This Week's Barrage Of Bad News Has Been Overwhelming
Updated: Oct 13, 2019
If this week did not convince you that SA is in a serious state of flux, nothing will. Take your pick from the series of headlines that made the news. President questions public protector's grasp of law. Eskom posts net loss after tax of R20.7bn. ANC Youth League disbanded. Investors jittery as Old Mutual, Moyo uncertainty continues. Government to divert funds from Prasa to pay e-tolls. Investors bewildered by attacks on Gordhan, Ramaphosa. Post Office CEO resigns. But by far the most important headline of the week is the higher unemployment number for the second quarter of 2019, which came in at 29%.
It is crucial not only because it is the highest in 11 years. It is important not only because the 6.7-million unemployed people, plus the 2.7-million who have given up looking for work, directly affect all South Africans.
The record-breaking surge in unemployment numbers is important because it is, in part, a report card or a reflection of all of the other headlines that have plagued us in the past few months, and perhaps this week to the point of feeling overwhelmed.
The bottom line in all our challenges is that we do not share a sociopolitical will to make the changes we need to make - and that is the fault of politicians and business leaders alike.
I recently read a letter to the editor that articulated at least one South African's view of why President Cyril Ramaphosa appears to be struggling to sustain the new dawn.
"It is folly to think that President Cyril Ramaphosa can root out more than a decade of political interference in key state institutions overnight. But he can dismantle this system, reduce corruption and bring about reforms to regulatory and administrative institutions ... Ramaphosa must tread carefully yet decisively to set in place a system of radical institutional reform without triggering an internal political crisis. But with a deft touch and strong independent leaders in key institutions, in concert with business leadership, his chances are good," says Adam Craker, CEO of IQbusiness, in Business Day.
Adam is a lot more sober in his outlook of the political challenge we appear to be facing. I like Adam. I wanna be like Adam. But I am just too impatient to be as measured as Adam. I want real action.
Then there's Old Mutual v Peter Moyo. I am no lawyer, so I cannot provide a professional opinion on the legal merits of each party's case. However, it has given us all a sneak peek into how listed companies and their executives behave when there are disagreements and personality clashes. On the day Moyo won his high court battle, the insurer lost more than 5% in market cap. Old Mutual is now appealing against the judgment, and no doubt shareholders will continue to be punished for this uncertainty created by the very board they must now trust to resolve it.
Last week, Fitch kept our long-term foreign and local currency debt on BB+, the first level of sub-investment grade, but it downgraded the outlook from stable to negative. Its reasons for this included concerns about the government's financial support of Eskom and the obvious low economic growth.
The reality is that the government has to continue to finance the recovery of Eskom, and low economic growth is likely to be with us for much longer than we would like.
We have no choice but to be more decisive in demonstrable actions that can stimulate the economy, and it starts with avoiding the unnecessary headlines.
This article first appeared in the Business Times section of The Sunday Times on 04 August 2019.