Western Cape Branch celebrates its year-end with good news!
Western Cape Branch members and their guests attended the Chairman’s Breakfast and Awards function, held recently at the Cape Peninsular University of Technology (CPUT) campus at Granger Bay - home of the Cape Town Hotel School.
The event provided an excellent opportunity for the Branch Chair to review the year’s activities, announce annual Branch awards, and listen to the latest opinion on the South African and Western Cape economies and network with local members.
Mfundo thanked members of the Western Cape Branch committee for their support and hard work over the year, and Adrienne Taylor- Fielder, who had provided professional and efficient secretarial services. Appreciation of the ongoing support of the Society by the many Company Members of the organisation was also acknowledged.
Mfundo then introduced the guest speaker, Craig Lemboe from the Bureau of Economic Research at Stellenbosch University, who presented his views on “Prospects for Western Cape business in unusually uncertain times - cutting through the noise”.
Craig began by taking stock of the surrounding environment where the mood is somber, especially with the year that South Africa has had. He said that much of the uncertainty we are dealing with is of a political nature. Politics, instead of promoting economic growth, seems to be a hindrance to it. This is highlighted by the downgrade of our local currency denominated bonds to “junk” by S&P and the announcement by Moody’s that we’re on review for a downgrade early next year.
Craig went on to provide the latest view on growth forecast for the country which, for 2017 is expected to register between 0.6 – 0.7%, from the paltry 0.3% in 2016. A further acceleration to around 1% is predicted for 2018.
However, there are many assumptions within this view and, to tie it back to the politics, implied by this growth trajectory is an ANC national election outcome which sees a more market-friendly candidate taking over the reins of Africa’s oldest liberation movement. Such an outcome will immediately lift business and investor confidence and, given the underlying economic momentum, could see growth fare much better then currently projected.
The Western Cape which has been a star performer relative to the rest of the economy for the most part of the last decade. Even with respect to business confidence Western Cape firms have been, until recently, significantly and consistently more satisfied.
The residential market in the region in particular has punched well above its weights due to a rise in residential estate developments and inward migration from other regions. This is paired with better government-led infrastructure spending.
Unfortunately, demand for non-residential investment is weak. The current slump in confidence in the province, while in step with the rest of the South Africa, is partially rooted in the water crisis, the impacts of which, according to research, is multifaceted. Diverse industries such as tourism and construction, not only agribusiness, are being affected. Forecast for the Western Cape at the start of the year had the region outperforming the national economy by between 0.3 and 0.5 of a percentage point. This has since been downwardly adjusted.
Craig said that it remains true that the best economic opportunities come from the worst economic situations. He quoted the famous economist Joseph Schumpeter who called it “creative destruction”. The economy’s way of doing away with the old and ushering in a new, often more prosperous economic path.
The need to invest in quality and efficient water infrastructure in the Western Cape and South Africa is potentially such a moment. A “pro-market” outcome over the next few weeks also holds promise. In fact, even a ratings downgrade holds within it economic potential for those who foresee and are willing to seize the opportunity.
In conclusion, Craig stated that while business and consumer confidence is low, due in part to the political uncertainty, our economy is far from dead. In fact, it is much more resilient than we give it credit for.
In thanking Craig for his insightful presentation, Mfundo expressed the branch’s appreciation of the fact that the speaker’s fee for the event was to be donated to a charity of Craig’s choice.
Ken Newton, Director of Kroonstad Terrazzo Works (Pty) Ltd in Cape Town, was announced as this year’s winner of the Chairman’s Award. Ken has been a member of the local Concrete Society for more than 30 years and the award was in recognition of the many years of hard work, input and dedication that Ken had shown towards the Society.
In receiving the award, Ken said he was totally surprised to receive the award, which he felt was unwarranted, but nevertheless greatly appreciated. The greatest reward he had received was meeting and interacting with all the people involved in the branch over the years.
He had, he said, seen many changes throughout the years and some, particularly of late, were difficult to accept. Nevertheless, they had been necessary, and he thanked the management of the Society for their foresight in taking the organisation forward for a sustainable future.
The Western Cape Branch would like to express its thanks to the V & A Waterfront for their generous sponsorship of this event.