Sil­ver lin­ings

The McKin­sey re­port re­leased this week is a boon to the op­ti­mists and a slap for the naysay­ers of our econ­omy

CityPress - - Business - FERIAL HAF­FA­JEE busi­ness@city­

Here lies hope. In a week that saw yet another set of in­di­ca­tors fac­ing down­wards and South Africa con­tem­plat­ing re­ces­sion­ary times, the McKin­sey sce­nar­ios re­leased on Tues­day con­tained sil­ver lin­ings ga­lore. The first such sil­ver lin­ing is Chris­tine Wu, the bub­bly prag­ma­tist who was part of the seven-per­son team that led the six-month re­search pro­ject to as­sess where South Africa’s growth op­por­tu­ni­ties may lie.

“I was pleas­antly sur­prised,” she said of the process, and the re­port that was re­leased this week.

And she was also sur­prised at how much more up­beat ad­viser Paul Col­lier was about South Africa than we lo­cals are. Col­lier is the co-di­rec­tor of the Cen­tre for the Study of African Economies at Ox­ford Univer­sity in the UK.

The re­port is a 152-page dis­til­la­tion of five ar­eas that the man­age­ment con­sul­tancy be­lieves can add R1 tril­lion to an­nual GDP and cre­ate 3.4 mil­lion new jobs. If you take the long view, South Africa stacks up fairly well: it is the sec­ond-largest econ­omy in Africa. Its econ­omy is also big­ger than Chile’s and Malaysia’s. We have pro­duc­tiv­ity com­pa­ra­ble to China and Brazil. And the busi­ness en­vi­ron­ment is good com­pared with peer coun­tries.

McKin­sey used nu­mer­ous stud­ies and in­di­ca­tors which re­veal South Africa’s busi­ness en­vi­ron­ment is rated bet­ter than those of Tur­key, Brazil, In­done­sia, Kenya, Rus­sia and Nige­ria.

“The fun­da­men­tals show us South Africa is still a healthy place to do busi­ness. Pro­duc­tiv­ity is on a par with China. But be­fore we get ex­cited, it’s worth not­ing China caught up and passed South Africa in a decade,” said Wu.

Wu’s team spoke to scores of lead­ers across the pri­vate and public sec­tors, as well as mem­bers of key think-tanks and academies.

The fir­ma­ment of ideas on how to in­crease South Africa’s econ­omy was ex­cit­ing – the team had a long list of more than 100 sug­ges­tions. The five they rec­om­mend are: ad­vanced man­u­fac­tur­ing; mak­ing in­fra­struc­ture spend­ing more pro­duc­tive; nat­u­ral gas to aug­ment power sup­ply; boost­ing ex­port ser­vices to the rest of Africa and build­ing the skills pool.

South Africa can com­pete well in ad­vanced man­u­fac­tur­ing and should niche it­self there. A range of medium-sized com­pa­nies are pioneers ( see list).

How can these com­pa­nies be boosted? Greater re­search and de­vel­op­ment to glob­alise them. They also need sup­port to de­velop them as na­tional cham­pi­ons.


HOPE­FUL Chris­tine Wu, one of the au­thors of the McKin­sey re­port

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