Reasons To Be Long On SA

Published January 17, 2012 | By admin

clean elephant

This is the elephant that greets you when you visit Maponya Mall in Soweto. It’s an impressive statue, fit for an impressive place. Maponya Mall makes the average big box shopping precinct in an affluent American suburb seem rather drab and lifeless by comparison.

Today’s Soweto is not the Soweto captured in the heartrending black-and-white images shot when the segregated township’s schoolchildren rose up against apartheid in 1976. Thanks to those children, Soweto is today the pulsing heart of a dynamic democracy at the gateway of a transforming continent.

Maponya Mall and its elephant give you an inkling of why Wal-Mart understands it has to get into the African market, why the $20 billion Harvard endowment’s fourth largest single holding in 2010 was a South African index fund, and why JP Morgan Chase CEO Jamie Dimon recently described himself as “incredibly impressed” by the opportunities he saw in South Africa and its region.

In picking its metaphor for Africa, McKinsey and Co. chooses another animal. It talks about “lions on the move”, and figures that by the end of this decade consumer-driven industries in Africa — agriculture, resources and infrastructure — will be generating $2.6 trillion a year in revenue, over two and half times the current figure.

South Africa will be a big part of the story. PriceWaterhouseCoopers projectsthat between now and 2050 South Africa will be the world’s seventh fastest growing economy, with an average real annual growth rate of 5%.

Judged strictly in terms of GDP and population, South Africa may not automatically be ranked among the BRIC nations — to use the acronym for the big emerging economies Brazil, Russia, India and China coined by Goldman Sachs. But the BRICs themselves see South Africa as a peer and have invited us to join their club.

What South Africa may lack in size, it more than makes up for both as a connector with a region that is being called the world’s last great investment frontier and from the respect the country of Nelson Mandela commands on the international stage. The way we prepared for and hosted the 2010 Fifa soccerWorld Cup hasn’t hurt our reputation, either.

Under the World Economic Forum’s rating system, South Africa’scompetitiveness score is all but indistinguishable from those of Brazil, India and Russia. In many areas of importance to investors, including strength of institutions, protection of property rights, quality of infrastructure, strength of investment protection and corporate ethics, we are ranked ahead of all the BRICs, sometimes by a wide margin.

In a comparison of 92 countries, South Africa’s budget process was recently ranked number one for transparency. The World Bank says that, overall, it is far easier to launch and run a business in South Africa than it is in any of the BRICs.

An important part of what gives South Africa its competitive edge is the quality of our people and the way we do things. And we do a lot more than many imagine.