Old Mutual sees resilient SA consumers aiding growth

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Old Mutual's head office in Sandton, Johannesburg.
Photo: William Horne
Old Mutual's head office in Sandton, Johannesburg. Photo: William Horne

South African consumers are holding up in the face of unemployment at a 17-year high and uncertainty related to the coronavirus, according to the continent’s oldest insurer.

"Consumers have been surprisingly resilient," Old Mutual CEO Iain Williamson said in an interview with Bloomberg News on Thursday. The company offers a wide array of financial services, including banking and savings products. "Our own front-end of our business is mirroring that kind of a pattern."

Economic activity appears to be returning to levels seen before a strict five-week lockdown imposed at the end of March shuttered most business, the CEO said. A second Covid-19 wave in South Africa would probably result in less severe containment rules as the government pushes ahead with plans to boost the economy.

The government is taking the right initial steps to revive the economy, and the crackdown on corruption within the ruling African National Congress is good news, Williamson said.

"There's positive momentum," he said. "It's a question of where's the tipping point, where people start saying, 'actually the return prospects here are attractive enough given the risk.'"

To push South Africa's growth beyond Old Mutual's forecast of 1.5% to 2% by 2022, the country requires deeper structural reforms and clarity around issues such as labour-market flexibility, mineral-extraction rights and telecommunication-spectrum allocation, Williamson said.

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