The chairman of Shoprite Holdings, Dr Christo Wiese, says that “attempts to find practical solutions to our social and economic challenges have been futile simply because the wrong questions have been asked”. Writing in the group’s annual report, published on Friday, Wiese says bluntly: “There is nothing structurally wrong with South Africa. The issue is that we are not following the policies that could so easily make life so much better for all South Africans.
“The right question is not: ‘What do our people want?’ Nor is it: ‘What do our people need?’ The right question is: ‘What can our people not do without?’ The answer is self-evident – our people need jobs.
“Once we arrive at that answer, then everything else falls into place. Everything our government does should be determined by whether it creates or destroys jobs. If guided by this test, we will arrive at the right solutions and focus on implementing policies and actions which bring more people into the economy.”
Wiese is decidedly more outspoken in this year’s report than in last. Last year he was optimistic and cited the work then being done by former Minister of Finance Pravin Gordhan and Treasury to restore investor confidence and boost growth. In 2016, Wiese wrote: “I have said much needs to be done before South Africa will again be a winning country but let me stress just how deeply impressed I was during the overseas roadshow by the world-class talent within the SA Reserve Bank and the Treasury. They are a measure of the South African expertise we have available to make the country a better place for all South Africans”.
A year is a long time under the Jacob Zuma presidency.
In the 2017 report, Wiese says that “South Africans have recently had some cause to contemplate what has gone wrong in our society and economy to have resulted in this dismal outcome”. He says there is “little doubt that the absence of growth in the economy is putting South African consumers under enormous pressure. In the course of our work in the communities in which we operate, we are constantly aware of heightened levels of financial distress”.
And while the Reserve Bank’s decision to cut interest rates and government’s new Inclusive Growth Action Plan are a start and “reflect a recognition by the state and regulators of the need to stimulate economic growth following the economy’s descent into recession”, Wiese argues that this is not nearly enough. “With a GDP growth outlook of less than 1% at best, and with our foreign currency debt downgraded to junk, these steps are widely acknowledged as palliative in a situation where intensive care is required, coupled with innovative thinking.”
In September, the World Bank halved its 2017 economic growth forecast for South Africa to 0.6%. At last month’s Monetary Policy Committee (MPC) meeting, the Reserve Bank adjusted its forecast to 0.6%, slightly higher than the 0.5% at July’s meeting. At that meeting, however, the forecast was halved from the 1% expected as recently as late May. (Growth of 1.2% was expected at the last MPC meeting of 2016.)
“At the heart of South Africa’s challenges is widening income disparity caused by rampant unemployment and poor education. The unemployment rate for the first quarter of 2017 was 27.7%, the highest it has been in 14 years. Of more concern is an unemployment rate among 15 to 34-year-olds of 38.6%. Various local and international organisations estimate South Africa’s youth unemployment at over 50%,” writes Wiese.
He reminds shareholders that the group is the country’s largest private sector employer, with over 143 000 employees. It creates “between 5 000 and 12 000 jobs a year. We walk the talk.”
It is important to note that while Wiese’s letter to shareholders highlights the challenges facing the country as well what he believes are solutions, he is not overly bearish or indeed negative. In a wide-ranging interview with Moneyweb managing editor Ryk van Niekerk earlier this year, Wiese offered useful perspective that we all-to-often easily forget: “In my opinion, in the last 50 years South Africa has been through tougher times than what we’re currently experiencing. There is no reason to believe that in this dark night, there won’t be a dawn again. Things will be better again.”
“If people ask me how I feel, then I’ll say I’m not feeling hopeless, but I’m bloody frustrated. Because we can so easily make life better for so many people in this country. It’s so obvious, and that is frustrating for someone that loves this country. And now I can also tell you after the trip I went on with minister Gordhan, I told people that it was clear that people across the world want South Africa to succeed. To be a successful country and to become even more successful. Everybody wishes that for us, but in the end it is in our own hands. And the point that you made – we all need to play our part every day to make the world here better.”
“All I ever tell people when they complain about South Africa – I’ll say yes, but in comparison to what? What do you think things are like in Europe with their migration problem. What do you think things are like in England now where they have a hung parliament, where they have to negotiate Brexit. How comfortable do you think that is? Problems are everywhere in the world, our problems in my opinion, are relatively easy to solve. If we start using our heads. Other countries are stuck with problems that are virtually impossible to solve.”
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