After 35 years in journalism, John Battersby became the inaugural London-based driver of Brand South Africa. During more than a decade of waving the flag for the investment and tourism appeal of the country, he engaged regularly with global movers and shakers. So there are few better placed than the London-based director of the SA-UK Chamber of Commerce to report back on Julius Malema’s visit to London last week where the EFF leader enthralled UK investors, attracting record crowds. I caught up with him by phone – and the result was the fascinating interview which is transcribed for you below. – Alec Hogg
Following EFF leader Julius Malema’s visit to London, Alec Hogg caught up with John Battersby to get a better sense of how the UK market reacted to his visit. He started off by asking Battersby what he went over to London to do.
It was a mixture of building relationships with senior journalists and correspondents over here, many of whom I knew from my journalistic career in South Africa and working for papers abroad. Then it was trying to build relationships with institutional investors. I would accompany the Ministers of Trade & Industry and Finance and sometimes the Deputy President etcetera when they came to do roadshows to present to the biggest institutional investors. I began to get a feel of which buttons one needed to press and how one presented South Africa as a desirable destination for trade, tourism, and investment, which is the role of Brand South Africa. Being the custodian of the brand means to create the climate in which one can more successfully (thatās the theory) persuade people to invest, trade, and visit South Africa.
Before we go into where they think weāre going at the moment, how important is the U.K. as an investor or a trading partner for South Africa?
Itās very important on both fronts. As a source of tourists, Britain is one of South Africaās leading investors to this day. China has overtaken, about four or five years ago, as the biggest two-way trading partner but thereās still very significant trade from the U.K. and very strong relationships and the U.K. as regards South Africa as a very important destination.
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Having left Brand South Africa and the International Marketing Council, you perhaps have a little more freedom to engage on a different basis to listen more, to hear how the British and certainly, those big investors are perceiving South Africa. Has it changed much in the last few years?
Oh, yes. The perceptions of investors in Britain have changed substantially but then of course, if one wants to mark a moment at which the relationship started to change, it would have been after the first term of the current President Zuma coming in. Even from the ANC conference in 2007 at Polokwane. One could see then a shift in the power balance within South Africa and if we then trace things going forward, in terms of the confidence in the country and the institutions there has been a significant amount of damage and unravelling in that period. Thereāve been high points but if you take a graph of the last five to seven years, itās been a downward slide and part of it has to do with the undermining of the institutions of democracy and perceptions that a lot of appointments are made entirely on the basis of political loyalty and no competency.
Itās also a perception that thereās a lack of managerial capacity and a lack of social cohesion and a kind of social contract within the society, where people actually agreed about where the society is going and that the broader society is actually playing its role. Itās more a kind of materialistic fragmentation when people are taking opportunities to feather their own nests and to promote themselves and that kind of focus that one had back in the early nineties of a real energy to make South Africa a better place, seems to have largely dissipated. At the end of the day, investors look to see what messages are coming out of a society. (1) Do these people know how to run the country? (2) Do they have a plan? (3) Are they implementing the plan? Yes, we have a plan. We have the National Development Plan. Weāve spent many conferences, seminars, and roadshows promoting the National Development Plan in all its aspects.
Then investors look to see āare they implementing the planā and when they see that not very much is happening, thereās a lot of internal squabbling, a lot of internal dissent, very high levels of protest, and continual unhappiness within a large part of the society about a politically connected super-rich elite and not a very happy ārand-and-fileā, this all impacts on investors.
Read also:Ā Malema: Unchecked Zuma = Failed SA state
Is it that there just isnāt a kicker that will get investment going again in South Africa? Is that what Iāve been hearing from you?
