Jason Myhill may not sit in lavish offices in central Cape Town, nor have homes in New York and Lake Como, but he does have the strategic knowledge and thought-leadership savvy to share with companies that desire direction, strategic facilitation and tactical mastery which will certainly assist executive board members to formulate good strategy for future uncertainties.

As a nation of multi-cultural and multi-talented individuals, it is not difficult to envisage a future filled with hope and success. After all, our democracy and worldwide awakening in the 1994 elections is proof of South Africa’s staying power and determination to make changes for the good of the entire nation.

Looking back over 2008 we remember a year riddled with political upheaval and global economic turbulence. Some believe that the past 12 months have been the most devastating for superpowers and the most empowering for weaker nations. In the global mix of economic turmoil, where does South Africa stand? Jason Myhill tells us how the future may play out for South Africans over the next 18 months.

What does the future hold for South Africa over the next 18 months?

There is a portion of economics that is self-imposed and similar to a self-fulfilling prophecy. The more people talk of a recession occurring, the more likely it is to occur.

Within the constantly evolving world in which we live, history seems to be intent on repeating itself.

This irony seems driven by our continued use of history as the source of experience to improve ourselves and our marked refusal to learn from it.

Scenario planning is a powerful tool to turn our attention to the future and consider the unthinkable.

The classic methodology of scenario planning comprises three steps: the rules of the game, the key uncertainties, and the possible scenarios that emerge from them. The rules of the game are those propositions that apply under all scenarios. The key uncertainties are surprises that include shock events which can have a sudden impact on the game or gradual threats that increase over time. The scenarios are the possible outcomes based on the rules and uncertainties initiated by something occurring – the trigger.

Although global scenarios lie largely outside the control of a single country, each country does have some measure of control over its own destiny. This means that the desirable scenario for South Africa is largely in its own hands.

The reality of a self-fulfilling prophecy is a practical impact and therefore companies and individuals need to make wise decisions regarding their direction or maintaining their chosen direction over the next 18 months.

Before outlining the possible scenarios, let us first consider the rules of the game for South Africa and the key uncertainties for South Africa.

The rules of the game for South Africa 1. Social harmony;
2. An inclusive economy: (Karl Marx said that if you alienate the masses, you can expect a revolution);
3. The characteristics of a ‘winning nation’, namely:
3.1 A good quality of education at all levels, particularly maths and science.
3.2 A strong work ethic and spirit of entrepreneurship.
3.3 A high rate of savings, implying a low inflation and a reasonable after-tax interest rate.
3.4 Adequate public infrastructure to support growth.
3.5 Be export-oriented, suppling goods and/or services to international markets that they cannot get elsewhere.
3.6 A dual-logic economy; a symbiotic relationship between the big business and small business sectors.
3.7 Competitive personal and company tax rates to attract and retain talented individuals and businesses.
3.8 An attractive investment environment; protecting property and creating a crime-free society.
3.9 Efficient government; service delivery, law and order, macro-economics and health system.
4.2010 Fifa Soccer World Cup opportunities and threats

A list of key uncertainties for South Africa

1.Whether or not South Africa can retain its competitive edge in the increasingly competitive global game.
2.Whether or not we experience some form of internal conflict as a result of political tension.
3.Whether or not the Constitution remains sacrosanct and the judiciary and media remain independent.
4.Whether or not the issue of land ownership can be resolved peacefully and productively.
5.Whether or not the current inadequacies in the country’s infrastructure can be resolved without hindering growth.
6.Whether or not HIV/Aids as the country’s worst epidemic is ultimately eradicated.
7. Whether or not the crime rate is reduced to an acceptable level.
8.Whether or not we can improve the quality of our education system, attracting good teachers.
9.Whether or not the critical skills deficit can be overcome in the near future.
10.Whether or not Zimbabwe, as one of our closest neighbours, can climb out of its abyss.
11. Whether or not South Africa can handle the diplomatic balancing act between the East and West.
12.Whether or not South Africa successfully hosts the 2010 Fifa Soccer World Cup.

