FTI Consulting has published a new report focusing on the future of South Africa – exploring emerging trends in the South African economic and business landscape.
As part of the report, a number of top South African analysts and business leaders gave their thoughts on where they believe the country is heading.
The report demonstrates that there is a gut feeling among many businesses that the stakes are high, said Petrus Marais, head of FTI Consulting’s 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.”
Some work needs to be done
In the report, Standard Bank South Africa CEO Lungisa Fuzile outlined his thoughts on the country’s future and what awaits investors.
He said that the country is particularly important to investors as it provides access to a market of more than 375 million middle-class consumers across the continent.
However, he said that more work needs to be done to address some of the country’s biggest challenges.
“There are aspects of our education system that need urgent improvement. But in recognising this, there are pockets of the public schooling system which produce good grades,” he said.
“Investment security is important, but physical security is also of paramount importance. High crime rates need a concerted response.
“The issue of property rights has also been elevated as an issue that needs to be resolved. But it is more than likely that the South African spirit will prevail, and an elegant solution, which is consistent with the letter and spirit of the country’s constitution will be reached on the land reform issue.”
Fuzile said that ultimately there are many things that worth being positive about.
“Both the public and private sector have a role to play in unlocking South Africa’s potential and turning government’s recovery plan into reality,” he said.
“It is up to all of us to collectively invest in our country’s future.”
Below he outlined seven reasons to be optimistic.
IRP – The recently updated Integrated Resource Plan will set the path for the future energy mix in South Africa. Not only will this ensure the diversification of the country’s energy supply to include renewable energy sources, it will also provide South Africans with sustainable, secure and affordable sources of energy for the future;
Infrastructure deficit – South Africa’s infrastructure deficit offers huge potential for foreign investors. The ICT sector, for example, requires investment to shift the country from 4G to 5G as the country undergoes unprecedented digitisation and broadband penetration begins to reach all classes of society in the country. Water and sanitation, human settlements, transport and education all require massive investment if the country’s growth targets are to be met;
Unique proposition – Compared with other emerging markets, it’s not difficult to differentiate South Africa. Whilst we cannot deny that our country has experienced bumps, twists and turns, there is plenty of evidence to show that our country is a resilient, stable, maturing democracy that stands apart from other emerging markets;
Fair elections – Regular, free and fair elections that have seen peaceful political transition take place within the framework of the law. This has been backed by consistency in terms of macro-economic management – sound fiscal policy under National Treasury and consistent monetary policy managed under the steady hand of the independent South African Reserve Bank;
Legal system – Our legal system is strong and presents those that invest in our country an opportunity to seek legal recourse in court if necessary. Our courts remain known for taking decisions without fear or favour;
Openness and depth of our capital market – The fact that South Africa has been able to finance elevated deficits at a reasonable cost for a considerable amount of time without yields rising, is largely due to the openness and depth of our capital markets. Government remains committed to policy regulation that has consistently moved towards exchange control relaxation which is vital for attracting foreign capital;
On the right track – The Economic and Stimulus Recovery Plan shows government is intent on removing roadblocks to investment. The domestic financial sector now needs to step up to the plate too as an effective market maker and source liquidity to turn this plan into reality. South Africa’s banking system will have to provide the systems and networks to facilitate basic transactions, and also assist investors looking for guidance on the broader economic, legal and political landscape of the country as well as provide value-based services across research, hedging and settlement capability.