State of the Nation June 2014

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PART 1

I had the privilege of attending this year’s state of the nation breakfast with Clem Sunter and Justice Malala in order of appearance at the Sandton Convention Centre.

At first I was very apprehensive about entering a room filled with some of the country’s finest academics and entrepreneurs. I was pleasantly surprised to find I felt quite at home with all these influential people around me. Just listening to all the discussions going on around me openly expressing similar views and opinions to my own, what a relief. During several discussions I had with a few of the people I met it became apparent that I am not alone in my views regarding the challenges facing our new democracy here in South Africa.

Two main topics that were being discussed were the unscrupulous politicians and greedy big business. A little less discussed was the problem of trade unions in South Africa. One big one they all agreed on was developing people as our greatest asset within the country.

Clem Sunter was the first speaker for the morning and gave a thoughtful dialog on what we the current decision makers need to be aware of as Red flags or positive indicators on a daily basis. He spoke about the warning signs in the European countries and China, not to mention America.

The EU has a major problem as their economies have less and less working people to support the ever growing 1950’s baby boomers who are rapidly approaching retirement age and people are living longer in these countries due to better health care (think about why these are challenges). In China we have a similar problem as they instituted a law in 1972 that allowed people only one child and all the Chinese people wanted sons so they are headed for a crash in another 13 years. This is amplified by the fact that there are two few Chinese women to produce children and they will all be too old to have children now. So in the world economy they will have become a diminishing economy instead of a growing or stable economy. This will have a devastating effect in those countries as they will be under a huge financial burden to support millions of old people with no young workers to take their place or pay taxes.

This effect will be felt by young countries such as South Africa as we supply them with raw materials which they no longer need and can’t produce new finished products to sell to countries outside their own to generate income. We begin to see the knock-on effect this will have for both EU and China.

The good news is that Africa is the new growth point on the planet. We as South Africans have to take advantage of this little fact.

South Africans need to change our opinion of that simple person who cleans the streets and makes our coffee in the morning, because without them all the entrepreneurs or academics in the world would not be able to do what they do best, find the gaps in the market to create jobs. Yes the JSE provides big business stability and funding. But it is the little guy who comes up with new ideas and has the ability to adapt to an ever changing work place. We as a society need to acknowledge each and every individual within our society. In countries like America the entrepreneurs is hailed as a hero and people of excellence are held high for all to see. Here in South Africa we have a culture which ridicules change and new ideas until they are proven elsewhere. This needs to change. All our top academics leave us here to move on to other countries who give them the respect they deserve.

In the last 20 years we have seen major changes in the way we live in our beautiful country. We now live in smaller homes. In 1994 the average home being built was 150m² and in 2014 it has reduced to a mere 100m². That is 1/3 smaller. Yet we have seen an increase in luxury goods being purchased with the surplus income made available due to this reduction of basic cost of living. So we have smaller homes and more stuff to keep in it. That is where niche industries such as self-storage and mobile storage have begun to grow. You only rent the space you need to keep what you can afford. The people who took a huge leap of faith and invested in this industry are beginning to reap the benefits of this. We have many such industries which before never existed in South Africa such automated carwash, home cleaning service, garden services all happened in the last years.

All these industries have survived regardless of banks and big business because they fill a need in the market. Can you imagine if banks, big business and the JSE could back these industries fully without all the government red tape and strict regimes they must follow? If the all these massive wealth resources could just move a bit faster in SA we would have one of the most vibrant economies in the world.

Justas I am positive about the future I too must be realistic, there are elements around that are warning flags even to the eternal optimist like me. The miners strikes in the platinum industries and the related down turn in the supporting businesses. Governmental changes in legislation regarding land and worker’s rights alike, keep an eye out. Unrealistic price increases to generate income other than direct taxes in any country are a concern (e-toll) petrol price taxes and increases, false preservation funds and unrealistic expenditure by government on new projects while they don’t maintain the current infrastructure adequately.

This is the end of the 1st portion of this blog and I will carry on with the state of the nation as seen by Justice Malala …. Till next we meet Anthony.

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