Old Mutual CEO cautiously optimistic about South Africa’s future

Iain Williamson

Old Mutual CEO Iain Williamson said the company is“cautiously optimistic” about the country’s future with many positive developments.

Williamson was speaking at Bloomberg’s Future of Finance Conference in Cape Town this week about the current operating environment in South Africa and what the future holds for the country. 

According to Williamson, South Africa faces major challenges, including potential social unrest and a grid collapse. 

These are among the primary threats to South Africa and have the potential to do billions of rands worth of damage to the economy. 

“However, I think on a medium-term view, things are significantly more positive,” said Williamson. 

South Africa is in a much stronger fiscal position than it has been and is showing signs of strengthening in the future. 

The outlook for the energy crisis is also positive, with the liberalisation of the electricity sector well underway. 

In the next two to three years, “load-shedding starts to improve, private sector generation comes on stream, and the fiscal outlook improves”. 

“We just need to get through the year and the elections in 2024,” said Williamson. “Once the country passes those hurdles, the outlook is better than it has been in a while.”

Old Mutual’s research indicates that South Africa avoided a recession in the first quarter and anticipates the South African economy will grow in 2023. 

Williamson called for the government to engage with businesses to build a better future for South Africa, saying that businesses are ready to contribute and partner with the government.

However, more action is needed from the government to tackle the energy crisis, logistical inefficiencies, and rampant crime.

South Africa well-positioned for growth

Allianz chief economist, Ludovic Subran

Despite all its problems, South Africa remains well-positioned to capitalise on its natural resources and potential to grow over the long term, according to Allianz’s chief economist Ludovic Subran.

Subran spoke on Business Day TV following Allianz’s leadership forum titled, ‘South Africa at a Crossroads: Exploring Possible Scenarios’. 

Surprisingly, Allianz said they do not think global investor confidence has deteriorated in South Africa. 

“South Africans are harsher on South Africa than the world is on South Africa,” Subran said, as the country fails to promote its strengths and potential. 

Short-term negative sentiment in the country is justified. However, the longer-term trends are positive, with labour force participation rates increasing, trade growth increasing, and a positive trade balance. 

Further, these positive trends will likely accelerate into the future, with South Africa set to benefit from the global shift to renewable energy. 

“South Africa is well-positioned for the export of raw materials vital to the green transition,” Subran said. 

The country can play a pivotal role in decarbonising the global economy, provided it plays its cards correctly.

South Africa must make critical choices in the regulatory and policy environments if it wants to unleash its potential. 

In particular, the country must have a stable macroeconomic framework to encourage foreign investment. 

To capitalise on the export opportunities of the global green transition, the country will also have to rectify the inefficiencies at the country’s ports and railways.