CNBC Africa spoke to Mary Vilakazi, Group CEO, FirstRand on the progress made in South Africa’s economic reforms.
As I did tease on the other side of this break, more discussions from the World Economic Forum would be taking place and the World Economic Forum annual meeting breakfast specifically held in Sandton, Johannesburg today. I also spoke with Mary Vilakazi, who is the Group CEO of the FirstRand Group. I spoke about the kind of progress that South Africa had made in the lead up to this year's meetings. This is what she had to say. Things coming down, we're all getting excited that interest rates are going to come down, but it now depends on what the US does. But the good thing is that South Africa has its own ability to create momentum and growth opportunities. And a lot of the economic reforms that we keep talking about speak to that. Because I think if we had the US getting into a position that it's getting into with South Africa on the back foot that we're on, I think it was going to be a really difficult time. So the macroeconomic situation, I suppose consumers should also get a bit of reprieve from whatever remaining interest rate cuts can come. There's a lot of investment in the economy. We are seeing corporates that have been kind of sitting on the sidelines starting to borrow money again, starting to replace machinery, equipment, all the things that are necessary for economic growth. So I think those are quite important because it's a GDP growth that we actually require. So I'd say that from the macroeconomic point of view, that interest rates, inflation, that's a bit more positive. Political stability, a very important factor because what we've seen after the new government is that our risk premium has come down. Because that's where investors look and say, okay, we think this country is going nowhere and that they might default on their risk. And that drives the interest rate that we pay on our debt. It raises the interest rate that we pay on our debt. So we've seen that come down. And National Treasury has also done certain things to make sure that they're not borrowing when they shouldn't be borrowing. So it's actively managed. So that's good because last year when we were into this, I mean, I think it was another downgrade that we were expecting. Okay, but now it looks like on the fiscal path, we are on a different, we might be on a different path. So, you know, thank you to National Treasury, I think, for making sure that they maintain the discipline. So that's, I think, from a macroeconomic situation, it, I think, illustrates that a completely different environment. And I think that key for me, though, that really gives me hope and allows me to be optimistic is the progress on the economic reforms. In South Africa, we've always had lots of plans. But here we've had plans where we can say there's been execution within reasonable timelines. Things can always go quicker. We'll always put more pressure on governments to execute faster because of the benefits. But the fact that we now actually have a government that's delivered, that's executed on plans, it builds confidence because we forget sometimes that if you're constantly on the back foot with delivery, you actually don't have the confidence to get certain things done. So you can see how, you know, even the issue of water, the issue of local municipalities is starting to come on top, you know, top of the agenda for governments and thinking about the successes of how electricity was dealt with and how that model can be replicated. And lastly, I mean, you have a business and a private sector in South Africa that is so willing to provide whatever capacity, whatever support government requires, and it has balance sheets to be able to fund a lot of the investments. So a combination of all of that just says, yeah, I think we are at a turning point. South Africa has always had potential, as one of people have mentioned, but now we at least seem to have alignment on what's going to create some shift. And lastly, can I just also say, the energy from our new ministers is also quite tangible. So we'll hold them accountable to delivery, but it's very encouraging to listen to their vision, and also to see what's been delivered. If you look at the Minister of Electricity, and the courage and the leadership that is also provided. So yeah, all of that, say, indicates that 2025 starts off very differently to 2024, and certainly very different to the last decade we've had. So bottom line, essentially, we have a better story to tell to the international community. But Mary, I also want to talk to you about the theme of WEF this year, this collaboration in the intelligent age. And I want to understand what that means from a financial services perspective, just especially given the fact that the financial services sector is one of the growing sectors in South Africa's economy. It's a sector that still has quite a lot of potential right now to employ new people, notwithstanding perhaps some of the disruptions that technology could bring to that employment. Intelligent age collaboration in South Africa's financial services sector, practically, what does that look like? I'd say, actually, we've been good at collaborating. If I look at the financial sector, if I look at how the Saab regulates banks in particular, there are certainly a lot more opportunities of what we can do. I mean, if I think about fraud, there, there's a big need for collaboration. Against the cyber risks that we face, we could be on a front footing. But those are things that actually the Saab is prioritized because we've indicated how that can help. I mean, the digital transformation in South Africa can be very meaningful to ordinary South Africans in the country. There's still a big opportunity. If you look at what India has achieved, just making it easy to have an ID, making it easy to be traceable in the economy, making it easy to just have a bank account. I mean, those are still things that we haven't done. And I go back to fraud. I mean, when we have money laundering risks, those things will become a lot easier for us to manage because ultimately, if we are a country that doesn't manage those risks well, we know we end up on the grey list. So there's actually a need for us to make sure that there's a good concerted effort between what Home Affairs does, Department of Justice, and the financial intelligence sector. And there's thought and a good thinking actually around what needs to happen.
Theme: Progress in South Africa's economic reforms and collaboration in the financial services sector
South Africa is making significant progress in its economic reforms, with a focus on creating momentum and growth opportunities. Mary Vilakazi, Group CEO of FirstRand Group, highlighted the positive macroeconomic situation in the country, with interest rates and inflation showing improvement. Vilakazi also emphasized the importance of political stability and government discipline in managing the fiscal path. She expressed optimism in the execution of plans and economic reforms, as well as the willingness of the private sector to support government initiatives. The intelligent collaboration in the financial services sector was also discussed, with a focus on addressing cyber risks and digital transformation to benefit ordinary South Africans. South Africa has seen positive developments in its macroeconomic landscape, with interest rates coming down and inflation showing improvement. Vilakazi highlighted the importance of political stability and government discipline in managing the country's fiscal path. She commended the National Treasury for maintaining discipline and expressed optimism in the progress of economic reforms, noting the execution of plans within reasonable timelines. In terms of the financial services sector, Vilakazi emphasized the need for collaboration to address cyber risks and facilitate digital transformation. She pointed out the opportunities for improvement in areas such as fraud prevention and financial inclusion. By learning from successful models like India's digital ID system, South Africa can enhance its financial services sector and better manage risks like money laundering. South Africa's progress in economic reforms and collaboration in the financial services sector are key indicators of positive growth and development. The alignment between government and the private sector, along with a focus on innovation and risk management, bodes well for the country's future economic prospects.
"South Africa has always had potential, but now we at least seem to have alignment on what's going to create some shift. The progress on the economic reforms and the collaboration in the financial services sector indicate a promising future for the country."
South Africa, economic reforms, financial services, macroeconomic situation, political stability, collaboration, innovation, digital transformation, fraud prevention