SEEING SOUTH AFRICA FROM A GLOBAL PERSPECTIVE
The well-worn saying that “it is darkest just before the dawn” is particularly relevant to contemporary South Africa. Our periods of dark are becoming longer and more frequent. The impact of the energy crisis on the economy is becoming apparent and the toll that blackouts are taking on our daily lives increases with every stage of load-shedding. Yet, I truly believe that no other nation on earth can deal with daily adversity and still deliver world class services, products and innovation the way that South Africa does. It is this fundamental belief in our country that underpins Warwick’s commitment to our clients, business partners and supporters.
Beyond belief, however, there are aspects to our country that are often overlooked and yet were highlighted by the International Monetary Fund in its March 2023 South Africa report. While noting the structural issues requiring urgent attention, notably South Africa’s FATF grey listing and the Eskom crisis, the IMF pointed out reasons to be realistically optimistic about the country’s future. I quote verbatim from their report.
The country’s large external asset position, low levels of foreign currency debt, diversified economy, sophisticated financial system, and flexible exchange rate regime are sources of strength, supported by the South African Reserve Bank’s (SARB) pro-active monetary policy that has kept inflation expectations anchored.
These features provide a favourable base for growth, as fiscal and structural challenges continue to be tackled. On the policy front, the government has made important headway on domestic revenue mobilisation, removed licensing requirements for embedded power generation, announced a plan to create a mechanism for private sector participation in transmission infrastructure, completed the spectrum auction, and has taken steps to improve third-party access to the country’s ports and freight network. Anti-corruption measures in response to the judicial recommendations of the Commission of Inquiry into Allegations of State Capture have also been announced in October 2022.
We know that words and policies need to put into practice to see the required results, but perhaps the IMF is seeing positives that we tend to lose sight of and it is worth bearing these in mind before the new dawn breaks.
I trust you will enjoy reading this month’s Wealth Matters and we very much look forward to reading your comments and input.