Christo Wiese on South Africa in 2010
This is a speech delivered in May 2010 by Dr Christo Wiese, Director of Primedia and Chairman of Shoprite Holdings
A few years ago I read a very interesting book, by a Lebanese writer, one Taleb, titled the Black Swan. By now, I am sure, we’ve all heard the story of the “once enigmatic” Black Swan – but what was the lesson of this story? Simply, that when confronted with incomplete data one often draws incorrect conclusions, and therefore – people often think they know more than they actually do know.
Perhaps one should pay more heed to what Donald Rumsfeld, former US Secretary of Defence said on occasion:
“There are known knowns. These are the things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But these are also unknown unknowns. There are things we don’t know we don’t know.” Being ignorant when it comes to the unknown unknowns is understandable, but what constantly amazes, in respect of our continent and our country, is how little many people know of what are or should be, the known knowns.
Non-Africans, and I suspect even some South Africans, often fail to grasp that Africa is not a country, but a continent. And a very large continent at that; the land mass of Africa is larger than the combined land mass of China, India, the US and Europe. This vast continent with its more than 800 million people is made up of 53 diverse countries whose inhabitants speak more than 2000 languages. And to mention only a second aspect of Africa’s diversity, per capita GDP in 2009 for example was 51 times higher in Equatorial Guinea than in the Democratic Republic of Congo. Another common mis-apprehension is that South Africa is a non-African country meaning unsuccessful.
How does one define a successful country?
Would you agree that a country with the following score-card can rightly be defined as successful. Let us call the country X.
1. X has the world’s 26th largest population and 29th largest economy.
2. X’s per capita GDP, corrected for purchasing power parity, positions the country as one of the 50 wealthiest in the world
3. X’s currency is the 2nd best performing emerging market currency of the 26 monitored by Bloomberg.
4. The IMF’s World Economic Outlook ranks X in the top 10% of countries in respect of real GDP growth projections for 2010.
5. X was ranked as the 18th most attractive destination for foreign direct investment by Global Strategic Management Consulting Firm AT Kearney.
6. In the Economist Intelligence Unit’s Survey of Democratic Freedom, X ranks 31st of 184 countries.
7. X has sold $1.8bn worth of cars to the US last year, putting it ahead of Sweden and Italy as supplier to the US auto market.
8. X, according to the Open Budget Index, ranks 2nd worldwide in terms of the transparency surrounding its budgets, just behind the UK, it ties with France, and is ahead of New Zealand and the US.
9. X is ranked 30th out of 178 countries for ease of doing business ahead of Spain, Brazil and India according to a joint publication of the World Bank and the International Finance Corporation.
10. X’s media ranks 26th out of 167 countries in the Worldwide Press Freedom Index 2007, higher than any country in Asia, the Middle East or South America, and ahead of Spain, Italy and the US.
11. Tax revenue in X has increased by 220%, over the past 10 years.
By now, I am sure, most of you have guessed that the mystery country of course is South Africa. Or rather South Africa as we have just analysed it, by focusing on the positive aspects. Of course there is another side to the coin. Our unacceptably high levels of crime and low level of policing efficiency. Our inability to achieve the desired output for our vast expenditure on education bearing in mind that – 25% of our noninterest budget expenditure goes to education. Also the ever present fear of corruption and maladministration, etc., etc. I am sure everyone has his or her own little list.
I would submit, however, that the positive aspects, that I have briefly referred to (and there are many more) at least prove that contrary to the way pessimists perceive South Africa there are definitely two sides to the South African coin.
The challenge for every South African appears to be which side of the coin do you wish to focus on for example when you drive to Cape Town International Airport – which is the lasting impression on your mind – the unsightly (albeit diminishing) shack lands – or the glittering new Airport precinct. Cape Town International Airport is regularly judged to be one of the best (mid size) airports in the world.
But as pointed out earlier, South Africa is unquestionably part of Africa. So we should also look at Africa.
Firstly, how is Africa faring politically. Fortunately we now have a very handy yardstick with which to measure African Governance. That is the Mo Ibraham Index established by the like-named Sudanese billionaire and compiled by a team from The Harvard Kennedy School of Government. The criteria used to compile the index are: economic stability, corruption, security, rights, loans, elections, infrastructure, poverty and health. The 2008 Mo Ibrahim Index stated that 31 of 48 sub-Saharan nations recorded higher scores than in the previous year’s survey. What this index reflects is the reality – that in Africa today the political generation of the Bwana Mkubas (Big Men) is showing signs of passing – prompting some to speak of Africa’s Second Liberation.
Those with a clear understanding of modern Africa believe that it is the growing democratization of Africa that allows the warm water of the market to spread within its states – a trend that in turn reinforces the spread of greater democracy. Economic and Political freedom will continue to lead as it has already done, to economic opportunities, social upliftment and a new place for Africa on the World Stage.
What are the reasons for Africa’s democratization? I would like to mention only four:
One powerful reason for this welcome change is demographic. The post 1960’s African population boom means that the continent’s electorate is on average young. Never having lived under colonialism they are far more likely to hold their politicians responsible for the challenges facing their countries. Blaming colonialism is increasingly seen for what it is, namely an excuse for bad governance.
Another reason for the greater democratization is the bigger role played by women in African politics. In Ellen Johnson Sirleaf of Liberia the continent has at last elected its first female president, one with an open style and a technocratic bias. Previously chauvinist parliaments across the continent are seeing the number of women MP’s increasing. In Rwanda, a recent African success story, the ratio is now 56%. In South Africa it is 33% with females constituting 40% of our Cabinet.
