Francois Gouws, the CEO of investment and insurance holding company PSG Financial Services, has called on authorities to rein in crime and corruption, which is making it unattractive for local and offshore investors to invest in the country.
This as the group continues to shrug off SA’s low economic growth to grow its bottom line, with its prized asset, the wealth management business, reporting double-digit growth in the six months to end-August.
The company reported a 21% surge in recurring headline earnings per share and a return on equity of 28.6% in the six months under review. It grew its total assets under management by 19% to R517.6bn in the period, up R385bn since 2015. PSG Insure’s premium of R4bn is nearly double the R2.1bn reported in the 2015 financial year.
Cautious optimism
The company said it was beginning to see signs of cautious optimism in SA’s economy after a decade of flat growth. However, the group said Africa’s largest and most industrialised economy found itself at a crossroads, where “reform-driven momentum is balanced against persistent structural challenges”.
Gouws said that while the group was realistic that it will take time to resolve the country’s economic and societal challenges, it continues to be confident in its long-term prospects and strategy and will therefore sustain investment in its businesses.
What is very disappointing from a crime and corruption point of view is that it undermines confidence in the SA economy and prevents international and domestic investors from investing.
— Francois Gouws
PSG Financial Services CEO
However, Gouws warned that the unabated crime and graft were stumbling blocks to investments in SA, and that reducing unemployment is the key to fixing a lot of social ills.
“What is very disappointing from a crime and corruption point of view is that it undermines confidence in the SA economy and prevents international and domestic investors from investing,” Gouws said. “To the extent that crime takes place, it undermines the success of the economy. This is one of the contributing factors why unemployment is so high.
“What is particularly disappointing for us is that this is now the second commission [Madlanga commission] after the Zondo commission which is examining facts that are not very different from each other, and the prosecution from the Zondo commission has not been followed up.”
The Reserve Bank’s September quarterly bulletin shows cash held by companies in their bank accounts amounted to a record R1.8-trillion at the end of July, up from the R1.1-trillion reported in 2019.
The enormous safety net piles pressure on President Cyril Ramaphosa to convert latent liquidity into productive capital, reversing a decade-long trend of weak growth and capital flight. Staking his political legacy on private sector-led economic recovery, he has unleashed structural reforms in energy, water and logistics.
The Bank said companies are holding excess cash because they are responding to economic conditions and balancing risk with readiness to invest when confidence returns.
Hendrik du Toit, CEO of Ninety One, the country’s largest asset manager, last month warned the authorities to rein in crime or risk capital flight as the rule of law wanes.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.