SA's highs and lows

December 2006 News & Events

If we do not have confidence in our country, how can we

expect the rest of the world to have confidence in us?

That was the question posed by internationally renowned economist Dr Iraj Abedian to a select audience at Elvey Security Technologies’ recent ‘breakfast of discovery’ at the Rosebank Park Hyatt.

Jack Edery, Elvey; Dr Iraj Abedian; Bev Scott, Elvey;
and Dave Waywell, Elvey
Jack Edery, Elvey; Dr Iraj Abedian; Bev Scott, Elvey; and Dave Waywell, Elvey

Senior economic advisor to president Thabo Mbeki, Dr Abedian held the audience riveted with his talk on South Africa’s economic scenario, making particular reference to the private security industry and the challenges currently facing it. A founding director of Pan-African Investment and Research Services, he has been at the forefront of economic policy development in South Africa since the beginning of its transformation. The author of numerous books, he is also an honourary professor of economics at Pretoria University and speaks with authority, having studied the South African economy for 20 years.

While people often tended to take things for granted, he said, it was important to sit back and look at the whole picture. South Africa’s economy was well diversified although the

country's growth had been predominantly in the services sector and agriculture was no longer the backbone of its economy. He then made reference to the growth of the private security industry in recent years, which he attributed partly to escalating crime levels but also driven by the growth and expertise of those in the tertiary sector.

South Africa's security industry had undoubtedly benefited from the country’s high crime levels, but this would only be beneficial up to a point, he warned. The country had to

address its structural imbalance as a matter of urgency – and focus on current inequalities regarding unemployment and income distribution. This problem was the Achilles heel of South African society since poverty was the breeding ground for discontent and crime.

Border control

Painting a verbal scenario of possible trends going forward, Dr Abedian said that as global regions continued to integrate, care needed to be exercised regarding the free flow of people and goods over borders. A lack of control here would result in an upswing in the volume of illegal goods coming into the country, making it increasingly easy for criminals to convert dirty money into assets.

Said Dr Abedian: “The problem is compounded when a region integrates faster than its law enforcement capacity, because it becomes more and more difficult to track criminals. This in turn opens the doors for international syndicates to move in.” Warning that perception played a key role when it came to branding a global region ‘soft’, he said legislation therefore had to be harsh and visible in the media. Integration had to be preceded by appropriate law enforcement and information collation if the result was to be a decrease in the cost of crime in an expanding market.

Private security

In terms of cost versus benefit, Dr Abedian said that right now the country’s business sector and its higher income groups were the predominant users of the private security industry. But, he added, if crime went beyond a certain level, the security sector would start being seen as ineffective with the result that its customer base would then start to deplete.

The country therefore needed to be aware of and proactive about what he termed its 'clear and present challenges'. For him, major issues include:

* Focusing on the implementation of policy and projects.

* Government infrastructure spending.

* The 2010 FIFA World Cup – this he felt was a bit of a saviour because the country and the government were in the global eye – effectively put it on notice to resolve its problems.

* Careful monetary policy reaction to world events.

* Political uncertainties – these had to be dealt with sooner than later.

* Safety and crime control – these were the government's top priorities or South Africa would suffer.

* There needed to be a drive to get back to 6% GDP growth which he felt was the magic number that would allow the country to deal with its infrastructural issues.

* And last but not least, Dr Abedian urged the private security industry to work closely with the police which would help bring crime under control.

The local economy

On a broader basis, Dr Abedian said business and consumer confidence in the economy were at record highs – and the emergence and sustainability of this confidence was something that citizens needed to get used to after the country's long history of economic uncertainty.

South Africa's sovereign risk versus its currency risk was declining, with the result that the borrowing rate was down. As one of the world's top emerging economies – in a matter of just a decade – the government was now in a position to borrow money at nearly one fifth of its former premium, he said, adding that it was now seen as a country with a more stable future, and the accompanying confidence was a telling indicator of how the global market regarded it. In 1994, South Africa was not a coveted investment destination, but the success of the country’s new economic policy had resulted in its improved risk rating, which in turn had lowered its cost of borrowing.

While there was no doubt that the country’s weakening currency, together with the impact of the price of oil, remained a major inflation driver, this was not nearly the end of the story for him. The government’s prudent macro policy had ensured that its finances were in a healthy position, which made borrowing easy. The problem, he said, was not a lack of willingness on its part to pursue this route, but rather that the government lacked the capacity to deliver right now.

