Cape Town - Is South Africa broken? No, it’s a hard country to break, although some are trying their best, Colin Coleman, head of Goldman Sachs in South Africa, said on Thursday.
Speaking at the Thomson Reuters Africa Summit 2017 in Cape Town, Coleman said: “South Africa is eight weeks away from a binary moment where new leaders will be elected to the ruling party, and the country has two choices.
"It can go into the direction of patronage politics, with a set of leaders who capture resources and distribute them among themselves and their constituencies to ensure victory in the future, or restore the constitutional path as was seen during the presidency of the late former president Nelson Mandela.”
He pointed out that South Africa has a sound Constitution underpinned by a strong judiciary, and that the business community, labour and civil society have recently joined hands to become more outspoken than in the past.
Coleman cited the emergence of Business Leadership South Africa (BLSA), of which he is a board member, as an example of how business has started to find its voice.
He believes South Africa can get back to a 3% GDP growth rate if it gets “the basics right”.
“If the constitutionalists are elected to positions of power, then patronage politics would fall into decline. That will find a fertile ground. It will see a huge renaissance of optimism, market confidence and more constructive behaviours by offshore investors, local institutions and local companies.
“And in the right circumstances, the country could even push its growth rate to 5% in three to five years.”
However, he pointed out that state-owned enterprises are the “biggest systemic failure” in South Africa currently.
Eskom the elephant in the room
“And the elephant in the room is Eskom,” he said, citing the recent poor governance scandals and more recently Eskom’s significant deviation from supply chain management procedures.
Fin24 earlier reported that Eskom tops the list of state entities deviating from procurement regulations, with more than R31.3bn in approved deviations.
Coleman said Eskom has a “huge restructuring job” at hand and that the time is right to exploit opportunities in the electricity sphere, similar to what mobile phones did to the communications sector.
He concluded by saying South Africa is at a crossroads, where the country is about to choose between politics of patronage where the old world, traditional hand-me-down political elite will face off against those in favour of a constitutionalist future where leaders will drive institutional reforms.
“I believe the good guys will overcome the bad guys. The potential for turnaround is there and I’m hopeful that it will take place,” Coleman said.
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