagwa this morning on Hard Talk and I thought to myself. The Zimbabwean head of state being interviewed by the BBC. Times have certainly changed… I look forward to both South Africa and Zimbabwe heading away from the darkness of their previous regimes and towards the light. Of course, there is enormous mountains to climb still and hopefully those who looted will be held to account and punished for their crimes but we are definitely heading in the right direction.

Cyril is next on Hard Talk …. see their schedule.

Do not underestimate how much a Goldman Sachs analyst report can do. That flow of money is so huge, that it can swing the currency purely on perceptions.

A lot brighter indeed. Just need a new push on renewable energy and water infrastructure. The looming crisis in Cape town needs first and foremost attention when Ramaphosa dusts off his ski boots from Davos.

Seeing those two men in the photo fills me with joy and hope for the future of this great country.

I agree. A number of reasons to be optimistic. And not to mention Zim’s president’s remarks that farm ownership should not be profiled by race as the concept is outdated. It is a stretch of the imagination but possible to think that appointing employees and awarding tenders should also not be racially profiled – and that is when we will become competitive again, employment will increase and the economy will grow.

Structural reforms. which reforms? Improve business confidence. how?? Mugabe is gone , Zimbabwe will boom. really? So all the property lost/destroyed should be forgotten and we should just blindly invest more capital. What guarantee of no future expropriations? Stronger rand. Will not last, that’s a guarantee.Look at long term trend. foreigners buying stocks.it benefits existing shareholders. FDI is what we really looking for.

I call Cyril a “Bubble”, why? so far all setting up his own agendas without making enemies inside ANC(unity),unfortunately the ANC and the supporters(voters)have proven that its about the ANC, and when Cyril enters his “oval”, the “demand” and “promises” will burst this bubble,…again.

Cyril is the plaster in the short term. Make hay whilst the sun shines.

I really don’t understand what people have against free education – granted – it is not viable to provide free tertiary education to everyone at the moment but at least deliver quality, free primary and secondary schooling.
Don’t you think it will have a positive effect on the economy, reduce unemployment, etc.
As it is we are sitting with a population receiving sub-standard schooling, a bunch of demotivated, low self-esteem dropouts eager to grab any scraps (grants etc).
I’m 85% convinced that lowering the standard of education has been a deliberate ploy by the ruling party to allow them to keep winning elections.
Surely after years of Bantu education, THE FIRST THING a reasonable person would do is to provide the best education to the majority who did not have access.
Yes the country is mostly still crap but just look what the possibility of some change has done to economy.

I’m not sure what my point is – I guess you can either complain about the ANC and moan about everything / leave the country / or try and be a mentor.
Nobody said this would be easy, but this is our home and we have to put in some hard work for the sins of our fathers

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