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Sun City – The future of South Africa is at a crucial strategic point, where key decisions by government and business could make or break the Rainbow Nation, according to future scenario planner Chantell Ilbury.
Ilbury, the co-author of the Fox Trilogy with Clem Sunter, told delegates at the Momentum Risk Summit in Sun City on Wednesday that the country’s future was as much determined by global flags as it was by local ones.
“We have huge uncertainty in South Africa,” she said. “There are a lot of risks at the moment, but there are also a lot of opportunities.”
Flags, according to www.mindofafox.com, can range from tipping points that might precipitate a different chain of events (like a jump in interest rates) to ones which are a sign that you have already switched scenarios (like a rise or drop in the unemployment rate).
“The purpose of flags is to remove the tint from the glasses we all wear when we look at the future. The tint may be caused by emotional make-up of being a natural optimist or pessimist, or by simple bias.”
Global flags
Ilbury said an explosion of religious fundamentalism is having consequences on specific regions, like the Middle East as well as places like Kenya and Nigeria, which are gateways to terror organisations. “When you look at Isis, it’s very diffuse and hard to get control over and is playing into Africa,” she said.
The red flag of Russian assertiveness also has its consequences, said Ilbury. “Putin is playing a very strategic game,” she said. “He could be a fox as he is highly strategic.”
“The ceding of Crimea is a done deal; what’s happening of Ukraine is very important,” she said. “But it’s not his key focus and there is more underneath that. He does have the Russian population behind him and he’s playing it hard with the military. But he’s also playing a soft strategy too. That’s why Germany is looking at the Greece issue, because of how Russia is playing a part in it.”
This graph shows the global scenarios that could play out, which can be read in more depths on the below link.
Read: Latest Global Scenarios
A grey flag was the issue around ageing populations. “Europe has an ageing population and will make it very difficult for it to compete,” she said. “Japan also has a lot of ageing and little immigration with zero growth.”
“It doesn’t affect Africa and in fact it is a potential area of growth as we have a young population,” she said. “As we see economic growth, we are seeing a move towards an increased middle class and urbanisation. It’s an opportunity for Africa for our changing demographics and economics.”
The urgency around climate change is also a major issue. “With an increase in frequency of extreme weather events, climate change will play into the health sector,” she said. “Energy, food and water is the nexus that is being looked at – and climate change is super imposed on that. The Paris 2015 climate change summit could change the game.”
Finally, the anti-establishment sentiment is a risk. “There is a shift to protectionism and nationalism,” she said. “We see it here with EFF and in Egypt with the Arab Spring. The middle class is being squeezed and are more becoming vocal.”
“When we talk about Africa and coming into its own, it needs to be regionalised and we need to find economies of scale,” she said. “There is a huge voice from the consumer for Africa to become more regionalised, which will open up and bring huge opportunities.”
Domestic flags
Using her future planning diagram to explain South Africa’s possible scenarios (see below), Ilbury said that South Africa’s position in the premier league was at a critical strategic point.
Read: Latest South African Scenarios
“South Africa is still a premier league player, but there is a 25% probability we could go to second division or we will become a failed state,” she said.
The biggest risks facing South Africa were corruption, unemployment, infrastructure and political and social instability, said Ilbury.
“In terms of infrastructure, Eskom and its ailing infrastructure is concerning,”she said. “We should also be looking at water, education, and health in terms of infrastructure.”
Global risks focused on income distribution and inequality, climate change and water, while South Africa’s focused on our political, social and economic issues.
She said a red flag would be the issue of corruption if the government decided to become more of a centralised state. “We are not going to stay in the premier league if that happened,” she said. “The second flag is our infrastructure, as that leads to our competitiveness.”
She said big decisions that will bring policy into play needed good leadership. “Do we have the right leadership,” she asked. “Is the trust between business and government moving together or apart?”
She also warned that if the country doesn’t focus on being entrepreneurial, “we will fall to second division”.
“Resource and economic nationalisation will take us to a failed state,” she said. “Land is also going to be a key issue. Capping land to 12 000ha is concerning when food security is an important issue.”
Finally, the national health insurance will shake up the health industry in a positive way, she said, “but its implications could signal a red flag”.
How business should move forward
Ilbury said that engaged clients were key to success in the financial service industry. “You will have to be highly innovative,” she said. “Technology will bring a lot of commodification.”
“Time spent with clients, the product offering, client segmentation, deep understanding of the client and cost efficiencies were important points to consider,” she said.
“Leadership has migrated from business to the consumer in an increasingly connected and complex world shaped by powerful mega trends,”Ilbury concluded. “Business leaders will therefore need to be authentic to deal with an empowered consumer and agile to deal with increased complexity.”
