Peering into the crystal ball
FAMED 19th Century American wit, author and social commentator Mark Twain once remarked that “prediction is difficult – especially of the future”. Looking ahead to 2011 is no different, except that with tectonic shifts in the global financial landscape one thing is clear: change is inevitable. Where the challenges and opportunities lie for 2011 and beyond were deliberated at a recent GIBS Foresight 2011 Forum.
Dr Lyal White, director of the Centre for Dynamic Markets at GIBS and one of seven high-level panellists on the night, says 2011 will be the start of the “dynamic market decade”. White explains that while mature markets are expected to grow in 2011 “by maybe 1,7% at best”, dynamic markets “will grow at an average of about 6,5%, a level they’ll retain and probably increase to about 7% by 2020”.
This emergence is driven by the fact that the world’s biggest economies – North America and Western Europe – are still battling with the fact that this is no ordinary recession, says Dr Adrian Saville, chief investment officer of Cannon Asset Managers. Certainly while these economic giants continue to stutter there will be headwinds for South Africa, but we find ourselves ensconced in the third-fastest growing region in the world; in fact sub-Saharan Africa is growing almost as fast as India and per capita incomes in sub-Saharan Africa are higher than India’s, says Saville.
MTN Group CEO Phuthuma Nhleko agrees that these global financial shifts “are of such a nature that for us in Africa and in this country they present an enormous opportunity. For me, Africa is the best kept open secret from an investment and a return perspective, certainly in our sector where we’ve enjoyed 30%-40% growth in subscribers and revenue per annum, while the likes of France Telekom and Vodafone have been flat. It’s not rocket science that that huge pool of money has to find an opportunity somewhere … so you come back to Africa, India, China, Brazil.”
In theory the prospects are there, but Nhleko stresses that Africa continues to be held back by negative perceptions; and while the allure of growth is helping to dispel these views at a business level, the key to banishing Afro-pessimism still rests in the political sphere. On this point Nhleko is clear: “ We can have all the policies we want, but without infrastructure development on this continent we will not see the full GDP growth we require.” Policies mean nothing without the capacity to execute them, he says.
South Africa, though, has impressive strategies in place which Saville believes bode well for our future: “We have a fantastic government balance sheet; very disciplined fiscal policy; and level-headed monetary policy which, in part, explains the low, stable inflation rates and the muted interest rate environment.”
In particular, South Africa’s “New Economic Growth Path” is expected to have an impact in 2011. Former politician Roelf Meyer, executive director of FeverTree Consulting, is optimistic about the opportunity for engagement on the proposal ahead of Minister in the Presidency Trevor Manuel’s first report on the work of the National Planning Commission in September 2011. While the plan’s predecessor, GEAR, was tainted at inception in 1996 due to a lack of input across sectors, Meyer says: “We can be very proud of what we have in place in terms of economic rules and policies, but obviously GEAR doesn’t deliver all the required results in terms of job creation, alleviating poverty, etc. What is now coming forward is a new attempt to address those serious problems … and maybe that is what we should take positively into the next year.”