KEYNOTE ADDRESS BY MAGDA WIERZYCKA
AHI SME INDABA – KELVIN GROVE – 26 JULY 2017
We are living through unprecedented times in South Africa where politics and economics have converged – one completely dependent on the other.
We are living through times when we are witnessing a battle between all that is good and decent in South Africa, and all the represents greed, corruption and economic destruction.
It is not simply an internal battle within the ANC. The truth is that agreement on what constitutes sound economics is not what divides political parties with the exception of radical left – there is not a great divide between what DA’s Mmusi Maimane and ANC’s Pravin Gordhan want for South Africa. And there is no difference in what we as business want for South Africa.
What is happening, and what is affecting business amongst others, transcends the politics of one party. It is a battle for the soul and the future of South Africa. Do we survive as a democracy or descend into an autocratic kleptocracy?
When deciding on a topic for today, I had to think long and hard about the message I wanted to convey – is it one of hope or despair for the future? The fact is - it is neither. I could talk about how to survive through these turbulent times as a business, but the truth is that if the right things do not happen in the next five months, no number of short term strategies are going to lead to a flourishing economy and job creation. If they do, we can recover again. It is as simple as that.
We are at a cross-road. And yet, I have been amazed at just how complacent most people are. Complacency, even just pessimism, is a comfort zone, so let me use this opportunity today to jolt you out of that comfort zone.
In the 1980s, Clem Sunter came up with the High Road and the Low Road scenarios for South Africa, a theme he adapted and perfected over time. We are here again.
My High Road scenario for South Africa looks something like this (where possible I will use real tangible examples):
• Business, civil society organisations, trade unions, community organisations and opposition parties unite, taking a strong stand against the moral corruption of the current government and the business sector aiding and abetting that corruption. This translates into:
o Mass protests to psychologically unify the nation (the 8th of August is important).
o Financial support for civil rights organisations and investigative journalists.
o Court actions and private prosecutions against corruption and money laundering – given the paralysed NPA, where need be, we need to use international bodies like the US DoJ, SEC and FIC against the implicated SA criminals and SA companies.
o Education campaigns: academic researchers did an incredible job in publishing the “Betrayal of the Promise: How the Nation is being Stolen” report – this research needs to be given more airtime and needs to spread to rural areas. Political parties are best positioned to do that.
o Support for free media through funding of court actions and taking a visible stand against any form of intimidation.
o Focusing more international attention on SA (the recent BBC Newsline programme broadcast on TV and social media).
• Public support gives more ANC members courage to speak out - whether through a vote of no confidence in August, or the election of Cyril Ramaphosa, Mathews Phosa or Lindiwe Sisulu to presidency in December.
• Public support gives rise to more Guptaleak-type disclosures.
• Those involved in plundering SA are brought to justice one by one. Perhaps to heal we need the concept of a new Truth and Reconciliation Commission.
• Strong boards of directors are appointed to lead state-owned enterprises.
• The National Treasury is once again staffed by experienced people with international credibility.
• The National Development Plan, or a version thereof, is finally implemented to jump-start the economy. It is not difficult to do, but it will take time: we need to focus on free, quality education for all, trade schools where appropriate, revival of fixed investment in SA through tax incentives and political certainty. We are a resource-rich country – that can be harnessed. We could develop a technology hub in SA (many prominent figures in Silicon Valley are from SA – Roelof Botha and Elon Musk). We are the financial centre for doing business in Africa. Government engages with business and ex-pats to generate ideas.
• Sound economics mean we claw our way out of junk status. It takes a country an average of 8 years to do so, although I recently listened to Pravin Gordhan saying it would take him 6 to 12 months.
• The 2019 elections come and go, peaceful and fair.
• South Africa becomes a worthy long-term investment destination again, leading to faster growth and job creation. The public sector and the private sector flourish.
My Low Road scenario is a lot more real as it is already in play:
• Forces of greed and corruption prevail. A parallel security state, rigging of election results, intimidation and political murders ensure that a Zuma proxy is appointed as the ANC President. KZN is already a war zone politically.
• Corruption becomes a way of doing businesses – we have already seen international companies such as KPMG, McKinsey, SAP, Bell Pottinger, be it through commission or omission, looking the other way or not asking the right questions – implicated. More companies decide that the only way to thrive is to do business with government by paying off rent-seekers.
• Slowly our media is intimidated and starved of finance – already all government advertising has been withdrawn and redirected to Gupta-owned media channels. We have also seen paid-for thuggery of BFLF and MKMVA. This can escalate.
