Gore, Saad, Joffe – SA well endowed in leadership; “clevers, moegoes” too

One of the reasons why Africa has failed to develop a vibrant manufacturing sector and other markers of a modern economy is that far too many of Africa’s best and brightest see a career in politics as the best and even only way to make money, have influence, and exercise power. If the African century is to deliver on its promise, this must change, as the three powerful businessmen interviewed below discuss. For Africa to succeed, we need the smartest and most competent young Africans to enter the world of business and to turn their talents to turning a profit. And for that to happen, we need to have a number of respected, talented business leaders to act as role models for the youth. Do you think South Africa’s business leaders are up to the challenge? – FD

ALEC HOGG: Welcome back. Effective leadership is an integral ingredient in all organised endeavours: political, social, and in the world of business. Great leaders take their followers to a better place. Bad leaders destroy enterprises and ruin people. Joining us in the studio to take this discussion further, is Stephen Koseff, Chief Executive of Investec, Johann Redelinghuys who is a partner at Heidrick & Struggles, and Herman Mashaba, who is Chairman of the Free Market Foundation. Gugu, to have these three esteemed gentlemen…we must be doing something special today.

GUGULETHU MFUPHI:  It’s very special. I think we’ll just keep quiet and let them talk. We have a wealth of knowledge around this desk.

ALEC HOGG: Often, when we talk about leadership, we talk about it in the African context and we get a little confused because young people in our continent still see the way to power as going through politics. Now, you three are all in the business community. How is that changing? How are the leaders of the business community getting the youngsters to say ‘well, maybe they shouldn’t go into politics; perhaps they can create jobs rather than suck in jobs’?

HERMAN MASHABA: It’s very interesting. I remember, on the 7^th of December I addressed a conference with 600 delegates, in London. Eighty percent of them were from Africa, and I think that’s precisely the issue that you raised. We need to create a culture in our continent where our youngsters’ aspirations for their future careers should not really be politics. I see my country actually following exactly the same path, but I think we need to really find a way to arrest this because it’s extremely dangerous to live in a country where people are under the impression that politics is the way to go. Politics are absolutely necessary. Political leadership, the rule of law in a country for business to survive, is extremely important. That shouldn’t really be the route for our kids to follow because politics can only accommodate a few individuals, whereas the business world has massive opportunities for most of our people in the country.

GUGULETHU MFUPHI:  Johann, is the problem then that there is an enabling environment to encourage this in the business community?

JOHANN REDELINGHUYS: I think the transition has already been made. I think that if you look at the quality of leadership in business compared to the quality of leadership in government, with respect…it’s much better in business. I think role models are growing up in the business community and it’s much more appealing to young people these days. They see bigger rewards, bigger financial rewards, and there’s bigger prestige. I don’t think government has the kudos anymore to attract young people.

ALEC HOGG: Maybe we should shift a little. All three of you are entrepreneurs, so it’s nice to hear from you rather than perhaps corporate professionals. You guys started Investec 30-odd years ago.

STEPHEN KOSEFF: It’s actually a bit longer. When I joined, (I didn’t start it), there were eight of us and now there are eight thousand, half in South Africa and half in the rest of the world.

ALEC HOGG: Call it eight thousand jobs. Why do the youngsters not want to become entrepreneurs in that way?

STEPHEN KOSEFF: I’m quite shocked that you’re saying that because the people that we interview every day/that we come into contact with – across the racial spectrum – want to be entrepreneurs, financiers, and want to be in business. I don’t know of one who wants to be in politics. It’s quite a shock to me, you telling me our quality….

ALEC HOGG: You live in Sandton, Stephen.

STEPHEN KOSEFF: I lived in Linksfield, now I live in Houghton, and I grew up in Benoni.

ALEC HOGG: I’m sorry. You work in Sandton.