Itās deteriorated in the sense of implementation capacity. South Africa is a very vibrant society in terms of debate, drawing up new plans, and having visions of where we need to go but the capacity to implement that has certainly not improved. When we get roadshows coming over here or like the BRICS conference where we had four Ministers coming over here, weād have a very good conference. Thereād be a huge amount of interest. It would be very well attended and then weād have a round table at Mansion House at the Lord Mayor of London whereā¦ People from the City of London are people that oil the investment in the City of London etcetera, and who oil the outfit investment as well would arrive with their order books, wanting to talk about āwhat projects in energyā and āwhat projects in infrastructureā. Weāre not always in a position to be able to enter that kind of level.
Thereās a kind of gap between the political level, which all sounds good and investors get interested and the kind of technocratic level, which you need to actually say, āRight. Well, hereās a project and hereās how a British company could partner with this company, etcetera.ā It happened around the World Cup because that was a very focused project. There was a set number of stadiums and what needed to be done around the stadiums, and four teams were put together. What is needed is that kind of commercial cohesion that took place in the World Cup. It needs to be happening in all the other arenas, and that has to do with the lack of social cohesion and consensus within the society. Itās not too difficult to see at the moment if you look at South African Airways or at the SABC, that thereās a deep malaise within those organisations, but it reflects a deeper malaise in the establishment, which is partly managerial capacity.
However, itās also political division and a lack of a shared vision of where the society is going and therefore, where everybodyās place in that project is. Itās a lack of cohesion and you see it from all the protests that take place on a daily/weekly basis throughout the country.
In other words, we talk a good story. Weāre just not executing terribly well and thatās being noticed. In this past week though, Julius Malema has been grabbing some important stages in the U.K. Did you have chance to witness any of this?
Yes, Iāve attended a number of events because it is a kind of āfirst visitā in his capacity as a leader of a political party and a Member of Parliament. Itās been an interesting experience to see his interaction with the investors over here. He was at Chatham House, which as you know, is the kind of top British think-tank both in terms of foreign and domestic policy and he drew a huge crowd. Iāve never seen a larger crowd at Chatham House. Iāve been to many events. He drew the kind of crowd that Heads of State would draw and that I think is because for many people he is a stereotype in their heads. They see the red overalls and they see the episodes in Parliament etcetera, and they want to say, āWho is this guy, really?ā Hence, the huge interest.
CIC @Julius_S_Malema Chatham House talking abt EFF's position on economic challenges facing South Africa #EFFUKTour pic.twitter.com/oWLfU18a0Q
— Economic Freedom Fighters (@EFFSouthAfrica) November 28, 2015
Curiosity factor as well as āwe need to know what he thinks ofā.
Yes. Curiosity factor ā definitely. Thatās a large part of it but I think itās not only curiosity. Itās also a reflection that the current status quo is not looking very good in South Africa.
How did he go down? How did Malema go down with this huge crowd that you say did attend?
Right. Well, Iāve been in different forums. The first one was a small engagement with mainly investors who were justā¦ I think they were surprised. Thereās no doubt that they were surprised to find somebody who was as smart, as thoughtful, as articulate, and who had a clear vision. They certainly wouldnāt have agreed with all of it but their ears did prick up when he pushed pretty hard at all the business meetings, the idea of employee shareholder schemes. His basic line has been instead of dishing out shares to politically connected individuals who then become super-rich and can offer protection to the capital that empowered them; if you want to really establish a more stable and productive society, you hand out those shares to the workers and they then get a vested interest in the companies that they work for and therefore, will protect those companies and want those companies to succeed.
At the end of the year, in addition to the salary, they get a very nice dividend cheque and that gives them a sense of ownership.
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Thatās a very rational approach and one that youāve been scratching your head to think why the ANC has gone with a different one of trying to just replicate the old ways in many ways, just with a different skin colour. You can see why Malema has grabbed onto this. Did he come across as credible? On the one hand, heās talking about nationalisation. Now heās talking about bringing in workers as part of the capitalist system.
