JOHANNESBURG — Here’s a fascinating discussion with Nick Binedell, founder and former dean of GIBS, Africa’s top business school. Binedell has productively applied the time freed up by his recent retirement. He is one of many unsung heroes who worked tirelessly behind the scenes as South African civil society fought back against the state capture which set the stage for industrial-scale corruption. I visited with him at GIBS this morning for his insights after Jacob Zuma finally threw in the towel last night. What transpired is a riveting must-listen for anyone wanting to make sense of SA’s historic developments in the past week. Especially interesting are Binedell’s views on what comes next for the young democracy. Hope Springs. – Alec Hogg
Well, I’m here in the dean’s lair.
The ex-dean’s lair.
The ex-dean’s lair but Nick, I thought it’s still your office – Nick Binedell’s office at GIBS (Gordon Institute of Business Science), the organisation that you started. The top MBA in Africa, I see you proudly advertise as I walked in here. But we’re not going to talk about GIBS today; we’re going to talk about Wednesday night (Zexit).
Where were you at 22h30 that night?
I was glued to the television watching visually on SABC Jacob Zuma’s long interview and then of course, I watched his press conference.
That press conference started half-an-hour late.
True to form.
Characteristically, moving the podiums around.
I watched the Rand, Nick, and the Rand strengthened, to begin with, and then started weakening half-way through, and towards the end, we had the resignation. How did you read the speech, when you were sitting there watching?
Because of the radio interview, the one-hour extraordinary interview that reminds me so much of how – as people fall, as authoritarian leaders fall – you always get this confusement. PW Botha etc – I remember these eras. You get this sort of garbled rambling and justification so, listening to Radio 702, I thought, ‘what is he going to say?’ I only started three-minutes late and then I listened for an hour and thought, ‘did he announce he’s resigned in the beginning?’ Then as I listened to the case, as he argued, I thought, ‘he’s not going to resign.’
This was the afternoon?
In the afternoon, yes. When he started the press conference, of course none of us knew but of course, many of us suspected that he would resign, and then he brought it in right at the end.
Why did you suspect it?
Why did I suspect that he was going to resign?
Yes, why did many people think he was going to go on Wednesday night?
Well, I was hoping he wouldn’t actually. That there’d be the vote of no confidence and that we would automatically then begin a very clear start on a fresh sheet of paper with a new Cabinet, and so on. So, I think that to me, would have been a more democratic thing. In this way he did retain the initiative inner-sense, although he had no option, I don’t think. So, why did he resign? Why did we think he would resign? I think he was surrounded. The Japanese, I remember when they took on Caterpillar with Komatsu, their strategy was called Maru-C (Surround Caterpillar). I think in the last 6 months he has gradually become surrounded. The sort of base on which he depended – legally, publicly, politically, in acts of great leadership, if I think back to Pravin Gordon’s extraordinary role last year. His personal role of standing as a flag-bearer of decency. All the way through to the organisation reflecting on its leadership, to those who strongly supported him, starting to drop away. The wafer-thin election of Cyril, the climate has moved so, he eventually, I think just didn’t have an option. Of course, the NEC had every technical right within the ANC’s procedures to recall him, and it did. So, the process was that the top 6 then went to the National Working Committee and they’re the ones who really said, ‘look, we must then go on him to resign.’
Who’s the National Working Committee of the ANC?
The NWC is 20 people, who are elected from amongst the NEC of over 100, and they meet fairly regularly. I think it’s every 2 weeks so, the top 6 are the officials. The NWC is the senior administration of the ANC. Then the NEC meets from time-to-time, but the NEC really has the authority ultimately.
A lot of people are confused, not surprisingly, because it’s almost byzantine, the structures within the ANC. But we go back to the 18th December. Cyril Ramaphosa is elected the new ANC President but there are non-Cyril supporters who are elected into powerful positions as well, and at that time we were told that this NEC that you’re talking about, around 100 people, there was also a balance there of Ramaphosa supporters and Zuma supporters, if you like. Yet things swung to the degree that Zuma is now gone. How does all this happen?