STEPHEN KOSEFF: No, I talk to people from other places as well. Obviously, the type/style of the organisation we are…we’re already dealing with either kids who are going to do well at university and are in the early phases of development, or we’re talking to kids who are coming out of university into our world, which is the business world/entrepreneurial world either as clients or as potential employees. Maybe you’ll say ‘you just come into contact with the wrong people’. That is very possible, but most of them want to go and build a career in business. Some want to be social entrepreneurs who help people, particularly if they come from well-off families, they tend to want to go, do good and help society at large, but many want to actually build things and create things.

GUGULETHU MFUPHI:  Well, let’s touch on our world – this business world. Are we finding that we have quality leaders in this environment, Johan?

JOHAN REDELINGHUYS: There are many comments these days about a shortage of good leadership, especially in the government. There is said to be a shortage in leadership. I don’t think there’s a shortage of leaderships. It’s just that the leaders who are there don’t believe the things we want them to believe. I think Julius Malema is an outstanding leader. He is a gifted leader, but he might not be proposing the sort of things we want to hear.

ALEC HOGG: Is he a wise leader? Does he know what he doesn’t know?

JOHANN REDELINGHUYS: He might not be that wise, but he’s…

ALEC HOGG: How can he be gifted if he’s not wise?

JOHANN REDELINGHUYS: He’s driven. He has a great vision.

ALEC HOGG: That’s not leadership, Johann. Surely, if you take the people over the fence…if you take them like lemmings, how can that be good leadership?

JOHANN REDELINGHUYS: Is one million people in eight months not good leadership? Come on.

ALEC HOGG: I’m asking you. Is he wise?

JOHANN REDELINGHUYS: No, he’s not wise, but he’s ‘Lindiwe Mazibuko’ wise.

ALEC HOGG: I’m asking you about Julius Malema. You raised your view. If we go the Malema route, are we going to end up as a better country or not?

JOHANN REDELINGHUYS: Most probably not, and I don’t think he’s a wise leader, but he is a gifted leader in the sense that he’s created a vision. He’s created a brand, which is instantly recognisable and he has a followership. Isn’t that leadership?

ALEC HOGG: I thought leadership was wisdom.

GUGULETHU MFUPHI:  Maybe it’s a component Alec, of what an outstanding leader should be.

ALEC HOGG: Adolf Hitler got a hell of a lot of guys to follow him, too. ET – Eugene Terre’Blanche got idiots to drive into the World Trade Centre while we were trying to create a democracy. He got people to follow him. It doesn’t make him a leader.

HERMAN MASHABA: Actually, I keep raising that issue with colleagues every time we really try to come out with a definition of someone who is clever in a township environment where I was born and raised. In terms of someone who would actually call it ‘clever’ in the township lingo… Those are the things that…. You have to really do wrong things for you to be regarded as clever, and someone who is a ‘moegoe’ is someone who really wants to work for Stephen, work for his family, and really do their best – he’s just a ‘moegoe’. As a country, we really need to find out – what is the meaning of ‘someone who is clever’.

GUGULETHU MFUPHI:  So we’ll find out about clever people and ‘moegoes’. Just a moment. We’ll unpack that further, but just for now, we need to cross to the Nigerian Stock Exchange where foreign portfolio inflows into that equity market rose by 65.1 percent to 357-billion Naira in the first quarter, as domestic investors cut their exposure. Joining this discussion now from the NSE is Oscar Onyema, Chief Executive of the Nigerian Stock Exchange. Oscar, thank you so much for joining us today. If we delve into the linkage between South African investors and Nigeria, are we finding that there is perhaps more camaraderie between these two large African economies?

OSCAR ONYEMA: Yes, thank you very much for having me on your show. There’s a significant camaraderie – especially from the portfolio investor perspective – where we’re seeing significant activity from the South African portfolio investors in Nigeria, including the Pension Funds.

ALEC HOGG: Oscar, you were here… Certainly, a delegation from the Nigerian Stock Exchange was here where we’re sitting now, at the JSE. Were you with them a couple of weeks ago?

OSCAR ONYEMA: I’m sorry. Can you say that again?

