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Message to South Africans: The good times will be back shortly

Things are getting better, ever so slowly.

Listening to the daily corruption report from the Commission of Inquiry into State Capture one can easily miss some shards of optimism glinting through the cloud cover.

FTI Consulting’s The future of South Africa report released this week has some encouraging words from CEOs such as Discovery’s Adrian Gore and Goldman Sachs’s sub-Saharan Africa CEO Colin Coleman, who breaks rank with many of his peers in forecasting reasonably strong growth of 1.9% in 2019 and 2.8% by 2021.

Coleman says a good target for SA is to get back to 3% growth within three to four years. “During the Thabo Mbeki years, we were growing at 4% and during the Jacob Zuma years, at 1.5%. Over the combined period we had an average 3% growth rate.”

Gore introduces some much-needed optimism into the picture, pointing out that life in SA gets better with time. “Our GDP is 2.5 times the size it was in 1994 on a dollar basis; formal housing has increased by 131% from 1996 to 2016; new HIV infections are down 60% from 1999-2016; and the murder rate per 100 000 is down 50% from 1994 to 2017.”

South Africans tend to wallow in gloom, which leads them to make erroneous predictions. In a recent survey involving 28 countries, South Africans gave the least accurate guesses on global and national development figures.

South Africans move on quickly

Gore points out that South Africans tend to obsess over the problems of the day and move on quickly to the next one: HIV, crime, labour unrest, the Eskom crisis, state capture and land expropriation. “It is precisely because these problems change that they cannot be intractable,” he says. “I’m not minimising these problems. They are tragic and need to be solved. I’m making the point that we have the ability to gain traction on these issues, albeit at times in a messy way.”

Claire Lawrie, senior MD at FTI Consulting, points out that SA tends to mirror global economic cycles and is currently lagging global growth rates. A key sign of improved outlook is the rise in foreign direct investment, which last year touched 2.25% of GDP.

Poverty rates are down over the last decade, though 14 million people are still unable to afford basic necessities.

Lumkile Mondi, Wits University lecturer and economist, says SA is headed for a difficult period of low growth akin to the 1988-1994 period preceding the country’s first democratic elections. The growth of the black middle class was a result of state intervention and preferential procurement for black people. We first need to accept that we are in a crisis before we can get out of it, he says. “We’re going to see more violence as claims having to do with the past come up. There [are] no consequences for breaking the law in SA. We need to reclaim our democracy.

‘Everything seems to be about BEE’

“SA has too many competing interests, and everything seems to be about BEE.” He cited the example of a much-needed Highlands Water Project phase that was held up by the relevant minister because there were not enough BEE participants.

Investec group economist Annabel Bishop agreed that SA is going to have to go through a period of repair, similar to 1994, when it took five years to fix national finances. SA has yet to benefit from the upswing in commodity prices, in large part because of higher energy and deep-level mining costs.

Dr Rod Crompton, director of the Energy Leadership Centre at Wits University, says several transformations are happening simultaneously, including deindustrialisation and IT modernisation.

“Only organised business can save the country,” says Crompton. “It needs to come out from behind the parapet and play its part.”

One sector to watch as an engine of growth is the gas and petroleum sector following the massive gas discovery by oil company Total off the SA coast. The centre of power in energy will shift from the state to the private sector, and this will undermine the business model of municipalities which generate revenue from electricity sales.

For a new democracy, SA’s public sector swallows 16.7% of GDP, well above that of other Brics countries and on a par with Sweden. “The public sector contributes 16.7% to GDP and 16.3% to employment, but takes a 35% share of South Africa’s total wage bill. This is a strain on public finances and reigning it in will be the litmus test of whether the government is taken seriously on sound economic management. There is a growing public perception that the public sector does not provide value for money for the services delivered,” says the report.

Bishop says business confidence is at levels previously seen during the global recession in 2009. SA risks credit rating downgrades on the weakness of government and state-owned company finances. “The private corporate sector has been increasingly crowded out by the substantial fiscal expansion of the past 10 years, as government debt has escalated rapidly, the budget deficit has widened and government expenditure consistently exceeds revenue.”

