Hedge fund warns of SA 'blow-up'
Fin24

Hedge fund warns of SA 'blow-up'

2011-03-04 17:14

London - South Africa is flawed and set to "blow up" within the next 15 years with more serious consequences than Libya, says Toscafund, one of the UK's most high-profile hedge funds.

It tips commodity-rich Russia and Australia to benefit.

Chief economist and partner Savvas Savouri, who has been researching South Africa's economy, cites emigration of professional workers and what he sees as a "lack of centralised leadership" when it comes to dealing with problems such as the Aids epidemic.

"It's socially, politically and demographically flawed. It will malfunction within 15 years. It will go the way of MENA (the Middle East and North Africa) but the blow-up will be much more serious," Savouri told Reuters in an interview this week.

"Professional whites and blacks are leaving in hordes - the human capital is decaying," he said.

Savouri's comments come as Libyan ruler Muammar Gaddafi struggles to contain a two-week-old popular uprising in the world's 12th-largest oil exporter, which has helped push brent crude above $115 a barrel.

The unrest across North Africa and the Middle East has also seen the ousting of Egyptian leader Hosni Mubarak and Tunisian leader Zine al-Abidine Ben Ali, as well as protests in Bahrain and Saudi Arabia.

Savouri said a "malfunction" in South Africa, which is the world's biggest producer of platinum and a major producer of palladium alongside Russia, would push commodity prices higher, benefiting rival commodity-rich countries.

"Clearly Russia and Australia will win out. The surge in commodity prices will benefit them," he said.

Savouri, who is known for being outspoken in his predictions, said in January that the financial services industry was practically "lawless".

Comments
  • Taetjo - 2011-03-04 17:35

    INTERESTING!

  • Joel - 2011-03-04 17:37

    Don't listen to this fool. Hedge fund managers will say anything that will benefit themselves financially. The ANC are to greedy too let the country fail completely. It is impossible to predict what will happen 15 years in the future. There is always negative news in the papers but there are also good things happening in South Africa. Mr Savouri, we never had a massive housing crisis and credit crunch in South Africa because people were not allowed to borrow more than they can afford, unlike Britain and the US. People you you could therefore not take advantage of this (thank God). This was due to forward planning and a bit of commen sense. Go make your money elsewhere. P.S. yes, I do live in London

      Eugene - 2012-03-21 19:03

      "The ANC are to greedy too let the country fail completely." Joel, that is a rather funny statement. Exactly because they are so greedy their policies will lead to failure!

      Mattewis - 2012-03-22 07:10

      I'm definitely not listening to him. I think the country will fail within the next two years, but for the very same reason you mention! The ANC are too greedy! You can already see all the unrest-cracks predicting the inevitable revolution on the horizon!

  • Larry Piggott - 2011-03-04 17:38

    Sitting in the dark in Bedfordview, for the second time in less than a month, with no explanation given by these arrogant incopetents, it is only a matter of time. Not if, but when the situation will occur here.

  • Mundu - 2011-03-04 17:39

    I think he's right, it may even be sooner. Time to get out if you can, because you just know that the ANC won't change and even more seriously won't give up power even if voted out ligitimately.

  • KRobberts - 2011-03-04 17:39

    And this is surprising... how?

  • JS - 2011-03-04 17:41

    I think this is a little far-fetched. South Africa is different in at least a hundred ways. We do have crime, corruption and a lot of poverty, but we do NOT have a single dictator (how many countries in the world can boast a blood-free transfer of power?), we DO have a (relatively) free media, we DO have quite a number of businesses that DO NOT belong to the ANC. To say South Africa is going the same way is foolish. However, we should continue to guard against dictatorship and elements that threatens the freedoms that we DO have.

