By their nature, risk analysts can overly-attune their eyes to perceptions of risk. This may, however, be at the expense of opportunities that exist alongside such hazards. Then there is the danger that some risk indicators quickly and wrongly become accepted truths, or ‘risk-facts’.
But, implicit in the degree of alarm expressed about one business setting or another is an acknowledgment of the value that exists there.
This brings me to post-Marikana, pre-Mangaung conference South Africa.
At this point, many a business reader moves to click to another page, because on one view prevailing in London, South Africa is old and boring, difficult and uncertain – the boundless opportunities of largely untapped markets and resources lie further north. To paraphrase one recent Financial Times contributor, one would have to have a very good reason to ‘go long’ on South African mining stocks in one’s investment strategy.
(Part of me is tempted to say ‘good luck to you, then, in your (ad)ventures in some post-conflict West African settings, or a Latin American or Indonesian one, that you might be understood to deem so attractive by comparison … but I must draw a line between being an advocate for, and analyst of, South Africa.)
Much has been written in London and elsewhere about how South Africa under the ANC and with Jacob Zuma’s leadership is, in effect, doomed. The situation is serious, and too many people have been killed or corrupted, but here are six thoughts – one for every ‘top six’ leader the ANC will ‘elect’ in December. Call them musings amongst the madding crowd, a cat among pigeons, or briefing points for the devil’s advocate:
- The economy is performing better than is mostly acknowledged. South Africa’s projected 2012 GDP growth rate (call it 2.6 percent, although I think it will prove lower) is still well above Brazil’s forecast of 1.6 percent. Yet the latter is still regularly championed as a stellar BRIC, while South Africa is generally portrayed, I think, unduly negatively. Yes, this G20 economy is under-performing and facing competitiveness issues. No, it is not the Congo (or Argentina).
- The residual ‘Wal-Mart’ effect is real and damaging. That is, the lingering unease among other potential investors given Wal-Mart’s experience with South African government departments and unions in its recent country entry. However, from much of the coverage one would think the US retail giant was crazy to enter. Is it really? Moreover, is the headache and political morass of entering India’s mass retail sector so much easier then? Hardly.
- Angst comes from unrealistic expectations. The country should be seen as it is, and as it could have been (which is far worse off). A strong sense of relative deprivation, unemployment and rank inequality, household debt, etc., mean that harder times almost certainly lie ahead – but some objectivity is needed. Many commentators find it unnecessary to point out, for instance, how the vast majority of mineworkers have not been striking.
- Pre-election political uncertainty is not exclusive to South Africa. The last months of 2012 were always going to be difficult. But is the much-hyped policy paralysis in the ANC ahead of December’s election so very different from what China experiences ahead of its leadership transition, or even the United States heading to November? The ANC policymaking process is messy, loud and scary-sounding. But it is open. The movement puts all its ideas – silly or otherwise – out in the sun. It seldom surprises, unlike governments in many other African settings. In many ways, the ANC is very policy stable; many party policy prescriptions fall away following adoption. And if the party/government is bad at implementing good policy, it is also bad at implementing bad policy…
- There is a danger in too much information. I think because we know so much about South African risks, we are in danger of seeing them as bigger and more prevalent than those in African settings that we do not, and possibly cannot, understand as well. This is a point I’ve made before (thanks, editor). We know far more about Limpopo Province’s finances than we do about the health of massive loans to Chinese provincial administrations.
- Has Jacob Zuma really been such a bad thing for the country? The Marikana incident has exposed leadership credibility and capacity problems for many actors. But would a more decisive leader have been more divisive at this time in the ANC’s history, with less actually achieved as a result? Would business really prefer a leader with clear policy ideas and drive – what if that policy were awful? Let us not forget this man was heralded as ‘the end’ when he took office, a rank populist, swinging madly to the Left. Those analysts who swore this would happen still happily draw a salary today! My point here is simply to remind ourselves that for a party and country finding its way, one yearns for a from-the-front leader with a clear compass – but an arch pragmatist is not necessarily a disaster.
Therefore, calm down. We risk entering the territory of self-fulfilling prophecies here: ratings agencies are not filled with fools, but neither (as 2008-09 showed so vividly) are they manifestations of God.
South Africa is turbulent and has some real long-term problems, but it is not – contra the tone of the stuff I read each day – about to collapse. The ANC’s moral fibre is under strain but this complex movement is hardly ‘morally bankrupt’ (as one leading authority on the country recently put it, also in the Financial Times). The Treasury may make spelling mistakes in its post-Moody’s downgrade press statement, but it still has a far finer staff than many countries deemed fit for the European Union. Bedaar – calm down.
I find myself driven to counter-exaggeration. The FT writer quoted above (and his or her readership) is welcome to look at highly unrepresentative photographs of spear-licking Marikana strikers and put their money instead in a fledgling mine in West African country X, miles from any port, or power grid, or skilled unionised labour force, or court, or banking and services sector. Hamba kahle – go well to you, then.
Jolyon Ford is senior analyst (Africa) at Oxford Analytica.