FTI Consulting suggests five enablers of growth:

  • Creating policy certainty
  • Addressing the skills mismatch between what exists and what is needed in a technological economy
  • Re-industrialising the economy
  • Improving investment attractiveness, and
  • Ensuring sustainable energy supply.

 

Annual GDP growth, SA and the world

Source: FTI Consulting, World Bank

 

South African GDP growth performance

Source: FTI Consulting, Statistics SA

 

Gini coefficient (the higher the score, the greater the inequality)

Source: FTI Consulting, World Bank

 

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COMMENTS   55

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The good times are permanent for corrupt ANC politicians and political gangstas and taxi thugs.

The good times will return when the thieves are in jail after giving back the money the stole.

Well the problem with this is that we then have to pay for 100 000 more people’s upkeep & needs in jail, more jails, more taxpayers money. On the same topic why not use inmates to do labour intensive work and in doing so they could accumulate some resources when one day they get released, in doing so they not forced back into crime because they have nothing.

@Keminsky88 I have a huge problem with that. It sounds like a good idea but then you are essentially punishing someone on the outside and is now without a job.

I think that there need to be a multiprong solution.
Prison Farms – they can ensure that their is food for blue collar workers across the country.

Keminsky88 I like your thinking. lets get Zuma and cronies working on the chain gang. they can build roads, prisons and power stations.

@Colson, I see that someone expropriated 98% of you “likes”. I believe it may be the obscure has-been called Ace Magashule. He needs all the likes he can gather right now….on the other hand, the Free State youth league are also contenders.

Without compensation as well!

I will bet Ciaran Ryan nay amount he wished, at an odds of one hundred to one, that ten years from now – SA will be even worse off than today.

Eg,

The rand will basically be worthless – you will pay around thirty rand per US dollar.

Most South Africans will be prisoners of a third world economic concentration camp, much like North Korea, unable to afford to escape.

A national electricity grid will be a distant memory and young children will not know the meaning. Only people who can generate their own electricity, will have it, iow – only those that pay will get it; and trust me – they will PAY; as fuel will cost around R50 per liter.

There will be no functioning policing – only state sponsored ‘highwaymen’ (in traffic police uniforms) will brazenly harass the few individuals that can travel the dilapidated roads (it will actually be safer to drive next to what was once tarred roads) – to extort de facto bribes from them (masquerading as ‘traffic fines’).

Etc…

With negative thoughts like this you will win. Why should it turn out that way? Zambia Malawi and many other African countries haven’t turned out that way.
Zimbabwe and Mozambique has but then again look who ruled the countries. SA under Zuma would have gone that way too BUT under Ramaphosa it can only be different.
If you really feel that strong James Morley then why don’t you leave to better lands. If we don’t stand together and build together then yes the country will go to the dogs.

Farmers know that the basis of success is to nurture and protect their source of economic activity. To be fertile, the livestock must be healthy, clean, well-fed and protected against parasites and predators.

The ANC is the bankrupt farmer. The 5% of the population who drives the economic activity and generates taxable income, is in a terrible state. The ANC unleashed a host of parasites and predators on the source of income. SARS, Eskom and rates and taxes at the municipal level are the sucking tentacles of the parasite. The emaciated and anaemic taxpayer has to fend off predators in the form of state capture and rampant crime. Some of the economically active individuals have fled from the farm, while the rest are barely surviving.

The management style of the ANC explains why land reform is a total disaster. The neglect of animals on the farm of the chairperson of the National Council of Provinces set the example for the way the government treats its economically active citizens. Government protects the parasites and predators and neglects and abandons the source of income.

The manager of this farm called South Africa is utterly incompetent and a total disgrace. No farm can survive such a criminally negligent manager. If you want to save the farm from total collapse, you will have to fire the manager and appoint a competent person with skill, experience and a favourable track record.

Good analogy. Ja, the fox (ANC) has been put in charge of the hen house (South Africa) it seems.

Brilliant analogy, Sensei! Always fun to read how you put economic aspects into a different, and unique perspective 😉

See what this ANC party did to the Estina Dairy Farm, or at least condoned it. Now they want to run a land reform campaign?