So, in most political systems, of course, when a leader comes to an end of a term there’s a lame-duck kind of phenomenon. Powers starts drifting away, and I think it did over the last 2 years but then there’s the question of the incomer and incumbency really matters especially in an immature political system like ours that is still coming to grips with being a constitutional democracy and what that implies. The ANC a liberation movement – it still dresses itself that way, which I think is a partial strategic error because it now needs to modernise a democratic party, and maybe we’ll come to that later. In this kind of liberation view it operates like any other party so, it elects, by a narrow margin, a president. But, as you say, some of the other members of the top-6, who are the key officials have supported him extensively and are entangled in many complicated issues, and have particular ambitions. So, it’s a complicated team to manage.
I’ve just watched the Churchill movie with Gary Oldman and it was marvellous how he bypassed the War Cabinet to go to his caucus and then to Parliament, and there’s Neville Chamberlain in the Parliament realising that him trying to get Churchill to explore negotiations through the Italians is not possible. So, I think managing the top 6 will be complex and I think many people who were in the middle of the NEC, my assessment in August was that 30% were very strongly pro-Zuma, 30% were anti, and 40% were in the middle. Those numbers shifted in 4 and 6 months, after the conference, and people started calculating their futures. Cyril had a few friends in August, and too many in December.
Many. The thing about SA politics and our economy, because it links to our economy, is for many people – their livelihoods are related to being in Government, whether you’re a local council or a new council or you’re a minister with a big portfolio. Where else would Dlamini be employed on the kind of income and perks that she does enjoy, at least today? Of course, for them it’s a desperate issue. Not to dismiss their political and ideological convictions because many of these cabinet members have given their lives to the party and the struggle. But this is a challenge for them and so, maybe the ones in the middle start to shift, and I think that has accumulated and now I think there’s now a broad consensus. For the Whips in Parliament yesterday to get, the members were instructed, I believe – that shows you the underlying shift. Zuma made an interesting point yesterday to say, “It’s just the officials who are ambitious and in a hurry. It’s not what the branches are saying.” I’m not sure that’s fully true but he has a point about that.
He also, in his outgoing speech put a lot of attention on his benefits. Almost too much attention because when he spoke in Zulu and when he spoke in English, he mentioned this, that he’s not scared of losing his benefits. But would that have been a consequence if there was a vote of no confidence? Why would he have mentioned that?
No, it he would have kept it. It was only impeachment that would strip him of his pension. There’s a standard policy about the kind of administrative security arrangements for an ex-president, and he will still get those. I don’t know why. The general gossip is that he’s made so much money, it’s parked offshore. He’s extremely wealthy – I don’t know if that’s true. His finesse at managing money is questionable, if you go back over 30 years and study his early history, which is so compelling, and we don’t know whether he’s extremely wealthy or whether the money that has been somehow associated with contracts and deals is not fully under his control and that he will rely importantly on the support of the State, and the pension.
Because he can’t rely on the support of those who he was relying on?
Correct, and of course, he faces major legal costs, which was why the legal costs were part of the complexed negotiations with the officials.
Everything that happened on Wednesday, a dramatic day for a young democracy. The Gupta compound being raided by the Hawks, who suddenly found their talons. That again, seems to be a seismic shift from what happened before the 18th December. If things had gone the other way would there have been a raid yesterday?
So, you use the word Byzantium earlier – this is a complex society and many things are not coordinated so, there’s pushes and shoves, and complex things going on and they’re not all coordinated so, I don’t know. It’s a great question. It seemed a strange day in which to do it. Was it people deciding, ‘we had better show our colours now – the tide has turned?’ Was it an instruction or was it just a random kind of event? Who knows, we don’t know – many of these things we don’t know.
Nick, I was at the WEF (World Economic Forum) in Davos at the end of January, where Cyril Ramaphosa made a very good impression. He told us, the South Africans present, that he had only three messages that he was telling the rest of the world who, by the way lapped it up as you can see from the Rand. The one was certainty of legislation and regulations. The second was fixing the state-owned enterprises (SOEs) and the third one was corruption and addressing it. In informal discussions with members of the Cabinet, who are likely to stay or who knows, but certainly those who seemed to be close to Ramaphosa at the time, they said that there would be no deals cut. This is not going to be another Truth and Reconciliation Commission, where people admit and then they can walk away scot-free. Is that a sense that you’re picking up as well? That this has to be SA’s Operation Car Wash that people have to go to jail?
