SA still a land of opportunity
Opinion by Howard Betts
Chairman: Betts Townsend Taylor
As a long-standing believer in the potential of South Africa, I find myself asking what is next for the country at this point. As always, there are concerning factors and cause for hope – and as so often happens, these two seem balanced on a knife-edge.
South Africa’s economy, which took off in the early 2000s after the transition to full democracy in the mid-1990s, has slowed considerably in recent years. Our best post-democracy year was 2006, when our real GDP growth was at 5.6%. Since then, it has steadily declined. It has seldom been negative, but it has been slow to negligible. Before COVID-19 threw out the balance of countries across the globe, our real GDP growth in 2019 was 0.2%.
This year it has recovered to around 3.1% but that comes off an extremely low base, and is only sufficient to put us 30th in Africa in terms of GDP growth. Libya, Kenya, Botswana, Niger and Mauritius (the top five) are all projected to have grown at over 6% in 2021. We are also no longer the leading economy in Africa in terms of GDP size. That place now belongs to Nigeria, with South Africa ranking third behind Egypt.
The Rand has lost ground against most major currencies over the course of the past two decades, and our sovereign credit rating was downgraded to junk status by international ratings agencies just over two years ago.
Yet, it is not all a dead loss.
South Africa still has rich natural resources – and even if we didn’t take full advantage of the surges in commodity prices over the past few years, these resources still provide a good underpinning for our economy at present. We also have well-developed financial, legal, communications, and transport sectors; and a stock exchange that is Africa’s largest and which ranks among the top 20 in the world.
Our infrastructure issues are, without doubt, one of the biggest constraints on our growth and competitiveness as a country at the moment. Gross fixed capital formation and the maintenance of infrastructure assets are critical to a country’s economic prosperity. I hardly need to state what we are currently seeing in terms of our failing electricity and water infrastructure. Our road network is over-used and under-maintained, and the extensive rail network which was built across the country even before some of the major national roads were developed, is sadly under-utilised.
It is unfortunate to see the deterioration of power and water infrastructure considering how well it once worked, but in that respect we could still consider ourselves better off than many of our African neighbours. Nairobi, for example, has no municipal water supply at all, and water must be trucked in. I have personally witnessed raw sewage running down the streets in Beira. A good many of the major cities across Africa are in a similar situation. I would like to hope that this is not where SA is heading.
The past few years have been strange times in SA politics, which probably hasn’t helped. We have seen riots, unrest and protests. Politically, we have become introspective and fractured – and we’ve taken our eye off the international ball and collective good. The recent elections were interesting, with more people seeming to take part in protests on voting day than actually voting, and with municipal councils being hung from one side of the country to the other and no clear winners.
Despite all of this, I believe there is hope.
The important thing about living and working in Africa is that one has to look for the silver linings and the opportunities. For some, the state of things in South Africa is enough justification to pack up and emigrate. Personally, I’d far rather be exactly where I am. I like the great weather, the diverse natural beauty, the friendly people and the incredible lifestyle that we still get to live in this country.
More importantly, what keeps me here is that this is still a land of opportunity – a place where one can make a difference. Certainly, one has to be prepared to take on a degree of risk, to work with what is sometimes unknown. It isn’t always easy, but the scale of the opportunities that can still be found or created here is incredible. There is quote that is famously attributed to Thomas Edison which says: “Opportunity is missed by most people because it is dressed in overalls and looks like work.” There is also a ‘meme’ doing the rounds that goes: “Too many people think the grass is greener somewhere else, but the grass is green where you water it!”
One thing which I believe has enabled us to weather economic ups and downs through 25 years of business is our can-do attitude and our willingness to look hard work in the eye and ‘water the grass’ where we are. We are coming out of yet another tough stretch and as we enter what looks like a period of growth for SA, we have some exciting projects lined up for the coming year.
There is meaning in doing work that changes the lives of people through the creation of infrastructure and amenities, through job creation, through mentorship and growing small businesses. This is what we get to be involved with every day in our business, and the sense of purpose in it gets us out of bed in the mornings. We might not be able to fix corruption, politics and some of the other issues currently plaguing us, but there is no reason that we cannot play a meaningful part in trying to move things forward.