Businesses will survive junk status, and will even continue to thrive, if they carry on innovating and providing outstanding services and products.However, they will need to streamline further, doing more with fewer workers, using automation and even moving into the era of artificial intelligence.This is the advice that respected political and economic commentator Daniel Silke gave the Dolphin Bay Brief last week, following the economic and political tumult that resulted from President Jacob Zuma’s sacking of Finance Minister Pravin Gordhan and his deputy Mcebisi Jonas.Daniel added that consumer confidence would continue to drift downwards in the coming months, but that businesses should not despair. “We have 55 million people requiring goods and services. Business can continue to thrive within a volatile political environment,” he said.South Africa is at a crossroads, Daniel said. Two forces, almost equally strong, are at loggerheads within the ruling party. “The outcome will determine the future of the ANC and of governance in South Africa.”Zuma has clearly been weakened by firing Gordhan and Jonas, and by the Cabinet reshuffle. “We subsequently saw two out of three of the alliance partners, COSATU and the SACP – the lesser of the three partners, but nevertheless two out of three - calling on him to resign, as have other institutions. Jacob Zuma’s strength is being whittled away,” Daniel said.Neither protests, not a vote of no-confidence, would have much effect on removing Zuma, he predicted. “The ANC will probably kick for touch, preserving Zuma’s presidency until the elective conference at the end of the year, where there is a more natural opportunity for change.”In the eight months until then, the party’s leadership will continue papering over the cracks. “The party will not want to be dictated to by the opposition, and don’t think a vote of no confidence has any chance of succeeding, because MPs are dependent on party bosses. If they don’t comply, they get removed from office. As a result, they are limited in how far they can go to oppose their own political party in parliament. For many of our MPs politics is a career. They become party apparatchiks – with nothing else to fall back upon.”South Africa has a democracy predicated upon free and fair elections, and change will occur “not through protest movements, but through the ballot box.”Fears of a Zuma dictatorship were overdone, he believes. “Any further attempt at centralising the power of Zuma will weaken him further despite recent developments. He is already a deeply polarising political leader. Any further attack on civil liberties would be an immediate signal for an implosion within the ANC.”South Africans are becoming increasingly aware of complex concepts, and more now understand what a “downgrade” by the ratings agencies, and “junk status” mean, than would have ever been the case previously, Daniel said. The work “junk” has some extremely negative connotations, which nobody wants to be associated with.“As South Africans urbanise and organise, and as our democracy becomes more mature, people are understanding more.”Asked how South Africans tolerated bad governance for so long, Daniel said that many societies around the world had done so. “I often think our political parties are products of the past, and have not adapted to modern times. Here, we are particularly affected by cadre deployment, which has led to mismanagement. Political activists are entrenched as party political animals, and do not have the degree of expertise needed to deal with complex issues.“South Africa needs to wake up to the fact that real skills are needed to manage complex government functions. These jobs are becoming increasingly complex, and would be so for highly experienced people in the private sector, but the least experienced people are getting complex jobs that they cannot deal with.“We need to review the link between skills and responsibility in government.”Bertus noted that Daniel’s analysis implied two paths are possible, given South Africa’s high employment rate and low skills base. In the first, best-outcome scenario – the path that the CEO Initiative and government were previously taking together – government could work with business, to ensure that business created increasing numbers of jobs, and that education system and workers’ skills levels improved. This would benefit both businesses and society.In the other scenario, which has recently become the case, government takes bad economic decisions and businesses go into survival mode, rather than focusing on the good of the country. This will entail shedding jobs, to cope with pressures such as rising costs and a poorer exchange rate.“This is extremely regrettable, but this is what will now happen until our politics and economics shifts,” said Bertus.
The next few years look positive for the timber industry, as the demand is high and the supply adequate.In the medium term, however, a timber shortage looms, as the total area under plantation in South Africa is not expanding in line with the demand for structural timber, Roy Southey, the Executive Director of Sawmilling South Africa, told the Dolphin Bay Brief.“South Africa is self-sufficient regarding structural timber at this stage,” Roy said. “The shortage in the next five to six years is what we have to address.”This year, the demand for structural timber is particularly high in the Southern Cape and Western Cape, Roy said. Indications are that the pole industry, too, is healthy, largely because the government is still implementing large electrification programmes.After five or six years, the supply is expected to become inadequate for demand. Plans are not yet in place to ensure an adequate future supply of timber, and it is estimated that South Africa will have to import nearly half its pine for structural purposes within the next two decades.The sawmilling industry is in consultation with the government about several possible remedial measures. One is for the government to grant licences for more plantations. The restrictions were introduced about 20 years ago due to a dwindling water supply, and as the economy of the country grew, the establishment of forests lagged behind. It takes 22-30 years for trees to mature sufficiently to be used for structural timber, depending on where the plantations are in the country.Another measure is for the sawmilling industry to increase its efficiency. “At the moment, only about 49% of every tree is used, of which 20% goes into the structural industry,” said Roy. “We need to improve this figure.”Expensive new technology would be required to achieve this. “We have been talking to the Department of Trade and Industry about this possibility, but whether it is viable for companies at this stage is debatable.”Roy said that each of the measures to ensure an adequate supply of South African-grown timber would many years to implement.“The best option, in our current situation, is to expand the area under plantations,” he said.