Further support for the Second Liberation has come from Africa’s increasingly vociferous fourth estate. In an ever growing list of countries the Media has become the guard dog that barks and that no longer readily responds to being told to shut up.
The justice system in a given African country may not yet always be able to bring its former leaders to book. However Frederic Chiluba in Zambia and Bakili Muluzi in Malawi are welcome exceptions. In addition, external institutions, supported by African Nations are being established to fulfill this role. Charles Taylor of Liberia is having his day in court in The Hague and the International Criminal Court has even issued an arrest warrant for the sitting President of Sudan, Omar Bashir.
Just as Africa’s condition and future development will have a massive impact on South Africa, so will developments worldwide impact on Africa.
So what will the New World look like that South Africa will likely inhabit in 2020?
China with a population of 1.5bn by then will be close to overtaking the US as the world’s largest economy. India (2020 population of 1.3 bn) will be a top 5 economy and Indonesia will be emerging as an Asian Brazil, resource-rich and with a population of 275 million. Commodity-rich countries from the “New World” – Africa, the Middle East, Russia, Indonesia, and South America will be prospering, because of Asian demand for their products. Most of the “Old World” – the US, Europe and Japan plus their adjacent, dependant regions such as Mexico and Eastern Europe will be stuck in a low growth economic rut. Indeed the coming decade may well be the West’s Japanese-style “lost decade”. The reason being that the demographic consequences of the ageing of the Old World – coupled to the fact that the US, UK & Europe – 15% of the world’s population – currently consume 70% of the world’s mobile savings – this means that in the West there will be higher interest rates, a higher cost of capital and consequently lower economic growth.
Overall South Africa will live in a more globalised, intensively competitive world economy that will be increasingly focused on an urbanizing, industrialising Asia. The region which by 2020 will also dominate the growth in global consumption, driven especially by the exploding middle classes of China and India.
By 2020 it is projected that South Africa will have a population in excess of 53 million of which 30 million will be under the age of 25. Forced by intensive competition from Asia on South Africa’s remaining industrial base our economy will have to refocus on its core, defensible, competitive advantages : mining, agriculture and tourism. Sectors that are doubly blessed in that they are all labour-intensive and export orientated.
South Africa’s trade focus will by then have diversified significantly from the West.Asia will have become by far our most important trading partner – China most obviously but with English-speaking India a strong number two. Indeed the Indian Ocean Basin – from South Africa in the West to Australia in the East will have become a very prosperous trading basin.
South Africa’s economic status will be secured by its natural-resource based development with targeted value-added propositions added on to this foundation further enhanced by the development of tourism – a “magic” industry in that it is an exportearning service sector capable of absorbing large numbers of lower skilled workers – especially in rural areas.
But then optimise these opportunities we South Africans will have to learn to think out of the box socially, politically and economically – designing policies that are made for South Africa and that are good for South Africa.
Events over the last two years have illustrated that the capitalist way is not only to be found in the West. We must and I believe we will develop a 2020 vision for South Africa that is much more globally relevant than to-day in the Asia-centred, commodity-hungry world we will live in by 2020.
Sceptics of course will have grave reservations as to our ability to develop and implement such a vision. The answer to such sceptics (perhaps the same people who were hoarding bully-beef and candles in the run-up to the 1994 election) is to point to the many successes we have achieved as a country – in 1994 and in the sixteen years since.
As Roelf Meyer recently wrote in Die Burger. In taking stock we should compare ourselves with comparable countries in the rest of the world. We should not compare ourselves to the developed or Western World, because we were never part of that world. We should compare ourselves with developing countries and also countries that recently emerged from internal conflict. In the latter group we are a shining star and within the international community South Africa is still hailed as a beacon of successful conflict resolution. Roelf refers to a 2009 issue of the Economist in which comparisons are drawn between 180 countries and specifically the 65 best economies in the world.
According to the survey: South Africa has the 25th largest purchasing power, is the 39th largest exporter, is the 25th largest manufacturer of goods and the 28th largest supplier of services. On the competitiveness Index we rank no 45. Not great, but it looks a lot better when one notes that Brazil, considered one of the leaders of the developing world and with a much larger population ranks 43.
But these are the achievements of yesterday and today. And we have to get from 2010 to the 2020 Vision. Other countries or societies will not do it for us. The Government on its own cannot do it.
Inter alia, because as Henry Kissinger once said:
“No policy – no matter how ingenious – has any chance of succeeding if it is born in the minds of a few and carried in the hearts of none” and Ronald Regan said: “The most terrifying words in the English language are: I’m from the Government and I am here to help”.
Every South African who has the best interests of this country at heart, will need to do his or her bit. As general pointers I would like to leave you with a few suggestions:
“Make a positive difference, no matter how small, inter alia, by developing a positive mind set : Perhaps along the lines of what George Bernard Shaw said “You see thing and you say “WHY?, but I dream things that never were and I say “WHY NOT?”but I dream things that never were and I say ‘WHY NOT?”
1. Harness the power of community
2. Engage in constructive participation
3. Do not be overwhelmed by all that is still unacceptable or sub-standard.
Look around at the great things that are happening – Soccer World Cup. We should not only see the positive – but embrace it and contribute to it. Surely then, but only then, will exponential benefits flow to all of us who share this beautiful country.