I don’t know the answer to that. There were discussions in November that I heard about how to handle this because the depth of corruption is very problematic. I think what we townies and urban people miss is the complexity of corruption in small towns. So, take a small town like Volksrust or Humansdorp where for many people who are politically engaged, being a councillor is a form of rent and that does really worry many people. I think there will be initiatives to start trying to tackle this and go to these towns, OUTA, for example, and pull them together to say, ‘you’ve got to clean this up – what has happened, and let’s sort this out?’ I think it’s going to be a long process.
I think the key thing that he will do that he has to do, is start at the top, and make sure that there are examples of people that are prosecuted appropriately, and he’s been clear about no indemnity. So, it will start there and people may turn State’s witness and start revealing information about what was done. He made an interesting point yesterday to say, because even in the Gupta-leaks there’s no direct evidence that links him, as I understand, I’m not a lawyer – that will stand-up in a court of law. So, it has to be that the system has to get exposed and then we’ll get the evidence of the transactions and so on. It would be interesting to see how that plays out. I think we’ve turned a corner, and I did fear last year that those who will resist have everything to lose, which means that they’ll go all the way, and there is a dark and shadow state. So, how you manage that, a bit like the tax amnesty, has to be done cautiously. A bit like the non-prosecution of the NP (National Party) Ministers, who might in one way legally, or from a human rights point of view have been complicit, and in many societies, they would have been prosecuted but there wasn’t because there was reconciliation.
I once wrote a line that said, “CODESA was the process of one side pretending not to have done it, and the other side pretending to have forgiven them,” and that was the lubrication of how we got to democracy. Then we embedded a Constitution, which is our greatest asset, and I think that’s absolutely true. So, if we prosecute, in a way, unadvisedly there may be a backlash but I think the corners turned. Again, this will be a great sign of SA’s constitutional strength that there is prosecution. The CJS (Criminal Justice System) is clearly going to be reorganised, and I think we’ll see, over time, the appointment of the right people in these positions and the right people doing what they need to do. I’m told, from many sources, that in many of these institutions in the middle and in the senior levels there are good people who are ethical, and civil servants. One of the great things about SA is that it has great institutions, and reasonable legislation, and strong courts that are independent. So, we have an independent media, independent courts, business has stood up a bit, we have civil society being active, and I think the brilliance of this moment is this consolidation of SA as a democratic society and ultimately, the people’s will has asserted itself.
Again, getting back to Davos and what Cyril said, when he was off-script. He said he’s done a movie on four lions and the four lions were the metaphor in SA, government, business, civil society, and labour, and that those four lions have to hunt together to be successful. How’s he going to do that though because this is a fractured society?
This is one enormously difficult task and I think what we’ve done is climate change, we’ve changed the confidence level. Now, we’ve got to reverse the damage, and then we’ve got to get back to the real agenda of transforming SA. I think the Davos business audience as an investor and the comments he’s making and that you’re reflecting are related to that part of the system. But he has to deal with the underlying structural problems, and he will – I’m confident he will. The land and agricultural issues. The question of how do we get investment to create jobs and how do we clean up the State? The State has got to be made more efficient and probably down-sized. Addressing the SOEs and making them efficient, and I think Eskom, I’ve been talking to people with insight into Eskom – it’s dropped dramatically in its overall skillset. It’s capable of being resuscitated and so, it will take time. All these institutions – Transnet, SAA, there are 700 of them. These institutions must be cleaned up and made efficient because they provide the backbone of the infrastructure that allows entrepreneurs, the private sector to invest so, it’s a critical priority area. The point for me is that he has to focus on dealing with the three structural issues of poverty, unemployment, and inequality.
Where do you start, Nick?
Well, where does he start? We’ll see because remember one thing about this guy and he’s a remarkable individual really, if you look at his life. He’s been a student leader, a union leader, he built NUM (National Union of Mineworkers) from 6 000 to 300 000 members and administered it as general-secretary. He was a negotiator, he’s a lawyer he was secretary-general of the ANC. He went into business, and he’s been deputy-president. I don’t know of any other country where a president has this kind of diverse CV, and he’s waited a long time to play this leadership role.
Yes, and he’s smart and he reads a lot.
He reads a lot, he’s a smart guy, he’s principled, and careful. Cyril is not an extrovert. He’s a careful man but I can see he’s enthused because finally, after many years, he’s been given the opportunity to serve the country and I think he will. So, where does he start? Well, he’ll start in the next few days of building an administration and picking a Cabinet and hopefully, making sure that in the key positions very good people are appointed. Those Ministers in turn may be reviewing the DGs and the functioning of Government. He’ll have to work hard at coordination and have good administrators who really bring these clusters of Departments in Government together. Then he’s going to have to talk to the country and spell out in common sense language and practical language for people to give a sense of the plan.
