Corporate SA has been lauded the world over for its ability to achieve impressive growth in a country that has been low on the list of attractive investment destinations for close to a decade. Its growth levels have been hard to match in developed markets such as Europe and Japan, which face ageing populations. The platitudes, I'd argue, were largely about its ability to focus on cutting costs, rather than finding new avenues for growth. There were some exceptions.
Somewhere down the line, I'm pretty sure one of the world's leading business schools will initiate a study on how corporates in a "highly" unionised market can achieve such efficiencies - which mainly means job losses - in a country such as ours. It's quite an achievement when you consider the heydays of Cosatu strength before the rust set in at the once towering federation.
SA corporates reacted in pretty much the same manner as their US and European counterparts to the 2008 global recession: they cut jobs and reduced investment significantly. More than a million jobs were lost in the private sector, the slack taken up by the administration of Jacob Zuma and his ill-fated journey towards a developmental state.
Given that SA's unemployment rate remains among the highest of the countries ranked by Bloomberg, I'd argue that those efficiency gains were never given up and during the decade of Zuma's governance the private sector maintained its cost focus. Its earnings in turn looked attractive for a global investment community in search of high-growth destinations as it waited on US and European economic recovery.
Excited by this increasingly global shareholder base, companies such as Steinhoff International were encouraged to seek expansion opportunities outside SA and the continent. We know how that turned out, and while the report cards of other companies such as Famous Brands aren't laced with the fraudulent actives of its directors, their expansions have made for poor reading.
Sentiment has shifted away from global expansion. And with SA corporates as efficient as they could possibly be, investors are left to consume some rather unnerving earnings reports.
Report cards have blamed factors such as a slowing SA economy and other uncertainties for depressing their earnings. A retail analyst providing "insight" blamed everything from consumer apprehension to spending on the upcoming May 8 general elections. That was really far-fetched, and the worst excuse I've heard. Just how can the sixth general elections in 25 years affect sentiment so severely? Someone has perhaps been imbibing too much of the corporate spin.
It is certainly the season when everything that has gone wrong is simply blamed on macroeconomic conditions and political uncertainty, which have been a feature of SA for more than a decade.
If you were to rummage through these reports, it would be quite sensible to take the view that there hasn't been much spending on innovation in recent years. What else are we to make of the various poor report cards that basically say that management's capacity for any form of innovation has been choked by poor economic cycles and the maddening politics of the governing party?
Now, there's no denying that economically we are in anaemic territory, with last year's growth at a paltry 0.8%. But it's a backdrop we've all faced, there's no point in blaming the economic woes for our troubles. What all this has served to do is to avoid more difficult questions for management about what growth strategies they have invested in domestically. Apparently none or nowhere near enough. Management spend has been about keeping the machine chugging along. And to make matters worse, there's a wave of disruption that I can't help but feel our corporates are struggling to get a handle on. All the while US investors are urging their Silicon Valley giants to find growth outside US borders.
Cost saving as a strategy is no longer viable...