Opinionista Johann Redelinghuys 29 January 2013

The good people at Standard & Poor’s may not be aware of all our resources

Citing concerns about ‘social dynamics’, the respected American rating agency down-rated South Africa’s sovereign credit rating for the first time since 1994, from BBB+ to BBB. It looks like a small difference, but the removal of the plus sign increases our cost of borrowing and creates another pall of negative introspection. As if we did not already have enough  self-doubt.

No doubt they have at Standard & Poor’s all the state-of-the-art economic forecasting technologies and rocket scientists who can read the economic bones. But when looking beyond all the ratios and hard numbers, one wonders if they have taken into account the human “software” of the country’s ability to borrow money internationally; the capacity of its business leaders to manage and work around the social dynamics that give them such angst. As anyone in corporate finance will tell you, when considering a merger or acquisition it is critical not only to look at the numbers and the facts, but also to get an understanding of the people of the business. The character of the person is a crucial element of their credit worthiness.

So how bankable are South Africans? And how trustworthy are we when we go into the international money markets to borrow money? Forget for a moment how flawed our political leadership may be and take account of the human material below the visible peaks of leaders whose comings and goings are the forage of the media. Unlike many of S&P’s triple A-rated countries,we are a people who grow up dealing with deep social and ethnic complexity. We understand what it’s like to live life with 11 official languages, multiple race groups and the need to constantly cross-reference the obtuse layers of our society no matter what we’re busy with. We have also learned the trick of playing off two or more conflicting scripts at the same time. There is never just one reality. Look at how President Jacob Zuma, this last week in Davos, extolled peaceful South Africa as a great, “investor friendly” opportunity while at the very same time, here at home, we were in the middle of the Western Cape labour turmoil with large scale looting and destruction of property in Sasolburg. South Africans don’t find this unusual or difficult to deal with. Paradox is what we do.

The president and his substantial entourage participated in a session at Davos where their subject was the “de-risking” of Africa as an investment opportunity. Amid the impressive statistics he quoted of growth and accelerated output, mentioning six of the world’s fastest growing national economies being in Africa, the rest of us were watching the BBC’s footage of the war in Mali and the other ethnic and religious conflicts of the continent.

Standard & Poor’s should also remember that South Africans have an emotional hardiness and an ability to get on with their lives that comes from years of living with violent crime, some of the highest rates of murder and rape, child molestation, corruption and social disintegration. It scares the hell out of our more tender-minded friends and relatives in the gentler countries of Europe and the Commonwealth that we tough it out and pick ourselves up from whatever crime episode we have been the victim of, and then get going again. Every family has a story, yet we forge on and invest ourselves into the process of getting over it and going forward. This resilience is one of the great assets of the country and gives it much strength. People in the triple A-rated countries like Sweden and Switzerland and the UK fall apart when they experience crime or urban mayhem, South Africans just box on.Don’t talk to us about scary “social dynamics”.

It is our magnificent adaptability and capacity to manage life’s complex issues that enables those South Africans who are expats in countries like Australia and Canada, to fight their way up the greasy poles of corporate competition, and end up taking charge.

If their concern for the “social dynamics” of the country indicates a fear of instability and the risks involved in social change, then welcome to our world; a world that has weathered many lifetimes of social change. Transformation is what we eat and drink and it is the leitmotif of every business these days.

When trying to get a fix on candidates for positions in business leadership we pay special attention to their ability to initiate and manage change. The kind of companies that will be looking at the Standard & Poor’s ratings would not want to invest in a business where the leadership will be de-stabilised by a sudden change in the interest rate, or a collapse in local government’s service delivery, or the behaviour of the unions, or any of the other issues influencing their business including the country’s “social dynamics”. South Africans, especially those in charge of businesses, are used to levels of social change and upheaval that would immobilise people in the smoother running societies.

The pioneering forefathers of all our ethnic groups came to this country out of choice. They were not sent here to get rid of them. The growth and advancement of South African society has always been accompanied by some form of turmoil or conflict. Starting from the various British and Dutch occupations and the sequence of border wars, through to the Boer Wars and the great fight for racial equality and democracy, all of it was eventually resolved through conflict and struggle. At times it must have appeared to outsiders that the country would never find itself and that hatred and revenge would destroy it. And every time it re-gathered itself and, with each push forward, new life began.

We know about pain and sorrow. We also know that to establish ourselves in a prosperous future and to repay our debts, we must continue to do what we have done for centuries, manage and thrive on our “social dynamics”. DM


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