By Alec Hogg
LONDON – Focusing on immediate surroundings is part of the human condition. Our ancestors soon realised it was more important to know a pride of lion had come into their territory than wonder whether a distant tribe was banging war drums.
The modern world challenges such hard wired pre-conceptions. We need to overcome these instincts or reap the downside that comes with operating in echo-chambers that amplify group-think and stop objective analysis.
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Given the sheer scale and crudeness of State Capture initiatives in South Africa, it has become difficult to see them in perspective. Doing so is vital to appreciate the binary option the country faces.
I was reminded of this yesterday by a thoughtful associate in the City of London who reckons next year’s forecast for the Rand could be anything from 10 to 18 to the US dollar – such is the uncertainty.
But he reminded me that the young democracy has some unique advantages for a developing nation. Its institutions are robust; the judiciary independent; the elections free and fair; and freedom of speech is robust as reflected in a vibrant and independent media.
He is mindful, as are we all, of the concerted attack on the system by crony capitalists who have successfully captured the President. He also frets about the structure of a system which vests so much power in a single person.
But even with such levers of political power at their disposal, the cronies are now in full retreat. There is ample evidence that the resolute resistance led by Finance Minister Pravin Gordhan is slowly gaining the upper hand.
This fact, my well-networked associate shared, is heartening global investors who are recalibrating their analysis. Uncertainty is becoming a feature all over the world. That makes SA’s war of attrition less of an outlier.
Far-sighted investors are starting to recognise the strength of a country’s governance structures. And, he reckons, South African’s have been tested and when you look past the noise, have held up well.
The reality of income inequality remains a real concern. And despite my instincts about interventionist economic strategies – and the obvious threat of increasing unemployment – the proposed minimum monthly wage of R3 500 may prove to be a step in the right direction. Surely no capitalist with morality can countenance paying someone less?
In an increasingly uncertain global environment, South Africa is not the exception those living in the country may believe. Provided the middle ground continues to hold, and those who would subvert it keep getting routed, a very bright future is possible.
Getting there will be bumpy. The Zuptas and their likes need not only to be ejected but criminally charged as a deterrent to potential successors. That won’t happen until political control shifts.
But with each new attack that is repulsed, the new dawn comes closer. South Africa is not Zimbabwe. It is not on a trajectory towards becoming just another failed African State.
And for as long as the institutions hold, international investors will remain engaged. And, when the time is right, reward the national perseverance. Now there’s something positive to work into your long-term investment strategy.
