‘Latest trends key for business leaders’

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Stanlib General Manager Kelello Rametse
Stanlib General Manager Kelello Rametse

Bereng Mpaki

CAPTAINS of industry have been called upon to keep abreast with current economic and investment trends to make informed business decisions.
This was said by Stanlib Lesotho General Manager Kelello Rametse this week during a breakfast economic and investment update seminar for business leaders hosted by the asset management services provider in Maseru.

Mr Rametse said having business leaders who were up to speed with the latest developments would not only benefit organisations, but would also lead to the development of the country.
“Ultimately it is what we do with this information in our businesses that counts,” Mr Rametse said.

Another keynote speaker, Dr Maluke Letete who is a lecturer at the National University of Lesotho and also board member of the Central Bank of Lesotho, said political developments played a major role in a country’s economic development.

He said political instability, as seen in the current coalition government in Lesotho, presented an uncertain environment which was not suitable to attracting investment into the country.
Dr Letete said fears the government could collapse any moment also created macroeconomic uncertainty which could lead to short-term decisions by the authorities.
“And when this happens, it affects the long-term development of the country,” the academic noted.

He said other challenges facing Lesotho’s economy included shrinking private sector investment, stagnation in the manufacturing sector with no new factories coming in, decline in Basotho migrant labourers in the South African diamond mines, declining Southern African Customs Union receipts, rising government debt, as well as escalating inflation which he said was frustrating savings attempts.

Kevin Lings, an economist from Stanlib South Africa, identified five constraints that were holding back the world economy’s development in his broader global economic outlook.
He said the first constraint emanated from the fact the global economy was moving towards a more protectionist direction where more trade restrictions were being imposed, leading to slower global trade.

Mr Lings cited Britain’s withdrawal from the European Union after a referendum held on 23 June 2016 as an example of the protectionist direction the world was taking. Brexit, which is an abbreviation of “British exit” roiled global markets, including currencies, causing the British pound to fall to its lowest level in decades.
He said the rise of far-right political movements in Western Europe and the United States was also another symptom of the protectionism which was caused by the sluggish global economic growth.

In Germany, the anti-immigrant Alternative for Germany (AfD) party won the highest share of the vote for the far-Right in Berlin since the Second World War earlier this month while in the US right wing Republican presidential candidate Donald Trump is gaining momentum against the moderate Hillary Clinton.
Mr Lings said second constraint was the slowing down of global fixed investment spending, which was not what it used to be. He said this could be influenced by general low level of business confidence.

Ageing populations in developed markets were another constraint Mr Lings identified. He said this situation led to employment of more older people than younger people as they were cheaper to remunerate.

Older people, he said, had different consumption behaviours compared to the younger counterparts resulting in sluggish economic growth.
“They are more conservative and are not likely to be extravagant in their spending like the younger ones,” he said.

The fourth factor was the rebalancing of the Chinese economy which was slowing down on investment spending. Being one of the main markets for commodities from emerging markets such as sub-Saharan Africa, Mr Lings said the contraction of China’s economy had a negative impact in those emerging markets.
The other factors were a global leadership crisis and ever rising wealth inequality with the rich were getting richer.

“Just 88 people in the world have as much wealth as 3.5 billion people. Unfortunately, the rich people are only getting richer while the poor continue to sink into poverty,” he said.
“The inequality is compounded by increasing corruption which was prejudicing the poor from opportunities to climb out of poverty and siphoning money meant for infrastructure development.”

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