There are two distinct uncertainties that stand out for me when thinking about the next 18 months. I have used them to formulate different scenarios for South Africa; the interaction of rule 3.8, an attractive investment environment; protecting property and creating a crime-free society and uncertainty number 12, whether or not South Africa successfully hosts the 2010 Fifa Soccer World Cup. These two uncertainties will need to be taken into account relative to the expectations of the world and, secondly, if South Africa is able to harness and maintain an attractive investment environment.

In order to be above the horizontal line, it would be fair to say that a country needs to be ranked in the top 30, particularly when it comes to investment attractiveness, which includes property protection and crime.

In the ratings of the World Economic Forum, Reuters and the Fraser Institute, South Africa although still above the line has dropped from sitting in the top 12 world rankings to below 20th position.

The optimistic scenario is that we see an upturn in this position triggered by attractive property ownership protection and a remarkable downward trend in crime, particularly violent crime. Going along with this includes things like new economic frontiers, country infrastructure, public service delivery and accountable, political leadership.

Combined with delivering a successful 2010 Fifa Soccer World Cup and meeting the world’s expectations, this quadrant is a profitable position to be in. This, however, is largely driven by perceptions and the media.

A key success factor for businesses to withstand any of the above scenarios is a focused strategy with efficient implementation tactics.

South Africans are generally passionate and resilient people who pull together to make things happen. This stands the country in good stead during tough economic cycles.

The next 18 months will bring opportunities to mature in tourism and processing immigrants. By then we will also know where on the horizontal axis we are positioned; either with a good reputation or a sour one. This outcome will be viewed through the eyes of the entire world, which will set the tone for future international trade.

What global scenarios will impact South Africa directly?

In my view there are three world scenarios: Rapid Economic Recovery, Big Guns Firing, or World War Three.

All of these scenarios impact South Africa, however, the direct links are along the lines of credit and ‘super’ trade. Three of the largest relationships in these areas are between China, the United Kingdom and the United States.

If there is global conflict that drags the world into a prolonged recession or a depression, South Africa will need to be self-sufficient and accept a slower rate of global development.

If the recovery of the UK, China and the US is swift, then this will directly impact South African economic growth rate.

Will these be negative or positive for South Africa?

Either way, the impact can be seen as positive in the long run. It will force South Africa to reduce the lines of credit and build up more internal independent wealth as Botswana has done.

It will also allow South Africa to be more competitive and efficient with exports, which is healthy and sustainable, in turn preparing the country to operate with a strong currency, lower interest rates and low inflation.

Homecoming revolution

Should we be surprised by the homecoming revolution?

No, it is a natural phenomenon for people to return to zones of familiarity and support when times are unyielding, particularly for those who went in search of ‘easy’ money.

According to recent data revealed by the Homecoming Revolution (www.homecomingrevolution.co.za), somewhere in the region of 50 000 South Africans returned from the UK and Middle East in the first two months of 2009. We need to be clear on whether these are people who had emigrated or people who had gone to the UK and Middle East for the experience, to travel and earn ‘real’ money.

There is a healthy balance to supporting a continuous process of young people gaining international exposure, returning to South Africa and adding value to our economy versus the risk of losing people to ‘greener pastures’ forever.

How will South Africa benefit from the current influx of highly skilled returning South Africans?

The skills and international experience gained by the working travellers will add value to the South African workforce and productivity of our nation through employment, economic activities and wealth creation.

However, these skills are more likely to flow into entrepreneurial business ventures rather than the corporate environment and are likely to engage with international trade, which is positive for South Africa.

Are there jobs available for returning South Africans?

There may not be jobs for these returning South Africans, but there are many opportunities if they are willing to embrace the need for entrepreneurship and economic diversity.

What are the long-term benefits for the South African economy?

