In the Business Beyond Covid series, CEOs and other business leaders and experts in their sectors look to the future after Covid-19. What effect has the pandemic and resulting lockdown had on their industries and the SA economy as a whole? Which parts will bounce back first and which will never be the same again? Most importantly, they try to answer the question: where to from here?

It has become clear that the restrictions relating to the battle against Covid-19 and its severe economic consequences will be with us for a long time. We will eventually get back to something we all call “normal”, but for now we need to dig in for a protracted campaign. For emerging markets such as SA, with limited fiscal capacity, this is a very challenging time.

For the first time in our lives we are going to witness the significant impoverishment of hundreds of millions of people, primarily in the emerging markets, as a result of the biggest economic contraction in living memory. This will be the first year since 1960 in which this group will record negative growth.

The IMF and China have offered emergency finance at a scale not seen to date. Unfortunately, this is against the background of a lack of policy co-ordination at a global level. The confusion between leading and tweeting is at a record high.

Here in SA the government has found it hard to balance the imperative of saving lives with that of protecting livelihoods. After a brief period of hope under the leadership of President Cyril Ramaphosa, the scale of the problems created by the Zuma era, and the lack of urgency by the government to tackle the economic challenges head-on, have left many South Africans deeply concerned about their future.

Before we get too depressed, there is a way out. SA has come back from the abyss many times in its history. I want to take you back to February 1990, when Nelson Mandela was welcomed to freedom by our current leader, Ramaphosa. That was the year in which we found the confidence to start planning for the launch of Ninety One (then called Investec Asset Management) in 1991. It was the beginning of an epoch of hope for this country. Ours is a story of a business that has grown organically from South African roots to compete effectively in the major markets around the world.

We have to limit the damage of the downturn, but this should not be only about damage limitation. This is the time to dream about the “better life for all” that late president Nelson Mandela spoke about. This is the time to start building a modern, competitive, outward-looking economy able to improve the living standards of all South Africans. It is time to put South Africans’ collective prosperity at the very heart of the national agenda. Simply put, we need to replace the “state of disaster” with a “state of emergency for the economy” where we explicitly prioritise economic growth and inspire SA with a new vision.

Prior to Covid-19 our economic record was already less than impressive. Over the past 25 years, SA has managed to add a mere 30% to its per capita income, while per capita incomes in India and China are now 300% and 760% of what they were in 1995. SA’s performance is simply not good enough.

This is not the time for complicated plans. We need a clear vision and the will to deliver. In the near term, all we need is an enabling environment to encourage private-sector investment to get growth going, supported by the national prioritisation of economic growth. This includes dealing decisively with the scourge of corruption. If we could arrest thousands of people during lockdown for not committing crimes, we can surely put the state capturers and corporate crooks behind bars.  

We must ensure our commodity producers are ready for the impending infrastructure boom that will come from the current stimulus measures in the developed world. Why not declare an open skies policy for our country and rid ourselves of the need to run a national airline?

A pro-growth, business-friendly environment will create the space to invest heavily in modern education to create the human capital we need to compete in the 21st century and sustainably grow our per-capita income over the coming decades. This is not rocket science. In the near term we need to get through the deep downturn in which we find ourselves. We need to support and protect the productive capacity of the business sector to be in a position to benefit from the recovery when it comes.

That is why we have announced our intention to raise R10bn for the Ninety One SA Recovery Fund in association with Ethos Private Equity. This vehicle is a market-led intervention to support deserving companies, and therefore much-needed jobs in these challenging times.

Ninety One and its many institutional clients believe the long-term savings industry has an important role to play in supporting the recovery of the SA economy. The Ninety One SA Recovery Fund will do this by fortifying the balance sheets of otherwise competitive businesses to cope with the risk of a deeper or longer recession than many of us initially anticipated.

There are good companies across all sectors of SA’s economy that will be facing funding needs that cannot be provided by the banks or the state. For some, the economic contraction will limit their access to capital to grow and expand existing capacity; for others it will challenge their solvency as well as their resolve to remain operational. A permanent loss of productive capacity will limit the ability of SA’s economy to bounce back. This will clearly have a negative effect on employment and the tax base.

The lockdown, while necessary to protect the nation’s health, has been akin to putting the economy into an induced coma. SA faces a once-in-a-generation economic challenge. With this fund we would like to support high-quality businesses and help protect the nation’s productive capacity, which will in turn preserve thousands of jobs and SA’s tax base.

It is our duty as South Africans to stand together to build a winning country. It was after all Mandela who said: “It always seems impossible until it’s done”.

• Du Toit is Ninety One founder and CEO.

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