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Challenges come with opportunities.

Most commentators said that treasury’s growth and inflation forecasts are realistic at an average of negative 0.4% and 3.9%, respectively, for the next four years with a budget deficit at 15.7% of gross domestic product (GDP) for FY20/21. Relative to the February 2020 national budget, revenue collection was revised lower by R716.7 billion in the MTEF è while expenditure was adjusted lower by a lesser R174.6 billion
We also see deterioration in SA’s government debt ratio due to a R299 billion revenue shortfall in the main budget and an additional R43.2 billion allocation to expenditure in FY20/21. Finally, the gross debt ratio is expected to rise to 86% in FY22/23 (previously 71.6%). This clearly indicates very tight belts over, at least, the next two years.

All hopes with infrastructure development– This month we carry a few articles on Construction and Engineering.

The FNB/BER Civil Confidence Index dropped to an all-time low of 5 in 2Q2020, from 24 in 1Q2020. Activity and overall profitability declined, as most firms halted operations for much of the quarter. According to FNB, looking ahead, company order books have diminished which suggests a more downbeat outlook than previously.

One counter to the downbeat outlook for the sector is the increased focus on infrastructure development as part of the broader post-COVID-19 economic recovery plan. During the third week of June, President Ramaphosa hosted the Sustainable Infrastructure Development Symposium South Africa (SIDSSA). The initiative aims to increase engagement between the public and private sector at every stage of the project life cycle, from planning to financing and implementation. The goal is to “emerge with a fundable infrastructure project pipeline”. It was announced at SIDSSA that 276 projects, with a total investment value of R2.3 trillion, are currently being evaluated. Fingers crossed.

Technology to the rescue – If anything should give us a positive outlook for the future, it is how our industry, and so many others, have rapidly adapted to the challenging environment. From all the discussions I have had with executives from all areas of the industry, primary to re-insurance, service providers, technology providers etc, most indicated that they are working on almost full capacity. Rapid adoption of technology solutions seems to have kept staff and client engagement going.

All of a sudden the term Insurtech is not a word used only in the IT corridors. One of the issues I would like to highlight in this regard is the absolute urgency for us, as an industry, to start develop technology skills specifically focussed on insurance. To date we have looked at the technology industry to develop the tech skills we use internally. If we do not increase our efforts in this regard, we will not increase internal insurtech innovations, continuously looking to technology companies and startups for our innovations.

We have a massive opportunity to storm into the 4rth Industrial Revolution as an industry. Let’s talk as an industry and act with urgence.