The National Planning Commission.
You’re like the ANC now, using these abbreviations.
Sorry about that, and that is a very important document that really good minds applied themselves.
It’s very brutally honest, isn’t it?
Yes, it’s quite straightforward and Trevor Manuel, I think…
Can he play a role again?
Yes, he might in the background play a role, and I think many people will play that role.
That was the other question that was put to the new President, which was, ‘how are you going to find the people?’ He said he’s going to tap skilled South Africans wherever they might be.
I think it was last year in Davos, he mentioned Elon Musk even, who has been a persona non-grata to this government forever.
You see, if you go back to Thabo Mbeki’s presidency he did a similar thing. He had an International Advisory Council. He met, from time-to-time with top business leaders. This has been catastrophic in the last 10 years. If you look at government delegations going to China, Russia, or to Europe the top business people weren’t in the room, and now they will be in the room and he knows many of them. I think he will reach out but you must put in a caveat that he’s an ANC person and will follow ANC policy, which will be a developmental state, and as I want to say again, he has to deal with the 20-million, who’ve been left behind. He has to deal with basic education.
Is it a second chance?
Yes, it is. I think this is a magical moment. Whether it will disappear in the harsh light of the sun it’s hard to tell because these are structural questions that are very difficult to turnaround. So, yes, I think it is. It feels to me, anyway. As a moment – as a very important moment. Maybe overemphasised because we’ve removed a bad thing so, will we get a good thing? But in the release of energy of removing a bad thing we’ve got a fresh start. I think back to PW Botha being ousted by his own cabinets and being shunted aside when FW came to power with his colleagues, Rolf Myer, Leon Wessels, Dawie de Villiers – these guys who were reformers who fought the verkrampte for a decade, and eventually they won. That’s what it is, it’s a moment for a new framework. I think it’s problematic for opposition parties. I think that Cyril Ramaphosa will appeal to a very broad spectrum, and I think it will put them under strategic pressure.
But isn’t that good for the country?
Many people seem to think that coalition politics is a good idea but for an economy, if you’ve got a very powerful government it can do the unpopular things.
I think a well-led State that does the right thing is what SA needs. I think we must have opposition to keep them honest and I’ve been arguing that the civil society has played a huge role, along with the media and the courts. But civil society has to remain energised, and on guard because it should support the right things. It should give input, it should critique where it has to, and it must hold things accountable. One of the features of SA politics is this lack of accountability of MPs. There’s no constituency so, where do you go? The answer is, civil society, faith-based institutions, NGOs, the media have been the places where South Africans have gone, and to the streets to protest. Those mechanisms are vital to correct bad leadership and one of the things we’ve been talking about in the last few days is, that as an incoming president he enjoys extraordinary executive authority, more than most presidents. That is a challenge here because as we’ve seen when it gets used well it will deliver results. When it gets used badly it can be abused.
Some are saying that this is another Mandela moment. That Mandela was able to get South Africans to exceed their own expectations. To lift themselves above their normal petty day-to-day grievances. Do you think that’s overdoing it?
Alec, I think about this a lot. If you look at SA history we have things that move slowly and then suddenly, and we’re quite emotional about conflicts. We’re not always analytical and rational. I can remember even in the 70s, after 76, and here’s an example. I remember Sasol listing because I wanted to buy some shares, I didn’t get any, because they were 17 times oversubscribed, and the stock market on that listing suddenly took-off. So, like most countries, we have these episodes – episodic optimism and episodic depression, and I think there is a climate change. I was overseas in December. I left from one country and I came back and it was further down the river in another river and so, I’m optimistic about this.
Is that how you really felt?
What made you feel that way?
What did you see though?
The fact that ANC delegates, 4 000 of them, a third of whom probably work for the State, a third of whom are employed in some or other way, often shop stewards, and a third who are unemployed – elected a billionaire to run this country is an extraordinary thing. He’s everything we’ve been talking about – I think he represents potential. It’s not going to be easy, as you said, it’s going to be damn difficult and he’s going to make some unpopular decisions for different sectors. He can’t keep the unions happy, business happy, civil society happy, investors happy all at the same time – it’s damn difficult trade-offs in the job. But I think he’ll have the goodwill so, at the surface level there’s a different climate.
