Roberto CoelhoBy Roberto Coelho|January 31, 2022|6 Minutes|In Opinion


" What will bring entrepreneurs back in SA?"

From Johannesburg to New York, Pretoria to Washington, heat waves to snowstorms, the South African story  to the American Dream. I have been Stateside evaluating the land of my birth South Africa against the land of the free and the home of the brave.

Over the last few weeks, I have been in central Pennsylvania, on the Eastern Seaboard of the United States.

Very different to my normality of living in Africa’s wealthiest city, Johannesburg. This experience has been incredible, living in the snow, only hours away from some of the most influential cities and figures in the world.

Yet I am not here to discuss the American Dream, rather I would like to discuss a conversation I had with two separate gentlemen on the future of South Africa.

The one, a South African gentleman close to retirement, born in Kimberley and a highly respected Investment Expert, Wayne McCurrie

The other, a Portuguese born American citizen of the same age and a former Executive at Volvo Trucks and property investor.

Essentially the American, a well-read business owner, suggested he is not bullish on South Africa, his reasons: the not so mighty Rand, a weak leading political party and a dying economy

McCurrie’s opinion differs to that of his American counterpart, not overly bullish yet not bearish; a realistic view on South Africa.

The conversation: is South Africa an attractive destination for entrepreneurs?

Let us begin with McCurrie’s prediction for the Rand.

“It’s very interesting in that over long time periods the valuation does exactly what it should do.

“Over the past 60 years, he says,  if one bought one Dollar and one Rand, the difference in value is the difference between US interest rates versus South African interest rates.

“The Rand is actually, for want of a better word, a highly accurate currency.” Entrepreneurs’ demand strong and accurate currencies for their wealth, and the Rand has valued appropriately. However, most individuals do not think in increments of 60 years, thus near-term security is as important as long-term prosperity. “In the shorter term, the Rand is incredibly volatile, and the volatility is driven mainly by the commodity cycle and political events.” Political events mean not just South African events, rather political global events.

The Rand is an easily accessible and tradable currency, hence has become a metric of international sentiment and emerging market risk.

Entrepreneurs may see this as a point of contention as it makes international investment difficult as volatile moves impact the possibility of expansion  Then, there is the ease of doing business in South Africa.

South Africa was ranked 84th in the Ease of Doing Business index- , the USA 8th and Mauritius as the highest African country at 13th.  The hope would be for obstructions to  be removed to make way for investment.

McCurrie’s view is that President Cyril Ramaphosa is implementing change.

“If we continue on the current path, will be OK, the path is going in the right direction.” Unfortunately, the divisions between the ANC make quick decisions impossible. “They’re moving incredibly slowly down the path, but on the right path.”

If correct political decisions are  the determining factor for an entrepreneur, McCurrie’s prediction suggests there is little to worry about. Furthermore, as the changes are implemented the ease of doing business will continue to increase. Concerningly, the South African economy is still in a rut, and entrepreneurs are not necessarily attracted to a slow growing country. One would imagine the primary cause of low growth is over regulation McCurrie feels this is a problem, yet not the main problem. “No business likes any government any form of interference, so they’re always going to complain about legislation.”

As I write, big Tech firms, Apple, Microsoft, Amazon, Google and Meta, in the US are Lobbying on Capitol Hill against legislation. South Africa’s major trouble is two dimensional, the first dimension is a lack of jobs, 38% official unemployment leading to more than 50% of the population on government grants.

“Obviously we’ve only got one real problem in South Africa. That’s jobs. “ However, creating jobs does not come by mass government plans, rather by attracting entrepreneurs.

To encourage entrepreneurism, McCurrie suggests only one ingredient is required in the recipe: confidence.

“South Africa is not a capital short country and overseas companies will invest in South Africa.  It needs just the confidence to invest. “

Encouraging entrepreneurism and potential entrepreneurs choosing South Africa goes hand in hand, he says.

“People are uncertain because they don’t have confidence in the leaders. The rules aren’t applied, the rules change, the rules are sometimes arbitrary. “

Create certainty and lead with conviction for confidence to flow with investors and entrepreneurs.

Without this South Africa becomes an unattractive location