Searching for the silver lining

There is no shortage of negativity when it comes to South Africa and its economy. Whether it’s the rand, the president, the far-reaching and devastating impact of the El Nino drought, protesting university students, the likelihood of a ratings downgrade or interest rate hikes – the list is long.

Suffice to say that the ‘impending doom’ narrative, although justified, is so common that it has become South Africans’ daily bread.

In light of this, Moneyweb went in search of a silver lining behind the dark cloud that is our economy, if only to break the monotony of peril and despair.

Mining and toursim

This year saw the rand reach a new low to around R18 to the dollar. The massive collapse, which has seen the rand lose well over a third of its value against the dollar in the past year, is perhaps the most depressing aspect of being a South African right now.

But the silver lining is that it could provide a much-needed boost to the country’s ailing mining sector, which has been struggling with falling commodity prices for more than 18 months. On Tuesday, Bloomberg reported that Sibanye Gold, the biggest producer of gold in South Africa, had seen its profit margins double in the past six weeks on the back of the rand’s depreciation, which saw gold priced in the South African currency rise 19% to R587 000 a kg since December 2015.

PSG Capital MD Johan Holtzhausen, says South Africa’s tourism industry is likely to benefit as well, with the rand-dollar, rand-euro and rand-pound exchange rates all making South Africa a more attractive holiday destination.

Says Holtzhausen: “South Africans will also opt to travel locally as opposed to going abroad. That’s a given. So there will be more money spent locally, which would have gone elsewhere. Add to that the influx of foreigners and it should see the local tourism industry get a nice boost.”

The only caveat with regard to tourism, is that the revision to the visa regulations – which dealt a blow to SA tourism last year – is yet to be implemented; this means the cheap rand incentive to visit our shores will be diminished somewhat.

Eskom and Sapo

Brian Molefe’s appointment at Eskom was one of the few good news stories of 2015. Even as we approach the end of January, there hasn’t been much to complain about in so far as load shedding is concerned. Granted, the power supplier is about to apply for yet another tariff hike, but at least – for the most part – it has been able to keep the lights on, which is a noteworthy achievement given the frequency of power cuts that we experienced this time last year.

“Certainly, in this environment, it’s incredibly easy to be negative,” says Adrian Saville, chief strategist for Citadel and Cannon Asset Managers. “But what that does is it often crowds out perspective. And perspective is about recognising there is also some evidence that points to real capability.”

Similarly, the appointment of Mark Barnes as the South African Post Office (Sapo) CEO instilled confidence in the hopes that by the end of this year, South Africans won’t look to courier services as the first port of call for mailing their post. His plan toturnaround Sapo is encouraging to say the least.

“This shows what can happen when we apply your minds and when we put pragmatism ahead of ideology,” says Saville.

Opportune time for aspiring entrepreneurs to make the leap

The tough economic environment is a difficult one for consumers who are increasingly feeling the pressure as the price of commodities threatens to rise. But, according to Raizcorp founder and CEO Allon Raiz, there is no better time to start a businesses.

Difficult conditions force entrepreneurs to think of the most efficient and innovative ways to run their operations. Those businesses that survive under this climate, will flourish when the local and global economic outlook improves.

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