As a latecomer added to the group, South Africa has an appreciably smaller population than other BRICS nations, says Leon Ayo, Chief Executive Officer at Odgers Berndtson’s South Africa office. A relatively young democracy, Ayo feels that South Africa’s situation is similar to that which Germany experienced during the reunification after the Berlin Wall came down.
“South Africa is up there with Brazil in terms of the Gini co-efficient, a measure of statistical dispersion intended to represent the income distribution of a nation’s residents and the most commonly used measure of inequality. There are a lot of issues on a macro-economic scale that affect South Africa,” he says. He believes that in the past the country relied heavily on its natural resources and commodities for growth. Now that corruption is being publicly addressed by the country’s leadership, economic improvements will follow.
World class institutions
“GDP is currently growing at one per cent, better than many countries in Europe – but we could be at least at three to four per cent given the opportunities that we have as an emerging market surrounded by fast growing economies,” says Ayo.
“South Africa has many world-class institutions which are very well regarded internationally – so there’s a lot of sophisticated infrastructure for us to build upon.”
Beyond tackling corruption, the key to South Africa’s future lies in the world-class education offered at business schools such as the University of Cape Town’s Graduate School of Business, the University of Stellenbosch Business School, the Henley Business School Africa and Pretoria’s Gordon Institute of Business Science.
Politically vocal and diverse, the country’s youthful population are also economically active in small, unmonitored businesses as well as on a larger scale.
“The youth at MBA level are as intellectual as any I’ve ever come across,” says Ayo, who has worked throughout Europe and North America.
“The racial lines that separated the country 24 years ago are blurring – so you’ve got Indians, white South Africans, Afrikaners, black South Africans all sharing a common view of what the future could look like – a non-racial society.”
Clearing the visa challenge
Legislation to promote that ideal may currently be inelegant, but the potential within South Africa is enormous, Ayo believes.
Foreign executives who clear the bureaucratic visa challenges to work within the nation find their preconceptions melting away – as Ayo himself did when he was considering his move to South Africa.
“It exceeds their expectations,” says Ayo. “I saw, within 24 hours of my arrival, a place where I could raise my family with a high quality of life, worldclass schools, world-class leisure facilities, and world-class hospitals.
I also saw I could grow a business aggressively because this is still a growing market… People come and want to stay.
“This is a country that – if you get it right – has such potential.” says Ayo.
Leslie Maasdorp, Vice-President and Chief Financial Officer, New Development Bank BRICS
The BRICS countries contribute around 23-24 per cent of the entire global economy and with strong and favourable demographics they will continue to drive such growth, says Leslie Maasdorp, Vice-president and Chief Financial Officer of the New Development Bank BRICS (NDB) – formerly the BRICS Development Bank.
In the past two decades emerging markets have more than doubled their contribution to the world – from around 21 per cent in 1992-93 to just over 40 per cent today.
One of the biggest things exemplifying the faith that this will continue has been the creation of the New Development Bank, the primary focus of which is lending to infrastructure and sustained development projects, backed by the BRICS governments themselves as an alternative to what is seen as the US-dominated World Bank and International Monetary Fund.
The NDB has been set up to foster greater financial and development cooperation among the five nations.
At 6.5 per cent, China’s economic growth remains spectacular in global terms, especially taking into account the country’s large size, Maasdorp points out.
“It is becoming increasingly integrated with the world, so whatever happens in China impacts directly on Europe, the US and large emerging market countries, such as [the others making up] BRICS,” he says.
It’s natural that any slowdown in China’s economy would have a knock-on effect globally, he says.
“China is still the fastest-growing economy by a long shot,” he says, and it is projected to become the biggest economy in the world within the next decade or so.
In the past the buoyancy of the BRICS economies depended strongly on sales of commodities, but the steady drop in the price of these, together with currency depreciation and drought – the latter has created inflation in food prices – have added to the range of challenges affecting emerging economies to a greater or lesser degree.
Yet for all of these adversities the faith in the ability of BRICS nations to maintain or renew their upward trajectory remains strong, as proven by the formation of the NDB.
The bank has started the process of recruiting up to 100 professionals for its headquarters in Shanghai, one of the fastest-growing cities in the world with a reputation for drawing dynamic and talented executives to the heart of its financial district, Pudong.
“The bank is on very solid ground… We are looking for executives who understand the long-term opportunity that emerging markets represent,” says Maasdorp.
These executives will also need to show adaptability to integrate culturally into their new environment.
Maasdorp is seeking executives who are open to develop new ideas while understanding all these factors.
They must focus on clean and sustainable means of economic growth, moving away from the carbon-intensive patterns of past growth, he says.
“As we develop the bank, we want to be at the cutting edge of innovation and adopt new technologies and new innovative ideas that will make us a bank of the 21st century, so innovation is the very important quality that we are also looking for,” he says.
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