Investing In The Success Of South Africa
I recently read a great opinion piece entitled “There is nothing wrong in South Africa that cannot be fixed by all that is right in it”, which was written by Patrick Gaspard, the president of the Open Society Foundation and former US ambassador to South Africa from 2013 to 2016. In it he quotes a statement made by Supreme Court Justice Ruth Bader Ginsburg, speaking in an interview in 2012, which says “I would not look to the US Constitution, if I were drafting a Constitution … I might look at the Constitution of South Africa. That was a deliberate attempt to have a fundamental instrument of government that embraced basic human rights, and had an independent judiciary … It really is, I think, a great piece of work.’’
He goes on to say that “Zuma’s defeat does not erase the acute challenges before South Africa. But his demise does represent the opportunity of reform for a movement and nation.”
This article got me thinking about our beloved country’s rich, and often violent, history and all the sacrifices made by so many to ensure a free and democratic country – a legacy that our children and all future South Africans can be proud of. More than that though, it got me thinking about how easily the legacy was almost destroyed by corruption and maladministration, and how our constitution which we hold so dear and which many others in the world envy, was compromised.
Whilst politicians faltered and national values were subverted, South Africa’s hard-earned moral leverage in international affairs was not the only thing being eroded. Commerce was also compromised. South Africa, once the economic powerhouse of Africa, was fast losing ground. The economy stumbled and foreign investment waned. All of this contributed to further marginalising young South Africans who saw their dreams constrained by inadequate, costly education and fewer jobs that would allow them to gain a foothold in the middle class.
There is no doubt though that the ascendancy of Cyril Ramaphosa has boosted business confidence to its highest level in two years and resulted in newfound optimism in South Africa. It is generally agreed that the country now has an opportunity to achieve substantive and measurable gains as it attempts to position itself as a competitive investment destination. So what are the fundamental steps that will be needed to help us realise success?
It is too early to say with any confidence whether the events of the past few weeks indicate that President Ramaphosa, along with the ruling ANC, will be able to shift the paradigm and set the country on a path to growth and stability. Whether that will be the case depends on how the new administration addresses two fundamental challenges.
The first is economic policy reform. These relate to areas of empowerment, the labour market, property rights and education. The weak economic performance endured over the last few years has resulted in a significant loss of confidence in the government, which in turn has set in motion the slow turning of a dangerous negative spiral. With effective reforms we should be able to break out of the spiral and herald an economic recovery, a rise in growth rate, a reduction in joblessness and a resumption of the socioeconomic gains witnessed in the first years of our democracy.
The second challenge is the restoration of the rule of law. Whether or not a realigned ruling party can eradicate corruption and introduce the necessary reforms required to meet popular expectations depends on their actions and choices in the months ahead. The signs so far appear to be promising. However, it remains to be seen if these early actions will result in the successful prosecutions of those who have so callously violated South Africa’s constitution and laws.
There are indications that these challenges are being addressed and, with the expectation that new government leadership will lead to more pragmatic and predictable business and economic policy options, there are already indications from various short-term economic and market indicators that the pace and direction of change reflects a more upbeat business climate.
The latest gross domestic product (GDP) results also provide some cautious cheer. Key facts from the fourth quarter 2017 GDP release are:
- Real GDP was up 3,1% quarter-on-quarter (seasonally adjusted and annualised).
- Unadjusted real GDP was up by 1,5% year-on-year.
- The South African economy grew by 1,3% in 2017 compared with 2016.
- Nominal GDP in the fourth quarter was estimated at R1,21 trillion (for the whole of 2017 the estimate is R4,65 trillion).
- Expenditure on GDP grew by 3,1% in the fourth quarter, with positive contributions to growth coming from consumption, investment and net exports.
Building on these positive results, reforms and the wave of optimism sweeping our nation, it is clear there could be no better time for all of the country, particularly the most inclusive organisations and businesses, whose evident commitment is driving social transformation and economic growth, to continue to elevate their aspirations for a thriving economy and country.
Now is the time to invest in the success of South Africa!