The hope is that the return of skilled South Africans to our shores will augment our productivity efficiency which then elevates the lifestyles of many South Africans. Essentially there are two key uncertainties that will impact the rate of influx into South Africa: the relative economic performances of countries around the world -- the ratio of real earnings to the cost of the desired lifestyle; and the safety of people and their assets.

Therefore the lever in our hands which would trigger a higher volume of people returning to South Africa is the level of crime and the level of perceived stability resulting from economic decisions and political leadership.

Worldwide recession

What are your comments on the worldwide economic slowdown? The worldwide economic slowdown is a bit like an adventure sport – the next wave of rewarding thrills will soon begin. It may become worse before it improves, but I believe that, in no particular order, various players will begin to experience the turning trough from November 2009 onwards.

This includes the ability for organisations to begin to operate at the new accepted levels of economics, having adjusted themselves and their cost burdens, such as stock levels and overheads, to cash-conversion cycle ratios and outsourcing versus in-sourcing.

There are two pictures we consider regarding the worldwide recession: one that looks like a ‘V’ shape and one that looks like a ‘U’ shape.

The ‘V’ is a recession with a relatively short turnaround period while a ‘U’ is a depression with a long turnaround.

I believe there are essentially two triggers that drive one or the other: world conflict and international investor and consumer confidence. Monitoring these triggers, affected by things like Barack Obama’s speeches and rocket launches, provides an indication of the probability of either picture occurring.

What does South Africa stand to gain or lose over the next 12 to 18 months?

South Africans will certainly feel the pinch and there will be people who crumble under the pressure and those who respond well to the inevitable changes.

The survivors will discover windows of new opportunities which were not available just six months ago.

It will be a time of weening out the lazy and lethargic.

The gains for South Africa over the next 12 to 18 months include growth in tourism, sport, niche product exports and property investment.

South Africa stands to lose international credibility and brand equity over the next 12 to 18 months.

Where will South Africa be in 18 months if we consider the global recession in the majority of markets?

South Africa is likely to be on the upswing in the next 18 months. South Africans are foxes; they are determined, entrepreneurial and keen survivors. There is an incredible mix of enviable qualities and tenacity among South Africans. We have our elections on 22 April this year which will be a large determinant of the future 18 months.

The National Prosecuting Authority (NPA) has announced the lifting of all charges against Jacob Zuma, clearing the way for him to become president after the expected ANC victory in the elections.

Zuma is a wild card for South Africa and the type of leadership team he attracts will affect international respect and recognition. With him as a leader over the next 18 months, it is likely to increase the political risks associated with South Africa.

What is the best-case scenario for South Africa’s future?

South Africa has been in an enviable position not to be engulfed directly by the global financial crisis. In fact we have one of the most advanced banking systems in the world which, although not without its challenges, places us in a sought-after position to influence the recovery and future appearance of international banks. The best-case scenario for South Africa in 18 months’ time would be one in which the ratio of real earnings to cost of living is internationally competitive; the crime rate, particularly violent crime, is drastically reduced to levels promoted by international media; legislative implementation protects property; and a successful 2010 Fifa Soccer World Cup, exceeding the world’s expectations of the experience and service delivery, with no blunders.

Conclusion

The uncertainty of the future is generally constant; how comfortable people feel in their uncertainty is what varies dramatically. For this reason we specialise in facilitating processes that help you and your business to consider the future uncertainties and the probability of their occurrence before they are triggered, so that you can be comfortable knowing that you are prepared and proactive. Businesses that engage strategic thinking and communication benefit by foreseeing necessary decisions and tactics to outmanoeuvre uncertainty. While some have saved themselves extensive losses, others have gained an increase in profit margins as well as boosted sales. This also directly affects the workforce or staff component; to win the game, one needs the best fit team.

If there were any doubtful South Africans among us, these thoughts will be displaced immediately and replaced with a beaming vision of opportunity and necessary change.

Jason Myhill works in association with Clem Sunter and Chantell Ilbury.
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