“Resilience!”. That’s what two business mavens advised me was the secret sauce which allows South Africa to power on. Even with blackouts from Eskom and other daily travails from our failing state.
“Africa’s grocer” as resilient Shoprite Checkers is dubbed displayed some of this sauce, not on its aisles, but in its annual results published this week. The headlines trumpeted the word ‘disappointment’ with the retail giant’s first earnings drop in two decades. But the wonder in the bad numbers, was that the group managed to increase its volumes and customer numbers at all.
Because in the detail of the results were numbers redolent of a ‘state of war’ as the shopping giant tells it. It was hit in the financial year by 489 armed robberies, 13200 products in deflation , a VAT hike, a sugar tax, the listeriosis crisis, and 150 trading days were lost to protests. The wonder then is not the 8% slump in its share price following this diet of bad news, but the fact that it trades at all.
Meantime, the state charged to provide an enabling economic environment and basic services for both business and citizen, is beginning to resemble Otto von Bismarck’s putdown of late nineteenth century Italy : “It has a large appetite but poor teeth.” Our government displays this dichotomy on steroids: it cannot ensure regular electricity or even basic sanitation at primary schools or safely care for mental patients in Gauteng. But its appetite to encroach ever further into the sections of our economy which actually work appears limitless: the health care sector, private farms, and even the rare foreign firm actually wanting to invest here. All these, our political masters want to control. Or anesthetize. Or close down.
Across the Atlantic as Donald Trump careens across the twittersphere on all topics from farmers in SA to trashing his convicted former lawyer. Just as he destroys the architecture of the post war order, an extraordinary number was recorded on Wall Street.
Apple became the first US company ever to hit the $1Trillion valuation mark. Less noted is the statistic that our whole national economy in 2017 was just $349.42 billion. Our sovereign GDP is only about 40% of the strength of the largest US company.
But there’s another lesson in that comparison: Naspers which accounts for a whopping 20% of the total market cap of the JSE recently shed R121bn of its value, almost entirely due to the unexpected earning’s slump in its core asset, the Chinese company Tencent. A key explanation was the heavy hand of the authoritarians in Beijing which froze its applications for launching new video games which were not ideologically in sync with the whims of the ruling Communist Party.
It is difficult to know how the Trump whirlwind, particularly using coercive economic diplomacy to wreak revenge against foreign potentates who displease him, will affect global giants like Apple. Evidence suggests ‘this too shall pass’.
One of the most interesting commentators writing these days is Bret Stephens. He is wise and eloquent, and impossible to classify with the binary rigidity we use here. Stephens is a mainstream conservative, but hates Trump, and now writes for the liberal New York Times. However, five years ago from his perch at the impeccably conservative Wall Street Journal he penned an essay “The Marvel of American Resilience”.
In it he pondered why the most breakthrough innovations in the world- from planes to mobile apps are all stamped “Made in the USA”. His answer was not to be found in the paralysis of its politics and the shortcomings of its leaders, and this was years before Trump entered the White House.
Rather, the answer at the micro-level was personal: “In the US I can drink water straight from a tap, a policeman has never asked me for ‘a contribution’, my luggage has never been stolen and nobody gets kidnapped for a ransom’. And he added, “Americans have property rights (even to minerals under their yards).”
Five years later, he might also have noted that, an independent special counsel appointed by the US Justice Department has just secured the conviction of the president’s campaign manager in the courts, and the president’s former personal attorney has pled guilty to a slew of crimes relating to payoffs he alleges made on behalf of Trump. None of this required years’ long judicial commission costing billions of Rands. Just dedicated and fearless prosecutors doing their work.
Space to innovate and flexibility to trade coupled with institutions larger and more resilient than the whims of their leaders are the ingredients for this not- so- secret, but tested, source of sovereign success.
Perhaps Checkers could stock it.
Leon, a former leader of the opposition, now chairs Resolve Communications and is a senior adviser to K2 Intelligence of London. @TonyLeonSA.
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