The one big advantage South Africa has over Switzerland: Capitec CEO

South Africa may have many problems, but Capitec CEO Gerrie Fourie says the nation is also filled with opportunity.

According to Stats SA, South Africa’s GDP grew slightly by 0.6% in 2023.

Although the country avoided a recession last year, it likely saw a per capita recession as GDP growth did not keep up with the average population growth of roughly 1.5%.

2024 has also started poorly, with GDP decreasing by 0.1% in Q1 2024, down from a slight growth of 0.3% in the prior quarter.

Speaking to BusinessTalk with Michael Avery, Fourie said that optimism is key to changing the country’s course.

“(You can) go to Switzerland where everything works, but there are no opportunities,” said Fourie. “Come to South Africa – there’s not a lot working, but there are massive opportunities.”

These opportunities are, however, dependent on the government improving service delivery.

The government and the private sector also need enough trust in one another to work together, he said.

When looking at Capitec’s specific operations, he said that its business bank is essential to access the informal economy.

“If we can get those informal businesses to bank, and (we) can provide credit, they can grow and develop,” said Fourie.

He said that this will be key in unlocking the potential in South Africa.

Informal economy expert GG Alcock said that South Africa’s informal economy is estimated to be worth around R750 billion, and it is hidden from many economic indicators and even SARS.

Capitec is not alone in eyeing this sector: large JSE-listed retailers, such as Shoprite, and fast-moving consumer goods companies, such as Tiger Brands, are expanding into this sector. 

Shoprite recently announced a move to get more bulk goods and wholesale to small businesses and spaza shops operating in the informal sector.

Tiger Brands, meanwhile, said it aims to have its product range available in 130,000 to 150,000 stores within five years. In the last two years, it has partnered with 46,000 stores to stock its products.

Other opinions

Several other prominent CEOs in South Africa have broadly agreed with Fourie’s points on how to turn South Africa around.

Speaking on the Money Show, Discovery CEO Adrian Gore said that South Africa needs to create jobs through major economic growth, adding that the Presidential task team Operation Vulindlela should have a unit that is solely focused on economic growth and jobs.

Gore also noted that a strong and optimistic narrative could act as a “defibrillator” that turns the economy back to where it should be, citing how the narrative of the Government of National Unity (GNU) led to a rally in South African assets.

Standard Bank CEO Sim Tshabalala added that the states need to be capacitated and work with civil society and business to accelerate growth.

Tshabalala said that the Public Service Amendment Bill must be passed. It would introduce transparent and competitive recruitment processes in the public service, improve pay, and increase civil servants’ status in line with Singapore.

Investec Bank CEO Cumesh Moodliar, like Fourie, said that there should be greater public-private partnerships.

As South Africa’s debt-to-GDP of 74% limits the state’s ability to raise capital from international markets, Moodliar said that private capital can be integrated into public-private partnerships.

With South Africa already having manufacturers, producers, and miners, he said that PPPs should focus on South Africa’s logistics crisis, as industries cannot export their goods, limiting their ability to maintain existing employment levels.

Reactions to the Government of National Unity (GNU) have been positive, with markets welcoming Finance Minister Enoch Godongwana’s reappointment.

Bank of America (BofA) noted that Godongwana’s fiscal plan could benefit from stronger growth due to reduced load shedding, which would result in better tax revenues.

Moreover, Bofa said that 2026 could be a turning point for South Africa as Eskom will need no further support from the Treasury, leading to enough of a primary surplus to ensure debt stabilisation (a year later than the Treasury’s baseline).

Read: The tiny municipality in South Africa that spends R23,000 on each resident