Clem Sunter: SA at economic crossroads – Election ’24 parallels pre-94 watershed

South Africa is home to one of the world’s foremost scenario planners – an Oxford PPE and erstwhile top business executive who played a huge role in the late 1980s in steering the nation towards the High Road of negotiation, rather than a widely anticipated civil war. Now in his late 70s, futurist Clem Sunter’s passion for the country is undimmed. But he fears that today’s political and business leaders are not appreciating the arrival of the second watershed that was highlighted in the original High Road Low Road scenarios three decades back. In this absorbing interview he explains to BizNews’s Alec Hogg what’s really at stake in Election 2024. In short, that it’s “the economy, stupid…” and without a 1980s-type refocus, this time to promote entrepreneurship, all of the Young Democracy’s gains since 1994 will be lost and an economic wasteland awaits. – Alec Hogg

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Relevant timestamps from the interview

  • 00:00 – Introductions
  • 00:50 – Clem Sunter on the books he’s authored
  • 02:25 – Sunter on his philanthropy
  • 03:12 – Sunter explains his flag watching
  • 05:10 – On South Africa’s skilled-worker exodus and the importance of the youth
  • 07:31 – On the upcoming 2024 national election
  • 10:18 – On the relationship between Big Business and small businesses
  • 12:24 – On Michael Cardo’s Harry Oppenheimer biography
  • 13:30 – On the need for a modern Harry Oppenheimer in SA
  • 14:34 – On if his advice is being heeded
  • 15:46 – On if he sees parallels today to 1994’s watershed election
  • 17:33 – On the path to the “people’s economy”
  • 20:59 – On if any political parties in SA understand the need for an entrepreneurial economy in SA
  • 22:22 – Concludes

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Edited transcript of the interview

Alec Hogg: There’s a recognisable face if ever there was one. Clem Sunter has been advising South Africans about the future for decades now. What you might not know is that Clem was actually a top businessman. He ran Anglo American’s gold and uranium division, which was the biggest gold producer in the world at the time. He was also chairman of the Anglo American Chairman’s Fund. But nowadays, he is known for his scenario planning, writing, and much more. Today, we’ll be picking up on his latest flags, but first, Clem, how many books have you written?

Clem Sunter: Well, including the Fox trilogy, which consists of three previous books, I have written around 20 books. Some of them have been very successful. The first one, “The World and South Africa in the 1990s,” introduced the whole concept of high road and low road scenarios to South Africans in 1987. That book was a really big hit. And of course, we did take the high road in 1990 with the release of Mandela. So yeah, that was probably the most successful book that I’ve written. But it’s important to note that all the research for that book was done by very clever people in Anglo, like Michael O’Dowd and Bobby Godsell, and by a superb London team led by one of the great futurists in the world, Pierre Wack, a Frenchman who had been the head of scenario planning at Royal Dutch Shell. I used their material to write the book, which hopefully influenced the debate in South Africa at the time about our future.

Alec Hogg: Not hopefully – definitely did. And we have a lot to thank you for. I received an email from someone who asked to remain nameless, but who was involved with you in writing a book. He had a wonderful experience and mentioned that you also donated your royalties to charity. Is that a normal practice? It seems like writing books doesn’t generate much income, so donating it all to charity may be a step too far.

Clem Sunter: That was before I retired from Anglo-American formally in 2002. We were simply not allowed to earn external income. So yes, I absolutely gave all the royalties from the books to charity before then. But I’m a genuine author now.

Read more: Clem Sunter updates his flags: SA’s binary 2024 Election; World also on a knife edge

Alec Hogg: Well, from the Fox trilogy and the concept of encouraging us to be more like foxes than hedgehogs, you’ve also developed flag watching. Before we delve into the update on the latest flags, could you explain the relevance and what it all means?

Clem Sunter: Certainly. In 2015, I wrote a book called “Flag Watching” because people kept asking me how to identify which future scenario is most likely. I realised that flags, indicators of increasing probability for each scenario, were just as important as the scenarios themselves. So in the book, I emphasised that before diving into scenario writing, the first step is to identify the real driving forces that are shaping the present and future, both globally and in specific contexts like South Africa or a company’s markets. In my facilitation sessions, I now ask participants to identify the flags currently influencing their game and discuss the potential consequences. It’s a revealing conversation as different people come up with different flags. Once we’ve had that discussion, we can explore the future and assess the positive and negative scenarios that arise from those flags.

Alec Hogg: Something that’s of great concern to both of us is the loss of skills in South Africa and the number of people who have emigrated. Have you encountered parents, grandparents, or even young individuals seeking guidance on which flags they should be monitoring?