  • Fred - 2011-03-04 17:43

    We didn't need these guys to tell us what is going to happen, because it's obvious..... Corrupt, greedy, self-serving and arrogant leading party will meet its Waterloo, and I predict sooner than 15 years. the country can only take so much bleeding before it's totally dry, and that's where the BIG trouble starts. The emphasis is on creating jobs, but then they want the most draconian labour laws so nobody will want to be in business here, so where will the jobs come from? No jobs = No Money = TOTAL REVOLT !!!!

  • GT - 2011-03-04 17:43

    We do have a lot more mineral and a lot more people, I just wonder how 'more serious' we're talking about ... The ANC's complete incompetence and poor 'leadership' are killing our beautiful country. Incredibly sad ...

  • RAT - 2011-03-04 17:45

    .....not with a bang but a whimper....

  • Orph - 2011-03-04 17:47

    One who despairs over an event is a coward. But he who holds hope for the human condition is a fool.

  • du Plessis - 2011-03-04 17:48

    Many of my professional friends are returning from UK as they have returned to recession and skilled jobs are now scarce there. Not sure I agree therefore based on my limited insight

  • JMan - 2011-03-04 17:51

    You don't have to be a "high-profile hedge fund" rep to know this. Its as clear as day. Very sad. And obviously no one in power will take this seriously and will cite all kind of "reasons" why this info should be ridiculed....once again...how sad.

  • Jan - 2011-03-04 17:54

    "Professional whites and blacks are leaving in hordes - the human capital is decaying," He does not identify the root cause. AA, BBEEE and the fundamental government policy of cadre / family and friend deployment.

  • Anton - 2011-03-04 17:59

    Wonder who payed this fool to write this crap. Somebody probably want's to manipulate the stock market or something.

  • Kevin - 2011-03-04 17:59

    May be, maybe not. It depends on the anger of the people and "Black" Africans have historically shown the most incredible tolerance of corrupt inefficient government. They simply seem to have no expectation of government. Their tolerance of Colonial Government was amazing, their tolerance of Racist Government defied understanding and their tolerance of corrupt government astounds me.

  • Malema - 2011-03-04 17:59

    hhhhahahah yes we will blow up the country but become rish while doing it a la Mugabe and Chaves and Kadddafi ... Viva Revolution viva

  • Johan - 2011-03-04 18:04

    Peculiar is it not that two people can look at the same country of wealth, potential, growth and development and one will see a country of wealth, potential, growth and development and the other will see a pouched egg. This doomsday scenario is about as convincing as that awful shrill hysteria of the 2012 movie.

  • Tshepo - 2011-03-04 18:05

    Same people predicted that SA will become chaotic in 1994....We've heard it all before it starting to bore us.

  • Winston - 2011-03-04 18:07

    The only time when the ears and eyes will open to hear and see is when the tide of Political Correctness begins to shift. This is a process which takes time like in Libya it took 42years.We have had 16 or so years of "Freedom" or "Democracy" whichever term one prefers to use and are still a long way off(15years I think sooner) before the Tsunami uprising hits South Africa. As a South African I would rather choose not to believe this but unfortunately all Sectors are pointing towards that direction. We are already at the point of debating whether "Grammar" should be basicly fuled out of education. To be so biased so as not to take cognisence of an objective view from across our shores is a very sad one indeed. The sad reality is even when something is truthfully spoken from across the borders of our country the ears and eyes continue to choose to disbelieve. Will this also be our destiny - looks like its going that way very quickly.

  • JZ - 2011-03-04 18:09

    SA is ok for now but poor leadership and crime and corruption are the driving force to a fallen economy Bob is next door and protected we heading the same way faster

  • Scaramouche - 2011-03-04 18:10

    As a returning professional (and family man) to South Africa, I think this a lot of hot air seeking attention. Not that the future should be approached blindfolded, but I am also aware of many professionals who are making their way back to South Africa as the global recession took its toll on ex-pats in the UK and Europe. The green grass on the other side has become stale and scarce. I do believe that there are flaws in the South African context, but the 1st world isn't doing that well either. They are struggling in coalition goverments and with union demands that is creating a high frustration undercurrent among everyday people...

