From negative to stable – it may seem like only a small shift. SA had a close call this year when Moody’s affirmed the country’s credit rating at investment grade. It had in 2017 assigned a negative outlook to the rating and many feared that this was merely a pause before we would be relegated to junk status completely. This would have triggered massive capital outflows from the country and pushed up the cost of our already large government debt burden.

So when the ratings agency revised its outlook for SA from negative to stable earlier this year, the shift was anything but small. It was a crucial second chance at reviving our economy. At the same time, it also highlights the shift in sentiment that is becoming palpable in our country. President Cyril Ramaphosa’s new administration has been lauded time and again this year for instilling new optimism in the future of the country, and reviving consumer and business confidence from decade lows. The surge in the ‘expected business conditions’ category in the Absa Purchasing Managers’ Index to its highest level since 2001 during February 2017 provides but one example.

The South African Reserve Bank now expects the economy to grow by 1.7% this year, compared to its previous expectation of 1.4%. Yet, while this more favourable outlook provides the first indication that increased optimism may be beginning to have a more tangible impact on economic activity, we should not take for granted either the change in sentiment or its potential impact on growth.

Sentiment affects how we feel about being in this country and, I think, it also affects how willing we are to work constructively together to build a SA in which all its peoples can thrive.  And yet sentiment is fragile. We react as a nation quite sharply to events even without waiting for the full impact of an event to be unpacked: consider how the post-SONA optimism was tempered by the initial discussions on land redistribution. So we should take care to add positively to sentiment and to measure our reaction to events against the reality that there are many good people in our country and many tough issues we still need to confront before we will have built a fair, just and inclusive society.

If SA is to succeed in creating the sustainable and inclusive growth necessary to adequately address the systemic socio-economic challenges we face, we will need to prioritise policy certainty in key areas so that we drive investment in those parts of our economy that will compel the growth we need.

The country’s new leadership has taken the first steps to address this through providing clearer and more transparent high-level policy direction to investors, for instance in the SONA and 2018 Budget. There is still, however, much to do.

While the need to prioritise land reform has been raised key questions must be answered around what we should try to achieve in this regard as a country, and indeed how we should try to achieve that. So for example, in relation to infrastructure development, the SONA mentioned prioritising water, health and roads – all of which have great potential for employment. But what exactly do we mean to achieve and how? And so we can unpack many stated directions of travel in relation to policy.

However, building a growing country is not just the responsibility of government. We all need to participate actively in the coming policy debates – not just around our dining room tables, but with the relevant policy makers – since, ultimately, the policies set will be richer and better informed the more they are discussed. We all need to do our bit to contribute positively to the national sentiment: to celebrate that which is good rather than only focus on that which pains us.

Through the actions of every South African company and every South African citizen, the message should be: we are working together to make sure that South Africa is, once again, open for business.

Nicky Newton-King
Chief Executive Officer
April 2018
Image: Hanlie Huisamen