By Prof. Busisiwe Mavuso
What stands out in KPMG’s recently released Africa CEO Outlook Report 2024, is that Southern African CEOs are more pessimistic about the global economy than they were a year ago. They are also more pessimistic than their African and global counterparts about the consequences of geopolitical tensions.
The survey was conducted in August to September last year, before the elections, when there was uncertainty, with the experiences at instability of coalition governments at local government level not having been inspiring.
In 2023, 70% were optimistic about the global economy, up from 64% the previous year, but this year’s survey finds that only 52% have confidence in the economy. The report says 54% of Southern African CEOs believe “geopolitical complexities represent a top of mind challenge they need to address”, against 42% for Africa and 47% globally.
The findings emphasise what a trying time it is for South Africa’s business leaders, with global tensions highlighting how important it is to keep focused on driving the reforms that will provide a strong foundation for sustained economic growth. The country is on the right path but many threats exist that could push us off it.
At this precarious moment in the country’s history, let’s not add any self-inflicted wounds to the litany of those that have come before.
South Africa is in fact in a hugely advantageous position in that we have strong historical and trade ties with both East and West.
Few other countries enjoy such an advantage. Given the public discourse lately, we should work harder to benefit from our relationships rather than making it a divisive “us or them” situation.
What we should strive for is to be a friend to all and work to find common ground between partners, an approach India seems to be getting right – and this is where our strength lies – our economy is less than 0.5% of global GDP so we don’t have any economic clout. We’re too small to pick sides.
It’s also important that we work hard to improve our trade with each partner. Our trade deficit with China, for example, is at R177bn – up from about R23bn in 2010. We also have deficits with Western countries. Improving each of those would certainly boost the economy.
That kind of approach would work well with South Africa’s stated non-aligned status. Let’s stick to it.
The KPMG report says the “growing complexity and variety of demands of leading a large organisation are being felt keenly by Southern African CEOs, with 77% confessing they feel under more pressure to ensure the long-term prosperity of their business.” It also says Southern African CEOs are the most concerned about the impact of economic decoupling between countries which may lead to pricing pressures over the next three years, followed by cyber security and emerging or disruptive technologies.
Stefano Moritsch, KPMG’s global geopolitics lead, writes in the report: “Geopolitical competition remains broadly inflationary and can cause disruptions to supply chains, trade and investment because it shifts the focus of investment from efficiency to resilience.”
These are the issues South Africa’s business leaders need to consider in their decision-making. Nationally, however, the best way to prepare ourselves for any kind of shocks that may come the country’s way, externally or from within, is to build a stronger economy, and that is based on ensuring reforms are carried through successfully.
