At a recent investment summit held by Nedgroup Investments, well-known scenario planner Clem Sunter outlined the red flags he thinks are important to watch out for both globally and here in SA:
Global Red Flags:
- Religious Flag: Islamic extremism is changing many aspects of people’s lives with heightened security and general tension in many parts of the world. Tourism is being affected.
- Red Flag: Putin’s Russia presents a challenge to the West on quite a few fronts. China’s South China Sea territorial claims likewise.
- Grey Flag: The ageing of the world’s population has significant economic consequences. Astonishingly, of the number of people who have lived beyond 65 in the entire history of the world, two thirds are alive today! Japan’s is the oldest population in the world. It is estimated that this will result in a population decline from 125m today to 95m in 2050. Consequently Japan may never again achieve sustained economic growth. China is in a similar position, although on a grander scale, due to its previous one child policy. Europe is significantly ageing too. By contrast the US has a relatively young population.
- Anti – establishment Flag: The global middles classes in many developed countries are angry at the super rich, the tax havens and the politicians. Hence the emergence of Donald Trump in the US and similar populist figures elsewhere. Brexit was to an extent an anti-establishment vote.
- Clockwork Flag: Climate change. Rising sea levels, drought (worst in 165 years), extreme weather patterns and events. This will increasingly impact the world.
Here in South Africa, these are five red flags to watch out for:
- Corruption: Can it be curtailed or is SA going the way of the likes of Brazil and Venezuela ? SA has the advantages of a free and resilient press, the Constitution , the ConCourt, an independent judiciary and the Public Protector.
- Quality of infrastructure. Are we seeing a turnaround in Eskom and Telkom which could be a sign of what is likely to happen more generally in the future? Vital that infrastructure and infrastructure spend remains a government priority.
- Inclusivity: As SA is more divided now than at any time since 1994, inclusivity must be re-gained if the country is to succeed. Quite possible that this will only be achieved through a leader who emerges from the so-called “born frees”.
- Pockets of excellence: SA must focus on what it does well in each sphere. For example, of the 28 000 state schools, 5 000 perform to a high standard and 23 000 are poor to downright bad. What are the 5 000 doing that is so right?
- Level of economic freedom: There is an economic apartheid in SA. Big businesses tend to suffocate small enterprises. The country must strive to allow small businesses to flourish. In the US 80% of new jobs are created in small businesses. Time is running out regarding the horrendous unemployment rate in SA.