The structural part of reversing the damage is going to take time, and then as I said earlier, dealing with the real issues here of transformation, of social relationships, and trust of South Africans figuring out they need each other – they can respect each other, and know each other which I’m seeing happen in spite of the past leadership. We’re moving. This is an increasingly modernising society. Here, at GIBS, we have 4 000 people a week. This is very different than 10 years ago. The social capital of people is moving quite quickly. We want to be a modern country. We want to succeed and people are more and more knowledgeable and well informed about what that takes so, I’m an optimist about that. But the real issue is this poverty alienation, and dislocation. I drove, in December when I came back, through rural areas as I do every year. We have a long way to go to give the 20 million people a place in the sun.
When I came back, driving to Sandton after arriving in London for some reason Waze decided to take me through Alexandra, and Alexandra Township, which as you know, is a stone’s throw from the richest square mile in Africa, in Sandton, happened at that time to almost look like a rubbish warzone. Subsequent to this, I discovered that there had been conflict between the one group who pick up the rubbish and another group who used to pick up the rubbish, and those who used to pick up the rubbish had just made it into one huge rubbish dump. But what got me was there was nothing on Google. There was nothing in the news. It was almost well, it’s their problem, (Alexandra’s problem). Yet, the Sandton CEOs will make a huge deal about sleeping out on the street for one night in the year, to show their solidarity, if you like, with homeless people. There’s a disconnection here, Nick.
Well, I said to a friend of mine last week, is the opportunity of a lifetime has got to be taken in the lifetime of the opportunity. Here’s an opportunity, and I’ve often said that for most Sandton residents, who are primarily white, the distance from Sandton to CT is shorter than from Sandton to Alex. And for many the distance to London, London is closer than Alex. We have to cross this divide. A Harvard professor said an astonishing thing to me. He came visiting and I took him through Sandton and he had never been to SA, and he said, ‘my god, this looks like New York.’ I said, ‘well it is – it’s the centre of the centre of the African economy, and we’ve doubled its height in the last 5 years.’ Then we drove over the freeway to Alex, and he said, ‘my god, this is Kabira in Nairobi.’ Then he had this lovely line, and he looked at me and he said, ‘who’s the idiots who built a freeway between them?’ It was a great line – we have divided ourselves from each other.
I think the younger generation that I’m seeing here are saying, ‘no, we don’t want to be divided – let’s get on with it.’ There’s an organic Shoprite checkout kind of humanity. The great gift that Africans bring the world is humanness, is warmth. When I watched Zuma speaking, like all of us, I lose him. Then he dances and you can’t help but respond. It’s this magnetism. This humanity. The forgiveness that we’ve had. Our essential conservatism, our religiosity that gives SA a kind of resilience and in a great company that kind of social capital gets organised and taken somewhere. In Singapore it gets marshalled. In China it gets marshalled. In democratic societies it’s kind of a voluntary association. I’m different to you but we can work together and I think that gap, that Alec – Sandton gap, is the job a huge part of what business has to do.
Civil society, these organisations that have made such a huge difference in the last 18 months the Sections 27s, the Outers, the Corruption Watchers are badly funded. I met with them two nights ago. They’re badly funded by SA business. If you look at the return of the little money SA business has put into them and you think the growth rate might jump by 2% on a $400bn economy – that’s a big number, $25bn in the next 3 years, if we can get up by 2%. For less than R50m we’ve had a $25bn uptick, if it happens. We need to invest. The risk for companies is partly competing against each other, what we all learn at business school, Nando’s versus KFC, or Standard Bank versus Absa. The second thing is industry risk. Is there a demand for fast food or for financial services, and what’s our strategy in it? But the real risk in this country for business, big business certainly, is country risk. I think we’ve miscalculated the energy and the resources that need to be put in by business and others, unions, and civil society, into country risk. It’s a time for business to be patriotic, and to make these kinds of commitments. They have a bit and I’m hoping that in electing Ramaphosa as the President, they don’t say, ‘well, our guy is there now – we can chillout.’ There’s huge work to be done to transform the economy.
So, where do you put a CEO in the room and you talk to them all the time, how are you going to change their minds? How are you going to open their eyes, rather then poking it out with a stick, to use a wonderful old liberal saying?
