With the election year in South Africa around the corner and economic uncertainty still rife, we at the Turnaround Management Association – Southern Africa (TMA-SA), believe it is important for organisations and businesses to keep focused on their long-term strategic goals. This was highlighted at the 2nd National TMA-SA Conference, sponsored by Hogan Lovells, Nolands, Shackelton Risk and Corporate Project Management (CPM), held in Sandton on 22 November 2018.
Currently, land reform is a sensitive topic with many looking at what happened in Zimbabwe as the barometer as to what could happen in SA. The first speaker at the conference dealt with the current state of the property market in South Africa. Andre Miller (from In2Assets) made comparisons of recent trends in the retail property market between Johannesburg, Cape Town and Durban, together with highlighting the recent fall in average prices per hectare in the agricultural sector.
The keynote speaker at the conference, Prof. William Gumede, focussed on land reform and provided some insights into land reform programmes which have been implemented elsewhere in the world. Examples of both successes and failures have been incorporated into a policy paper which Prof. Gumede has prepared for the Presidency. President Cyril Ramaphosa has been clear that government’s policy is that the land reform process should not compromise the overall functioning of the economy. So, the main message is that while land reform is needed in the country, how it is going to be implemented will be crucial for its success.
Similarly, the construction sector is also facing major challenges, which was the focus of the presentation by Ken Stewart. The reduction in corporate and infrastructure spend has resulted in many of the large construction companies going into business rescue causing huge distress in the market. Corporate turnaround in this sector is vital as it has a huge knock-on effect within the economy, with Ken highlighting that foreign companies (particularly Chinese) are now beginning to predominate, both within South Africa and elsewhere in Africa. All the suppliers in the value chain are impacted by these difficult times. In turn, this puts them in a difficult financial situation where cash flow and future business growth becomes severely constrained. With construction being a key indicator of the strength of the economy, more needs to be done around returning confidence in this sector.
Another issue that needs to be overcome is how to rebuild trust in professional services organisations. The auditing issues that have come to light recently has created a negative perception that must be changed. Willie Coates from the South African Institute of Chartered Accountants (SAICA) gave an overview of what the Independent Regulatory Board for Accountants (IRBA) has been doing to rebuild trust within with accounting and auditing professions. Reliance on audited financial statements is key to understanding the financial health of a business and to determine whether to commence a business rescue and turnaround. If the financials cannot be relied upon, what will be the impact on being able to determine whether to undertake a successful business rescue?
A panel discussion was held on the legal developments affecting business rescue and corporate recovery to give an update on case law and highlight the emerging trends in litigation. The panel was composed of Alex Eliott (Hogan Lovells), Gareth Cremen (Hogan Lovells) and Cloete Murray (xxx). Background was given in the latest developments concerning the Samons and Diener cases, and lively debate ensued as the impact of the these cases was discussed.
The consensus emerging from the conference is that with national general elections set for 2019, the President is playing his cards close to his chest. While the primary focus from government will be around the elections, there are signs that dealing with the major issues facing the country are starting to be addressed. Even though no unpopular decisions are likely be made until after elections, statements around dealing with the debt of SOEs, corruption and the land issue indicate that change is coming. What this will entail will become clearer during next year. There are signs that the ship is turning for the better and it is important now for the government to be seen “walking the talk”.
The Conference ended with the first Accreditation Certificates being awarded, followed by networking and cocktails on the 12th floor terrace of Hogan Lovells new office building in Sandton.
Photographs taken at the Conference can be accessed at
https://henrymarsh.smugmug.com/Events/TMA-Conference/n-PjTLqN/i-NTWJhjPwith an option to purchase.