I write this article in the wake of the national and provincial elections in South Africa, the results enabling the ANC to retain its ruling party status, though significantly weakened. The next five years will reveal if the President and the ANC is worthy of this ‘second chance’.
In the slew of political and economic commentary that followed, I saw a tentatively positive response to the relatively orderly and incident-free voting process, with the Rand appreciating 20c (also attributable to global factors), RSA ten year bond yields improving nine points and the big banking shares rising between 3% and 4%.
As a Financial Planner focused on helping clients in their wealth creation phase, it is a matter of concern for me that almost 10 million eligible voters did not even register to vote. Given our country’s history, and the cost at which the universal right to vote has come, this apparent apathy is worrying. Of course, it may be argued that a reluctance (or refusal) to vote shows no confidence in any of the 48 parties. The pessimism can be understood: the ANC’s recent kleptocracy and pillaging, and the lack of credibility of the other parties.
That said, I am a firm subscriber to the view that our younger generations can shape the future of this country; and participation is personally empowering – be it in our country’s political elections or in shaping our personal financial futures. I believe that this is the time for younger generations to be active in building our nation.
How to be an active citizen
All eyes are on the President who, no doubt, helped the ANC stay in power. A good start has been Cyril Ramaphosa’s revival of the advisory unit to drive policy. The challenges, though, remain what they have always been: economic growth not entirely based on direct foreign investment, but on creating, in the words of Ronnie Kasrils in a Daily Maverick article: “ … industrial policy with teeth to reinvigorate production, giving rise to economic modernisation with jobs, and redistribution instead of austerity.”
Obviously, government must implement measures to regulate SOEs such as Eskom, SAA, Telkom, and Transnet. Government spending on employees needs to be revisited.
Large corporations are cutting back on staff, an indication of the slowing of the economy. While government is setting up policies to create jobs, we as citizens can lend support to the quest to bring economic stability by supporting local entrepreneurs and small businesses; mentoring and encouraging those seeking to create a local brand of excellence; as an employer, to transfer skills to employees and help domestic staff where possible.
South Africans have a dismal record of saving, and improving our savings culture contributes to a healthier national economy.
The role of Financial Planning
In times of economic uncertainty or constraint, planning our finances becomes paramount. Being strategic about spending, saving and investing means that our money works for us and is the means to supporting the life we want for ourselves and our families, as well as helping those who work for us and philanthropic initiatives.
One way to be strategic is to ensure that our money is wisely invested. In the past five years, I am pleased to see clients asking more questions about their portfolio and its composition.
Some clients have enquired about investing money offshore (outside South Africa). I always emphasise the need to diversify with my clients, and part of that is investing offshore, though political uncertainty is but one factor to consider. A diversified approach includes choice of asset classes and asset managers, economies, politics, currencies, and a much wider scope of investment choice. A significant consideration for me is not to have all assets exposed in one country.
Economic prosperity in South Africa will require more than the efforts of government – let’s respond to the President’s call: Thuma Thina: Send us.
Craig Turton is a Certified Financial Planner® and Head of the Wealth Creation team at Chartered Wealth Solutions.