The truth about living and doing business in South Africa: Discovery CEO

South Africa has tremendous potential, and the narrative around the country is much worse than the reality, says Discovery chief executive Adrian Gore.

Speaking following the recent South African Investment Conference, Gore said that this disconnect between the narrative surrounding the country and what is happening on the ground actually creates opportunity.

“Assets are underpriced, opportunities are overlooked and underpriced and people are distracted – I think that is the opportunity in South Africa. The economy is less risky than people tend to think. Forget about emotions and opinions – look to crunch the data.”

He pointed to South Africa’s GDP data which shows that the country’s growth is too low, but also stable, which shows it has some form of resilience built into it. This is different from other BRICS countries and is more similar to the United Kingdom, he said.

He cited the Covid pandemic as another example – with economists previously forecasting that it will take five years for the economy to recover to pre-pandemic levels. However, if the country continues on its current trajectory and the commodity boom continues, the economy will likely break through pre-Covid levels in the coming quarters, Gore said.

While Russia’s invasion of Ukraine has created tremendous uncertainty in global markets, it is also another example of South Africa’s resilience, Gore said.

He noted that many of the resources and exports which have been sanctioned from Russia are the same ones exported by South Africa – creating a natural counterbalance to the potential increase cost of oil and food.

“The economy is relatively well-placed compared to others to weather the economic storm. Of course, there are tremendous risks in there, but it does demonstrate the scale of the economy.”

The economy is bigger than people think 

Gore said the contemporary view of South Africa is that the economy is small and unsophisticated – which is not the case.

He pointed to the anecdotal fact that the domestic flight route between Cape Town and Johannesburg is one of the busiest in the world – a proxy of a strong economy.

He noted that 80% of Africa’s pension assets are in South Africa -which gives a sense of the scale and depth of the country’s capital markets, while Gauteng alone is between 80 – 85% the size of Ukraine’s economy.

“We are kind of suffering from a situation where the narrative is dramatically worse than the reality. While in the short-term that offer arbitrage opportunities, in the long-term it has a causal effect by retarding investment and creates a pessimistic, declinist mindset that is very detrimental.”

Read: This is a bright spot for South Africa in a ‘sea of bad news’: Ramaphosa