Clem Sunter: Not really, Alec. I’ve primarily worked with companies, both locally and internationally, to identify flags in Europe, America, and Australia. I’ve tried to avoid giving personal advice on whether individuals should stay or go. However, one consistent flag I’ve always highlighted is the impact of aging populations on an economy, represented by the grey flag. Pierre Wack first brought this to my attention in 1988 when he said that if property prices in Japan crashed, the country would struggle to grow due to its aging population. And in 1990, that prediction became a reality. Japan went from a 7% to 8% annual growth economy to zero to half a percent growth. We are now witnessing similar trends in Europe, particularly in countries like Greece, Italy, and the UK, as well as in China. Last year, China’s population declined by a million people, which was a significant flag indicating potential challenges ahead. On the other hand, the United States has a young and resilient population due to its immigration policies, and India also has a youthful population that could potentially become the largest economy in the world in the latter half of the century. Africa and South America also have young populations, but their potential for economic growth depends on the quality of governance.

Alec Hogg’s notes from the interview

Alec Hogg: And that’s perhaps the most critical of your five flags for South Africa. Let’s focus on it—the 2024 election, which could potentially be a binary one.

Clem Sunter: Yes, currently, and this was outlined in the book I co-authored with Mitch Ilbury titled “Thinking the Future,” published by Penguin two years ago, we presented two scenarios for South Africa. The first is the people’s economy. The real challenge now is not just achieving democracy, as Mandela and de Klerk successfully accomplished in the early 90s (which exemplifies the power of the leadership flag, by the way). Today, our challenge lies in building an economy that truly reflects our democracy. We still have significant barriers between the mainstream economy and the informal sector, hindering the growth of young entrepreneurs. The positive scenario revolves around prioritising this issue in the election and ensuring that the government formed after the election commits to addressing it. On the other hand, the cautionary tale scenario depicts a future where the kind of riots we witnessed during the pandemic in KwaZulu-Natal become increasingly common, leading us down a path of misery. This is an opportune moment to present these two scenarios and ask political parties what concrete steps they will take to develop an economy we can be proud of. It will require significant collaboration between government and the private sector to bring about this change. Hence, one of the flags to watch is the extent of serious discussions between politicians and business leaders. While some progress has been made, these discussions need to intensify to foster the entrepreneurial economy that I consider vital for the people’s economy.

Alec Hogg: But when you mention business people, it’s almost expected that those in big business are opposed to entrepreneurship. They prefer the status quo and the power they hold. They don’t necessarily welcome smaller players nibbling at their market share.

Clem Sunter: Absolutely right. This is true worldwide. Furthermore, big businesses, particularly in the high-tech sector, tend to acquire small businesses that could potentially threaten them in order to obtain their innovative apps or devices. There is a natural tendency for big and small businesses to compete in a manner that disadvantages the smaller players. However, in our original work for the high road scenario, we highlighted Japan’s dual logic economy, where large corporations worked closely with small businesses. For instance, Toyota outsourced the manufacturing of individual car parts to small businesses, which were then assembled and branded by Toyota. This kind of partnership between big and small businesses must be a part of our future economy. In fact, during the mid-90s, we initiated a project at Anglo where we sought out small businesses near our mines that could supply goods for our underground operations. The project, called the Zimele project, was successful, leading to the prosperity of several small businesses and the expansion of their client base. This type of partnership between big and small businesses is what we need for the future.

Read more: Unveiling the extraordinary life of Harry Oppenheimer – diamonds, gold, and a legacy defined by power and politics

Alec Hogg: Anglo was truly ahead of its time, and it’s encouraging to see people starting to recognise that. On a different note, have you read Michael Cardo’s biography on Harry Oppenheimer?

Clem Sunter: I’ve read parts of it, and yes, he was a remarkable individual. One of the things that made Harry Oppenheimer exceptional was his entrepreneurial instincts. He had a keen sense of whether an investment was a good or bad idea, and he would provide his opinion to the Anglo executive. Moreover, he was one of the few business leaders who spoke out against apartheid before South Africa transitioned to democracy, recognising it as an evil system that needed to be dismantled for the country to rejoin the global community. Working for the company during his tenure was truly a pleasure.

Alec Hogg: It’s often said by people like Rob Hersov, “Where is the Harry Oppenheimer of today? Is there anyone?”

