MAGDA WIERZYCKA'S PRESENTATION AT THE FW DE KLERK FOUNDATION ANNUAL CONFERENCE

Delivered by Magda Wierzycka and published by the FW de Klerk Foundation on 31/01/2025 

 

South Africa’s Position In The World Today From A Business And Ethical Perspective

 

It is a privilege to participate in a conference that speaks to both the past, the present and the future SA.

Let me start with an anecdote which speaks to both where SA was and is, as well as to who FW de Klerk was.

  •  I met FW de Klerk in London – 2019 – PwC luncheon with investment managers – he was a guest speaker
  • He valiantly stood up and spoke about SA as an investment destination of choice – being supportive of the country he clearly loved 
  • Faced barrage of accusations – mostly focused on corruption 
  • I thought he needed help.  I remember standing up and saying  “My name is MW and I am proudly South African”.
  • McKenzie, SAP, Deloittes, KPMG, Bain (I think I skipped PwC) – they all looked at their plates and that was that.
  • When bribes are paid there is always the one that pays and the one that accepts – how much easier but emerging markets – McKenzie paid a mere $122m in fines for bringing down Eskom.  But I digress.

 

Much has changed since that lunch. 

Jacob Zuma:

  • shadow of his former self, despite his gallery of rouges reappearing under the guise of the MK Party.  
  • made EFF irrelevant

 

Cyril Ramaphosa is far from ideal.  

  • We had greater hopes for what he can achieve.  
  • The best description of him has been non-strategic and indecisive.  This has played out since his election.  What we can thank him for is that ANC’s share of the vote dropped to 40%.

 

We now have GNU.  The best thing about it is that it has brought about accountability to the table again.  

It is also the most business-oriented climate that we have seen for a better part of 20 years. 

Domestic business confidence is at its highest in years.  


There is a lot of
pollical bluster:

  • Expropriation Act – codify what is there.  
  • NHI bill is – years to get through courts and no budget 
  • Internal sources: in cabinet it is business as usual. 


This does not scare corporate SA.

 

QUESTION IS: WHERE TO FROM HERE?

In 1994 when the country was liberated from the legacy of the past – 10 years were the golden decade.  We even had a budget surplus under Trevor Manuel.  Can we get back to that era?  

 

CHALLENGES ARE ENORMOUS AND THE ROAD IS LONG.

IT IS WORTH FRAMING SA IN THE CONTEXT OF AFRICA AND INVESTMENTS – forgotten continent

  • Despite:
  •  being home to 30% of world’s mineral reserves, 40% of gold and 90% of chromium and platinum.   
    • fastest growing and youngest population in the world. 


BUT

  • will be disproportionately affected by climate change it is estimates that by 2050 there will be 1.2 billion climate refugees moving North
  • Eskom reliance on coal – 2050 a lot of WC farmland will be a wasteland
  • is being left behind in technology, infrastructure and financing 


SOUTH AFRICA SPECIFIC COMMENTARY – AS INVESTMENT DESTINATION – BRICS – s is not a plural letter

Attended Miami conference – panel of largest private equity managers – BRICS – “s” is not a plural letter.  

 

HENCE ARE WE REALLY RELEVANT? 

WE ARE LOUD (International court of Justice) BUT ARE WE RELEVANT?

Difficult to say. 

  • Foreign money is still flowing out of SA.  
  • Inflation is high.  
  • Budget deficit is increasing.  
  • We are on a FATF’s greylist. 
  • Economic growth is anaemic at 1.6%. 
  • There are problems that we will not solve in our lifetime: unemployment, poor education. 

 

This is playing itself out against a polarised world where alliances and partnerships are in the spotlight.  

More importantly we are moving into a TRANSACTIONAL WORLD

Business understands transactions and dealmaking the way politicians do not.  

In dealmaking optics and bluffing matter.  Photo ops with Putin are not a way to strike a deal.

Particularly when:

  • Our largest trading partners are US and EU.  
  • US can easily destabilise SA – the biggest donor to our HIV/AIDS and TB programme is US – recent executive order – over $400m in aid has been suspended – 13 000 people in health care sector
  • AI arms race is leaving SA and Africa for that matter behind with no investor support for AI and AI related infrastructure investment.  

 

WHAT CAN SA BRING TO THE TABLE?

  • SA controls 70% of the world’s supply of manganese and 80% of platinum– key input in car batteries – particularly as clean energy takes a back seat.
  • US imports 100% of its chromium, 25% of its manganese, titanium, and platinum from SA.
  • Parts of Southern Africa still look to SA for leadership.
  • Largest per capital economy in Africa.
  • Perceived as stable again with two re-ratings expected by some investment banks.
  • Wealthy people are coming back – SA has a benign tax regime.
  • Huge effort is being made by regulators to remove SA from greylist
  • Increasing investment in infrastructure through private and public partnerships with potential for much more.
  • Some (but not enough) white collar prosecutions

 

So which camp do we choose to do a deal with and what are the implications?

CHOOSING EAST

  • China and India provide massive consumer bases
  • Diversification of trading partners
  • Unlocking of infrastructure investment
  • Maintaining BRICS status for what it worth (New Development Bank has little going for it)
  • Risk of becoming a victim of Trump’s policies
  • Risk of trade imbalances – can we compete on price
  • Risk of debt dependence

 

CHOOSING WEST

  • Continued access to EU and US markets with significant purchasing power where we have long standing trading frameworks AGOA 
  • Faster progress in technology as Western firm bring in more advanced technology and management practices to help modernise local industries
  • More culturally familiar way of doing business
  • Alliance with countries which emphasise democratic governance and rule of law which aligns with the constitutional principles of post-apartheid South Africa.
  • Increasing confidence in SA prospects by rating agencies – unlocking capital inflows 
  • Domestic optimism which matters a lot
  • Still at risk of becoming a victim of Trump’s policies

 

Only once that is answered we can start to debate SA’s position on the global stage. 

Ideally  it is a bi-partisan non-alignment approach.  Realistically I think that will be difficult.