Edward King, Partner – Private Equity, shares his thoughts from a recent visit to South Africa.
I recently travelled to South Africa to catch up with some longstanding Private Equity clients and CEOs. It is always interesting hearing views from the market, illuminated by some key business themes. The messages I heard this time around were refreshingly positive, reflecting a sense of optimism for the future.
Recent headwinds.
It is well reported that South Africa has had a tough time recently. The region has grappled with a complex set of challenges that have hindered the economy, acting as a virtual handbrake on growth. These challenges have included increased political risk, electricity supply constraints (severely affecting infrastructure and progress on infrastructure projects), and a weakening currency. These dynamics including growing unemployment, inflation and the knock-on effects from the global economic slowdown have all had an impact on sentiment. Combined, these have resulted in a difficult period for the region, hampering critical inward foreign investment.
Positive Change.
Up until recently, this was the outlook. However, my conversations with Private Equity leaders and prominent CEOs indicate that sentiment is shifting and that there are green shoots in evidence, driven by several elements.
New Power Sharing Coalition and effect.
- A significant factor is the new power-sharing coalition within the newly elected government of national unity. This new agreement differs from previous power-sharing arrangements and now means there are multiple voices at the table. Those I spoke to shared how the new coalition is already demonstrating results. For example, the Competition Commission, previously notorious for being difficult and unhelpful to business, is now proving to be much more ‘pro-business’.
- Another positive effect of the new coalition is that some of the large national infrastructure projects, which have sat dormant for years, are now finally moving ahead at pace. These include significant water purification projects.
- Eskom’s (the state owned electricity provider) commitment to ending load shedding (controlled energy shutdown) has eased the strain on businesses, restoring much-needed energy stability and predictability for businesses and consumers.
- Data also backs this up. South Africa’s Gross Domestic Product (GDP) is projected to grow at 1.6% in 2025, and although still relatively glacial it remains positive and on an upwards trajectory. On inflation, the Consumer Price Index (CPI) inflation rate recently dropped to 3.0% and retail trade sales have recently risen following increased consumer confidence and activity.
Conclusion
While the recent positive developments in Southern Africa, driven by the new power-sharing coalition and its pro-business stance, are promising and point towards a more positive future in the short and medium term, there will likely be further volatility to navigate. Success is rarely a straight line.
Edward King is a Partner at The McLean Partnership.
He has more than 20 years’ experience within Executive Search and leads our Private Equity practice with a focus on identifying key talent for funds and their portfolio companies. Typical roles include talent for portfolio companies such as CEO and CFO hires as well as Investment Partners. Prior to that, he specialised in running senior mandates within Investment Banking.
If you would like an informal and confidential discussion as to how we can support you, please contact Edward King on:
- Mobile: +44 7970 492 265
- edwardking@mcleanpartnership.com
The McLean Partnership work across a range of sectors, including Financial Services, Real Estate and Infrastructure and have worked with clients on targeted team lifts, regional office openings and build outs. We are also known for bespoke projects advising clients on team restructuring and role and remuneration benchmarking projects.