Commenting on South Africa’s household debt which he said was at a record high, Dr Abedian said that people's incomes and their ability to earn meant that they could still service their debt. And for him, consolidating debt was definitely the route to go, provided the funding mechanism was used wisely and not for parties or fancy cars.

From a property perspective, he confirmed that house prices were also at record highs – which he felt was good from an economic point of view since the country's assets had long been undervalued by global standards.

Predicting that prices would continue to rise for the next five or six years, with a few exceptions, Dr Abedian said property ownership was an important asset class in terms of stability and predictability.

Locally-manufactured goods

Manufacturing and exports should be higher, he felt, but output was currently hampered by a lack of skills. This was exacerbated by the fact that South Africa had lost 20 years of investment and infrastructural development during the ’70s and ’80s. Transformation, when it came about, again diverted time and funds away from development in this sector, leaving the country with a below-standard infrastructure and limited developmental progress owing to a lack of capacity. The result was that despite the current commodity boom, the country was exporting five to six times less than it could and should be doing. To underpin his assertion, Dr Abedian noted the number of skyscrapers on track to be built in China over the next few years. On completion, this would translate to the country tripling its existing number of skyscrapers. Incidentally, the spin-off from this wave of development would create huge demand for building products such as cement and steel, he said, which made it important for South Africa to think globally and for its business sector to start taking itself seriously.





Share this article:
Share via emailShare via LinkedInPrint this page



Further reading:

Highest increase in global cyberattacks in two years
Information Security News & Events
Check Point Global Research released new data on Q2 2024 cyber-attack trends, noting a 30% global increase in Q2 2024, with Africa experiencing the highest average weekly per organisation.

Read more...
The power of PKI and private sector innovation
Access Control & Identity Management News & Events Government and Parastatal (Industry)
At the recent ID4Africa 2025 Summit in Addis Ababa, the spotlight was firmly on building secure, inclusive, and scalable digital identity ecosystems for the African continent.

Read more...
Bosch Security renamed Keenfinity
News & Events
Globally renowned brands for video systems, access control and intrusion alarm systems, as well as communication systems, unite under the roof of the new company Keenfinity Group.

Read more...
2025 video surveillance market set for improved fortunes
News & Events Surveillance
Novaira Insights has unveiled its latest report, World Market for Video Surveillance Hardware and Software – 2025 Edition, forecasting a healthy growth rate of 8,1% until 2029, excluding China.

Read more...
Wialon announces integration with fleet maintenance and optimisation platform
News & Events Transport (Industry) Logistics (Industry)
Fleet management software platform integrates with a fleet maintenance and optimisation platform to support mutual customers for better workflows and deeper insights into fleet operations.

Read more...
DeepSneak deception
Information Security News & Events
Kaspersky Global Research & Analysis researchers have discovered a new malicious campaign which is distributing a Trojan through a fake DeepSeek-R1 Large Language Model (LLM) app for PCs.

Read more...
Almost 50% of companies choose to pay the ransom
News & Events Information Security
This year’s Sophos State of Ransomware 2025 report found that nearly 50% of companies paid the ransom to get their data back, the second-highest rate of ransom payment for ransom demands in six years.

Read more...
Value and industry insight
Securex South Africa Training & Education News & Events
Securex South Africa 2025, co-located with A-OSH EXPO, Facilities Management Expo, and Firexpo, drew thousands of security professionals from across the continent and beyond, offering a platform for networking, product discovery, and knowledge sharing.

Read more...
Gallagher Security achieves ISO 27001 recertification
News & Events Training & Education
Gallagher Security has successfully achieved certification to the updated ISO/IEC 27001:2022 standard for Information Security Management Systems (ISMS). This accomplishment builds on previous certifications and reflects a continued commitment to the highest standards of information security.

Read more...
Survey highlights cost of cyberdamage to industrial companies
Kaspersky Information Security News & Events
The majority of industrial organisations estimate their financial losses caused by cyberattacks to be over $1 million, while almost one in four report losses exceeding $5 million, and for some, it surpasses $10 million.

Read more...










While every effort has been made to ensure the accuracy of the information contained herein, the publisher and its agents cannot be held responsible for any errors contained, or any loss incurred as a result. Articles published do not necessarily reflect the views of the publishers. The editor reserves the right to alter or cut copy. Articles submitted are deemed to have been cleared for publication. Advertisements and company contact details are published as provided by the advertiser. Technews Publishing (Pty) Ltd cannot be held responsible for the accuracy or veracity of supplied material.




© Technews Publishing (Pty) Ltd. | All Rights Reserved.