Clearing women’s path to the top
Women make up just under a third of companies’ senior management in South Africa – more than the global average. But 60% of firms support a quota system to ensure gender equality, and the country is putting measures in place to ensure there are more women in top corporate and government positions.
Romaana Naidoo
May 22, 2013
South Africa is working to ensure there are more women in top corporate and government positions, and while a recent report found that women make up just less than a third of companies’ senior management – more than the global average – 60% of firms supported a quota system to ensure gender equality.
The Grant Thornton International Business Reporton women in business, an annual survey, tracks the views and expectations of more than 12 000 large, privatelyheld businesses and mid-sized listed organisations in 44 countries.
According to the latest report, released in March, 28% of senior management positions in South Africa are held by women, a level unchanged over the past six years. But it is still higher than the global average, which at 24% has also remained static. The country drops in the rankings when it comes to board members, however: 15% of board members are women, compared to 19% globally and 26% in the Bric countries of Brazil, Russia, India and China.
Jeanette Hern, a partner and the head of corporate finance at Grant Thornton Johannesburg, said the statistics indicated an urgent need for change. “However, when South African businesses were asked whether they would support the introduction of quotas to legislate for more women on executive boards of large listed companies, it is pleasing to note that 60% of [them] said they would support the quota system,”she pointed out.
The report also foundthat women were making strides in finance:“Women chief financial officers in South Africa more than doubled this year compared to 2012, up 128% from 14% to 32%.”
Hern said increased numbers of female chief financial officers improved women’s chances of rising to corporate board level.
The report is supported by earlier findings by the Businesswomen Association, whose 2011 South African Women in Leadership Census uncovered a significant lack of women in companies’ most senior positions. It found that women held just 4.4% of chief executive or managing director positions, 5.3% of chairperson positions, and 15.8% of directorships. The public service fared better, with 35% of senior management positions held by women.
More women in the government and judiciary
The South African government is also working to increase the number of women in senior positions, and in August 2012 the Cabinet approved theGender Equality and Women Empowerment Bill. This draft law aims to ensure a 50% representation of women in the public and private sectors.Then, in his State of the Nation address on 14 February, President Jacob Zuma promisednew legislation to place more women in decision-making roles.
Reforms are planned in the judiciary, too: women are seriously under-represented as judges in South Africa’s courts, where only 65 of the 233 permanent judges insuperior courtsarewomen.In August 2012,Justice Minister Jeff Radebeannounced that the government was beginning “radical reforms” to the State Legal Services to increase the number of women in top positions in the judiciary.
“In the justice sector in particular, women are still the least represented category across the entire hierarchy of the courts.”
But in the government, women’s law-making role is improving. According to the South African Institute of Race Relations, the number of female members of parliament rose from 111 out of 400 in 1994, to 173 in 2009. The Inter-Parliamentary Union places the number at 169 as of 1 April 2013.
South Africa’s governance ranking and its impact on domestic and international reputation
By
Miller Matola, Brand South Africa CEO
The issue of governance is one that remains top of mind on the African continent and one that presents continual challenges to governments and institutions alike in each country. A key focal point for the world’s attention is also on Africa’s ability to continually improve its governance rating and, as a result, improve its reputation on the global socio-economic and political stage. This is becoming ever more important for the African continent, particularly for countries such as South Africa, when competing in the global marketplace for business and investment against fellow BRICS and Next 11 Group of Nations countries. The benchmark for the continent in this regard can be found in the plethora of world-class indices that examine not simply issues of governance, but competitiveness as a whole, based on the World Economic Forum Competitiveness pillars which examine the strength of institutions, infrastructure, goods and market efficiency, financial market development, technological readiness, business sophistication, and innovation.
Another useful benchmark for the African continent that specifically focuses on issues around governance and compares the performance of 50 countries against this pillar, can be found in the annual publication of the much-respected Ibrahim Index of African Governance (IIAG), the 2013 edition of which was released this week. Since its inception and launch back in 2007, it has become a highly respected, independent, and much referenced index focused on monitoring the development of governance best practice across the continent. It remains the most comprehensive collection of quantitative data on governance in Africa, and has an essential gravitas as a result of it being compiled in partnership with experts representing the continent’s leading institutions. This annual assessment of governance in every African country provides a framework for citizens, governments, institutions and business to assess the delivery of public goods and services, together with policy outcomes across Africa, and to benchmark performance amongst a total of 52 countries. Ultimately, every citizen has a right to expect a certain level of delivery in terms of essential political, social and economic public goods and services from government. The Index therefore provides a useful comparative measurement tool with which to shine the spotlight on such critical areas as Safety & Rule of Law, Participation & Human Rights, Sustainable Economic Opportunity, and Human Development.