ALEC HOGG: Were you amongst the Nigeria Stock Exchange or the Lagos Stock Exchange delegation that came to the Johannesburg Stock Exchange a couple of weeks ago?

ALEC HOGG: Did you make any progress in working together?

OSCAR ONYEMA: As you know, we have a strong collaboration with the JSE, so it was a visit to really do a dip-dive where we can learn from the JSE with regard to their policies, procedures, how they do business, and to share thoughts and ideas on how we do business. Obviously, the expected outcome is closer collaboration as we try to drive the markets to the highest standards in the world.

ALEC HOGG: Do you have any practical points on your agenda though, that we can look forward to being implemented as a result of those discussions?

OSCAR ONYEMA: Certainly, shared products, development, and cross-listings etcetera are definitely on the agenda and we look forward to taking those discussions forward.

GUGULETHU MFUPHI:  Oscar, we know that liquidity on many African [inaudible 0:09:25.7] is still a challenge. I understand you’ve made some leaps and bounds with regard to improving that on the NSE. Could you walk us through that?

OSCAR ONYEMA: As you know, we introduced a market-making program. That program was really designed to drive improvements in liquidity, especially where you have dislocations in liquidity, as well as to drive better market quality with regard to tightening of the spreads. We’ve seen the uptake in liquidity. We also noticed that with the widening of the ‘limit up/limit down’ circuit breakers, we’ve seen more trading opportunities and more trading activity, so it’s a combination of things driving liquidity. However, liquidity continues to be a challenge not only for us, but for many of the African Stock Exchanges and that is why we are strong advocates for sub-regional integration of markets, so that we can have larger pools of liquidity that make us very attractive not only to foreign portfolio investors, but local investors as well.

ALEC HOGG: It certainly is a step in the right direction this week, when S&P Dow Jones launched indices on African exchanges, including the West African index, which is primarily the Nigerian Stock Exchange. Are you expecting that this kind of development is going to take us a little closer to having these deeper capital markets?

OSCAR ONYEMA: I think it’s a very good initiative and I think it’s going to take us to where we need to be in terms of more integrated markets on the continent. If you look at the West African region, we are really pushing hard to have full integration of our capital markets from a virtual perspective. The individual exchanges will therefore continue to exist, but it will all be linked up in such a way that qualified brokers can access liquidity across the sub-region and companies that are coming to list can raise capital across the sub-region. Indices such as these tend to be very helpful because portfolio managers who track these indices are able to deploy capital across the sub-region in a very efficient manner.

ALEC HOGG: We look forward to making those investments in the indices for West Africa, East Africa, and Southern Africa. That was Oscar Onyema, Chief Executive of the Nigerian Stock Exchange. Thanks for joining us today. We didn’t manage to ask him whether we’d be able to open a CNBC.

GUGULETHU MFUPHI:  Hopefully, that will come soon, though.

ALEC HOGG: A studio at their exchange… I think they were looking around here. They actually came up to the media hub and they had a very good look, so maybe. Before we get back to our discussion with the studio guests, all our non-South African viewers: don’t forget to catch Power Lunch West Africa at 1:00. We do have split, so in West Africa, you will be getting your normal Power Lunch there. We will continue with Power Lunch in the rest of the continent. Now, we’re going to continue with the subject of ‘moegoes and clever people’. I thought that was only…

GUGULETHU MFUPHI:  Alec, I think it definitely highlights drift and whether leaders in business or even politics, are accepting mediocrity. Remember, we touched on drift and mediocrity with Russell Loubser.

ALEC HOGG: Yes, we go on about this drift, but tell us about moegoes. I really thought that was only what we knew from KZN.

HERMAN MASHABA: It’s something, which is of grave concern to me, and I think we really need to find a way to get a new definition of ‘clever’ so that people in our communities can understand what it actually means when we say ‘Stephen is clever’ or when we say ‘Stephen is a moegoe’. Right now, we have things totally mixed up because my interpretation of ‘clever and moegoe’…I grew up in that environment but obviously, as I get older I can really understand the implications. I really think we need to start dealing with this so that our kids out there in the communities can understand.

