We all thought 2021 would be a far better year than 2020.
Why? The signs were positive that COVID – 19 would be conquered by smart scientists, many of whom reside and ply their trade in SA, developing cocktails to combat any new, mutated strain that this dreaded virus threw at us.
Major industries such as mining, commodities and resources, tourism, pharmaceuticals, industrial, and even retail, would rebound on the back of rising precious metal prices, research into medical cures, consumer confidence, possible job creation and political stability. The commodities boom did result in a mini mining boom, but we have still failed to rejuvenate the mining sector. Coal is battling with the collapse of Transnet freight and port backlogs. There has been massive demand for road freight as coal went to USD60, ripping up the roads to Richards Bay. Renewables are a big future market, and the sector was partially enabled with recent announcements to open tenders for renewable electricity generation by independent power producers, albeit sub-100 MW generation. Travel restrictions were lifted briefly, only for the doors to be slammed shut again.
But what was also happening in the world, particularly the tightening of monetary policy in the United States and the China slowdown in economic growth, combined with the collapse of global supply chain and compliance rebellions, resulted in South Africa being more effected by global events than ever before. The disruption to stocks, internationally procured brands and products is ongoing, as is slower exports out of SA and investment appetite into our country – and this is likely to continue into 2022.
Taking us by the scruff of the neck, the Pandemic continued to play havoc with the economy and gamble with our futures – as did loadshedding which shot us in the foot. Despite GDP growth of over 5% released recently, comparisons were achieved off a porous 2020 year that bore the brunt of the global Pandemic. The horrible unrest and political morass that occurred in KZN and Gauteng was sad, while the quagmire effect of our erstwhile President being jailed, and spate of municipal failures and tragic crime stats dragging us down further in our beloved country – we were punch-drunk with the body blows and negative sentiment the media continually threw at us.
We know there are still big risks in key areas of curtailing expenditures; governance failures and the political infighting within Government to instil investor confidence; restoring municipal capacity and efficiencies, whilst also trying to fix state-owned enterprises – and there will be energy inflationary pressures brought to bear from Eskom, coupled with increasing oil prices as the global economy improves. Food price pressures and global logistics issues are also adding to inflation and the attempts for global quantitative easing has reached its limits resulting in rising interest rates and global cash shortages. The borrowing excesses in the major economies and hedge funds are real and out there. It is extremely tough to raise funding for entrepreneurs and organisations alike, particularly with the risk-averse environment and appetite for start-ups, or businesses struggling to survive the cash-flow crunch.
The effect on staff morale and employee wellbeing has also proven worrying – and retrenchments, job losses and closures has severely dampened the social consciousness of our country. Families are continually re-adjusting their cost-of-living reality and making sacrifices to survive.
Easing out of the Pandemic and moving into a post-pandemic era will present once-in-a-lifetime opportunities for companies and brands to help communities and people’s quality of life and serve a higher purpose using brand-power. Globally, brands grew in stature that materially demonstrated communities’ wellness versus profits, even if the latter was achieved as a result. Trust in Zoom increased as did its share price as millions of adults owed their employment to Zoom’s ability to scale services, and tens of millions of students got their education via Zoom. Netflix’s contribution to mental health positivity is well known as Covid-19 brought wellness to the fore on the global stage. People are desperate to help each other manage their lives better during the Pandemic. Nike also profited by connecting digitally with customers by offering a free app and training videos on YouTube which grew millions of new members and saw a big peak in digital sales.
However there continues to be light at the end of the tunnel. Omicron is proving to be a milder virus and there are far less hospitalisations per capita than the horror Delta variant. Travel restrictions are being lifted, allowing precious foreign currency to be spent on our soil.
It was also really encouraging to see the JSE advance by 24% in 2021, led by giants Anglo, BHP and Richemont. Many other industries and companies are publishing excellent results and we are also hopeful that foreign investment will be stronger in 2022. The Agricultural sector continues to deliver strong performances for GDP contribution to our economy. The vaccine rollout programme should gather more momentum and instil better consumer and investor confidence in our market, while there are strong moves to curtail corruption and bring perpetrators to book.
There is also acknowledgement and desire from Government to close the gap between policy formulation and policy implementation and assist an “implementation-led” economic recovery that eradicates structural obstacles to enable higher growth and job creation – providing global markets with investor confidence, better ratings, and confidence for all.
So that leads us to a few selected #futuredrum pointers and suggestions for future planning and growth strategies to Improve Performance in 2022.
- Preserve cash, and ensure you manage your expenses in 2022. Rather take the upside in margin as you trade your way out of trouble. Cash flow is king. Many corporates will be tempted to leverage balance sheets to take advantage of ambitious Capex projects or even acquisitions of brands or companies that are attractively priced but struggling to survive. If they were performance shy going into the Pandemic, then they will not benefit from your efforts now unless you’ve done your homework on the synergies, economies of scale, pricing strategy and product appeal in your stable. There will be no greater task than managing debtors tightly, while attempting to manage your stock more effectively -perhaps even negotiating better terms with your creditors too.
Cash conservation is important but so is investment for the future. Where would you invest the last Rand you have has never been more relevant. To grow does not only mean cost curtailment, but also product and service innovation and collaboration, new markets, new distribution – even backward or forward integration into your supply chain!
- As your employees start to make sense of their lives and start to lift their heads and stare into the future, we need to support and nurture dreams again. Rebuild trust, be transparent and boost morale by paying fairly, communicating clearly and re – imagining the workplace to acknowledge the new hybrid approach to the eternal work, life conundrum. Remember everyone has been deeply affected by the Pandemic, losing precious family and friends, while trying to protect loved ones.
- Marketing strategies for companies, services and brands that morph into caring, societal engagement, but offering value-for-money, will be rewarded. Don’t get too hung-up on the social media and digital obsession to reach as many people as possible, as your customers will connect meaningfully through word-of-mouth and referrals to find your offer. Rather spend time getting your product foundation right. Build your brand – not another commodity. Spend some time monitoring reputation and using feedback to improve. Of course, you will still need the basics such as distribution to put your brand in the hands of your customer, comms and content sharing to push your message, or the right price to move product off the shelves!