Interestingly, when examining South Africa’s performance against the IIAG’s 2013 report indicators, the country still ranks fifth over-all in terms of its governance, a position it has held for the past three years. Once again, South Africa sits in the rankings positioned behind Mauritius (1), Botswana (2), Cape Verde (3), and Seychelles (4). Yet, the report contains some good news and also food for thought for both South Africa’s citizens and also those global decision-makers and influencers who are considering the country as a potential future investment destination of choice. From a positive indicator perspective, South Africa has this year scored an overall Index rating of 71.3 out of 100, higher than the African average of 51.6. This marks an overall improvement of +0.6 since 2000, and earns the country a 3rd position ranking out of 12 countries in the Southern African region. If one specifically looks at where the country ranks its highest, it is in its performance in the field of Public Management where it scores 1st place out of 52, and also in the field of Participation & Human Rights governance, scoring a prestigious 3rd position out of 52. This category of the IIAG measures the protection and promotion of human rights, civil and political participation, and gender issues. Overall, South Africa has also seen important improvements in ratings in Index categories that are important to our global reputation as a potential investment destination of choice. For example, in the fields of creating sustainable economic opportunities, creating constructive business environments, infrastructure and the rural sector. Improvements have also be recorded in the Human Development category relating to welfare, and in particular health, which has recorded a 15.6% increase in our rating. However, on a slightly negative note, this year South Africa’s performance in Participation & Human Rights has declined from the previous year’s rankings in the Index.
The further good news is that South Africa is one of only eight countries to have remained consistently in the Ibrahim Index of African Governance’s top ten rankings since 2000. Other countries in the top ten include: Botswana, Cape Verde, Ghana, Mauritius, Namibia, Seychelles and Tunisia. If we are to remain consistently in the top 10 performing countries in the Index, and indeed work on moving up the overall Index ranking table, it is essential that we find the critical solutions needed to address those challenging areas where the country is not performing as well. For example, South Africa ranks its lowest in the sub-category Personal Safety where is scores 41st position out of 52. It has also seen a change in the category Safety & Rule of Law where it has recorded its lowest position yet in this area, 7th out of 52, a drop of -3.2.
This latest survey on governance comes hard on the heels of the recently published 2013/14 WEF Global Competitive Index, which saw South Africa improve or hold its position in the rankings in seven of the twelve pillars of competitiveness. The country performed particularly well against its BRICS counterparts, demonstrating its strength in financial market development, scoring a 1st place ranking amongst the BRICS countries and 3rd place overall in the world. It also performed well in the sophistication of its business environment, ranking 3rd amongst the BRICS countries and 35th overall in the world, and also for its goods and market efficiency where it ranked 2nd amongst the BRICS countries and 28th globally. The same high level of confidence is seen in the ranking of South Africa against the Next 11 group of nations (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Turkey, South Korea, Phillipines and Vietnam), where is outperforms these countries in the 7 key pillars of Institutions, infrastructure, goods and market efficiency, financial market development, technological readiness, business readiness and innovation.
So, what exactly do these rankings mean for South Africa and the building and maintenance of the country’s positive reputation in the global marketplace, particularly in relation to its position as the most recent entry into the increasingly influential and important BRICS grouping of nations? And what does this year’s Index rankings mean for Africa as a whole in terms of the continent’s global reputation? In his introduction to the 2013 Ibrahim Index of African Governance report, Mo Ibrahim, its founder, observes that,
“The answer is a mixture of overall progress but increased complexity. The findings highlight widespread improvements across the continent since the turn of the century. They show that 94 per cent of people living in Africa now live in a country that has demonstrated overall governance improvement since 2000. Eighteen out of the 52 countries analysed saw their best ever performance in this year’s IIAG. But these figures, of course, also reveal the challenges of sustaining progress and underline that an equitable allocation of resources must be a priority for policy and decision makers.”
From South Africa’s perspective, we can celebrate the overall positive ratings recorded in the report as they send a clear message to both citizens and the global investment community that the country remains well and truly open for business and is still one of the world’s attractive business investment and leisure destinations. Underpinning this position is a keen focus on further efforts to continually develop strong governance structures across all spheres of government and society, ensuring that those areas identified as current challenges are addressed with equally effective solutions. Ultimately, South Africa’s reputation as an exciting emerging market economy on the world stage depends upon our success in this regard.
Key positives about South Africa’s economy to emerge from the Goldman Sachs “Two Decades of Freedom” report
[Miller Matola for Business Day]
As South Africa prepares to celebrate the 20th anniversary of the birth of democracy in the country in April next year, it is perhaps a good time to reflect on how the economic environment in the country has developed and to look at where we are now as we prepare to embark on a new economic journey in the year ahead. A new report has just been published by Goldman Sachs entitled “Two Decades of Freedom – What South Africa is Doing With It, and What Now Needs to be Done”, which provides a data-rich, empirical analysis of the structural advances made during this time, and their impact on the country’s economic standing today. The report’s findings highlight a significant number of positive results that send a clear message to both citizens and the rest of the world that the South African economy continues to make positive strides and that the country is open for business in the global marketplace.
