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2016 is likely to be another turbulent one for South Africa as stagnating economic growth and political uncertainty place the country under pressure.
At the recent GIBS 2016 Foresight Forum, representatives from business, civil society and academics agreed that the year ahead is going to have to be one of action to pull South Africa out of its current malaise.
Gordon Institute of Business Science professor of strategy and leadership, Nick Binedell, said: “We are going to have to work hard for the kind of country that we want. We can get through this, but we have to do better than we are at present.”
Economic outlook
Trudi Makhaya, chief executive of Makhaya Advisory said: “Government spending and debt has hit a ceiling. Now the government has to demonstrate that it has the credibility to sustain social and economic stability.”
She said fragilities inherent in the economy had begun to show in weak currency levels: “There is a lot of emotion around the fall of the rand as it is seen as a symbol for the country. But currency weakness is the result of things that have been going wrong for a long time,” Makhaya said.
She argued the country hadn’t given enough thought to where fundamental growth is going to come from in the short, medium and long term: “Growth will come from Africa and we need to optimise our existing trading partners while finding new ones.”
The role of business
Chairperson of Massmart, Kuseni Dlamini, said the corporate sector was doing its ”fair share” to grow the economy of South Africa and “is a force for good through the money it contributes in taxes.”
He said it was “in the enlightened interest of corporates for the economy at large to grow,” and that business wanted an environment conducive to investment.
Regarding the anticipated implementation of a national minimum wage in 2016, Dlamini said: “It is key for business to be competitive and sustainable. There is no point in regulating it out of existence.”
Stacey Brewer, co-founder of Spark schools, a network of low-fee private schools, said encouraging entrepreneurs and creating an enabling environment for them was key to South Africa’s economic growth and the reduction of unemployment: “Entrepreneurs are able to act quickly and solve South Africa’s problems, rather than waiting for others to do it.”
Political year ahead
All panellists agreed that the nationwide fee protests, culminating in the #FeesMustFall movement, was the seminal event of the past year.
Shaeera Kalla, president of the student representative council at the University of the Witwatersrand during the protests said the rallies demonstrated the “power of a mobilised youth to shake the core of an unjust society” and forced the country to have difficult discussions that are important for our future.
“We live in a reality where being intelligent is just not good enough if you are poor,” Kalla said.
The lack of social cohesion in South African society “is a natural process which will unfold over many years,” Binedell said.
“We are living with the socioeconomic consequences of less than 2% growth,” he added.
Nationwide municipal elections, due to be held early in the new year promised “to be an election of a different kind,” Binedell said.
Dissatisfaction with service delivery might see the ANC losing control of metropolitans such as Johannesburg and Tshwane, resulting “in some unusual alliances forming,” he continued.
“We are approaching what will likely be the most heavily contested election in post-apartheid South Africa,” executive director of Corruption Watch, David Lewis, said.
The possible loss of metropolitans by the ANC would mean “a scramble to build coalitions.”
Lewis called the recent Constitutional Court judgment against the Independent Electoral Commission “sobering,” as the court set aside the controversial by-elections in Tlokwe Municipality for not being free and fair.
“The IEC has stumbled very badly. There are not enough institutions that hold South Africa up, and we are rapidly reaching a tipping point,” Lewis said.
Corruption continued to be an inherent problem, Lewis added: “ We have an extraordinarily weak state and a weak ruling party that is extremely fragmented. Patronage keeps the system together, but it is this fragmentation which makes halting corruption extremely difficult.”
Top five take-away points:
- “We live in a reality where being intelligent is just not good enough if you are poor.” Shaeera Kalla, former President of the Student Representative Council at the University of the Witwatersrand and #FeesMustFall leader.
- “Government spending and debt has hit a ceiling. Now it has to show that it has the credibility to sustain social and economic stability.” Trudi Makhaya, CEO of Makhaya Advisory.
- “It is key for business to be competitive and sustainable. There is no point in regulating them out of existence.” Chairman of Massmart Kuseni Dlamini, discussing the possibility of a mandatory minimum wage.
- “We are approaching what will likely be the most heavily contested election in post-apartheid South Africa.” Executive Director of Corruption Watch David Lewis.
- “We are living with the socioeconomic consequences of less than 2% economic growth.” GIBS Professor of strategy and leadership Nick Binedell.