Clem Sunter: It’s a valid question. We need a few individuals in the private sector to advocate for an inclusive economy that can sustain our democracy. That’s the direction I want the debate to take during the 2024 election. This election is an absolute tipping point in our destiny. Regardless of the alliances formed between political parties, we should be discussing the kind of economy that can instil hope among young people and ensure the long-term sustainability of our democracy, rather than falling into the cautionary tale of decline and wasteland. Initiating that discussion is critical at this moment.

Alec Hogg: You’ve been on this path for quite some time. Is anyone listening?

Clem Sunter: I’m not sure. I conduct webinars where people ask me to share my insights, and I write the occasional article. However, it’s not like the situation in 1986-87 when Anglo produced research that led to widespread conversations. Back then, I traveled around the country with two colleagues, Jim Buys, our economist, and Michael Spicer, head of corporate relations. Our presentations truly changed the conversation from one of pessimism and civil war to considering the high road of negotiation and peaceful reintegration into the global community. The efforts I’ve made in recent years haven’t achieved that same scale, but I’m doing my best, despite being at a fairly advanced stage of my career.

Alec Hogg: Are you observing parallels then?Between that time of taking the high road of negotiation

Clem Sunter: Yes, absolutely. I see clear parallels. In the late 80s, our team, particularly Bobby Godsell and Michael O’Dowd, created a remarkable diagram. At the beginning, it presented the choice between becoming a democracy or adopting an artificial system, like the proposed tricameral parliament. We thankfully took the path of negotiation with the genuine leaders of our country. Prophetically, they included a second crossroads in the diagram, indicating that if we failed to achieve substantial economic growth rates and significantly reduce unemployment to a level between 5 and 10 percent within 10 to 20 years, we could potentially reverse the political progress we had made and regress toward a wasteland. And that is precisely where we find ourselves today—the economic crossroads for South Africa.

Read more: Clem Sunter: Time for the DA to rebrand itself

Alec Hogg: So, to move toward the people’s economy, we need to embrace entrepreneurship and encourage the participation of all individuals, regardless of age or race. Am I understanding your perspective correctly?

Clem Sunter: Well, the point is that there are a couple of things I feel strongly about. In order to become a winning nation, we must have quality infrastructure in terms of health, education, electricity, railways, ports, and more. The flag to watch is whether we will witness a genuine partnership between the government and the private sector in addressing these issues, including resolving problems with Eskom and allowing the private sector to contribute to South Africa’s electricity generation. That’s a significant task at hand. Additionally, we need to go all out in creating an entrepreneurial economy. This means big businesses must play a substantial supportive role for small businesses. The banks should collaborate to develop systems that enable micro-finance for small businesses, even if it’s considered expensive. Bangladesh’s Grameen Bank demonstrated that such initiatives can be successful, and we can adopt similar approaches here. We could explore the possibility of establishing e-stock exchanges in major cities, where businesses can leverage crowdfunding, similar to eBay, to make their ventures work. Furthermore, schools should start teaching entrepreneurship to prepare children for the future rather than the past, as work has changed. In the past century, large companies like the mining industry created numerous jobs, but with automation, robots, and artificial intelligence, the landscape has transformed. America currently boasts an unemployment rate of 3.5% because it is the most entrepreneurial country. People pursue their own ventures, sometimes juggling multiple businesses or jobs, leading to a lower unemployment rate compared to Europe. The flag is that work has evolved, and if we want to reduce our high unemployment rate, we must fully support and encourage young people to become entrepreneurs. As we’ve discussed previously, we should examine successful entrepreneurs in the informal sector, like GG Alcock, who have studied the township economy, and find ways to help them transition into major players in the formal sector.

Alec Hogg: So when we cast our votes in 2024, we should consider factors beyond the usual ones. Specifically, we need to assess the level of support for entrepreneurship, as we’re at a crucial turning point. Is there any political party that truly grasps this concept yet?

Clem Sunter: I don’t think so. That’s why I wrote an article about the DA (Democratic Alliance) and suggested a rebranding. Currently, no party is passionately embracing this concept and making it a priority. It’s unclear what it will take for people to see the importance of entrepreneurship. There hasn’t been much political discussion on this topic, despite it being one of the most critical concepts right now. We have a small business department and efforts to reduce red tape, but we need a focus on how to enable young people to become successful entrepreneurs, just like in the 80s. Extending opportunities to all should be a key aspect highlighted during campaigns. It’s not enough for parties to make negative comments about each other; they need to present their plans and demonstrate what they will do if elected. Particularly now, in order to tackle unemployment, we must create an entrepreneurial economy.

Alec Hogg: Clem Sunter, futurist, scenario strategist, and national treasure, it’s been a pleasure speaking with you once again. I’m Alec Hogg from BizNews.com.

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