  • Baas'Boerseun - 2011-03-04 18:12

    This oke wants to make money and therefor he had a really good look at RSA. If I was the ANC, I would take serious notice and then do something to change that outcome.

  • Gavin - 2011-03-04 18:15

    No harm in investigating his allegation and taking the appropriate corrective action! Consider ourselves forewarned ..

  • James - 2011-03-04 18:19

    @ Joel. Maybe you should pay SA a visit sometime and see for yourself then perhaps you might change your views as to whether Mr Savouri is a fool or not. The ANC who themselves have lost all of its people of even slight intellect are making this country bleed and eventually the masses will revolt. Unfortunately there is no doubt about that, it is just a matter of time and I personally think it will be sooner than 15 years ! Who knows maybe in 10 years time you can have the pleasure of Julius M as your neighbour in England when he has to seek out somewhere to live !

  • Winston - 2011-03-04 18:20

    I do believe this to be true. The amazing thing about believing the truth is that it sets you free to deal with the situation and then move on from there and in this case it may mean figratively and literaly

  • Winston - 2011-03-04 18:24

    couldnt have said it better.

  • Doug - 2011-03-04 18:24

    SA lacks the balance of a true opposition party who can keep the ANC on their toes. The ANC just do what they please and its wrong. This dark shadow will prevail over SA for years to come

  • Inky - 2011-03-04 18:24

    Yea right. These are the same prophets of doom that said that visitors to the world cup would be killed, mugged, hijacked, robbed etc. , that stadiums would not be ready on time, that the entire world cup would be failure. Our economy is growing, no banks have been nationalised, our government is not de facto bankrupt as in the UK. Sort out your own backyard Pommie

  • Tau Motau Jr - 2011-03-04 18:24

    This is Utterly Bull-crabb!! I actually do not trust the intergrity of this report: this is to create sensitivity in the market to place funds in Aus & Russia as he alluded. It is true that many south africans left the country in the nineties but according to FNB's homecoming initiative, statistics shows on avg 5000 south africans are returning back to SA per month due to a stable economy, this is positive to adress the skill shortage. Likewise there is thousands of british expats in SA & everywhere in the world. Our Financial system is still sound compared to the Uk, Ireland,US, Greece,Spain etc, atleast none of our banks were bailed out by the Government. Thirdly they're still deep in the recession & we've came out of that period Dec 2009 already, 2010 we had a positive GDP, 2011 the SA economy is expected to grow by 3.6% which is positive. Our Govt debt level is only 4% of GDP against 41% in the USA, the UK deficit increased with a 120billion pounds... we are by far doing better than them. Before the world cup British media said SA will NOT be able to host the world cud due to poor infrastructure & we did it very successfully!! I acknowledge leadership challenges but SA is no way closer to Libya, this is a democratic country & advent of sound political opposition like DA & others will help the situation....

  • Relative - 2011-03-04 18:26

    You can only measure what happens in SA against alternatives - looking overseas the alternatives look just as scary! If you spend the next 15 years being an Afro-negative you will miss out on some of lifes biggest gains! Those returning in droves will tell you the same story as their bet on SA for the past 10 years has been totally wrong!

  • Paul F - 2011-03-04 18:26

    @Joel , I couldn't agree more. Savouri certainly knows how to promote his own interests for free. Where did this "15 year" time frame come from? Anything could happen over the next few years as the western powers continue declining and the East gains more power globally. SA is well placed to take advantage of the potential chaos in the West. In fact, I predict that London will "blow up" in the next 10 years.

  • NICK - 2011-03-04 18:32

    great article. it is very worrying though that this has been written in the business section by Toscafund. the fact is that none of our current leadership cares about these issues as long as they can live their respective polished lives. there is so much at stake here, the whole southern region of africa will collapse with us.wake up voters!

  • Justin - 2011-03-04 18:32

    Rubish!

