FTI Consulting has released a new report focusing on ‘the future of South Africa’ – exploring emerging trends in the South African economic and business landscape.
It is based on an independent assessment of the state of the South African economy and engagements with South Africa’s leading business leaders for their perspectives.
The report demonstrates that there is a gut feeling amongst many businesses that the stakes are high, said Petrus Marais, head of the South African practice.
“Yet, in true South African spirit, there remains a sense of determined optimism,” he said.
“Finding solutions to South Africa’s challenges will require compromise and a meeting of minds between public and private sector players.”
“The report highlights that there is a desire and willingness of South Africans to work together to build a more positive future for the country. Time will tell whether as a country we are able to address and harness the enablers of the future and find solutions to the challenges that will define the next decade.”
Gloom and doom is misplaced
In the report, Discovery CEO Adrian Gore provided his insights on where he thought the country was heading.
Despite being generally positive, Gore admitted that there are some challenges that needed to be addressed.
“GDP growth is at 0.7%; 50% of those aged 15-35 are jobless; we have a bloated public sector wage bill and a hefty budget deficit to fill; and tragic inequality,” he said.
“But I believe there is room for positivity – not in spite of these challenges, but because of them.”
One of the biggest problems is that South Africans battle to see the country’s progress, said Gore.
“The fact is, South Africa, like the world, is a fundamentally better place as time progresses.
“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.”
He added that a lot of gloom and doom is misplaced.
“Not only are South Africans gloomy about how the world has changed and what the future holds on a broad range of issues, they’re also confident in their erroneous perceptions. In a recent survey they gave the least accurate guesses of where the figures on global and national development stood – out of 28 countries.”
Gore said that a ‘declinist’ view has real and dangerous consequences which impede our progress.
“As South Africans, we suffer from a declinist view of our country – persistent and pervasive public pessimism.
“The major flaw in this narrative is the failure to distinguish between absolute and relative changes: relative decline is interpreted as absolute decline,” he said.
“When we think in a declinist way, we start perceiving our country and its economy as risky. We avoid investing, when the opposite should be the case.
“South Africa has a relatively stable economy, as seen by its GDP growth which is the lowest in volatility when compared against BRICS peers over 1994-2017. This suggests that we misprice risk and miss opportunities.”
In addition to the country being larger and more relevant than many South Africans think, Gore said that it was also possible for businesses to grow here.
“Our provinces square up against entire countries in terms of GDP: Gauteng is bigger than Kenya and Ethiopia, and the Western Cape is almost the size of Ghana,” he said.
“Our market also enables massive companies to be built. Discovery’s revenue footprint (including Discovery Health Medical Scheme) is more than half that of Mauritius and both Standard Bank and FirstRand are bigger than all Nigerian banks combined on a Tier 1 capital basis.”
A choice between two paths
Gore said that ultimately it is attitude that drives fundamentals – not the other way around.
“We have a choice,” he said. “A problem-centric leadership approach, which perpetuates declinism – or a vision-based leadership approach, which is an antidote to declinism.
“The latter involves acknowledging our country’s progress and creating hope; seeing our problems as real, but soluble, and seeking out positive cues alongside negative ones when reading our environment; and recognising the potential of our economy and investing in it.
“This is how change happens.”