Well, the investors and businesspeople who attended the sessions that I did were very interested in that. One senior executive that was in the Chatham House ruled the session so we canāt name them. One senior executive in South Africa said, āLook. I think we actually agree on many things. If you could just calm down the rhetoric and adopt a softer approach, I think we could stop to talk about partnerships.ā That was one of the more positive reactions. Clearly, his critique of Black Economic Empowerment and the politically connected thing, which leads to corrupt relationships, is very valid. Obviously, it doesnāt always happen but it has happened a lot, and many of those relationships have not worked out so heās offering something. You only have to look at John Lewis (the department store in Britain), which has adopted this model for decades and itās hugely successful.
They donāt even call their staff āstaffā. They call them partners so they have 72,000 partners at all the various branches of John Lewis around the country. They all get a share in the business and therefore, they build a huge loyalty to the business and itās become part of the success story. Itās not brain surgery and itās not some Marxist/Leninist concept. Itās actually something that really works. I canāt see that itās actually that difficult to implement. Yes, thereād have to be some changes in legislation with BEE etcetera. There seem to me to be two ways in which one can in a fairly short space of time, transform the growing instability in South Africa, which is partly because of the underclass who have not really benefitted from the transition and then the capital-owning class who do not have security of tenure. The combination of those two things is creating increasing instability in the country.
CIC @Julius_S_Malema & EFF Delegation meeting with South African Chamber of Commerce in United Kingdom #EFFUKTour pic.twitter.com/0f6b3HwfHq
— Economic Freedom Fighters (@EFFSouthAfrica) November 26, 2015
The two ways that you could actually turn that around (quite quickly, I would argue) is to give land title to people in the Peri-urban squatter camps and so forth. There is a way of doing it. Itās been done in South America and so forth, so thatās one way you can stabilise a society. The other way is to give workers shares. Yes, Malema does still talk about nationalisation of strategic assets and he talks particularly about mines and about land. What heās been pushing is this social compact cooperative relationship between capital and labour through the distribution of shares/proceeds in the business. As you say, itās a very rational suggestion so heās made an impression at that level, but he did wear his red beret and red T-shirt at Chatham House. It was quite an interesting sight, but listen. He is a persuasive leader, he has created a very strong brand, and you certainly canāt argue with that. You can argue with his policies.
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Did he make sense? Did he actually resonate with the kind of people whom you would have normally expected the Chatham House crowd not to take that well to? Was he able to connect?
I think people overall were again surprised at how articulate and clear he was in painting his vision. I think there were some laughs and at one or two stages, ā heās quite amusing – he had some of the laughs at his own expense. I think the big pitfall was when he was asked towards the end by an investor, āIām an investor in your country and I want to invest more. What would you say to me?ā He hadnāt actually been on that track and he said, āNo, we definitely want you to come invest with us.ā Heās been adamant throughout that heās not anti-White and heās not anti-business. He wants a cooperative relationship with business and he wants young, White South Africans to come home to bring their skills and their experience and to build a country together. He was at pains to eliminate any kind of suggestion of replacing White supremacy with Black supremacy or any kind of racist element to it. He says White supremacy has to go and we have to have a new relationship, so Iām not sure how much he convinced the investor. In fact, the investor was an institution investor, which I donāt think he fully grasped because he gave the guy the same message that āyou must come and you must work with us, and you must help us empower the workersā.
So Malema was a bit of hit over there, a bigger hit than perhaps Jacob Zuma on his recent travels.
Itās a rather difficult comparison to make because heās the leader of a growing, but fairly small opposition party and he talks with great confidence whereas the Head of State still carries weight and can go and spend the afternoon with Angela Merkel and discuss the latest R6bn investment from BMW. As a result, itās a bit difficult to compare the two but I do think that he struck a chord because he articulates the huge problems of inequality, poverty, and unemployment in South Africa, which is another area that worries investors. Investors want stability. They want predictability into the future. If they see things coming apart in terms of a government not being able to generate enough growth and enough revenue to foot the bill for the huge social welfare spend, large problems with fiscal leakage, and patronage at the expense of merit; thatās not going to attract investors to the country because they donāt see long-term prospects.
