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What are chances of SA becoming failed state?

Cape Town - The chance of South Africa becoming a so-called failed state is very unlikely and probably between 5% and 10%, according to scenario planner Clem Sunter.

In his view this would be, for instance, if public violence "goes through the roof".

At the same time he estimates the chance of SA staying in what he calls the "premier league" of top 60 nations at about 50% and that of going into the "second division" also at about 50%.

In order to stay in the "premier league", however, SA would have to see that a number of warning flags stay or become "green". These flags are the flags of corruption, infrastructure, leadership, pockets of excellence and the level of economic freedom.

READ: Cyril Ramaphosa for president - Clem Sunter

Sunter said the corruption flag is currently a "hybrid" one in SA.

"It is red because of the corruption which has been exposed, but it is also green because that corruption had been exposed," Sunter said at a Deloitte State of the Nation event held in Cape Town on Friday.

As for the infrastructure flag, Sunter said despite progress at state-owned enterprises like Eskom, there still remains a lot of work to be done on infrastructure in SA - including roads infrastructure.

Leadership

The third flag to watch in SA - leadership - is an important one for Sunter.

"Neither of Nelson Mandela's successors came close to having the unifying ability he had. SA is now more divided than ever. One only has to hear the rhetoric of some of the students to realise that," said Sunter.

"SA needs a leader who can bring us together. It may well be Dr Nkosazana Dlamini-Zuma, but I think we could see a younger generation coming to the fore - the likes of Julius Malema, Mmusi Maimane and younger ANC leaders. I feel we have moved away from the struggle generation," said Sunter.

"The best thing to turn this flag green in SA would be a generation of young leaders determined to get to grips with the current economic challenges."

The fourth flag for Sunter is about pockets of excellence in SA. He worries, for instance, how the unrest at universities will affect the quality of staff. He would like to see the pockets of excellence inspire the rest of the country to excel too.

The last and most important flag for SA in Sunter's view is the level of economic freedom that must be created for opening opportunities for the business sector. In his view entrepreneurs and small businesses need to be enabled to play a much more important role and an "equal game" must be created between what he terms township and main stream economies.

On a global level, Sunter said there are a number of flags his clients are concerned about. These are the flags of religious conflicts; Vladimir Putin and Russia; the ageing world population; anti-establishment; the environment; and security.

Sunter, therefore, sees three possible scenarios for the global economy. He thinks the most likely is the "grey flag" of hard times continuing due to low growth and money being tight.

An upside variant would be if a ground breaking technical innovation comes about - for instance regarding smart energy, smart water management, artificial intelligence; or a medical breakthrough.

A downside would be if there is another financial crash like in 2008.

"We must, therefore, watch the flag of inflation," said Sunter.

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