Michael Jordaan is Chief Executive Officer of Montegray Capital Pty Ltd. and one of South Africa’s true thought leaders. In this Biznews interview he shares his view on the state of the world. From the US election to the GNU and the South African economy. He also gives updates on the businesses he is involved in namely Bank Zero and Rain. Michael highlights his optimism for the coming decade. This is one not to miss.
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Edited transcript of the interview ___STEADY_PAYWALL___
Bronwyn Nielsen (00:01.576):
I’m wanting to get a little insight into the world of Michael Jordaan as it is today. So Michael, over to you.
Michael Jordaan (00:12.172):
Well, thank you very much for having me, Bronwyn.
Bronwyn Nielsen (00:16.382):
Let’s talk a bit about how you’re looking at the landscape. One thing we know for sure is that it is very complex, with multiple challenges but also numerous opportunities unfolding all the time. So for you at the moment, Michael, what is absolutely the most important thing?
Michael Jordaan (00:40.674):
Well, we’re all South Africans, right? And we’re proud to be South Africans. It’s great when we win the Rugby World Cup, but unfortunately, the challenges we face as South Africans are far more severe than that. It’s unemployment and poverty. There’s a lot of violence and insecurity. To fix all of these, we’ve got to grow. So I’d say the most important thing for South Africa is to make the right decisions, maybe sometimes tough decisions, but we’ve got to get this economy to grow. That’s how we can create jobs and reduce all these societal tensions we have.
Bronwyn Nielsen (01:15.256):
And that’s a key theme that’s really emanating in so many boardrooms at the moment—the theme of creating jobs. But we’re not moving the needle. We hear about all the work that the private and public sectors are galvanizing and starting to do together, but it’s not translating into job growth. Michael, from your bird’s-eye view, what are we getting wrong?
Michael Jordaan (01:43.308):
Well, growth is a choice. Growth isn’t something that just magically happens. Companies don’t just grow. If you don’t take tough decisions as an executive, place bets on the table, and make trade-offs, then you don’t grow. Now, I say it’s a choice, but it’s also not a secret. If you look at the countries in the world that are doing well, they follow clear guidelines on what you need to do to grow.
These are things like having respect for property rights, building institutions that work well, and investing in growth-enabling initiatives like education. So we know what we’ve got to do. It’s just a matter of making sure we do the right things. I have to tell you though, Bronwyn, that I’ve become far more positive about the next decade than the past one. I do think we can be a bit tough on ourselves.
I’d like to think it’s perfectly possible that South Africa will grow at around 2.9% over the next decade. Now, if we do that, it’s still not enough—it needs to be 4, 5, or 6% to make a big dent in unemployment. But it will be significantly better than the last decade, and we will be creating some jobs at least.
Bronwyn Nielsen (03:01.298):
What’s fuelling your positivity? As you said, you are more optimistic about the coming decade than you were about the previous one. What underpins that optimism, Mike?
Michael Jordaan (03:13.516):
Well, first of all, you can rely on other people to do all the hard work and studies. Now, there’s a particularly interesting analysis of global growth, or at least the top 20 economies globally, done by Ray Dalio, a famous hedge fund manager who’s done incredibly well for his investors and for himself by doing deep research and understanding historical precedents. He recently released a report that considers more than 80 indicators for each of these countries and compares the expected growth for the next decade.
Now, there are the usual suspects—India will do very well, as will Indonesia. Interestingly, so will the UAE and Saudi Arabia. But pretty close to the top is South Africa, with 2.9% growth predicted for the next decade. What’s also interesting from his analysis is that the US and the UK will struggle at just over 1%, and most of Europe will actually see zero or negative growth. So the world is going to change quite dramatically. Emerging markets are definitely going to outperform developed markets, and South Africa is an emerging market after all.
Of course, I wish we could make tougher decisions to grow at a higher rate, but I think most South Africans will be happy if we achieve 2.9% on average for the next decade. It’ll be a good place to be.
Bronwyn Nielsen (04:35.294):
You’ve almost answered my next question, which was how South Africa tallies up against other emerging markets. Do you believe we’ll hold our own?
