Debt ceilings, double dips, currency volatility and Walmart -- the Mail & Guardian rounds up the business highlights of 2011.
The business year of 2011 will go down in history as one that offered up as much uncertainty about the globe’s financial future as it did the hopes of a recovery from its woes.
The crisis in Europe definitely took centre stage, as one of the world’s guiding financial lights stumbled from one calamity to the next, each characterised primarily by the inability of the so-called “PIIGS” nations of Portugal, Ireland, Italy, Greece and Spain to assure the globe that the European Union (EU) was not headed for disaster brought on by massive debt.
Angela Merkel of Germany and France’s Nicolas Sarkozy have tried gallantly to push through bailout packages for their troubled neighbours but have at times seemed to be trying to achieve the impossible.
So while the PIIGS remain a blemish on one of the world’s sinking economic powerhouses, the clock is slowly counting down to the 27-nation economic bloc’s inevitable demise.
With waning profits, a sinking currency and sluggish growth—how the union finds its way out of this mess is anybody’s guess.
They are in fairly good company though as the US still grapples with its economic woes and attempts to keep its fiscal head above water.
In what could be interpreted as political grandstanding, the US economy faced a last-minute rush to secure a deal between the Republicans and the Democrats on raising that country’s debt ceiling.
Although it was raised several times during the administration of George W Bush, in aid of funding wars in Iraq and Afghanistan, the Republican-led House of Representatives pushed the issue as close as possible to deadline.
As the world collectively held its breath at the pending financial disaster that awaited them should the US default, politicians reached an agreement and we all moved on.
This no doubt raised the ire of many around the globe, which was evident in the emergence of the #OccupyWallStreet in September.
Armed with little more than placards, tents and passion, thousands of protestors converged on Zuccotti Park in New York’s financial district to remonstrate what they believe to be an unjust financial system.
Although dismissed by those they wish to bring down, demonstrators remain resolute and continue in their quest—even as New York Mayor Michael Bloomberg attempted to evict protestors.
But it’s not all bad in the world, especially if you are a member of Brics—the world’s group of biggest emerging economies in Brazil, Russia, India, China and South Africa.
Capitalising on the EU’s debt worries and the US’s inability to speed up growth, Brics is slowly emerging as the world’s new economic super-bloc—with some analysts predicting the group will head a new economic world order.
Hopefully, SA can begin to capitalise on its Brics membership soon instead of merely surviving on scraps from the world’s economic dinner table.
Many criticised SA’s ascension to the grouping at the end of 2010 and we are still to see any remarkable improvement in the country’s financial fortunes since then.
Local: Is it still lekker?
On the local front it’s hard to pick from a wealth of stories ranging from the encouraging to the shocking.
The stop-start motion the Walmart deal has left many with the feeling that SA might not be the most welcoming destination for foreign investment.
After initially having the deal conditionally approved by the Competition Commission, in June three government ministries followed Cosatu’s immediate rejection of Walmart’s overtures, by requesting more terms to be added to the deal in August.
Some of the arguments posed by Trade and Industry Minister Rob Davies, Agriculture and Forestry Minister Tina Joemat Pettersson, as well as Economic Development Minister Ebrahim Patel, are compelling but confusing, as government has always maintained its priority is attracting investment—not repelling it.
The latest on the deal has seen Deputy President Kgalema Motlanthe categorically state at the beginning of November that SA welcomed Walmart’s investment—making no mention of his ministers’ opposition to the deal.
Diamonds aren’t forever
The Oppenheimer family’s decision to sell its 40% stake in diamond conglomerate De Beers for $5.1-billion certainly sent eyebrows north after their almost 100-year involvement in the gemstone giant.
Their decision, however, to begin wide scale investment in farming might be the surest sign yet that tomorrow’s millions will be made tilling the world’s agricultural fields.
Most controversial of all, the nationalisation debate remains firmly on the South African business agenda.
The ANC youth league will revel in the fact that its push for the expropriation of South Africa’s mines has attracted the attention of media, politicians and the mining houses around the world.
But the question remains: How seriously is South Africa taking the possibility of nationalisation?
Although the ANC assembled a task team to study the feasibility of nationalisation based on the international examples of the practice, the ruling party’s government seems to think it’s a bad idea.
We have had no fewer than three ministers in Pravin Gordhan, Malusi Gigaba and Trevor Manuel publicly state that the debate on the controversial economic manoeuvres is hurting the South African economy.
Even Mineral Resources Minister Susan Shabangu has repeatedly aired her views on the matter, saying that nationalising the mines would not cure the country economic ills.
So while the youth league has received tacit support from tripartite alliance member Cosatu, it would seem the nationalisation debate is far from over.
View more highlights of the year that was in our special report.