Colin Coleman has played a quiet but critical behind-the-scenes role in South Africa ever since taking over the local Goldman Sachs operation almost 14 years ago. A partner at the US investment bank, he is that financial powerhouse’s eyes, ears and mouth in this part of the world, a position that carries huge responsibility. If Coleman gives the thumbs up, the Wall Street giant will advise its clients accordingly and capital will flow into the developing nation which, after all, is a mere 0.3% of global GDP so needs all the attention it can get. A bearish Coleman would have the opposite effect. Fortunately, despite the temptation of getting caught up by the roller coaster emotions of being South African, Coleman manages to keep a cool head. It shines through in this opinion piece which appears in this morning’s Financial Times of London, which with the Wall Street Journal is one of the two most influential newspapers in the financial world. Its conclusion: who Zuma deploys into the critical positions during the next five years will determine whether, next time around, the rising generation of ANC leaders will be making make the laws, or opposing them. – AH
ALEC HOGG: Colin Coleman, the Managing Director of Goldman Sachs here in South Africa and a partner of the Wall Street firm, joined me earlier to discuss his views on South Africa’s chance to repeat the Mandela miracle. This was sparked by an op-ed that was published this morning in the Financial Times of London. Let’s take a look.
Well, it’s not every day a South African gets pride of place in the Financial Times of London. The FT is probably, alongside the Wall Street Journal, the most influential newspaper in the world, but that happened this morning and the Managing Director of Goldman Sachs in South Africa, a partner of the big Wall Street firm, Colin Coleman is the man who was given that honour. I guess Colin, the fact that you wrote this piece and it’s a superb piece of writing – I didn’t know a banker could actually write as well as a journalist – you did a great job.
COLIN COLEMAN: Thanks for saying so, Alec.
ALEC HOGG: You must have thought about it a lot.
COLIN COLEMAN: Yes, because as you say it’s not every day you get into the Financial Times, South Africa’s 20-year celebration of democracy is an important, and I think they wanted to look forward as well as look back. It was therefore important to balance what the next five years as well as look back at what we’ve achieved in the last 20 years.
ALEC HOGG: I guess the critical thing certainly, that came out of the piece for me is what one does expect into the future. You were talking about the way the ANC deploys its generals and its soldiers for the next five years, is really going to determine not just the country but probably the party itself.
COLIN COLEMAN: Yes. Look, I think the question is ‘what is the overall objective of the next five years?’ Clearly, the National Development Plan sets out a five-year growth target of just over five-and-a-half percent in order to reduce unemployment, grow the economy, and increase GDP per capita. Clearly, at the same time we have this ‘two speed society’ we mentioned in the article. What we need is an administration that tackles both objectives, growth and closing the gap between the ‘have’s’ and the ‘have-not’s’. I’m hoping that the Zuma administration, whose overwhelmingly likely to prevail in the election in May, has learned from the first five years what the success are, what the failures are, reorganises, and restructures to get the best people in the best slots to get the weaknesses addressed and to ride on the strengths.
ALEC HOGG: You hope. How optimistic are you that the right people will be picked?
COLIN COLEMAN: I think one hears rumblings of reorganisation and restructuring within the ANC ranks, so I think the ANC top six are talking about ways in which they can restructure the government to eliminate ministries, and add some new ministries. I think the SME Ministry is one that’s been mentioned. I don’t necessarily think that’s the most important organisation, or restructuring that will happen. The important point is when you look at the key ministries, what are they? The Labour Ministry, the Mining Ministry, the Police Ministry, the Finance Ministry, the coordination of the MDP itself, and Trade and Industry… How are those ministries going to be populated, not just at the cabinet level, but at the Director-General and main departmental level as well, plus the main institutions of the state, particularly the developmental state – meaning the state-owned enterprises? In particular, Eskom has been in the headlines. How are these generals going, who are they, and how are they going to be deployed? This is critical for the country. In my mind, it’s more important than the outcome of the elections, whether the ANC gets 60 or 65 percent.
ALEC HOGG: We need to watch the people who are put into those positions.
COLIN COLEMAN: Who the people are and making sure those people are the best, and most capable collective the country can put in place.
ALEC HOGG: But isn’t there a concern that someone who is highly admired both here and internationally – like Trevor Manuel – has gone off the scene? We’ve seen a few others who’ve gone into the sidelines as well. Do we have a strong bench? I guess that’s what I’m asking.
COLIN COLEMAN: I think it’s a tremendously strong bench. There might be some people that have left, served their country well, and are going to do other things. We might see some new faces, but there’s definitely (and we touch on this in the op-ed) a generational shift coming, and I think this is President Zuma’s last administration. Constitutionally, he can only be there for two terms. The generations are shifting in the ANC, and we’re going to see new people rising up and it’s very important that we get the mix of the right experience, the right objectives, and that business and labour play as a partner with that new administration. If we are not working with the government to try to bridge the gap with the ‘have’s’ and ‘have-not’s’, we’re not trying to work with the government to get the growth, if labour doesn’t play ball with its alliance partner. There’s going to be tremendous amount of tension and we’re not going to get to where we need to be.
ALEC HOGG: The other consequence, which I found fascinating in your article, was in five years’ time, depending on what happens in this period – this last period of Jacob Zuma’s administration – you said the ANC might be… I’m using my own words…making laws, or actually on the opposition benches.