@ Sensei…cant help but apply your analogy here to one of Orwell’s finest…: “All animals are equal, but………”

I’ll let the well educated fill in the rest

😉

Very true and I believe that while there are many, many solutions to SA’s problems, most are simple, none are easy. But reality is that the ANC is not at all interested or focused on solutions, growth, a better life for all, non racism, equality, freedom; all the buzz words it loves to spout. The ANC interest is self enrichment front, middle and centre.

So we have a disconnect. Puff pieces will not change this.

My English comprehension is still fairly rock solid despite leaving school back in 1963 and to me this article says the total opposite of what the author/journalist is alluding to in the headline….In fact I see it as yet further evidence that in the coming 3 years SA is just getting deeper and deeper into the financial mire.
How can the writer possibly think things are looking brighter when more than a third of the national wage bill is being paid by TAXPAYERS who make up about, at best, only 3% of the population?
In conclusion, here’s my personal in-your-face party pooper for SA’s future: Until EVERY single electricity consumer/business pays IN FULL for his/her electricity consumption we simply cannot prosper, EVAH!

Exactly my thoughts. The article is full of bad news, yet the heading says something completely different. Its even worse when you consider that the one positive (GDP growth) is entirely due to inflation, which means you aren’t growing. Also, all suggested enablers are looong term, which means no ‘good times’ around the corner. I’ve been accused of being negative, but I tell you what, having read this article, I’m surely not encouraged to change my mind.

@Davebee: Perhaps a bit of irony / sarcasm in the headline? Intentional or sub-conscious?

Mr Coleman ( the art collecting specialist) from that fine firm Goldman Sachs called Ramaphoria totally incorrectly. GS has been so wrong due to the questionable quality of its SA leadership that their view has to be disregarded.

As for Discovery, Mr Gore s business is under colossal threat from NHI-thus his desperate attempts to diversify into banking( good luck-Capitec runs a very good shop and gets bigger and better daily). Accordingly his sycophantic approach to the ANC has to be ignored as lacking credibility and substance. ( our population was about 20 million less so GDP per capita is very far from 2,5 times!!)

Mr Mondi -a capable and objective economist-gives a more rational and substantiated view based on facts not desperation( Gore) or hot air( Coleman). Same as Miss Bishop-more objective.

With 17 million people on basic grants, the middle class created through government jobs, hostile unions, low quality education, and wholesale corruption, growth simply cannot happen. ( The odd car dealer investing USd200m is not going to turn things around dear Cyril!!)

I’m glad someone is actively trying to fix the issues we have… oh wait, some good PR from some billionaires, trying to save their wealth generation empires doesnt actually solve the fact we have a mass of people wanting to expropriate and steal everything… eish

Discovery’s Adrian Gore will sing a different tune when the Health Minister eats into his profits with the implementation of NHI

I don’t know. As with the small pharmacy destruction; opportunity is around. Just maybe Mr Gore sees that NHI will need service providers and administrators and he is really good at making money out of this. Morality aside of course.

Ryan, you should write children’s books.

Yes, those ones which have dodgy moral stories and are complete fabrications of reality

How does the Gini coefficient work? if there are 100 Zillionaires, 5 million middle class on the border of poverty and 50 million in poverty, does it mean you end up with the second highest coefficient. Is there any weighting that takes out the effect stolen taxes?

Not necessary for me to comment. The preceding comments say it all.
This article reminded me of my Sub A Enid Blyton books.

And there . . . I thought this was all about ” PAY BACK THE MONEY”

Clearly the writer is living in a dream world. South Africa is gone people. Move out if you can while you can. It will NEVER get better

It will get better…. It was broken, because we changed regimes without an all out conflict… regime changes through dialogue is just cosmetic. We need to die, for peoples of this country to value their freedom. What kind of freedom we have here, what a farce. America had its share of blood, England did for centuries, France did, Germany etc,etc… South Africa what we have is just a recipe for disaster… after we do what’s natural and historically acceptable then we will see real change.

The refusal to take responsibility for themselves, the toxic combination of ignorance and arrogance, combined with the collectivist mindset and socialist policies create an environment that can only be corrected by what Bastiat calls “the terrible lessons of catastrophe”.

