There are three possible scenarios that could play out for South Africa as an investment destination: a 30% chance that this will remain unchanged, a 60% probability that the country be relegated to the “second division”, and a 10% possibility of a failed state, said Chantell Ilbury – strategist and lecturer who has co-authored several books with renowned scenario planner Clem Sunter.
Scenario planning is therefore crucial even in the short term, with many different factors at play, including the outcome of the African National Congress leadership race and the possibility of a downgrade to junk status by ratings agency Moody’s at the end of the year.
“Globally, games are being played. In South Africa, there are games within games within games,” Ilbury added, noting it is important to “question assumptions”.
In a changing world, it is important to consider the “new normals”, Ilbury told the audience at Sasfin Wealth’s Beyond Global Wealth conference, These are driven by four main factors: globalisation (leading to an economic power shift and increasing barriers to trade); digitalisation (with social media giving a voice to consumers); individualisation (with a swing to individual power, and increasing middle classes); and technological conversion (characterised by “disruptive innovation”).
When considering the “new world”, it is key to look at the “flags” that come up.
In a global context, these include the red “religious flag”, with increasingly troubling prospects in the Middle East, religious fundamentalism and other factors leading to an “unsettled” environment. Added to this is the red flag of Russia, China and North Korea.
The “grey flag” – referring to ageing populations – does not affect Africa, but the challenge here is to get young people into employment.
The “anti-establishment flag” (which has manifested as Brexit and the Donald Trump presidency) can be viewed as either red or green.
In South Africa, flags include wide-scale governance failure, which will affect the country’s global competitiveness, said Ilbury. “There’s not one sector where the relationship between government and business is healthy ... We need to get the stakeholders together to start thinking – otherwise we will never deliver on the NDP [National Development Plan].”
The red “social flag” (strikes, student protests and unrest) and “economic flag” (credit ratings and infrastructure) are major factors in scenario planning, as are the “environmental flag” (pointing to issues such as food security, drought and energy mix) and the “technology flag” (cyber threats and “disruptive technologies”).
Considering the “clear vision” of countries such as Mauritius (to be a “smart island” by 2030) and Rwanda, the question is whether South Africa’s education system is preparing young people for the new order, asked Ilbury.
“With innovative thinking and understanding a changing world, we could connect the dots and bring this economy into play relatively quickly.”