Exactly so, it’s self-interest but self-interest that is moderated by the national interest. We all claim we’re South Africans, we all love our country. Well, you must love it in a generous way. We have to think, as those with resources, to think about what we put in and not just what we take out.
Nick, there are a lot of people behind the scenes who’ve been working on this. Not all of them have received the kudos that they deserve, I know you’ve done a lot of work, as have many other people who are unknown. Is this a day of celebration for them? Are they going to come out of the closet, if you like, and say, ‘look at what I did?’
I think the kind of people you’re referring to aren’t the kind of people who will be so self-congratulatory, but there have been many people who have worked behind the scenes, in government and in the ANC, and elsewhere in civic organisations. There are the higher profile people who play such a vital role because they’ve been flag-bearers of what we need so, you can start with Pravin Gordhan, or Thuli Madonsela, or Sipho Pityana speaking at the funeral.
Sipho Pityana, how big was that, at that funeral?
It was huge. It was a turning point that he spoke at the funeral. Ahmed Kathrada, reading the letter from Kathrada at that funeral. It was a huge moment because it was so direct. So, there are these leaders and they truly are national leaders, who may not have been in positions of government, like Pravin Gordhan who has not been for nearly a year now, but they’ve played a huge role in giving people confidence.
Do you think it was a good thing for Pravin Gordhan actually, to be outside of the tent, with hindsight?
No, I think Pravin Gordhan in that portfolio was playing a vitally, critical role, and Nhlanhla Nene who really put the brakes on the nuclear deal from the Treasury Department, as I understand it. So, no, it would have been much better if they had stayed and got their way but the point about them, especially Pravin Gordhan, who has been a lifelong activist and is a man of extraordinary principles and ethics, and Thuli. Thuli in her own interesting way and personality. Mogoeng Mogoeng and the judges, who have over-reached in a way, their judiciary boundaries when the executive fails – you’re lucky to have a Constitution that allows them to extend the boundary a bit. But there are many people behind the scenes who have been in civil society organisations.
Why did they do this? Why did they risk what they have risked?
They’re patriots. It’s this thing I’ve said earlier that in their minds – look, many of them come from a history of struggle and they struggled and suffered for a reason and to see that work getting dissipated, lost, and corrupted. I mean the word corrupt – it’s the turning of it into something that’s the opposite. It’s not just that they damaged the economy, and so much of the damage is just not measurable. But that they corrupted it. They twisted it into a project of extraordinary self-aggrandisement of too much ego, disconnection from people. So, often leaders do this. They think they’re connected because they can get a response from their acolytes, and then they can go into public and because they’re powerful they can get a response.
That moment when in Bloemfontein when Zuma was not allowed to speak by COSATU, that was a turning point. The alliance came in and the SACP and COSATU, and their kind of critique of Zuma, and in firing Blade Nzimande in that way. Change the public sentiment to say, these are people we respect and look how you’ve treated them? The idea of throwing people under the bus – that became a behavioural style. The public are smart enough to eventually say, ‘no.’ So, I think there are many heroes in NGOs, in Government, in political parties who have put their lives at risk. If you go down to Mpumalanga and look at the split in Mpumalanga in the different ANC groupings – it was risky business.
So, what happens next? What do those people, who’ve fought so hard to have this second chance for SA, what do they do to make sure that there’s not a repeat? Do they change the laws? Do they rewrite the Presidency Laws, not as it was originally done for a Mandela, now you’ve got a Ramaphosa, who would presumably benefit from that, but to ensure that there is a Zuma in there again, he doesn’t have this unbridled power?
It may be that we need that kind of reform.
Would it even be on the table?
It may be, I don’t know. But certainly, the ANC I think faces an organisational challenge of renewal. I think, as I said earlier, the State and the SOEs, the private sector, the unions and all of us – we need to think again about what kind of society do we want? What kind of democracy is this? Work our way through the conflicts, which are visible. I think these people will remain as guardians of democracy. Even in opposition political parties – guardians of democracy. The fact that all the parties agreed about the vote of no confidence says there’s a kind of unity. Now, we can get back to parliamentary politics where today the DA might not vote for Cyril. It doesn’t matter because the structures in place. So, I think the older generation or the veterans played who played a big role, 101 veterans, the split of the MK veterans into two groups. These guardians didn’t give up and they won’t, and I’ll think there’ll be ones who follow them, who may not be actively involved in official positions but will hold the ANC to account, and hold the government to account, and hold business to account.
