Thoughts on a South African recovery

When the end of lockdown approaches (whenever that may be) South Africa will be looking at a tornado ready to hit. We will be heading into the eye of the storm. But it is important to remember that this thing will pass. Yes, it will.

The question then is, what’s next? How will life change for us here in SA after the storm? A few thoughts to give a South African perspective – all based on this American blog’s vision for the USA:

A Slice of South Africa Will Ignore It Completely

While the Big Red Car focuses on the young and invulnerable moving on quickly in America due to their ‘joie-de-vivre‘, in South Africa (and Africa more broadly) once COVID 19 moves on, there are very pressing issues to distract the population from whatever disaster just finished up. For example the longer term health issues of HIV and Tuberculosis will pick up where Corona left off. The economy, massive unemployment issues and general poverty will push vast swathes of the population to move on quickly in search of their next meal.

South Africa is young in terms of demographics and as a Republic. It’s probably true that many South Africans will remember this as a bad flu affecting only older folks. But when South Africa is finally clear of COVID 19, instead of a great celebration and party, there will be a quick moving on simply in order to deal with what’s next, because in Africa there is always something next. It will likely be a case of desperate, hungry African youth – rather than dumb, ignorant American youth – ignoring the impact of COVID 19 in search of a Rand.

Business will come back with a vengeance

I think Big Red Car’s prediction will apply partly to SA too – in SA there will be hand sanitisers popping up all over the place, marginal businesses will not survive, and the economy will crawl, walk, run to its recovery. But I don’t know if SA will do any business ‘with a vengeance’. That will rely on leadership and politics getting out of the way.

In South Africa the proportion of businesses that are marginal, non-resilient, and informal is huge. Combine this with the lower level of COVID 19 government assistance received compared to USA and this disease will knock many of the smaller, less stable businesses out. The bigger, more resilient businesses will crawl and walk far longer than the USA equivalents will. Whether or not the economy ever gets running again will rely on leadership taking some bold decisions. Decisions needed include those relating to healthcare, its trading partners (ahem…choose Kenya), local Black empowerment legislation and the power of the unions.

So less running, and more crawling in SA businesses than in USA.

Employees

Again USA’s situation only partly applies – I think that Big Red Car can apply his prediction to SA in that SA businesses will also be surprised to learn during COVID 19 just how little some of its employees contribute. However, the huge political clout of the unions and the constant need for the ANC to consolidate its voter base will push many unproductive people back into the workplace quicker than should be.

Hopefully some employees have figured out during the lockdown and the COVID days that they can work for themselves. Perhaps the internet has woken some South Africans up to their own strengths and some ventures will start. Some new business to employ others would be a nice outcome.

Work From Home

Surely this will grow in SA too? Why wouldn’t it? We have fibre internet, we have plenty of time now during the lockdown to get used to the concept. I think this will become more and more normalised in SA. Similarly, meetings will be put off for Skype/Zoom/Hangout calls and this will be a great thing.

Obviously this depends on what industry you are in. Mining is hard to do from home. Mining is also a major factor in SA’s potential economic recovery. Further, the average South African worker probably doesn’t have fibre internet. So the weighting of people working from home will be far less in SA than in USA due to the type of work on offer/industry weightings, and due to wealth/access to the required tech too. For those of us in the professional services industry though, this WFH trend will be a real shift in the right direction i think. Less meetings please, more autonomy. I need more art for the home office.

Social urges will counter this trend throughout the world though – perhaps those who are not married or who are reliant on work for their socialising will choose to stay at the office. This is a complex trend, but the concept of WFH will be far more normalised than it was.

Education

This will be fascinating. I love Big Red Car’s thoughts on this, and I think that education ‘could’ change dramatically here in SA. However, there is still a huge emphasis here on ‘the badge’ that you receive from the very old institutions (universities, high schools) and this prestige is further tied up with post-apartheid freedoms – denied access to education is one of the worst offences committed by the apartheid governments on the black populations here in SA. Therefore, any efforts to reform or dramatically change the hard won access to education institutions will be resisted locally even if this change is an improvement. I’d love to be proved wrong and, anecdotally, the schools have been the most desperate of messengers, money requesters and appear uncertain in this lockdown environment. The old model simply doesn’t fit the new reality. How much this continues post-COVID will be interesting indeed. I predict a return to the old ways pretty quickly though. If any – biggest changes to occur at University level through remote learning.

Medicine

The trends mentioned by Big Red Car and a “sprint toward telemedicine” will again be tied up with politics in South Africa. On of the ANC’s key projects is universal health care in South Africa. Whether or not the political leadership is there to use cell phone technology to its advantage remains to be seen.

