By Garth Klintworth
While it is easy to buy into the narrative that South Africa – and even the broader African continent – will fail to live up to their potential, it is critical that we push back against this message.
Tomorrow is a lot brighter than many people think and we only need to focus on a handful of enablers to realise this potential.
Absa has positioned itself as the leading Pan-African banking group and our futures are inextricably linked with the success of the continent. Like any good rugby, football or cricket team, it is imperative that we are strong at home so that we can be successful on the road.
To achieve these goals, we need to get the following enablers right:
The South African fiscus has benefited enormously from the recent commodity sector boom and this has been a key part of our post COVID recovery. Government has been able to utilise this windfall to ensure that we can support economic recovery and many of its social programs.
Yet one can’t help but wonder where South Africa would be if there had been policy certainty for mining operators and power producers.
Whether it is resources, land, intellectual property or inbound investment, South Africa has been poor around framing its narratives and converting them into compelling policy. These discussions are being reduced to Western versus Eastern or Capitalist versus Socialist ideologies and they ultimately become a punching-bag for the political class while South African growth stalls.
We could take some direction from the likes of Switzerland which has spent a lot of time positioning itself as a technology and fintech hub. On its own, Switzerland is not the first country that comes to mind when it comes to innovation or high-technology. What Switzerland has done well is create an enabling environment where regulators, fintechs, banks and even the Central Bank have committed to a regulatory framework which is robust yet simple. Everybody is speaking the same language.
The Swiss have leveraged their intellectual skillset and this has translated into an environment that has stimulated innovation and ideas which has in turn driven employment.
There is an important distinction here. Switzerland has built its regulation to service not just the Swiss, but to fit in with the European Union framework.
The worry for South Africa is that we are looking to build policy which is relevant to 60 million people instead of policy that can transcend borders and be relevant to 1 billion people.
Skills: We need to be outward looking
As a bank which operates in multiple jurisdictions including the UK, Prague and the US, we are concerned about the skills drain and the lack of local talent.
There is no question that there needs to be remediation in the local employment market but we are rapidly reaching a tipping point where we cannot rely on local capacity anymore.
South Africa desperately needs to bring in new skills and we can no longer be defensive when it comes to suggestions of importing skilled professionals. The reality is that global trade will continue with or without South Africa and we need to start benchmarking our talent against the rest of the world. This message needs to resonate through all of corporate South Africa. This is especially true if South African companies, with multi-country presence, want to base their head offices in South Africa.
If we look at other African markets where we have a presence, they seem far more open to foreign skills with some countries taking quantum leaps forward in developing their technology ecosystems.
ESG: A true opportunity for tomorrow
We have been pleasantly surprised by the adoption of Environmental, Social and Governance (ESG) frameworks in South Africa and we believe that this will be a catalyst for further inbound investments.
If we look at some of the innovative projects that our clients in the resource sector are doing and the discussions that are happening around alternative energy, we can envision a much brighter future.
We are optimists for the future of both South Africa but also the broader African continent. We represent one of the most compelling frontier market investment propositions out there at the moment.
The question we need to answer: Is this a 10 year story or a 100 year story?
To our stakeholders joining us at the SA Tomorrow conference on June 21, we urge you to see it as a 10-year story…. Momentum can be a very powerful force and we look forward to partnering with you on this journey.
Garth Klintworth is the Head of Global Markets at Absa Corporate and Investment Banking.