As a parent, I often think about how we can build a better South Africa for them – and all our children – to inherit. How can we overcome the risks rampant in our society to set them up for success? How can we stop the internal arguments over things that don’t matter to focus on the things that do? Things like education, eliminating crime, kick-starting economic growth, and creating jobs. We are on a precipice. We can still turn our situation around, but we must act now. We must identify the most prominent risks we face and start to address these head on.

Our biggest risks right now

Education:

My biggest concern is that we’re not preparing ourselves enough as a country to produce the kind of employee we’ll need in the future. I am deeply worried about the quality of education especially at primary school level. Recent employment statistics show that 73% of our unemployed youth did not complete matric. At least 40% of all learners drop out of school in South Africa. And only a fraction of learners who sit for matric pass mathematics as a subject. And this was prior to Covid-19. Now, with Lockdown affecting schooling many of the children are only experiencing full-time learning 30-40% of the time.

The problem is not with children. It’s the system that’s failing them. In China, young children are learning English and other foreign languages to prepare them for the long-term scenario where China might play a dominant role in global trade. To support that, a Chinese population that speaks prominent foreign languages becomes crucial.

Maths is also compulsory, teaching and learning hours are longer and children’s rights are valued above educators’ rights. I’m jealous of forward-looking policies like these that put young people first. The future job market will be vastly different – more niche, data, and digitally focused. And the world economy will be more integrated. Businesses will be able to hire workers for specific, ad-hoc jobs from anywhere, at any time. Maths is likely to be where the need will be. Our children will need to compete with youths from China, Germany, etc. My fear is that we are behind the curve in setting them up to do so.

At the moment, many of our interventions to prepare for a globally competitive economy do not have a long enough horizon. We can change this. We must be youth-centric in our policies and do everything with the understanding that it’s our children who will be managing the economy in the future. Protests for access to education have been a common sight in South Africa in the last few years. We have an incredible advantage with our diverse backgrounds and burgeoning demographic dividend. We must do everything we can to capitalise on this.

Debt:

Our debt to GDP ratio is another way we’re failing our children. It’s sitting at just above 80% of GDP. This means the debt-service burden will fall on future generations. It would have been most helpful if most of this debt were meant for capital projects, building the most needed economic infrastructure that could help propel long-term growth prospects.

Other risks:

Electricity: I’m worried about the security of our supply of electricity. The crisis at Eskom is extremely urgent. The growth this country needs depends on us fixing this situation.
Vaccinations: I’m concerned about the national rollout of the vaccination programme. We’ve had over a year of lockdowns in one form or another. We’re going to pay some serious damages in the next 18 to 24 months. It’s good we’ve started but we must fast-track the roll-out before there’s more economic damage.
The fiscal position; the government’s own public finances. This has been dwindling over time. But think about it. Today, 18 million people are on social grants, with 14 million taxpayers. 20 years ago, this was reversed, with just 2.5 million people on social grants, and 12 million formally employed. The situation now is unsustainable.

Addressing our risks head on

Growth:

To fix these problems, we need to generate growth. Growth has been less than 1% for too long now. The last time our economy was creating meaningful jobs was when the economy was growing at about 5% per annum soon after 1994.

PPPs:

We also need more successful public private partnerships (PPPs). I believe we lost a great opportunity by not leveraging the private sector distribution capabilities in rolling out vaccines early on. The private sector is geared for distribution, logistics, and cost-saving. The same applies to the production and distribution of electricity. There are examples where these partnerships have worked well. Telkom is an example of this working in practice.

I think banks are also failing here. We are not playing our part well in having crucial dialogues with the government. I think that under the previous administration, we abandoned PPPs. The private sector looked inward – and for ways to exit our investments out the country. I think this was a mistake.

Taking ownership:

The business sector needs to remember that we are all responsible for the future of South Africa. We must take ownership and become active corporate citizens. We must fight in the policy space to ensure we make things better for the future. The private sector must increase its voice significantly and be in public policy spaces that matter.

The risks I’ve outlined were prominent even before the pandemic; now they’ve become even more urgent to manage effectively. The fiscal situation has worsened. The lackluster growth has been made worse. I remain optimistic and have hope that we can turn it all around if we work together. The lockdown has also shown us what we’re capable of as a Nation. Who could have thought so many companies could shift their normally office-based activities could run your entirely from home within weeks? Call centres as an example? If we could achieve that, we can achieve a lot more if we collaborate.

ENDS

Sidebar: Big risks in the banking sector:

The biggest risk is credit risk. So many companies needed payment breaks or closed as a result of lockdown and were unable to pay their dues. There were consequent job losses as well. The growth outlook is still muted which means investor confidence is very low. We can see from the amount of cash corporates are piling up that they’re not intending to invest it in their companies to buy additional stock to sell later. So, credit risk stays my main worry.
Payment is another concern. Big risk of disintermediation in the financial sector at the moment. Lots of fintech’s recently came into the market that doesn’t have as much regulation as banks. This can be dangerous. If one of the big five banks were to collapse, we know exactly who its exposures are, so we can adjust our capital requirements accordingly. But when you allow lots of non-regulation entities, there’s no opportunity for that. I am a big fan of fintech, but we need a level playing field and fair regulation that applies to all players.

Sidebar: Big opportunities in the banking sector:

Using client insights to foster greater financial inclusion. Client insights are a powerful tool to promote financial inclusion and better client experiences. Young people especially demand to be understood. They only want to be shown products that are relevant to their needs. The best banks are those that can differentiate client-level behaviour and tailor-make offers to individuals.
Cloud computing, mass data and data analytics: We have the ability to process massive data sets through cloud computing. Through this, many pioneering innovations come about. Again, it’s about using the data clients have in their audit trails to tailor make solutions to their needs. As the bank for all South Africans, Capitec’s challenge is to ensure we use tech in a way that stays true to our fundamentals – to offer simple, accessible, affordable financial products that help our clients to live better.