Over the past two decades, the country has made decisive structural advances in ten key areas. Firstly, South Africa’s macro fiscal and monetary balances have improved. The period from 1994 to 2007 witnessed a golden era of higher growth and lower inflation, recording an average GDP growth rate of 3.6% and an average inflation figure of 6.3%. Post 2007, the onset of the global financial crisis served to moderate this growth, resulting in a more subdued but still positive average GDP growth rate of 2.3% and average inflation of 6.5%. This impressive performance throughout this period has transformed South Africa from an US$ 80bn economy 20 years ago, to a US$ 400bn economy today, supported by a disciplined monetary and fiscal policy.
Secondly, the government’s debt position has improved and foreign reserves have risen over the past two decades. The National Treasury’s recent forecasts aim to keep South Africa well clear of the high indebtedness recorded in certain developed markets and well below 50% in the next four years. South Africa is currently recording its government debt as 42% of GDP. This is in comparison to fellow BRICS member countries Brazil and India, which are experiencing debt figures of 68.5% and 65% of GDP respectively.
Thirdly, the overall cost of capital has declined over the past twenty years, in line with falling inflation. The average lending rate from 1980 to 1994 was around 17%, compared to the aggregate figure recorded over the past five years of 11%. This downward trending benefits all members of society, from individual consumers to major corporates in the country.
Fourthly, corporate valuations have improved relative to the country’s global peers. South Africa’s golden period of prosperity saw the upward re-rating of companies listed on the Johannesburg Stock Exchange, whereas US and European markets were impacted by the global financial crisis, thereby bringing valuations closer today. South Africa’s current one-year forward valuations are surpassing those of Europe, and are only just lagging behind the US by one point.
In the meantime, South African companies are enjoying better comparative valuations on aggregate than they have been since 1994 with the JSE outperforming the S&P500 Index on a relative basis during that period. Fifthly, real asset Rand returns have compared favourably, with the performance of South African cash and stocks largely in line on a global basis. This situation reflects favourably on returns for South African investors, notwithstanding exchange controls, inflations and currency effects.
Interestingly, and of particular importance going forward due to South Africa’s recent membership of the BRICS grouping of nations, is that China/Africa trade has risen significantly. This has helped to largely offset European trade declines which have been impacted by the European economic slowdown in recent years. Whilst exports to Europe have decreased from 32% to 25% since 2002, exports to China have increased from 1.5% to 14%. Imports from China have similarly increased during this period from 5% to 14%.
This reflects the growing importance of China as a strategic partner to South Africa and bodes well for our continuing maximization of our BRICS membership.
Another positive economic factor in the country has been seen in the rise of disposable income for South African households, increasing in line with real GDP per capita gains. According to a recent IMF report, real GDP per capita has increased from just over US$ 4300 in 1995 to US$ 6000 in 2012, representing a 40% increase. The upliftment of the poor, together with the meteoric rise of the black middle class in the country, are contributing demographic shift factors to explain this positive rise in disposable income. This has in turn led to a remarkable progression in the LSM (Living Standard Measure) profile of South Africa. Between 2001 and 2010, the number of citizens in the lower income group category LSM 1-4, decreased significantly from 52% to 31%.
Simultaneously, almost 10 million more people graduated to the middle to upper LSM 5-10 band, a truly remarkable socio economic development. The accompanying rise in the black middle class in the country has also led to a structural boost in spending, providing a much-needed boost for not only retail spending, but also housing, transport, leisure and recreation. Wage inflation of around 3% per annum together with government social grants have also supported the upward movement of this trend and boosted consumer expenditure, good news for the overall economy.
Finally, and of interest to all those looking to invest in business and industry in South Africa, per unit labour productivity has improved over the last decade by 11% CAGR (Compound Annual Growth Rate). Productivity output has increased from US$ 8800 per worker in 2002, to US$ 25,000 in 2012, positioning South Africa in the top third of growth markets on this measure.
Despite the progress that South Africa has registered, the Report also mentions 10 areas that must receive attention: unemployment and inequality, the current account deficit, fiscal trends and currency volatility, inadequate savings rates and consumer indebtedness, challenges in the manufacturing and mining sector, and labour instability and wage inflation. Education, health, public sector productivity, infrastructure, computer and internet access, research and development, as well as sovereign credit ratings which are under pressure are also major challenges to the country’s growth and development.
However, while much socio-economic progress has been recorded over the last two decades of democracy in South Africa, and although significant challenges remain, there are many achievements we can, as citizens, be proud of.
The world views our country as a ‘good neighbourhood’, one that is stable and presents good economic development and investment opportunities, in a world that has in recent times seen its share of turbulence and instability. The country’s proactive socio-economic development policies and programmes, such as the New Growth Plan, the National Development Plan, and the National Infrastructure Plan, all send a clear message that the country is investing in its future and has the people, capital, talent, and government will to achieve its goals. Business, government, labour, institutions, academia and civil society are now working together to take the necessary individual and collective decisions and implement the ambitious strategies needed to improve South Africa’s competitiveness and performance in the global marketplace. These are yet more positive signs to emerge from the last two decades of socio-economic progress in the country that will take South Africa into a new and dynamic era of development.
ORIENT PUBLICATION 