ALEC HOGG: That’s what I was saying to you. Surely, wisdom is about knowing what you don’t know – its knowledge. You grow knowledge by learning, by reading, by being ‘a clever’.

JOHANN REDELINGHUYS: If wisdom is your essential requirement of leadership though, you’re going to point to very high-profile leaders worldwide who are not that wise and even leaders who have been wise in the early part of their careers do some dumb stuff later on. Does that mean they’re not leaders? I don’t think wisdom is an essential requirement of leadership.

ALEC HOGG: What do you think? Weren’t you guys involved there with the Wits property?

STEPHEN KOSEFF: Yes, at one stage, before Bidvest took it from us. On this issue, you get charismatic leaders such as Malema, Chavez from Venezuela, or even (although I don’t like to say it) a guy like Hitler…they are very, very dangerous people because they can take you down a very poor road. They find where the sensitivities are in a society and that’s what they harp upon. You need balanced people to lead society – people who see both sides – and that was the beauty about Madiba. He actually took different parts of our society, brought us together, and he helped change historic perceptions of people in a way that was very positive for our society. He was a great leader and there are many of them out there, but when you have populist leaders, it can be very, very dangerous because they’re good at talking to the street and they can take a street down a very wrong road.

GUGULETHU MFUPHI:  In the South African business environment, are we seeing many more Madiba’s then being showcased? Johann, you’re shaking your head.

JOHANN REDELINGHUYS: I don’t think so.

STEPHEN KOSEFF: I would dispute you. We have some very strong business leaders in South Africa. You see guys build great businesses. Take a guy like Steve Saad, Joffe, and Adrian Gore: these guys built great businesses from nothing and they’re not the only ones. There are a host of them. There are the Steinhoff guys – Marcus and his team – and they put themselves on the global stage, too. You can see what Patrice Motsepe has done. Even if you take Cyril with Shanduka, he started with nothing, so you’ve seen people who can actually lead and build great businesses. We have a strong business community in our society. I don’t know if its appreciated enough, but it is a very strong community.

GUGULETHU MFUPHI:  A strong community, indeed. Johann, you did agree but you had a point you wanted to make a moment ago.

JOHANN REDELINGHUYS: The issue of wisdom as an essential attribute of leadership – and that would be nice if it were true – but I think one of the famous examples of Reagan… Reagan was not a very clever man. Reagan was a very competent leader because he had an astute skill. Even some of the people we’re talking about – great entrepreneurs – might not be rocket scientists. They’re not clever or wise, but they have drive, they have good business nous, and that’s not necessarily cleverness.

ALEC HOGG: Well, they had the wisdom to know what they don’t know. They have the wisdom to open their minds. Reagan appointed smart people around him and that’s what you need to do. It’s the key.

STEPHEN KOSEFF: That is the key to anything, be it business or politics. If you want to get the job done, appoint the right people to work with you.

HERMAN MASHABA: The one challenge we need to deal with in our country – and we tried it many years ago under Madiba’s leadership, when we came up with this moral regeneration program – because one thing our country really requires is ethical leadership. We need people with the right kind of value system. As a country, we have major challenges to deal with regarding these issues because it’s not really a question of hoodwinking people. It’s a question of people having trust. When you come to me and you say ‘these are two cents’ I can believe that these are two cents. In our country, it is currently a huge challenge. When someone comes to me and says ‘these are two cents’, even though I know there are two cents I have to really dig a bit deeper. As a country, we face this challenge. Moral regeneration should really be one of the key priorities in rebuilding our country.

GUGULETHU MFUPHI:  Indeed. Well, maybe some lessons for political leaders to learn from business… Nonetheless, thank you so much from two of our guests. That was Stephen Koseff (Chief Executive of Investec), Johann Redelinghuys (Partner of Heidrick & Struggles), and Herman Mashaba (Chairman of the Free Market Foundation).