  • Pothole - 2011-03-04 18:33

    @ Tsepo The country is becoming chaotic since 1994 but OF COURSE you do njot want to see the truth, as you fail to see that the white people brought and is still bringing aal the technology and knowledge to Africa. You like your cellphone and your TV and your computer hey Tsepo? Throw them away and go beat our drums.

  • Cynic - 2011-03-04 18:34

    Sorry was it not the doomsayers of the UK that were warning people to buy knife proof vests for the SWC Hedge Funds rate just above bankers and second hand car salesman in the pantheon of slimballs! Their aim is to make money by creating a perceived shortage in commodities! Quick everyone run there will be a shortage because.... Oh and by the way I can sell you some ....

  • Kathy Davey - 2011-03-04 18:36

    'Professional whites and blacks are leaving in hordes - the human capital is decaying' Really? Where are your stats...or is this anecdotal? Anecdotally most of the SA friends I had in th UK are back here in SA now, and it's only a matter of time for the ones that aren't.

  • Michael - 2011-03-04 18:41

    I have returned to South Africa after ten years out and I can see a positive change, things are better in SA than before I left, it is first world for the most part and I have more choicses here thatn I had abroad, I dont mean things are perfect but Government everywhere has its chalenges, just follow sky news about the UK chaps and you will see, I dont have to but am chosing to invest my future here and I am not the only one. South Africans are the bigest chalenge, they only see the negative, I tell them how things have improved and they try and convince me I am wrong

  • Tau Motau Jr - 2011-03-04 18:44

    This is Utterly Bull-Crabb! I actually do not trust the intergrity of this report: this is to create sensitivity in the market to place funds in Aus & Russia as he alluded. It is true that many south africans left the country in the ni...neties but according to FNB's homecoming initiative, statistics shows on avg 5000 south africans are returning back to SA per month due to a stable economy, this is positive to adress the skill shortage. Likewise there is thousands of british expats in SA & everywhere in the world. Our Financial system is still sound compared to the Uk, Ireland,US, Greece,Spain etc, atleast none of our banks were bailed out by the Government. Thirdly they're still deep in the recession & we've came out of that period Dec 2009 already, 2010 we had a positive GDP, 2011 the SA economy is expected to grow by 3.6% which is positive. Our Govt debt level is only 4% of GDP against 41% in the USA, the UK deficit increased with a 120billion pounds... we are by far doing better than them. Before the world cup British media said SA will NOT be able to host the world cud due to poor infrastructure & we did it very successfully!! I acknowledge leadership challenges but SA is no way closer to Libya, this is a democratic country & advent of sound political opposition like DA & others will help the situation....

  • William - 2011-03-04 18:45

    Tell us something we don't know. There is incompetent leaders steering the SA economy. Only a miracle can prevent eventual collapse, and I don't believe in miracles. The focus should be on technology, sound business and efficient labor but instead the only focus is political.

  • koolerom - 2011-03-04 18:46

    Invest in Platinum today and you could be sitting pretty in Australia in 15yrs! But seriously the hot air is just trying to distract our cricket boys when they play tomorrow. They're still gonna get Klapped Its up to you . . . yes you! to prevent this type of scenario - Viva SA

  • jay - 2011-03-04 18:50

    Whether this will happen or not... question is: what is the daily reality in SA and what is the nation doing about it? Who REALLY has the country on his/her heart and NOT their own pockets only? Even in the "1st world" more and more people are struggling to make ends meet. Qualified engineers doing cleaners work (news in Germany from 1 March 2011...I foresee a blow up there too. SA has all potential to remain a african powerhouse - let`s hope politicians will keep the economy alive!!!

