"It was the best of times, it was the worst of times... it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us..." So wrote Charles Dickens in the opening lines to A Tale of Two Cities . Those words seem especially apposite to the SA economic, financial and business environment in 2006. Naturally one must moderate the typical Dickensian "superlative degree of comparison" - after all, we are not in the situation of pre-revolutionary France (the novel begins in 1775). And as Jan Smuts once put it, the best and the worst never happen in SA. But the images of contradiction are irresistible.
This was a year of paradox, perhaps the most confusing since we began to rejoin the global economy and then achieved democracy over a decade ago. This was the year when we perceived for the first time that strong economic growth was not only possible but was perhaps already happening at above 5%. Tens of thousands of jobs have been created (though many more are needed).
As work began at last on construction of the Gautrain and preparations for the 2010 soccer World Cup, we realised, after so much talk, that these massive projects were really going ahead. Economists reached a broad consensus that there has been a major structural change in the economy, taking us beyond the familiar boom-and-bust cycles and creating substantial new wealth.
True, 2006 was also the year when the long bull run on the stock exchange - one of the longest in history - began to slow, as inflation and interest rates crept up again. But this is not in itself upsetting, because business confidence remains high, both in the Reserve Bank's response to the cyclical turns of the economy and in the broader outlook.
Much more disturbing are the intractable social difficulties that we face. The Aids pandemic continues to claim lives, destroy families and undermine the normal functioning of society. Much of the education system remains dysfunctional. There is a severe shortage of skills to manage and support the growth we are planning. What was in effect a two-decade investment strike by both private and public sectors has left our infrastructure disintegrating, especially railways and roads. Violent crime has made fear a debilitating and pervasive part of the national culture. Corruption threatens to undermine democracy faster than it can be consolidated. We are getting used to the novel idea of a government that is strong electorally but weak administratively.
All of this affects business, which literally cannot afford to dismiss these issues as "social" and not its concern.
The year also saw a substantial change of guard in the business community, both corporate and individually.
The appointment of the American Cynthia Carroll to head Anglo American reminded us that one of our most important companies is actually no longer South African; its famous Johannesburg establishment at 44 Main Street is now a branch office, not a headquarters. Relations between government and business remain uneasy, with the maintenance work now entrusted to representative bodies such as Business Leadership SA rather than major companies. The dialogue will probably be more subtle and less public.
It also seemed that in 2006 a generation of corporate leaders was bowing out, some of them before the normal retirement age. Last week it was Barloworld's Tony Phillips, but there were many others, including Anglo's Tony Trahar, Grindrod's Ivan Clark, Massmart's Mark Lamberti, FirstRand's Laurie Dippenaar and Liberty's Myles Ruck.
That was the generation that cut their executive teeth in a economy that was isolated, sanctions-strangled, cursed with double-digit inflation, distorted by military priorities and threatened by political instability. These men had to be tough, subtle, clever and resourceful, or they wouldn't have lasted.
Their successors, many in their late 30s and early 40s, will need these qualities and more. They had hardly got onto the corporate ladder when Nelson Mandela was released from jail. They are not yet household names. Too many of this generation have emigrated, and not enough are black. But they are the business leaders who will have to see us through the dual and non-negotiable challenge of achieving transformation and growth.
As if to match the fresh winds in business, government this year showed a welcome pragmatism, as in the compromises reached in the BEE codes. There's a new acceptance that many of our problems are real, and will not be solved simply by throwing money at them. The resignation of the combative Tony Leon as leader of the opposition may herald a more co-operative political mood, which may give the lame-duck Mbeki government the confidence to do the right things and remove obstacles to job creation and skills placement - such as red tape, onerous visa requirements, and laws that encourage business to avoid labour-intensive investments.
In 2006 there seemed to be a growing view that no amount of sunshine posturing and "proudly South African" whistling in the dark would sort out our problems, and that - despite our many strengths - getting to where we want to be will be more difficult than we thought. If so, it follows that government and business will be less quick to blame, and more ready to understand and work together. And if they do, to adapt the final words of Dickens's novel, it will be "a far, far better thing that they do, than they have ever done".
Ranking the Analysts 2009
