Bidvest cautious ahead of polls
Industrial firm unlikely to make big investments before the 2019 election
Bidvest Holdings, one of SA’s largest industrial firms with about 130,000 employees around the world, is unlikely to make significant growth investments before the 2019 elections, as its directors adopt a cautious stance ahead of the polls.
Comments by Bidvest chair Lorato Phalatse, chief executive Lindsay Ralphs and CFO Mark Steyn in the company’s latest annual report indicate that the lead-up to next year’s elections and the poor state of the economy could slow down President Cyril Ramaphosa’s drive to attract investments worth $100bn over the next five years.
Their comments further suggest that the weak economic growth and the uncertainty associated with the elections could prompt companies to adopt a wait-and-see approach. Steyn said while the lowgrowth environment in SA presents acquisition opportunities for Bidvest Holdings at attractive pricing, the period leading to the elections would dampen organic growth opportunities.
“We will focus on improving market share through this time, as well as maintaining our margins,” he said. But he said the company, which celebrates its 30-year anniversary in 2018, is alert to acquisition opportunities presented by the lowgrowth environment.
Phalatse and Ralphs affirmed the company’s guarded stance ahead of the elections.
Ralphs said the company expected lacklustre economic growth over the next year. There would be caution until the elections, he said.
“It’s encouraging that our president recently outlined a significant stimulus package that is squarely aimed at fasttracking spending in SA, while making the country more attractive to foreign investment. The successful implementation of this package, as well as other regulatory and policy changes, will be an important catalyst to reignite growth and investment in our economy,” Ralphs said.
Phalatse said SA’s economic, political and social instability affected SA negatively. It contributed to ever-rising unemployment, constraints on consumer spending, a scarcity of foreign investment and increasing demands on the state to provide adequate services and facilities for the growing population.
“Considering next year’s national election, we’re not expecting any short-term change or improvement in economic reform. Similarly, the non-availability of funding for adequate upgrades to infrastructure, including within state-owned entities, will prevent any real improvement or job creation. Investment is desperately needed to kick-start the economy,” she said. The lack of investment could prompt ratings agencies to downgrade SA’s sovereign risk rating, Phalatse said.
The country should emulate Bidvest’s business model which entails investment of significant funds in local infrastructural and logistical development, she said. “SA has the people, skills and technology, the funding and financial ‘machinery’ which is the envy of many, superb infrastructure – albeit in need of much repair in many instances – and we remain blessed with sought-after commodities and enormous tourism and agricultural potential.”