COLIN COLEMAN: Well, I think the ANC can’t rest on its laurels. No one can rest on their laurels. In 2019, this will be 25 years of an ANC government, and at that point in time the new-born will be in their mid-twenties. I personally think the new-born, this time around, are too young to exercise a conviction vote, but in five years’ time, they’re going to be a very important segment of society, much more mature, and much more capable of playing a decisive role. I think that what happens in the next five years is going to be very important to the ANC. Does it keep its alliance together? Does it keep its programs on track? If it implements well, it deserves to be in government for the next five years. If it doesn’t, it’s going to struggle to keep the troops united.
ALEC HOGG: Which gets back to your point about ‘people, people, people’. Colin, just to close off with, you do a lot of work behind the scenes. You’ve been representing Goldman Sachs in South Africa for nearly 14 years now. Do you remain as optimistic as you were in 1994?
COLIN COLEMAN: I think the country, since 1994, is a much better country. In that sense, our outcome… If you’d asked me if we were in this position in 1994, I would have said ‘wow, that’s a lot of progress that’s been made’. There are certain things which I’m hoping can be corrected, particularly the culture of corruption, the culture of dependency, and the culture of believing that you rightfully are going to get certain things rather than work for them. I think that culture has to change, but I’m quite optimistic going forward, that if we put the right team in place, we send the right signals early on, and we take certain actions, which are crystallising out for people that things are changing for the better, we will get to the right point.
ALEC HOGG: Weren’t those fascinating insights from the Managing Director of Goldman Sachs here in South Africa, a man who is extremely well connected here and globally, and is shaping a lot of opinions about this country with his op-ed today in the Financial Times of London – Colin Coleman. Stay tuned.
The FT Op-Ed
By Colin Coleman*
The world should expect a clear victory for the ruling African National Congress in South Africa’s national elections on May 7. Far less certain, and of greater importance, is what the ANC does with its fifth consecutive term of office – President Jacob Zuma’s last.
The robust national discourse reflects political tensions that remain 20 years to the month after Nelson Mandela became president.The country’s fortunes read like a balance sheet. On the asset side, the economy has tripled in size during two decades of growth. Inflation has been tamed.
Support for the poor has been expanded, with cash grants now being made to 16m people. The middle class encompasses more of society than ever before; in the decade to 2010, 1m people joined its ranks every year. There has been a dramatic broadening of the tax base. And the civil service is no longer staffed exclusively by a white elite.
What was in 1994 a divided country and a broken polity is now an unrecognisably modern, investment-grade economy. It is home to the continent’s deepest and most liquid capital markets; and to innovative companies led by modern managers poised to capitalise on the resurgent economies of sub-Saharan Africa.
As one of the five Brics – along with Brazil, Russia, India and China, leading emerging economies – South Africa will play a decisive role in global economic development in the coming decades. But the liabilities inherited from the apartheid era loom large. South Africa’s 7m unemployed people account for 35 per cent of the workforce. Fifteen million people live on less than $2 a day, and 6.4m are infected with HIV.
This reflects the country’s two-speed society: one part modern, sophisticated, skilled, dynamic and increasingly affluent and non-racial; the other, marginalised unskilled, poor and young, mostly rural or peri-urban outcasts, increasingly restless and bereft of hope. It is the latter society that must now command the attention of the ANC.
The struggle for greater social equality is causing deep rifts in society, including inside the party itself and between members of the broader Tripartite Alliance, which the ANC leads. After 1994 Mandela managed to bring temperatures down from boiling point. But they are once again on the rise. Widespread protests by local communities against failures in delivery of social services are an early warning sign of this growing gap.
Serious opposition is more likely to emerge from within the ANC than from outside it. Uniting a sometimes fractious alliance will therefore be among the party leadership’s greatest tests. For Mr Zuma, it is critical in forming his new administration to professionalise and increase capacity and quality across the entire public service.
His choice of generals and foot soldiers to implement his National Development Plan, to drive growth and tackle joblessness, will be the first decisive signs of the trajectory for South Africa in the next five years. And the ruling party will need to regenerate the moral leadership and authority seen under Mandela, which of late the party has lost to scandal, infighting and controversies. For it is this team that will need the credibility to lead the effort to close the gap between the haves and the have-nots.
To achieve the 5 per cent growth-rate target necessary to double gross domestic product per capita, halve unemployment and narrow structural inequalities in the next 20 years, the ANC government will need to focus sharply on better-quality public spending, especially in health, education and infrastructure.
The new administration will also need to rein in and punish corruption. It will need to tackle the failing labour environment with its union allies. It will have to tie wage increases to productivity improvements and improve the skills of the workforce. It must revitalise mining. It will need to build trust with business and labour, and be smarter on market regulation.If all this is achieved it will create the environment to lift annual foreign investment from an average of $2bn to the required $5bn-$10bn.
In five years there will be a new generation of ANC leaders who will succeed Mr Zuma. What they inherit from his leadership over this time will determine whether they are in the driving seat, forced into a coalition or watching from the sidelines.
And it is the skill with which the ruling party prosecutes its plans in the next five years that will either uphold or deflate the miracle that Mandela symbolised on the world stage: the miracle of reconciliation and transformation in overcoming South Africa’s apartheid past.
The ANC’s performance and record is the barometer that the South African electorate will use to decide whether the 2019 election becomes another passing of the baton from one ANC generation to another or the moment of reckoning for the party.
* Colin Coleman, who runs the Southern African operations, is a partner and managing director at Goldman Sachs. This Op-Ed was published this morning in the Financial Times of London and is republished with Coleman’s permission.