Growing Responsibly
Writer Armien Tyer Head of Investment Cluster: Absa
Is a sustainably higher economic growth rate the holy grail? Is this the panacea we are seeking to address South Africa’s challenges?
• A lost decade for South Africa’s small economy has resulted in a missed opportunity to capitalise on a world awash with cheap capital.
• Redirecting matters amidst a cyclical slowdown will prove diffi cult as markets and economies readjust to withdrawal of liquidity and increasing global interest rates.
• Our real issues are structural and if they are not substantively improved, we will be entering a challenging phase in South Africa’s political history.
• Addressing these fundamental, if not existential, issues means driving economic transformation and policy reform in order to address South Africa’s monumental challenges and defi cits.
• Addressing these structural impediments requires sustainable, above-average growth.
While the Jacob Zuma moment in our history may have come to an end, its impact and the cost of a lost decade in our nascent democracy and small economy will be with us for some time. During this period, we have largely wasted our Mandela political dividend to be transformative and exponential. We have wasted resources, dithered with policies and lost our moral compass as we transitioned from a revolutionary movement to the career-focused and self-interested leadership of the 1990s and 2000s. We missed much of the secular bull market in commodities in the early 2000s. We also missed the opportunity of a world awash in cheap capital and hungry for growth and income following the great recession of 2008.
Yes, we have had to adopt prudency following the sovereign downgrades handed down under the Zuma era, but redirecting matters now in a world that is becoming uglier by the day geopolitically will be a challenge. This world is one of increasing oil prices, where technology is disrupting industries at a blinding pace and stability is threatened by an upcycle in global interest rates.
Out of nine Bank for International Settlements, fi ve of their cyclical indicators have turned negative, which
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