Key to psychological survival in South Africa is being able to see us the way foreign investors do, and comparing us to the countries against whom we compete for investment flows. Nobody asks whether they should invest in London or South Africa, or New York or South Africa. What they do say however, is should they invest in South Africa or should they rather invest in South America, the rest of Africa or Asia? And against those countries or continents we generally stack up (reasonably) well.
South Africa’s problems are not unique
So, the South African economy isn’t alone in facing tough times. The Brazilian and Indian economies have also slowed significantly, as has foreign investment into these markets. Their currencies are at record lows and their deficits and unemployment levels are high. In fact, most emerging market economies have slowed considerably. The rand isn’t being punished because of our politics or strikes, for that matter. Despite ourselves, the rand has been punished along with most emerging market currencies, simply because massive inflows suddenly become massive outflows as sentiment towards emerging markets deteriorated.
We have enormous youth unemployment, but the levels are not dissimilar to that of many other emerging markets. For that matter, many European countries have similar youth unemployment levels. We grumble about our politics, but politicians across the world behave badly. ‘Gravy’ is not unique to South Africa; after all, was it not expedient politicians feeding tax breaks to voters in exchange for votes that led to the European collapse (and in many cases debt levels that will take generations to repay)? The French president’s approval rating is below 20%, less than half the level of our president.
From a corruption perspective we have much work to do, but we are by no means worse than other emerging markets. In fact, we are better than (or equal to) the majority of South America, the rest of Africa and most of Asia, according to Transparency International’s 2013 Corruption Perceptions Index. On the list of 177 countries, we rank 72nd.
We have to continue to jealously guard our press freedom, for which the country has fought so hard. We also have to appreciate that we currently have of the freest press in the world. According to the World Press Freedom Index for 2014, we are in line with the UK and the US and once again freer than the majority of South America, the rest of Africa and Asia.
In short, we are not nearly as fascinating to the rest of the world as we think we are. Very simply, we are part of a grouping known as emerging markets, and when they are in vogue, so are we, and the reverse applies when they are not. As I have argued earlier, what we are going through at the moment will pass. Almost like winter eventually becomes spring and then summer, so too will the sun return to the emerging markets and indeed to South Africa. Then this phase will be forgotten, and my brother – along with the 359,000 other skilled South Africans who (according to Adcorp) have returned home since 2008 – will stop getting asked why they came home.
Jeremy Gardiner is a director at Investec Asset Management.