So, the thugs who wrecked the place are out or on their way going out?
Oh, no, we don’t know that yet.
We don’t know that yet?
No, I think we say there is a process that should unfold. No, I think this is going to take a while. This is like Sicily capturing Rome.
Well, Sicily is the home base of the mafia and Rome was Rome, with all of it’s democratic practices, and authoritarian practices, but let’s just think of that image, and to a degree, the dark state. There’s a book coming out soon – How to Capture a State. The State was captured, there’s no question about it, there was a shadow state. We’ve shone the light into that cupboard and shown what people are, as where you started, the raid on Saxonwold yesterday.
What’s their future, the Guptas?
I don’t know, I’m not a lawyer. I think they’re in big trouble.
Well, there’s a good question. I think in the focus on dealing with the Nasrec Election those of us who pursued the KPMG, McKinsey, Trillian story have had to put our energies into other things, and I’m hopeful that there will be some return to this discussion, to make good.
How would they make good, SAP, in that group as well and others?
Yes, these processes are continuing. They’ve damaged their reputation very significantly and a number of companies have said to me that they would cease to work with them. But I think it’s lost a bit of its energy. This is the damn thing about compromise. Back to 1990 – there were many things that weren’t done in order to do a deal. So, do we say, look, you’ve suffered enough on your brand. You employ, at KPMG, 5 000 people do you want them all to lose their jobs? That has some merit to the discussion. Others would say, you’ve to take the harsh line and prosecute and go all the way. It’s very difficult to find these compromises because there should be punishment. Where there’s boundaries been crossed on legality and there’s evidence, then there must be prosecution.
The second layer is, but would a business then feel differently about a McKinsey? I mean, for me, I fell out of the bed. McKinsey was the royal blood consulting firm. I know this area of strategy. I could not believe it. I still find it hard to believe what McKinsey did because of what it stood for – in terms of quality and delivery. It’s an extraordinary thing. So, there must be consequences to it but we’ve kind of, I think, backed off for the moment because of this effort to deal with all these things in the last 3 months so, it’s maybe that there’s a rejuvenation of some of it. Certainly, for individuals, I mean, the KPMG report was a direct contributor to why Pravin Gordhan and other officials were fired, and I’m sure they have a right to compensation, well I hope they do.
Perhaps reemployment would be the…?
Well, KPMG can’t appoint anyone to government but certainly, they suffered financially. Mid-level and senior officials have been unemployed since then, and KPMG and others were contributors to those.
And you would have thought reemployment in SARS because SARS is a shadow of what it was before?
Yes, exactly, all of that.
A year ago, well under a year ago was a very dark time in SA. Today, if we look a year ahead, how are we going to look back on what has happened?
As a moment, as a turning point or a bend in the river that hopefully leads to good running water. I don’t think we must get over excited. South Africans tend to overestimate the triumphs and underestimate or overestimate the disasters.
We’re very Mediterranean in that respect.
Yes, we’re very Latin actually, you’re absolutely right so, let’s not get carried away. I’ll come back to what I said earlier. There are three layers to this thing. There’s the climate, which has shifted, there’s reversing the damage and then there’s getting back to the hard work of transforming the country, and these are very tough things to do. Just take the public education system. We are now a services economy. Many years ago, when I was in mining, this country was a mining economy, overwhelmingly. The banks, the engineering – they all fed-off mining, as did retailing. This was the capital of mining. Today, Sandton is a services economy. Now, in a services economy if you’re going to compete globally, you better have a brilliant public education system – end of story. How on earth do we fix that? That’s the long march that has to happen, 80% of our schools don’t have internet access. You can’t run a modern economy with people who leave school without being capable in a digital economy.
So, there’s a good place for companies to start.
Adopt a school and put internet into it.
Well, it’s never that simple but nevertheless that’s the focus and to understand that that’s a fact that 2kms from you, our future consumers, our future employees, and future stakeholders, who don’t have access. When I fly around Africa and go to African cities I’m stunned by the lack of infrastructure. If you fly over Africa at night and then you suddenly enter SA airspace and it’s all yellow lights down there. We have a huge infrastructure. Most South Africans are not aware of how much infrastructure we’ve got compared to the rest of the Continent. We’ve got the institutions so, basic education is a huge infrastructure and to have it be so poor in the skills that really matter, maths and science, is a disaster for this country and it will remain a mill around our necks for decades. It’s long-term and we can only start now and do the best we can. It’s improved a bit in some places but when I go to Singapore or to Turkey we don’t compare.
