The second year of COVID-19 was a tough year for SA


The national state of disaster, declared in March the year before, remained in force with many of its attendant restrictions. The economy performed better than initially expected, but the warning signs burnt brightly; from constrained energy capacity to an unemployment rate moving inexorably upward, with the expanded rate – which includes both those out of work and those who have given up looking for work – nudging 50% by year end.

The country experienced a period of great disruption in July 2021, when unprecedented levels of public unrest wrought havoc in KwaZulu-Natal and parts of Gauteng, paralysing the vital N3 artery between the country’s biggest commercial port and its economic heartland. The unrest raged like a veld fire, with the same level of destruction. But, like a veld fire, the flames might have raged high yet they were quickly extinguished. The green shoots were fast to come through the devastation. After an initial drop, the benchmark All Share index swiftly recovered.

The market takes a long view, something not always shared by mainstream media and certainly not the often polarising elements of the social-media commentariat. It’s something that we should do well to heed ourselves in a country where the level of inequality is heart-rending and the fracture lines in our society even more visible than before, due to the impact of COVID-19.

SA has weathered countless challenges. We are a nation of grand passions, even grander hopes and equally strident opinions. This is a place where debate doesn’t happen behind closed doors but out front in the open. True democracy is never neat and tidy, but vibrant, loud and complex. However, if we are not careful we can easily disappear down the rabbit hole of despondency. We shouldn’t do that; SA’s institutions were tested once more last year, but not found wanting.

The first of Acting Chief Justice Raymond Zondo’s three-part report into state capture has provided an unequivocal and unashamed mirror to the recent history of this country during a public process that has been as necessary and cathartic as the Truth and Reconciliation Commission that helped the country make sense of the worst excesses of the apartheid state.

Turmoil is unsettling, but it is not necessarily bad. It is a vital ingredient for change, especially in a situation where change is necessary for a sustainable and prosperous future for all. The key to achieving successful change is the presence of leadership, supported by the strength of the institutions that underpin the society – as well as our own sentiments towards the change taking place.

Winston Churchill famously described an optimist as a person who saw the opportunity in difficulty, while a pessimist saw the difficulty in every opportunity. Last year, the markets saw the opportunity rather than the difficulty. At the close on 31 December 2021, the Mid Cap index was up 24.06% for the year, outperforming the Top 40, which itself was up 20.95%, while the Small Cap index was up more than 50%. It’s something that comes into even sharper relief when we look at the US, where the performance of the S&P500 finished at an all-time high, thanks to a handful of stocks – 10 in fact, while 93% of the index experienced a sell-off in excess of 10%.

There is no doubt that we face challenges as a country but, equally, there can be no doubt of the resilience of our markets and their potential to create value – and sustainable value – across the board. The challenges won’t go away in 2022. The pandemic – despite the very encouraging early indicators that the Omicron variant is far less virulent, though highly transmissible – will be a factor for some time to come. The world will have to learn to live with it, while protecting itself against future pandemics. We will still have the dilemmas of energy generation on an unstable grid, joblessness and a looming fiscal cliff.

This is, as the Secretary-General of the UN António Guterres has reminded us, a time to build back better. It’s a vital injunction for us on the tip of Africa, but it is critical for the rest of the world. Building back better means building back sustainably, whether this is in renewable energy or creating prosperity for communities and developing sustainable jobs, rather than short-term profits. There are plenty of benefits in the near and the long term to be made in going green; good news for the bottom lines of both corporate and community balance sheets.

SA will experience other inflection points this year; more crises to be managed. Some we can foresee and prepare for, others might catch us off guard. Our greatest safeguard for either is the strength of our key institutions – both state and private – and the incredible resilience we have as a country, coupled with the will of a people that has shown that it will always stand as one in times of great crisis. As the father of the modern SA Nelson Mandela reminds us from beyond the grave, ‘after climbing a great hill, one finds that there are many more hills to climb’. It’s eerily prescient when you think of the challenges that lie ahead in 2022, but it’s also equally encouraging at the same time. If we can successfully summit one mountain, we have the necessary wherewithal to summit others. I believe we can.

Dr Leila Fourie
Group Chief Executive Officer
December 2021