South Africa has a fine Medical history and tradition. Hopefully this continues through high-tech interventions amid the push to give access to millions of South Africans. I am doubtful it will. But I would also have been doubtful of heart transplants originating here in SA, so there is always a chance.

Supply Chain

We work in procurement and supply chains here in SA. I am doubtful of a rapid move away from Chinese suppliers compared to the stance Big Red Car takes in USA. I know that South Africa is relying heavily on China for masks, and more and more Africans are tied up in the Chinese supply chain than ever.

Part of the problem is a lack of affordable options. If Europe and America can grow its own capabilities and offerings to Africa that would only be a good thing.

China

South Africa and Africa general’s stance on China will be fascinating to watch. In case you missed it, The Big Red Car is virulently anti-China:

Not Made In China will become a thing.

Look, China is not our friend. They are liars. They are our rivals, so let’s “Game On” them and compete.

https://themusingsofthebigredcar.com/the-post-covid19-world-will-be-different/#more-8993

South Africa cannot really compete with China in most industries and is too heavily reliant on China to treat them as a rival.

However, more looking West and North for assistance to counter Chinese influence throughout Africa would be a good thing to come out of this pandemic.

South Africa First Nationalism

Of all the countries in Africa, South Africa is most able to look after itself and embrace Nationalism. The legacy of apartheid is a powerful foundation for nationalism. SA has food, energy, military capability, industry, manufacturing ready to be woken up – However, this would be a reversion to Apartheid policies and thus will never happen at the scale Big Red Car is suggesting will happen in USA. It will be interesting to see if there is any backlash to Chinese goods and influence in particular.

Politics

The ANC will likely tout their swift implementation of lockdown measures as a life saver. The severe impacts on the economy may be pointed out by the opposition.

While I’m pondering this – What if this virus becomes a platform for a new political movement in SA? A new party heavily focused on health care? I think there is room for that in SA with the massive problems faced across the nation, the country’s medical legacy, the expectations of universal care, versus the reality of pandemics and lack of access.

Must put that idea down for reference. Oh…I just did. 🙂

Economic Recovery

At the onset of this pandemic, SA was deemed junk status by all the ratings agencies.

Any real recovery will be slow and require massive changes to existing systemic issues.

The National Debt

This will balloooon! Social programs will escalate in response to the impacts of the pandemic and this will likely be funded by issuance of debt.

Hopefully Eskom and SAA are taken off the government paycheck in the next few years. This pandemic might force the government to rationalise its spending on state-owned entities. Pigs could fly.

Financial Reworking

I like the Big Red Car’s ideas on this. I have not much to add and think this will be adopted here in SA too:

Tenants, landlords, mortgage lenders, pension funds, REITs are going to get a damn good lesson in reworking real estate obligations.

If you have a five year lease with two years run and you are in default (couldn’t make your rent payment), then you and the landlord will sit down, extend the lease, maybe decrease the rent, and end up with fairly equivalent cash flows using a Net Present Value Approach.

Same idea, but substitute landlords and mortgage lenders. Terms get extended, payments missed get folded back into the principal, and NPV is the rule of the land.

This happens all the time in Bankruptcy Court. It is a known skill.

Sophisticated lenders will figure this out in a NY Minute — why? They don’t want to take back this real estate. They have huge numbers of problem mortgages.

It may take a push from the FED or President Trump, but this is what is going to happen in Rework City.

Cities

South Africa’s cities are not so much planned and thought out as they are in USA. There are few subways save the Gautrain in Joburg, However – the taxi system might be impacted – hand sanitiser all year round?

Eventually, people need jobs and they need to get to the jobs using the old methods. This need will override any novel city planning ideas for the vast majority of SA cities and towns.

Attic Stock and the Strategic National Reserve

I dont know if South Africa has any such reserves – perhaps the more prominent reporting of this will be a good place to start in response to the pandemic here in SA.

Sports

Public workout facilities will be slow to recover because of their diverse customer base.

High school and intercollegiate sports will be negatively impacted. If more schooling is done remotely, sports will have a funny feel.

https://themusingsofthebigredcar.com/the-post-covid19-world-will-be-different/#more-8993

Bottom Line It, Chimpwithcans

OK, here is the bottom line as viewed from a home office in Cape Town:

South Africa is not ready for this virus.

Once this eventually passes, I hope it will put things in perspective. I hope it will push politics away from its ridiculous nature. Push Africa away from its reliance on China. Away from unsustainable social programs and rising debt. But I doubt it really will.

Instead, I see this as potentially accelerating the long term shift of South Africa moving from a pretty well developed African state, to a developing country economy along with the likes of Kenya.

The everyday common man in the townships and streets of SA will have to quickly move on as a matter of necessity. The myriad of other challenges facing Africa and South Africa mean that there will be little time, money, or planning compared to USA in responding to this pandemic.