  • Glen - 2011-03-04 18:51

    For someone with a PhD, Mr/Dr Savouri is certainly ignorant. Yes, as things stand now and will be for the foreseeable future, SA is at risk of revolt. But I believe that that risk is low. The same can be said of other developing nations: China, India, Brazil, etc. The political situation in middle east, north Africa and South Africa are fundamentally different. 1. Whilst SA has only had one party rule since democracy, we have been through 3 presidents. Many North African and Middle Eastern countries are not true democracies. 2. No one can dispute that the ANC has won every election - and NOTE I am not an ANC fan. Not the same in Egypt and Libya, let alone the Middle East. 3. North African and Middle Eastern countries are obsessed with Israel. At least in South Africa we argue/debate/fight/talk about the economy, jobs, education, crime. 4. Whilst AIDs is a threat to demographic structure. We attract professionals and academics from other parts of Africa (and no, I am not black myself). 5. The West is threatened by Islam. SA is a predominantly Christian society. Come on news24 - this seems like an article just to wind the readers up. Has this article even made the news in the UK? I would be interested to read about his other predictions.

  • The1EyedKing - 2011-03-04 18:52

    The varied themes of the writers are both interesting and saddening. We have a group of “dooms day” profits and we have naively optimistic blind fools. Lets face the factcts. The State President stands up and makes a “State of the Nation Address” and in his opening statement he proudly states that there are nearly 15 000 000 people on government grants. Who is paying for them to be there the 4 000 000 tax payers, the figures don’t balance and any fool can see that the tax payers are tired of funding corruption, greed and incompetence. What value is the tax payer getting? We know that we can “sell” our skills anywhere in the world. So lets get a dose of reality hear, don’t dismiss the affect of lost revenue to the Government Fiscus every time a skilled person leaves SA and becomes an economic refugee in a place which will appreciate the contribution their skill make.

  • Joe - 2011-03-04 18:53

    Tosca [of which he is the chief economist] came close to collapse in 2008 after mistiming investments in troubled banks. It was the second biggest shareholder in Washington Mutual at the time the bank failed.

  • Sbu - 2011-03-04 18:55

    To Mr Economist my question is if you so smart at predicting countries blowin up , did he predict the crisis in Middle east n North africa? The answer is no, its easy to talk intelligently in retrospect the fact thoeries n reality are two different things.How many of the so called analyist from similar country predicted doom for soccer world cup ? Mind your own business if dont have much to say shut up.

  • DONOVAN - 2011-03-04 19:03

    “Being forewarned forearmed” is not the answer!!! Trends and movements in world economy has help this world to survive many dark days, as the world assisted this government in bringing down “Apartheid” the world has the obligation to assist the democratic members of this country to survive this onslaught on life. You are worried about the 10 to 15 years from now when thousands of “White” farmers are being killed “NOW”, black and white members of the fine country are dying of hunger “NOW”, criminals are running “democratic” elected positions of power enriching them self’s and members of their families, 32 “BLACK” Billionaires in 12 years and this in a country where BBEEE is so successful, come on people do something about this and the looming ZA “blow-up”

      karos - 2011-05-23 21:03

      Well said Donovan!!!

  • King - 2011-03-04 19:11

    Wasn't the same thing said in 1995? Most hedge fund reseachers predicted doom in SA by 2010. Sometimes computer programs are wrong...well most times.

  • Realist - 2011-03-04 19:21

    @Tshepo Mar 04 2011 18:05 Same people predicted that SA will become chaotic in 1994....We've heard it all before it starting to bore us. Are you an idiot or just blind? SA has become chaotic and has/is falling apart since 1994.

  • Mike - 2011-03-04 19:31

    Sadly they might be right. It has less to do with the corrupt ANC, than with the sheer number of people living in appalling conditions (never mind the new ones flowing over borders on a daily basis). The sad fact is that the poor breed poverty, which in turn breeds crime and eventually social/political collapse. History repeats itself always.

  • OAGENG - 2011-03-04 19:38

    Me and my other 20 friends and their families are heading back HOME to Mzansi soon.This morons predictions have no backbone,it is just one of them wishful thinking.They think nothing proper will come out of a black run Country.Anyway his wishes will disintegrate just like his fart.