The promise and challenges of South Africa

I’m currently in Johannesburg, just back from two days in a game park, where one of my clients was holding a board strategy offsite. Here many of the contrasts of a country still in transition are evident. Nelson Mandela came to power in 1994, taking the nation from a history of apartheid into a new-found democracy. The country has come a tremendous way. The economy shrank consistently for the last 12 years of apartheid. Economic growth this decade has stayed close to 4%, with a recent revision suggesting the current growth rate is around 5%. While this is still not high for a developing country, it has helped support the emergence of the so-called “black diamonds” – middle-class blacks with disposable income and inclined to spend. Yet inequality remains enormous. A select few have gained enormously through black economic empowerment programs, yet with an unemployment rate of around 25%, many are not seeing the benefits of change. Violent crime has surged over the last 6 months, fed by an influx of battle-hardened former soldiers from across the continent. My driver from the airport showed me his bullet wounds from when he was recently carjacked. The HIV/ AIDS situation is dire, with official figures suggesting over 30% of pregnant women have HIV. Broad dissatisfaction is fueling populist politics and a powerful communist party. There is the real potential for a shift in power that will result in an undoing of much of the last decade’s economic reforms.

So while there has been a world of change in the last 13 years, South Africa is still in the midst of a transition which has a long way to travel. There is tangible excitement about South Africa’s hosting of the World Cup in 2010. The infrastructure development required will boost the economy and employment. More importantly, there will be tremendous pride in being the global center of attention. Connectivity is a major part of the story. Owning a mobile phones is now considered essential, with the poor not forgoing cell phones, but being prepared to spend 25% or more of their income on phone bills. As I’ve written earlier, mobile internet will be the foundation for connectivity for the entire continent. The potential of the country is immense. I hope that promise is fulfilled.