In South Africa, it is easier to be a pessimist than an optimist.
We could argue rightly so: Politicians are driving us nuts with their infighting, State Owned Enterprises (SOEs) are falling apart, unemployment is stubbornly high and the pace of transformation in industries is without a doubt still too slow.
While a change in leadership of the country will probably usher in some renewed economic confidence; employers, employees, entrepreneurs and investors still have to keep the economy ticking over on a day to day basis.
With that in mind, I compiled a couple of reasons to feel good about South Africa. If there are other thoughts that spring to mind then let me know (email@example.com) and I’ll update the list as we go along.
Special dividends are being declared
Businesses have been nervous and have hung onto their cash for a while but just recently there was a big announcement from Exxaro – and a smaller one from Sabvest – about making special dividend payments to shareholders.
As an empowerment success story, Exxaro is the big one declaring a special dividend of R12.55 per ordinary share to shareholders. According to its last annual report, Exxaro had just over 13 000 shareholders who held between 1 and 10 000 shares in the business – that’s 13 000 people who are going to have some unexpected cash in their pockets in the next few weeks.
Venture Capital is exploding in South Africa
Whether this is entirely a good thing is up for debate but in the last 3 years, the number of registered Venture Capital Companies (VCCs) has jumped from less than 30 to nearly 90. Much of this has been driven by the take-up of Section12J as an asset class where (excluding asset backed finance deals), there is probably around R1bn available for high-growth entrepreneurs.
Whether it will ever get released or not, there is over R1bn committed to the “CEO’s Fund” which was established two years ago which is aimed at supporting early stage businesses in South Africa.
The JSE is changing too slowly but …
In respect of the changing face of the South African economy, the JSE is effectively the public scorecard. We want to see entrepreneurial black-owned businesses making their mark on the exchange and coming through and not just through empowerment deals.
It’s still baby steps but businesses like Hulisani (Renewable Energy) has a market capitalization of R475m, RH Bophela (Healthcare) is over R500m, Rebosis (Property) is a R6.5bn business and the Motsepe backed ARC Investments is over around R7bn.
Investec also announced its Izandla deal (Property) deal last year which is around R550m.
Enterprise and Supplier Development (ESD) is finally gaining traction
ESD and BEE scorecard compliance has come in for plenty of criticism, especially with an economy which has been in the doldrums for the last couple of years. However, if you scratch beneath the surface there are a number of success stories and the Inyosi fund (which has disbursed over R250m to small black-owned businesses without a single default since inception) proves that entrepreneurs can stand on their own two feet and a smart approach to ESD can grow the economic pie.
Love them or hate them but Goldman Sachs is talking us up
Whatever your views on GS, they represent a wall of global money and they have a lot of very positive things to say about South Africa.
South African operations CEO Colin Coleman points out that with a little bit of direction, the SA economy could in fact double its growth rate.
We’re not out of the woods but …
There’s a bit to be hopeful about.
Over the last 2 years, South Africa has woken up to the fact that we have a lot of work to do. We need to tackle inequality, skills and give people hope that they can actually participate in the SA economy. I believe that 2017 was the “Year of the journalist” and the strength of our media, civil society and judiciary has given us a lot to be proud of.
A new politician isn’t going to change things overnight but momentum can be a powerful force when sent off in the right direction.