Economic Watch

An alternative view: Ignore the good news at our peril

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South Africa has a good news story to tell, despite all the unfavourable economic indicators from dwindling growth to high inflation.

Even a downgrade will not impact this good news story, but the politicians and even government departments do very little to sell it. This may be an even-bigger risk.

Statistics SA’s annual General Household Survey of 2015 released last week, again confirms that South Africa is a very different place to that of 1994 or before and even from 2002, and that there are many good news stories that seem to disappear within the perpetual negativity.

This survey looks at what South African households have in assets and if they have certain services such as water and electricity. It also asks questions on health and education and gives us insight into how people earn, live and get services.

One aspect which really represents a good story is the fact that South Africa, with a median population age of around 25 years old, has a home-ownership rate of well over 60%. This is one of the most amazing development stories to come out of an emerging market country, according to calculations based on the survey (This does not include President Jacob Zuma’s PTO Permission To Occupy).

Moreover 78% of South Africans live in formal houses, which is far higher than most other emerging market countries and certainly far higher than anywhere else in Africa. Only 14% live in RDP (Reconstruction and Development Programme) houses!

In 2002 there were 8.6 million formal houses. This grew to 12.6 million in 2015. This is an increase of four million formal sector houses and suggests that there were more formal houses than the actual total number of households in 2008.

Furthermore, of the four million homes, according to government data, only 1.7 million RDP homes were completed. This means that 2.3 million formal houses were built by households themselves, sometimes with subsidies, but mostly without State assistance.

Building data from the private sector suggests that of these 2.3 million houses, fewer than 800 000 were built in large towns and cities. This means that 1.5 million were built in rural areas, with or without formal planning permission. (Planning permission would be the way the building statistics are collected).

No other country with such a young median age has this much wealth! None.

This is probably the reason why more than four million foreigners live here.

Add the fact that South Africa has one of the highest numbers of second home-ownership in the world by far. Close to 30% of South African households own a second home, which is much higher than the 4% found in Europe. Yes, SA has eight times the rate of second homes than people in the richest trading block in the world.

Something else is happening here that is not explained by poverty and inequality.

A total of 6.5 million households had six or more rooms in 2015, while the average number of people in a household fell from 4.7 in 1996 to 3.4 people in 2015.

That the average household has declined by one-and-a-half people from the mid-1990s is a clear indicator of increasing wealth and resources, as poorer households would tend to be bigger and richer households smaller.

Yes, nearly as many families rely on grants as they do on work as a source of income, leaving many in relative poverty. But the fact remains that South African households have far more in assets than income (perhaps a telltale sign that people lie about income?)

Other wealth indicators fare well too

Households with stoves more than doubled from 6.5 million in 2002 to over 13.2 million in 2015.

Since 1996, the number of households owning television sets has risen from five million to 13 million. In fact more households today get satellite television than the total number of households with televisions in 1996.

Piped water in or on the actual dwelling went from 7.4 million to 11.7 million. Households connected to the electricity grid went from 8.3 million in 2002 to 13.8 million. More than ten million households were added to the grid in the last 26 years.

The number of households with cars has more than doubled since the turn of the century.

Over 90% of adults have mobile phones.

South Africa has the sixth-highest pension assets to GDP in the world - the youngest country by far to have such as high ratio (with Namibia the only one breathing down our necks). There are over 15.25 million pension accounts in SA that we know of (according to OECD data and our own FSB data updated to 2013 for pension assets).

Amps (all media and products survey) lifestyle measurements back up the general household survey data and show upward mobility and a huge compiling of assets from cars and houses to phones and fridges. Moreover, the non-financial census of municipalities confirms electricity and water trends as well as that a large proportion of households get these services for free.

There are huge success stories, but they are buried by politicians trying to play to the slogan-happy popular gallery. ‘Why?’ remains a big question here.

Just knowing these facts would give many of the protestors and social media intellectuals at least some food for thought.

Do we have the most self-destructive leadership in the world?

Unfortunately, South Africa’s leadership only focuses on the failures. Repeating and confirming that the people live in ‘poverty’ will result in protests, even if images of destructive protests are banned on the public broadcaster.

We see around 5 000 protests a year, even while a record number of students attend university. Politicians then aim their actions at minorities and allow people with misguided information to rule the debates and social media.

If you want to organise your own destruction, then clearly you let the ‘information-deprived’ rule the airwaves and social media with suggestions rather than fact.

This is clearly what will not just bring about a downgrade but complete economic destruction.

You get the wrong policies by focusing on minimum wages and not business creation. You also end up confirming that you have achieved nothing. People tend to believe that and you have no clear way back other than banning bad news – which you yourself spread.

‘Success breeds success’ is a truth that is universal. Real leaders point to successes, like Barack Obama does about the economy and politics. He does criticise, but more often than not he points to the wins and not the losses of his government. So too do most democratic leaders.

It is silly to point out failures as your way to victory. It will lead to people who worked at making things successful becoming disheartened and those who have benefitted to expect more as they are still ‘poor’.

If we allow this to continue we will become the first modern economy in the world to self-destruct. Some of our ‘facts’ in public debates are so wrong and so far out that we need our full attention to set things straight.

Yes, there still are problems and yes, downgrades will come. But if we carry on with the current mindset and not see the facts for what they are, we run the risk of destroying ourselves and regressing to an economic stone age.

(This article was first published on the Moneyweb Today website.)

by Mike Schussler

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