JZ spins while country is spinning

I've always kept my distance from politicians.

Nonetheless, I watched last Thursday night's playground squabble, mostly to establish whether the president would offer clues about what the minister of finance might include in his Budget speech in a fortnight's time.

Before the commotion began, I was distressed to observe that representatives of the main opposition parties did not rise when the head of state entered parliament - an affront to the country's highest office but a striking demonstration of their belief that the present occupant had brought the position into disrepute. More alarming, though, was the president's brazen dismissal of our acute social and economic troubles .

His speech was hollow, skewed with spin and half-truths. He proudly divulged that 15 million people were gainfully employed, ignoring the 5 million jobless. He said the International Monetary Fund had downgraded its 2015 forecast of world growth to 3.5%, but failed to say that South Africa was projected to grow by only 2%.

Not once did he raise how prolonged strikes in our mines and factories last year had crippled business, or how the self-inflicted power crisis would impede industry's productivity. His slant appeared to be that our economic woes were mainly the consequence of slow global expansion.

While his musings might have appealed to his party faithful, the rest of the world wasn't that magnanimous. The rand showed little sign of recovery, remaining at levels previously reached only at times of global crisis.

Since 1994 our currency has depreciated from 3.50 against the US dollar to its current rate of around 11.70, a compound decline of 6.2% a year. Over the past 20 years, in global terms, we have become 6% poorer every year.

Yet in that 20-year period the JSE All Share Index has more than compensated for the currency's decline, generating an average annual return of 16%. I can't accurately determine the exact reasons for this exceptional performance but I have identified factors that might have driven share prices higher, including the benefits exporters have reaped from the slide in the rand. In the analysis I could not ignore the resilience of our private sector, which has continued to yield remarkable profits in challenging times.

The liberalisation of our economy, relaxing of exchange controls and technological advancements opened the way for foreigners to invest in our bond and equity markets, increasing liquidity and lifting multiples. At the same time local businesses began seeking new markets and expanding abroad.

On top of that, in 1994 the prime lending rate was 17% compared with 9.25% at present. An extended period of low interest rates in the global economy that dates back to the bursting of the internet bubble in 2000 has also increased the appeal of higher-yielding equities, underpinning our market's rise.

The most remarkable revelation of my simple study was the extent to which our stock market, and hence our economy, has altered in 20 years. In December 1994 there were 640 listed companies, with the top 10 capitalised shares, primarily mining businesses, dominated by the Anglo American stable. The big four were Anglo American, De Beers, SA Breweries and Liberty Life. Included in the JSE Actuaries Index were 27 mining counters, seven clothing manufacturers, 12 engineering and electrical businesses, seven food producers and other industrial firms that have subsequently vanished off the boards.

Today there are only about 400 listed shares with Anglo American down at number 10 on the list of the most valuable companies.

For the government to reverse our economy's course, it must admit the mistakes of its inglorious past, rid itself of corrupt and incompetent officials and put out a welcome mat to foreign investors. Thursday night was a shambolic start.