Thoughts on a South African recovery

When the end of lockdown approaches (whenever that may be) South Africa will be looking at a tornado ready to hit. We will be heading into the eye of the storm. But it is important to remember that this thing will pass. Yes, it will.

The question then is, what’s next? How will life change for us here in SA after the storm? A few thoughts to give a South African perspective – all based on this American blog’s vision for the USA:

A Slice of South Africa Will Ignore It Completely

While the Big Red Car focuses on the young and invulnerable moving on quickly in America due to their ‘joie-de-vivre‘, in South Africa (and Africa more broadly) once COVID 19 moves on, there are very pressing issues to distract the population from whatever disaster just finished up. For example the longer term health issues of HIV and Tuberculosis will pick up where Corona left off. The economy, massive unemployment issues and general poverty will push vast swathes of the population to move on quickly in search of their next meal.

South Africa is young in terms of demographics and as a Republic. It’s probably true that many South Africans will remember this as a bad flu affecting only older folks. But when South Africa is finally clear of COVID 19, instead of a great celebration and party, there will be a quick moving on simply in order to deal with what’s next, because in Africa there is always something next. It will likely be a case of desperate, hungry African youth – rather than dumb, ignorant American youth – ignoring the impact of COVID 19 in search of a Rand.

Business will come back with a vengeance

I think Big Red Car’s prediction will apply partly to SA too – in SA there will be hand sanitisers popping up all over the place, marginal businesses will not survive, and the economy will crawl, walk, run to its recovery. But I don’t know if SA will do any business ‘with a vengeance’. That will rely on leadership and politics getting out of the way.

In South Africa the proportion of businesses that are marginal, non-resilient, and informal is huge. Combine this with the lower level of COVID 19 government assistance received compared to USA and this disease will knock many of the smaller, less stable businesses out. The bigger, more resilient businesses will crawl and walk far longer than the USA equivalents will. Whether or not the economy ever gets running again will rely on leadership taking some bold decisions. Decisions needed include those relating to healthcare, its trading partners (ahem…choose Kenya), local Black empowerment legislation and the power of the unions.

So less running, and more crawling in SA businesses than in USA.

Employees

Again USA’s situation only partly applies – I think that Big Red Car can apply his prediction to SA in that SA businesses will also be surprised to learn during COVID 19 just how little some of its employees contribute. However, the huge political clout of the unions and the constant need for the ANC to consolidate its voter base will push many unproductive people back into the workplace quicker than should be.

Hopefully some employees have figured out during the lockdown and the COVID days that they can work for themselves. Perhaps the internet has woken some South Africans up to their own strengths and some ventures will start. Some new business to employ others would be a nice outcome.

Work From Home

Surely this will grow in SA too? Why wouldn’t it? We have fibre internet, we have plenty of time now during the lockdown to get used to the concept. I think this will become more and more normalised in SA. Similarly, meetings will be put off for Skype/Zoom/Hangout calls and this will be a great thing.

Obviously this depends on what industry you are in. Mining is hard to do from home. Mining is also a major factor in SA’s potential economic recovery. Further, the average South African worker probably doesn’t have fibre internet. So the weighting of people working from home will be far less in SA than in USA due to the type of work on offer/industry weightings, and due to wealth/access to the required tech too. For those of us in the professional services industry though, this WFH trend will be a real shift in the right direction i think. Less meetings please, more autonomy. I need more art for the home office.

Social urges will counter this trend throughout the world though – perhaps those who are not married or who are reliant on work for their socialising will choose to stay at the office. This is a complex trend, but the concept of WFH will be far more normalised than it was.

Education

This will be fascinating. I love Big Red Car’s thoughts on this, and I think that education ‘could’ change dramatically here in SA. However, there is still a huge emphasis here on ‘the badge’ that you receive from the very old institutions (universities, high schools) and this prestige is further tied up with post-apartheid freedoms – denied access to education is one of the worst offences committed by the apartheid governments on the black populations here in SA. Therefore, any efforts to reform or dramatically change the hard won access to education institutions will be resisted locally even if this change is an improvement. I’d love to be proved wrong and, anecdotally, the schools have been the most desperate of messengers, money requesters and appear uncertain in this lockdown environment. The old model simply doesn’t fit the new reality. How much this continues post-COVID will be interesting indeed. I predict a return to the old ways pretty quickly though. If any – biggest changes to occur at University level through remote learning.

Medicine

The trends mentioned by Big Red Car and a “sprint toward telemedicine” will again be tied up with politics in South Africa. On of the ANC’s key projects is universal health care in South Africa. Whether or not the political leadership is there to use cell phone technology to its advantage remains to be seen.