I think his critique of that is fairly accurate but as I say, he has a lot of polishing to do in terms of the alternative offering. The one thing that people were interested in was the shareholder scheme but there would be many other areas, which would be of concern to investors so I donāt want to pitch it too high but certainly, there was a lot of interest. Itās something new and he is somebody new for people over here in an otherwise, fairly static scene where the Brits have so many other things to worry about. For example, will the attacks in Paris come to the U.K.? How is the U.K. going to pay back its debt? Then, trying to woo China. Itās a rapidly changing world so there isnāt a lot of focus on South Africa. Except amongst those who are very well informed like people who are invested in the country and institutional investors, the general view here is ābeen there and done thatā.
South Africa is a democracy now. It doesnāt need aid from the U.K. Itās doing its own thing. Itās not one of the highly indebted countries, etcetera.
EFF Delegation visit Karl Marx's Grave in London #EFFUKTour pic.twitter.com/VDxpVA9ZPf
— Economic Freedom Fighters (@EFFSouthAfrica) November 27, 2015
The focus point that you did raise there was Malema saying to young South Africans (and there are hundreds of thousands of them sitting in the U.K. now) acquiring skills, that they should come home. Do you have much to do with the Homecoming Revolution as well? They seem to be having a similar message and claiming some quite big successes.
Yes, I have quite a lot to do with the Homecoming Revolution and Martine Schaeffer some time back, and Angel Jones who was the founder of the movement. Itās changed over the years but itās gone on virtually for the whole decade that Iāve been here and itās been a very effective marketing and information campaign to provide to South Africans here. Now of course, theyāve extended to five African countries so itās no longer just South Africans. They have Ghana, Zimbabwe, and Zambia etcetera. Itās a mix of a kind of an EXPO, which they have out at Daleās Court and then a series of talks from South African thought leaders, entrepreneurs, and political and civil society leaders (Thuli Madonsela was one of the speakers last year).
Itās a very useful forum and of course, in the ten years that Iāve been here the numbers of South Africans coming to the U.K. has reduced drastically because (1) the Brits cancelled the special two-year deal for Commonwealth youth coming over here. They could spend a year and then they could extend it for another year. That was cancelled way back in 2008 or something like that. I forget exactly. Then of course, the Visa regime came in after 2010 and that has more or less stopped the inflow so the main inflow of South Africans into the U.K. happened between 1994 and 2004. Then it started to slow down. After those doors were closed and they also raised the bar on highly skilled visas etcetera, itās whittled right down.
Yes, there are a large number of South Africans in the U.K. but one now tends to find that with the conditions also changing here and becoming pretty tough that anecdotally (and I believe that is the case), there are more South Africans going back. Many of the South Africans come here. They donāt emigrate. They come here to get job experience. Some of them end up doing extremely well and stay here. Others filter back to South Africa. The Homecoming Revolution has played quite a significant role in terms of people taking their skills and experience back to the country.
John, I was talking to Moeletsi Mbeki. We had a conversation last week. He was with you recently and said you had some fascinating insights, which weāve covered a lot of ground on, on how you U.K. investors perceive South Africa today. He was of the opinion that it isnāt a very bright picture.
No, it isnāt a very bright picture. He called me when he was here and then asked me if we could have a conversation, but it was the day he was leaving. One of the things I sent him when he got back to South Africa was a very interesting posting on Facebook by the former Governor of the Reserve Bank, Tito Mboweni who of course now is a major business figure in terms of being a Chairman of various mining and oil & gas companies etcetera. Tito Mboweni has continued ā annually ā to go to the U.S. (New York and Boston) and then to London to talk to institutional investors about South Africa. Having people of his stature and calibre sitting down with the institutional investors, which is much of what I used to do particularly in the mining industry as well as in other areas, is a way of building confidence. Heās done this off his own bat.
