South Africa is a good place to be - provided the world recession is V-shaped, Clem Sunter, famed scenario analyst, told 500 delegates at a breakfast in Sandton on Wednesday.
If the recession is u-shaped, lasting years not months, "our social cohesiveness will be sorely challenged".
Sunter puts the odds of a V-shaped, quickly ending world recession at 60% and that of the U-shaped "perfect storm" at 40%. This scenario implies years of zero or negative world growth and high unemployment reminiscent of the Great Depression.
Sunter does not under-rate the horror of the 6% negative growth reported for the first quarter. He is particularly perturbed that recession has hit not just mining and manufacturing but also the services sector, which is bigger than the other two.
In brighter vein, South Africa is being buoyed by sports events and the infrastructure expansion boom, its banks are unscathed, emigrants are returning "having lost their jobs", Zimbabwe is stirring and Africa remains an exciting hinterland.
Sunter says "so far so good" on the question of SA's regime change. He says so far the Zuma administration shows signs of being inclusive - being concerned about the poor and the unemployed but keeping the rich on side. That's vital as the rich have the capital.
But he does qualify what he says, adding "we are still in the talking phase".
"South Africa has improved in the World Competitiveness Report compiled by IMD from 53rd out of 55 to 48th out of 57. That is a big improvement.
"There is some progress towards rectifying the problems that made us uncompetitive - crime, HIV/Aids, worn-out infrastructure and uncompetitive industries, such as textiles and clothing. "
He applauds some progress towards the dual logic economy - adding value to raw material exports, pushing tourism and sport and being the gateway into Africa.
Sunter remains a champion of small business. He says no company profit of less than R1m should be subject to tax. He also advocates zero capital gains tax below a certain level.
"I think we should develop the capital ladder, emulating the example of Muhammed Yunus, the Bangladeshi who won the Nobel Peace Prize for pioneering micro loans to the very poor."
Sunter says even if the world does come out of the recession fairly quickly, certain things will change:
1. There will be no more easy credit
2. Banks will be more tightly regulated
3. The East will become the economic equivalent of the West by 2015
4. New technology, particularly energy efficient technology, will lead the next boom.
Sunter says the implication of eastern ascendancy is "huge".
At the moment, the US economy is worth $14trn a year and Europe $8trn. Since it hit the wall in 1990, Japan has made little progress but the Tigers, together with China and India, will propel Asia faster than the west. This is good for non-aligned South Africa.
"SA has 35% of the GDP of Africa. That is equal to the US share of the world economy. We are the main player on the African continent, which is better than being in Britain, where you are not even dominant in Europe. Africa is opening up and SA remains the launching pad.
"This is recognised in deals such as the ICBC purchase of 20% of Standard Bank and the Indian bid for a slice of MTN."
Sunter says trade with Zimbabwe is already increasing dramatically. Quick witted people such as his Indian friend who owns most of Louis Trichardt and is busy buying Musina, stand to score there.
Sunter said South Africans appeared reluctant to recognise and celebrate excellence.
"I was on the adjudicating committee for a very attractive bursary. We were blown away by one applicant out of St Johns College, Siyabulela Xuza. He had mixed chemicals in his mother's kitchen and came up with a more energy intensive rocket fuel.
"As a winner of the SA Science Olympiad, he travelled to Europe and met the king and queen of Sweden. He went to the US. A sample of his fuel was sent to NASA, who were so impressed by it that they named a minor planet after him. He subsequently won a top science scholarship to Harvard. This young man has appeared on Carte Blanche but has certainly not had the coverage of Julius Malema.
"The US celebrates excellence. Like the Australians, we tolerate mediocrity. Gavin Hood, the maker of ‘Tsotsi', has just finished his first Hollywood movie. We are world champions at rugby and at one-day cricket. Can we use that excellence to improve our soccer team?"
well said.
Killed the thread!