South Africa has a fine Medical history and tradition. Hopefully this continues through high-tech interventions amid the push to give access to millions of South Africans. I am doubtful it will. But I would also have been doubtful of heart transplants originating here in SA, so there is always a chance.

Supply Chain

We work in procurement and supply chains here in SA. I am doubtful of a rapid move away from Chinese suppliers compared to the stance Big Red Car takes in USA. I know that South Africa is relying heavily on China for masks, and more and more Africans are tied up in the Chinese supply chain than ever.

Part of the problem is a lack of affordable options. If Europe and America can grow its own capabilities and offerings to Africa that would only be a good thing.

China

South Africa and Africa general’s stance on China will be fascinating to watch. In case you missed it, The Big Red Car is virulently anti-China:

Not Made In China will become a thing.

Look, China is not our friend. They are liars. They are our rivals, so let’s “Game On” them and compete.

https://themusingsofthebigredcar.com/the-post-covid19-world-will-be-different/#more-8993

South Africa cannot really compete with China in most industries and is too heavily reliant on China to treat them as a rival.

However, more looking West and North for assistance to counter Chinese influence throughout Africa would be a good thing to come out of this pandemic.

South Africa First Nationalism

Of all the countries in Africa, South Africa is most able to look after itself and embrace Nationalism. The legacy of apartheid is a powerful foundation for nationalism. SA has food, energy, military capability, industry, manufacturing ready to be woken up – However, this would be a reversion to Apartheid policies and thus will never happen at the scale Big Red Car is suggesting will happen in USA. It will be interesting to see if there is any backlash to Chinese goods and influence in particular.

Politics

The ANC will likely tout their swift implementation of lockdown measures as a life saver. The severe impacts on the economy may be pointed out by the opposition.

While I’m pondering this – What if this virus becomes a platform for a new political movement in SA? A new party heavily focused on health care? I think there is room for that in SA with the massive problems faced across the nation, the country’s medical legacy, the expectations of universal care, versus the reality of pandemics and lack of access.

Must put that idea down for reference. Oh…I just did. 🙂

Economic Recovery

At the onset of this pandemic, SA was deemed junk status by all the ratings agencies.

Any real recovery will be slow and require massive changes to existing systemic issues.

The National Debt

This will balloooon! Social programs will escalate in response to the impacts of the pandemic and this will likely be funded by issuance of debt.

Hopefully Eskom and SAA are taken off the government paycheck in the next few years. This pandemic might force the government to rationalise its spending on state-owned entities. Pigs could fly.

Financial Reworking

I like the Big Red Car’s ideas on this. I have not much to add and think this will be adopted here in SA too:

Tenants, landlords, mortgage lenders, pension funds, REITs are going to get a damn good lesson in reworking real estate obligations.

If you have a five year lease with two years run and you are in default (couldn’t make your rent payment), then you and the landlord will sit down, extend the lease, maybe decrease the rent, and end up with fairly equivalent cash flows using a Net Present Value Approach.

Same idea, but substitute landlords and mortgage lenders. Terms get extended, payments missed get folded back into the principal, and NPV is the rule of the land.

This happens all the time in Bankruptcy Court. It is a known skill.

Sophisticated lenders will figure this out in a NY Minute — why? They don’t want to take back this real estate. They have huge numbers of problem mortgages.

It may take a push from the FED or President Trump, but this is what is going to happen in Rework City.

Cities

South Africa’s cities are not so much planned and thought out as they are in USA. There are few subways save the Gautrain in Joburg, However – the taxi system might be impacted – hand sanitiser all year round?

Eventually, people need jobs and they need to get to the jobs using the old methods. This need will override any novel city planning ideas for the vast majority of SA cities and towns.

Attic Stock and the Strategic National Reserve

I dont know if South Africa has any such reserves – perhaps the more prominent reporting of this will be a good place to start in response to the pandemic here in SA.

Sports

Public workout facilities will be slow to recover because of their diverse customer base.

High school and intercollegiate sports will be negatively impacted. If more schooling is done remotely, sports will have a funny feel.

https://themusingsofthebigredcar.com/the-post-covid19-world-will-be-different/#more-8993

Bottom Line It, Chimpwithcans

OK, here is the bottom line as viewed from a home office in Cape Town:

South Africa is not ready for this virus.

Once this eventually passes, I hope it will put things in perspective. I hope it will push politics away from its ridiculous nature. Push Africa away from its reliance on China. Away from unsustainable social programs and rising debt. But I doubt it really will.

Instead, I see this as potentially accelerating the long term shift of South Africa moving from a pretty well developed African state, to a developing country economy along with the likes of Kenya.

The everyday common man in the townships and streets of SA will have to quickly move on as a matter of necessity. The myriad of other challenges facing Africa and South Africa mean that there will be little time, money, or planning compared to USA in responding to this pandemic.