Zaid Moola, Head of Client Coverage at Standard Bank South Africa

As South Africa starts the process of rebuilding its economy, the country should focus on stimulating sectors in which it has a natural advantage, including agriculture, global business services and tourism.

South Africa’s economic stagnation in recent years – exacerbated by the COVID-19 pandemic – belies the immense growth opportunities that still exist across numerous sectors. To unlock these opportunities and ensure the country reaches its potential, there is a need to rebuild trust between the public and private sectors and Labour, and to ensure that all stakeholders are committed to playing their part.

The social compact reached between government, business and labour on the economic recovery plan is a step in the right direction and adds to the progress made in rebuilding key public institutions. The recovery agenda should also include a deliberate focus on the sectors with the most promise.

Agriculture is one of the bright sparks. Despite the impact of COVID-19 and lingering policy uncertainty, the sector has shown its resilience this year. Production forecasts are generally upbeat, thanks in part to decent rainfall and favourable commodity prices.

But the industry has a long way to go to reach its full potential. For one, policy certainty will be critical in encouraging long-term investments in production capabilities and agro-processing infrastructure. The sector’s growth will be held back until there is full certainty regarding expropriation laws and property rights.

If we get this right, the opportunities are great. There remains much scope for growth in terms of high-end agricultural exports to Europe, while the realignment of global supply chains provides South Africa with an opportunity to increase its exports to the rest of the world. The country has a geographic advantage that it is yet to fully exploit. At the same time, the African Continental Free-Trade Area, which will become operational in January 2021, could stimulate exports to the rest of the continent.

With policy certainty and investments in logistics and storage capabilities, South Africa’s agricultural sector will be primed for strong growth in the years ahead. Similarly, the country is punching well below its weight in the global tourism arena, partly because of policy own goals that made it more difficult for foreign tourists to enter the country. But progress has been made in recent months, with some onerous requirements dropped and visa-free entry granted to several nations.

While the sector has been hit harder than any other by national lockdowns and travel restrictions, the imminent roll-out of vaccines will accelerate the recovery process. To maximise short-term opportunities and position the sector for long-term growth, there should be urgent steps to relax visa rules further, provide visa-free entry to additional markets, and deploy an efficient e-visa system. 

In the very short term – ahead of the festive season – foreign tourists need to feel comfortable that COVID-19 travel rules will not be constantly changed. 

Policymakers could also consider innovative ways to boost the sector in the months ahead. Several countries, including the United Arab Emirates, are offering one-year visas for people who work remotely. Similar initiatives in South Africa could help to restore the health of the local tourism sector.

The travel and tourism industry undoubtedly faces a long road to recovery, but with pragmatic policymaking and firm commitments from both the public and private sectors, we believe it can reach new heights. In 2019, before the pandemic forced governments to close their borders, South Africa recorded 10.2 million tourist arrivals. Compared to a similar-sized nation such as Spain – which attracted 83.7 million international visitors last year – South Africa has a long runway ahead. 

The pandemic has also shone a spotlight on the importance of domestic tourism, and many operators are finally starting to cater specifically for locals in off-seasons.

There are many other opportunities at our disposal. One is the global business services industry, which plays to South Africa’s natural advantages – its time-zone, strong English-speaking skills and culture, relatively low labour costs, and the empathy of her people. This sector could get a further boost from the remote work trend and from any improvements in terms of policy certainty.

Traditional industries, such as mining, energy and manufacturing, would also shift onto a new growth trajectory if an enabling environment for investments is created. The infrastructure development programme can assist in that regard, particularly if it is aligned to the opportunities at hand.

We are encouraged to see that progress is being made in restoring confidence in South Africa. Much now rests on the implementation of reforms, and on the commitment of the public and private sectors and Labour to work together in the interests of the country’s long-term prosperity. We need to remind ourselves that opportunities abound in Africa’s most advanced economy.