This lesson will come in the shape of hyperinflation of the currency and the premature death of 20 million people. Those who depend on government-subsidized antibiotics, insulin and Aids medication will die within 12 months of the onset of runaway devaluation. Simply look at Zim and Venezuela as proof for this statement. The death of 20 million people is totally preventable, but under ANC rule, it is a virtual certainty.

Good times will be back now-now…now-now HAHHAHHAAHAHAHHAHAAHH

Shortly? You mean after all these protests that have kicked off dies down?

Or shortly as in now now?

Until those who thrive on corruption and thuggery are removed from the echelons of power, nothing will change.

Good times for who ? Honest, law abiding, taxpaying citizens or low life criminal thugs ? It is currently good times for one of these categories already.

This is like the Allan Gray radio advert: “Is your money ready yet? ….. long pause ….. No. And now? ….. long pause …. not yet ….. blah blah …. investing takes time”

A looooong time in which time the managers take their fees and hope for the best because SA hangs on the tails of the global economy and especially the US.

Yeah ,…. economies do recover as the world did after the Great Crash .. it took 30 years and a world war to do it though.

And if Mr Gore is so positive about the country why is he spending so much of our Discovery Medical Aid contributions in places like Hong Kong and China?

He’s the last person I would believe.

“The good times will be back shortly”. Your hope will be answered in about 150 years time. Please be patient. In the meanwhile the tooth fairy is expected in town next month. Thank you.

As the old SABC TV used to say”Normal services will be resumed as soon as possible”
Just don’t hold your breath.

Forgive me for making a comment I have made regularly in the past. I get incredibly irritated by the hypocrisy of corporate SA. Always very proudly SA when speaking to media and painting an unrealistictly positive picture of South Africa.

Coleman from GS is the praise singer in chief yet the bank he represents is not registered as a bank in South Africa (in contrast to nearly all other bulge bracket investment banks) and most of the staff servicing SA clients or doing research on South African companies are based in Dubai.

Same goes for Discovery that for years have been commiting more capital to new venture abroad than in South Africa.

I will run naked through Sandton if Coleman and Gore’s personal fortunes are solely or even predominately invested in South Africa.

Yet these hypocrites has the damn cheek to berate ordinary South Africans for being overly negative, when ordinary South Africans have to deal with the brunt of government’s mismanagement.

Long before things goes properly pear shaped in South Africa these two clowns would have left the country sipping pina coladas on a tropical beach somewhere living from cash squirreled away in an offshore tax haven

They are overly positive because they need our money to make them money! They make so much from us they send their kids to private schools and probably have second passports hidden away.

Please report every six months regarding the performance and forecast of this article.
FG

“Good times” will be back, when the 80’s rock band DEPECHE MODE returns in full glory!

😉

Isn’t it just surreal we have our very own version of “Game of Thrones” rolling out in jolly old RSA

GOOD TIMES WILL BE BACK
Been hearing this since the 60’s – Congo , Kenya, Nigeria , Angolsh, Zambia and best of all Zim. LOL LOL LOL LOL

The problem is that while “Good times” technically should come back it is limited to the minority business and political elite in control of the economy (we don’t have one of the worse Gini Coefficients for no reason) it is smothered just as quickly by politicians.

For SA to use the coming turn around (US growth is driven by their reserve interference) we need to remove politicians/gov from business and they refuse as this is part of their voter base power. Combined with the fact that gov equally refuses to place limits on presidential overreach and we always one conference away from someone like Ace becoming the next president. Until that is fixed, SA is about as stable as watery jelly and this is not what u want to base your life one.. so yah.. unless your earning big bucks sustainably for the foreseeable future, your ability to live out your life is best elsewhere.

Ciaran, with regards to your heading “Message to South Africans: The good times will be back shortly. Things are getting better, ever so slowly”.

I have one question, do you actually live in SA?

The only good news is i can see is that Trevor Noah will have more material to make us laugh from.
I would like to have a drag of what the author is smoking to take me out of my depression i am suffering from all the good news.

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