A year of living dangerously in South Africa
In the previous note, I summarised our view of the world economy. If you missed it, read it now. In this note, I comment on our expectations for SA.
There are many negatives locally. The state-owned enterprises (SOE) have been run into the ground by the cadres and gutted financially in recent years. The same goes for the state’s finances. Debt has become unsustainable and I can’t see how we are going to avoid a further downgrade.
Additionally, this is an election year and politicians will turn up the populist rhetoric. So, I reckon we won’t see strong investment commitments until at least after the elections. I know that the popular theory is that we must wait until after the elections for the “good” guys to strengthen their powerbase, then all will be well. I am afraid I do not ascribe to this theory.
The “good” guys were mostly part of the previous regime that caused immense damage to the SA economy. I did not hear them speaking out then. Also, during the past year, the “good” guys have mostly been in charge anyway and I am not particularly impressed with their performance so far! Will this suddenly change after the elections?