He went to speak to these companies like Fidelity and Capital International etcetera, some of which command in the region of $1.5trn under management. I read through his experience and the doubts that were expressed to him and it was really like an action replay of many of the roadshows that Iāve done. The concerns that he picked up were that the economyās not growing and some even think it might be headed for a recession. The mining production is in serious trouble. The investors argue that the commodity prices appear to be tanking and that South Africaās in trouble. Then they also spoke about the student campaign and āhow on earth is South Africa going to fund (1) the scrapping of the six percent increase. (2) How on earth are they going to fund the next demand, which is going to be for free education?ā The general view was that the ANC is losing the plot and was likely to suffer significant losses at the coming local elections in May next year, and the investors donāt like that.
CIC @Julius_S_Malema now addressing the Oxford Union #EFFUKTour pic.twitter.com/Aa9yrjJxCB
— Economic Freedom Fighters (@EFFSouthAfrica) November 25, 2015
Investors either like a stable, repressive regime that can keep people doing what they need to do, which provides some kind of stability even if it isnāt in the long-term, or the first prize would be that you have a stable democratic system where you can have a change of government without major disruption and without huge swings of the currency. Of course, the currency has been a big factor for investors. The currency over the last 15/20 years has been volatile. Itās had some kind of stability for periods of up to a few years sometimes but then for instance, in the last six to eight months you had a dropping from R12.00 to over R20.00. Thatās really bad news for investors. The other point they raised, which is a bit of catch-22 was the prospect of ratings downgrades for South Africa by the ratings agencies.
Of course, that means that the capital that we have to raise to fund Eskom and Transnet etcetera, is more and more expensive. The National Treasury is certainly, still regarded as a very impressive and well run institution but the fact is that the ratings agencies call the tune in terms of the cost of capital.
So itās a rocky road ahead. Thereās no doubt about that ā confirmed by the international community.
Itās a tough road ahead. Yes, South Africa is a resilient country and its shown before that it can get through hard times but I think itās going to be a very tough period going ahead now. The kind of growth rates we have at the moment (one-point-five percent or whatever it is ā predicting to two, two-point-five and three) is just not going to carry us through in terms of the inequality, poverty, and unemployment. Thereās going to have to be some kind of real leadership, which does tackle things like shared employment schemes and land title for people. It requires some kind of dramatic leadership that gives expression to the promise of the new South Africa.
The political competition on the rise here in South Africa, is exciting locals but it isnāt exciting international investors who would much prefer to just have things pretty calm.
Yes, but I donāt think that political competition in itself is worrying investors. I think itās that the government of the day doesnāt seem to have the wherewithal to deal with that and to stabilise things. For instance, another point that Malema has been raising, which I think did resonate with people is that when it came to the studentsā campaign; instead of calling a national convention and sitting down and working out āhow are we going to fund education without the six percent increaseā or āhow are we going to work towards free education in the long runā, government just threw in the towel. All within the space of a few days and said, āright. Okay. You winā, which has sent a message to the rest of society that all you have to do is march on the Union Building and you can get what you want. That doesnāt build confidence in the establishment and in the government of the day.
I think one of the things that one really needs to see emerging from South Africa is leadership. We have the āborn freeā generation. We know there were very impressive people in all sections of South African society, particularly the urban youth but it requires leadership to pull it all together. If you donāt have leadership to pull it all together you tend to get a populist leadership, which is not necessarily going to potentially pull it all apart but could further fragment things. Thereās no question that there is going to be significant and even fundamental change in South Africa over the next few years. Of that, thereās no question. The question is how will it happen? Will it be under a leadership that can control the nature and pace of that change or is it going to be change that builds its own momentum and creates all the kinds of social disruption and problems that would then come?
As one can see, however well-intentioned revolutions might be (you only have to look at Arab Spring) can have disastrous impact on a society for decades to come. We shouldnāt likely be talking about āare we heading for the South African Springā.
