During the third Nation in Conversation (NIC) discussion forum at Nampo Cape, a panel of industry experts took a closer look at the challenges and opportunities within the context of both the global and the South African economy.
The panel consisted of Madalet Sessions (Denker Capital), Dawie Roodt (Efficient Group), Dr. Roelof Botha (Optimum Investment Group), and Prof André Jooste (Stellenbosch University). The facilitator was Theo Vorster (Galileo Capital).
An overview of the South African Agri economy
Professor André Jooste set the tone for the discussion by giving an overview of the current South African agri-economic climate. According to him agriculture, over and above its low contribution towards GDP – which is normal in a developing economy – contributes in various ways to the economy such as being a stimulus for job creation, acting as an economic multiplier, enhancing food security, and ultimately contributing towards social stability.
He continued to explain that the country’s agricultural sector is in a state of good health, but identified several challenges that can have a negative effect on growth. These challenges include biosecurity, the ambit of Act 36 concerning agricultural exports, heightened input costs, climate change, infrastructure deficiencies, and growing concerns over market access.
The world economy at a glance
At present, there are two major variables at play in the world economy, namely the conflict in Europe and high levels of inflation.
According to Dawie Roodt the ongoing war between Russia and Ukraine is hugely impacting commodities, both hard and soft. He believes that the world should prepare for a long protracted war that will continue to affect commodity prices. In terms of high inflation rates globally, there is according to Roodt also mounting pressure on inflation expectations. These two variables create an environment that is not conducive to economic growth or financial markets. The latter is especially true of emerging economies, such as South Africa.
When it comes to making investment decisions within this global state of economic turmoil, Madelet Sessions reminded investors that capital is cowardly. It comes to play when risks are limited and opportunities are ample and hide away when risks are high and opportunities are limited. The impetus should therefore not be on happenings within the economic future, but rather on mitigating as many risks as possible to ensure a resilient business irrespective of the economic climate.
South African economy at a crossroads
Dr. Roelof Botha believes that South Africa’s public finances are not the worst it has been in the past 20 years. He based this statement on the fact that the country has managed to stabilize its public debt GDP ratio and that the three rating agencies have upgraded the country’s economic standing.
It is however important to take cognizance of the relationship that exists between the country’s economy and the political landscape. An example hereof is the corruption associated with state capture. Dr. Botha is however optimistic about the potential of a political turn-around soon and he stated that there is a definite drive to address the current economic challenges.