Peter Burdin is a former BBC Africa Bureau Chief. He has thirty-five years’ experience as a senior editorial leader in the BBC’s International News operation and has worked extensively in Africa, the Middle East, Europe, the Indian subcontinent and Asia from where he has covered numerous major international news stories. He has won several Sony Awards for his news and documentary programmes, including the war in Bosnia, the Tiananmen Square protests, South Africa’s first democratic elections and the funeral of President Nelson Mandela. Peter is an Advisor to BBC Africa and is lecturing in International Journalism at universities in the UK and Africa.
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South Africa is expected to see its best economic performance in more than a decade next year with a projected growth outlook of 2.2%.
That’s the view of South Africa’s Bureau for Economic Research. It’s also clear to any recent visitor that the country is experiencing a boom in confidence and construction with more and more office blocks being built alongside a dramatic expansion of increasingly lavish shopping malls and restaurants.
Politically, there’s also a wind of change in the air. After thirty years in charge the ruling African National Congress’s grip on power has been loosened after the elections in May, and a Government of National Unity (GNU) has been formed to end a political dominance that under former President Zuma had become tarnished by corruption and nepotism.
The GNU has given a voice to millions of voters by involving former opposition parties, like the Democratic Alliance, in all decision making. Sources on the ground say this is also a shield against corruption with erstwhile opposition parties sitting in all government meetings and in a position to hold the ANC accountable.
Certainly it has restrained some of the more radical elements in the ANC and has enabled President Cyril Ramaphosa and his leadership team to appear bullish about South Africa’s future. He’s been schmoozing investors – including South African born Elon Musk - in the United States, while Deputy President Paul Mashitile has been on an investment drive in London, pitching for investment in energy, water and freight projects. The South Africans are seeking around $22 billion in investments over the next three years.
At the heart of this transformation is a new partnership between the government and a group of 150 prominent South African business leaders seeking to help fix the country’s economic problems. In an innovative demonstration of business and government working together the entrepreneurs have been implementing strategies across the economy to reform dysfunctional municipalities, improve water supplies, boost educational standards and transform early childhood development programmes.
These top CEOs are now saying that the South African economy could even grow by 3% next year and that would create more than one million new jobs. One of them, Sim Tshabalala the Standard Bank CEO says the crucial factor is how the GNU has accepted private sector help in areas previously monopolised by the state:
“Business and the government are continuing the momentum on reforms” Tshabalala says, “And based on the improvements delivered so far, there is every reason to believe that the momentum will continue”.
That momentum is being seen particularly in the logistics and energy sectors. The efficient global logistics company DP World has bought out Imperial Logistics for $890 million and is busy increasing the capacity at the ports of Richards Bay, Durban and Port Elizabeth. Inefficiency, sluggishness and high costs at the ports have long been a lead weight for the South African economy.
On the energy front, there has also been a surprise respite from power cuts this winter that few saw coming. Last year there were 153 winter days without power – this winter there was not even one. Load shedding – as it is known in South Africa - has cost the economy billions in the last decade.
At that time the critics have been scathing about the national power generator Eskom accusing it of lethargy, inefficiency and corruption.
Just last year former CEO Andre de Ruyter – touted as a “Mr Fixit” – fled the job into hiding claiming the odds were stacked too highly against him and even that someone had tried to poison his coffee.
Yet, out of this maelstrom, Eskom has completed its maintenance and refurbishment programme and now most of its units are running at high capacity. As a result the lights have stayed on for the last six months.
Discovery Health CEO Adrian Gore believes South Africa is now in a completely different place from the decade of decline and corruption under former President Zuma and the days of ANC domination:
“There is a feeling that we can turn this flywheel of growth. The narrative around South Africa is much better now. If we can capitalise on it, the potential is massive”.
Yet there is a large elephant in the room and it impacts on direct foreign investment. Despite the business leaders now working with the police to deliver forensic expertise to help investigate and prosecute complex corruption-related crimes, South Africa’s crime statistics are still too high. An average of 70 murders a day, - approximately 22,000 murders a year - remains a drag on public confidence and social cohesion and makes international businesses hesitant to invest and relocate their offices and staff into South Africa.
Although the rise in growth is enough to make headlines in South Africa, after years of heading the other way, it’s still not enough to bridge the gap between rich and poor. South Africa remains one of the world’s most unequal societies. Many economists estimate that South Africa needs at least 5% growth every year to stand any chance of reducing poverty and mopping up unemployment.
One of the greatest worries for the country is youth unemployment as the country fears the havoc which could be wreaked by the idle hands of the youth. According to estimates around one in two South African youths are unemployed, many will never find work in the formal employment sector. South Africa’s current unemployment rate is 32.9%, that’s more than eight million South Africans without work.
The CEOs admit there is much more work to be done if the economy is to return to the days of 5% growth last seen in 2005 and have the means to address these seemingly intractable issues.
It's been 30 years since South Africa buried its apartheid past and voted President Mandela into the Presidency. At that time many observers expected South Africa, Africa’s most diverse and developed economy, to lead the continent out of poverty to a brighter future. That never happened. As South Africa seemed to turn in on itself with crime and corruption at the fore it lost its image as “the gateway to Africa” to countries like Mauritius, Kenya and even Rwanda and its booming tech industries.
South Africa has made much of being the “S” in BRICS and has enjoyed being a player in this fledgling alliance that has brought it economically and politically closer to China and Russia. Its controversial decision to take Israel to the International Court has also been a source of pride in what some South Africans hail as a coming of age of the country as a global player, capable of adopting its own unilateral positions on the world stage.
Yet perhaps South Africa’s most significant transformation to become the continent’s regional super-power will come when it takes over the chair of the G20 in December. Next year it will host G20 world leaders on home soil hoping to embrace all the political and economic opportunities that brings with it, and show the world how business and government working together really can be a recipe for economic success and social stability.
