Fin24

Predictions work – sometimes

2004-05-05 00:00

TEN years ago, Finance Week’s sister magazine – Finansies & Tegniek – published a special supplement in which several experts were asked what they thought South Africa would be like a decade later.

Making such predictions is always a gamble. People tend to keep their ideas vague but most are usually wide of the mark. Some were brave – or foolish – enough to speculate on the line-up of President Thabo Mbeki’s new Cabinet; few were even close.

However, one of the experts came very close to the mark. With the celebration of SA’s 10th anniversary of democracy last week, many will be surprised that what he predicted a decade ago is now part of our lives.

In 1994 Harry Schwarz (then SA ambassador in Washington) wrote that in the ensuing 10 years SA would not escape the influence of Afro-pessimism. He said that the negative images and events in Africa being presented to the world would affect us and that SA would need to pay attention to the problem.

In view of what has transpired in Zimbabwe and how it has affected us, Schwarz wasn’t far wrong. The same applies to his view that SA would not only be seen as a leading hope for Africa but also the first real test of whether different groups could live side by side in harmony. “It can be done,” he said then. After the recent peaceful election and last week’s third presidential inauguration since 1994, one must admit that Schwarz’s vision wasn’t bad for someone then living in the shadow, as many feared, of an approaching Armageddon.

There were other predictions that revealed that his crystal ball was clearer than that of others who contributed to our supplement. For example, Schwarz said that SA should take advantage of foreign trade competition but that we’d remain disappointed about the amount of foreign investment until we proved to the world that we were a stable country. “This will take a while, and in the meantime we will have to concentrate on more domestic saving and fixed investment.

A healthy monetary policy must be in place while reasonable expectations are met to ensure stability.”

He said increased exports were extremely important but that exports of products, excluding commodities, would only grow if SA increased productivity. “This does not mean lower wages, but rather a more productive labour force and better equipment.”

Even Schwarz’s view that China would develop into a major world power and would be increasingly seen by the US, not only as an economic opportunity, but also as a political threat now seems utterly logical. However, 10 years ago that wasn’t so obvious.

Trends such as the race for new markets would intensify, and the fact that productivity and technological knowledge would become important weapons also came true. He was also spot-on about privatisation, the development of banking, the speed that money changes hands, 24-hours-a-day world markets, and the increasing power of governments and central banks to control economies.

Schwarz’s predictions regarding the growing influence of Islamic fundamentalism, the growth in market-orientated economies and the economic success of the East make him look like a latter-day Nostradamus. However, as Schwarz himself said: “To risk making predictions is rather presumptuous and unwise. If I’m wrong, it will never be forgotten. If I’m right, no one will remember.” Well, you can’t expect him to be right about everything.

• Schwarz’s full report – as published originally in F&T – is available to subscribers on the Web site www.fnt.co.za.