Manuel lists five trends that cannot be ignored

Former finance minister Trevor Manuel.
Former finance minister Trevor Manuel.

Johannesburg – Investors are taking decisions in an arena of growing complexity and there are five trends shaping the future we cannot ignore, according to former finance minister Trevor Manuel.

Manuel was speaking at the Old Mutual Investment Group’s Tomorrow conference earlier this week, where he unpacked five trends we need to take heed of.

1. Shift to the East

“In the past 15 years we have seen a shift in the centre of gravity of economic and political force, from the West to the East,” said Manuel. If current trends are sustained, India’s economy will be larger than that of the US by 2050, he explained.

“All of us in our training have opted for one particular understanding of a world view. We would understand the decision of the Fed rather than the decisions of the People’s Bank of China.”

China has shifted from being an exporter of goods that will add value for companies like big US electronic firms, to developing its own brands. As the profile of China changes, our understanding of it will also have to change.

2. Shifts in science and technology

“We must also get a handle on shifts of science and technology,” said Manuel. The automobile sector particularly has held up, but we do not manufacture electronic vehicles. “Trends in the world show the internal combustion engine is on its way out,” he warned.

We must consider the impact this will have on jobs, he said. There have been significant shifts in technological trends, and smartphones used to be considered a thing of the distant future. Manuel said we should start co consider what technology would enable by 2030.

3. Climate change

SA’s energy choices are fundamental decisions that link to the future, said Manuel. “Are we going to continue to pretend carbon emissions don’t matter?” Manuel asked. “How are we going to deal with the people at Megawatt Park who continue to insist the only way out is dirty coal energy production?”

Manuel said that although nuclear, which is cleaner than coal, is being put forward as an energy choice there are safety issues to consider.

“It is fundamentally important that government be asked to explain what the investment choices will be,” he said. “They will snuff out every other aspect of life by making early commitments to a big fleet of nuclear power stations when all the other social and economic options have not been catered for.”

4. Inclusivity

Inclusivity is not just a global trend but a South African issue, he explained. Decisions need to be taken to ensure better distribution and inclusivity.  

“We need to take these ideas forward in a particular way. If we don’t, apart from the absence of income and greater inclusivity of the SA economy, there are going to be very real issues.”

Among these issues include food security. Manuel explained that there is growing pressure from the rest of the world on continents like Africa for its resources. “What we are doing is not nearly sufficient. In SA there is too little engagement.” There needs to be active engagement and wealth creation, he said.

5. Demographic transitions

There are big demographic transitions, including in fertility and mortality, and the migration to cities. South Africa is on the “back end” of the demographic sweet spot, with more people of working age than dependents, he explained.

“The economy is doing too little to create employment. First we must understand the demographic reality and then the social challenge. If we don’t understand, we will leave too many people behind.”

Given the low labour absorption rate, Manuel said the gap in the education system must be addressed, as well as skills development. “Only 42% of the 800 000 people who will write Gr12 exams can possibly think about finding employment, and after the rest are out there somewhere forgotten,” he said.

When it comes to the economy and employment, our battle is to ensure that decisions are rational and predictable and provide more certainty, said Manuel.

“We need to construct trade-offs and must be open about the fact that we will not resolve the employment crisis and provide investment certainty to domestic or foreign investors unless we are clear about the trade-offs," he said.

Furthermore, there should be commitments to agreement structures in place, he said.

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