• Civil rights organisations are prosecuted – activists are arrested under flimsy excuses.
• Cases are not prosecuted and stay in limbo – Hawks and NPA have been reduced to toothless tigers.
• Court judgements are simply ignored – witness Bathabile Dlamini and the CPS disaster; Zuma, and the fact that he violated the Constitution and his oath of office and yet manages to skip and dance from one courtroom to another; Thuli Madonsela’s recommendation of commission of inquiry has stalled.
• GEPF/PIC money is used up to prop up SOEs while money is stolen through rigged tenders and diversion of money flows - everyone feels emboldened. SOEs already cannot raise any external funding and depend on the PIC. Using pension fund money to pay off SOE debts means that pensioners will eventually suffer.
• There is no revenue to pay social grants and eventually pensions. Mechanisms to do so collapse. Again, witness the CPS/Dlamini saga.
• Racial tensions increase as the government continues to use “white monopoly capital” and other slogans to detract attention from their own inattention to the plight of all South Africans. Remember these target rural areas – not you and me.
• There is no focus on maintaining the infrastructure – water, electricity, roads. There cannot be – no one will lend us money to build any more roads or Gautrains. There is no coordinated policy framework on dealing with the water crisis. All this is already in play.
• There are no sound economic policies as we condemn another generation of youth to unemployment. Again, this is also in play with Minister Malusi Gigaba having absolutely no international credibility and no economic background to achieve the economic transformation we need. For that matter, the DA also has no economic policies on the table. There’s too much jostling for power, too little attention to detail.
• Assault on the independence of the Reserve Bank continues to enable illegal money flows to happen.
• Crime thrives and the quality of life deteriorates for all. We already have a 27.7% unemployment rate – the highest in 16 years.
• Taxes increase – people emigrate if they can and send their children abroad.
• All credit rating agencies rate us as “junk”.
• No foreign fixed investment takes place, internationals pull out – we have already seen GM withdraw.
• The economy flat-lines in a recession.
• Savings are worth less and corporate profits fall.
• South Africa signs an unaffordable nuclear deal with Russia.
• 2019 elections are rigged through a new voting system. ANC stays in “power”.
Again, none of this is a figment of my imagination. Many of the things I have listed are already happening.
It took Turkey three years to transform from a democracy negotiating to join the EU to a dictatorship, with Germany issuing a warning to its citizens about travelling or doing business there. All it took was three short years in which a staged coup gave the President an excuse to arrest activists and journalists (there are more journalists in Turkish prisons than in China, Russia and North Korea combined), dismiss academics, ignore court rulings and amend the Constitution to give himself complete immunity and impunity to loot.
Having hopefully made the situation a bit more real for you, let’s look at the options we have.
As business leaders, small, medium and large, what should we be doing? In the words of Pravin Gordhan when he was dismissed as Finance Minister: Organise!
• More financial support for civil rights organisations fighting corruption such as OUTA, the Helen Suzman Foundation, Corruption Watch, the Ahmed Kathrada Foundation and a number of others.
o Ignore BEE points (Sahara Computers has a level 6 BEE rating!), donate that money to fighting corruption instead.
o Sygnia Money Market Fund – invest if you do not want to donate or be seen to donate.
• Encourage your staff to participate in marches (many are afraid to do so and need you to lead the way). Give them time off when needed.
• Educate your staff about the reality we are living through. Let them act as ambassadors within their own communities. Do not make it about the ANC vs the DA. This is not about politics – this is about the forces of good vs evil. For that matter, encourage your staff to become paid up members of the ANC and vote in the right way. Operation Xmas was a campaign launched in Colombia to encourage FARC guerrillas to demobilise. Families were asked to write messages to the fighters encouraging them to come home – those were suspended from trees along the paths used by FARC.
• Business activism – encourage your suppliers to do the same. Question what they are doing.
• Use your retirement funds: put pressure on asset managers not to fund SOEs and government – Coronation led the way.
• Support free media – recently the JSE proposed that listed companies no longer need to advertise in newspapers – superficially it looks great, realistically it is a disaster for free press. Advertise.
• Be visible leaders in your organisations – leadership is different from a defeatist attitude and whinging while going about your daily business.
• Read and educate yourself. Stay aware and stay engaged.
We have five months to turn South Africa around. If we do not, we are in for a very tough time. It will be very difficult to do business in an economy where there are no jobs, and hence no consumption or demand for goods or services.
We are at a cross-roads – but we are not helpless! I would encourage each and every one of you to walk out of here today emboldened to take action. We have a very narrow window of time to stand up and be counted. Those that do, will be remembered.