We’ve seen the Rand appreciate by 20% since the penny dropped that the Zuma-dynasty was not going to continue in the same way, or there was a possibility it wasn’t going to continue in the same way as the Mugabe-dynasty has happened there. That would presume that there is more interest in investing in SA, and that certainly the feedback we got from Davos, the international community or many in the international community are wanting to get a slice of this country. Is that something that will have an immediate impact or is it going to take a long time to filter through their boardrooms before it gets here?
I think somewhere in between. I don’t know what a long time is. So, we’ve gone a bit wrong, and now we’ve corrected. The rating agencies and all these things will play into the investor’s psyche. They’re looking for value in emerging markets and SA is a sophisticated economy and I think we’ve proven the point of being a constitutional democracy. We’ve got a sophisticated infrastructure, good companies, maybe they’ll take a second look, as the Goldman Sachs’ Report indicated – we are seen to be the top emerging market. But it won’t happen overnight because it’s the risk return calculus. I remember when I worked in New York for Mobil Oil. They used to have a joke. They used to say, in the 70s, when the oil industry was under tremendous pressure in SA, was they used to say, ‘it’s 1% of our assets, 2% of our returns and 10% of our headaches.’
So, multinationals earn very good margins in this country and they’ve been here, we’re so fortunate to have them. To have the GE, Microsoft, and Apple, etc., on the scale that we have is a huge advantage and we must encourage them to stay and invest but they will make the risk return calculus and in the country risk piece of the equation we’ve gone, ‘oops.’ But having said all of that, this is a resilient country with a lot of skills and many South Africans are naturally entrepreneurial and we produce these Elon Musks from time to time, who really are extraordinary leaders. I think now we’re seeing this next generation coming. Compared to many other countries – I think we’re in reasonable shape but it is not a celebration. It’s the start of the next march or the next journey.
You always give me great books to read. I remember one called Breakout Nations and talking about it around the time. The obvious question was, does SA have the potential to be a breakout nation? Your response at that time was, ‘well, we’ll muddle through – it doesn’t look like we could replicate what the Israelis have done.’ Do you think, with a sussed leader, and with a potential rejuvenation or release of energy, given what’s happened here that that could change? That we could become a breakout nation?
I think it’s too far.
Too high a hurdle?
Yes, first we must stabilise and normalise, and once you’ve stabilised and normalised, and government works well, and business and government coordinates, and labour is part of the compact, and civil society – you can then hope that you’ve got the preconditions for great innovation. That’s what the Breakout Nation book was about. That’s what Singapore has been about, and China, but you’ve got to get the basics right. We’re a long way from getting enough of that right, I think, to be in the tipping point of a leading breakout nation. The great opportunity SA has is as a Continent because I don’t see us competing against China and manufacturing or services. Or the US, on innovation and technology but what I do see in the next 20 years is this remarkable Continent and its cities and its complex countries – that’s our natural market. There we should be able to beat almost everybody because as we become more integrated.
We have maybe always been an island country actually, because of apartheid and colonialism, and its isolation from the 60s onwards. And we’ve moved into Africa where a lot of businesses have gone in and Africa goes through these ups and downs around the commodity cycle and governance challenges but I think it’s our natural market. There are individuals and companies who can play globally. It’s interesting to see how many of them are successful and how many are not, but our natural long-term market with our demography and our culture is an African market. The unique thing SA has is this diversity, which I think all of us love.
There used to be a joke many years ago about if you want to have a bad evening you ask the English to cook, the Italians to organise it, and the Germans to tell the jokes. If you want to have a great evening then you get the Germans to organise it, the Italians to cook, and the English to tell the jokes – and that’s what SA has. If we take the best of what everyone has to offer, this could be a breakout nation but it’s going to take a whole to learn the lessons of what each of us can bring.
I just want to come back to this last thought about it, and the 20 million people who are living desperate lives and are not included in the productive life that they should be part of – that is the underbelly of the SA challenge. If all of us think about what we can put in, rather than what we can take out and we all have enlightened self-interests that the whole thing has to work for us to be able to live the life we want. Then this country will move to the next level of performance.