Michael Jordaan (04:46.818):
The world is “easternizing”—power and economic power are moving to the east. That’s where we’ll see the most growth: in the East, the Middle East, and even parts of Northern Africa, closer to Saudi Arabia and the UAE. We’re likely to outperform emerging markets in South America. Emerging markets aren’t just one homogeneous group, though—it’s diverse.
But once again, it comes down to doing the right things. In South Africa, for example, we have to fix energy. Energy is crucial for any economy to grow. We’ve come through a very tough period of load shedding, which—touch wood—has improved a lot. Much of that improvement came from the private sector installing significant solar capacity. While the urgency to do so has decreased somewhat, you can still see a lot of solar installations happening, not because it’s green, but because it’s the cheapest form of energy available.
Energy is important, and as an export nation, we also need to fix our railways and ports. I’m encouraged by the progress there. We’ve also seen big reforms in home affairs, which is critical for getting the right skills into South Africa. Skilled people don’t take jobs—they create jobs. So, one by one, we are starting to do the right things that will make us outperform. It’s easy to be cynical, but I’m nailing my colours to the mast: 2.9% growth for the next decade.
Bronwyn Nielsen (06:25.792):
From a political perspective, 2024 has been a pivotal year globally. Almost half the world has gone to the polls this year, can you believe it? Most elections are behind us, but there’s one key one ahead: the US election. Any thoughts you’d like to share on that front?
Michael Jordaan (06:47.138):
Well, first, an innovative statement made by George Soros: the US election is so important to the rest of the world that we should at least have a 10% vote in it. If the rest of the world had 10% of the vote, the outcome might be significantly different, and it might help the US maintain its important global role—the so-called “Pax Americana.”
Secondly, I think we’re now seeing the downside of a two-party system. People are essentially divided into two tribes. It’s said that Democrats now marry only Democrats and Republicans only marry Republicans. There’s very little room for bipartisan middle ground, and that’s a real problem.
Thirdly, amid all the electioneering and concerns about everything from abortion to border control, no one seems to be addressing the real issue, which is the incredible debt the US is accumulating—far more than its economic growth. This year, the budget deficit will be 6%. Now, it sounds great that America grows at 3%, but it’s not good if you’re spending twice that amount in debt. Neither party seems to have a solution for that, and that’s why I believe power is rapidly shifting from the West to the East—at least economically.
Bronwyn Nielsen (08:28.116):
So, are you a betting man? Would you make a prediction on the US election, or will you just let it unfold?
Michael Jordaan (08:39.228):
Are you challenging me to say who’s going to win the election?
Bronwyn Nielsen (08:42.686):
I’m trying, in a roundabout way.
Michael Jordaan (08:47.274):
I’ll go with what the markets are saying. It’s interesting—there are pollsters who predict election outcomes, but there are also markets where people put their money where their mouths are. I tend to follow the people with skin in the game, and at this stage, it looks like Harris might win the popular vote, but Trump has a better chance of winning the electoral vote. This is a quirk in the system—they haven’t adjusted it for population distribution since the country’s founding.
So, I think we’re likely to see a Trump victory. That will create uncertainty, primarily because it’s not always clear what Donald Trump is going to do—even he doesn’t always know. So, we’re going to get policy uncertainty. Personally, I hate being in one of two camps. I’d prefer to debate issues individually and based on facts, whether it’s abortion, gun control, globalization, or tariffs. That’s the big pity: regardless of who wins, America is stuck in two ideological camps. That’s not a good way to run a country or a company.
Bronwyn Nielsen (10:02.474):
I want to bring it back to your investments and talk a little about Bank Zero. How are things going there?
Michael Jordaan (10:12.270):
Very well, thank you. It’s small, but it has launched. Other new banks like Discovery Bank and Tyme have spent billions getting up and running. Ours is a much smaller enterprise
—if you exclude the cost of developing our own technology, we probably spent about 60 million on it. We now have about 30,000 clients and haven’t spent a cent on marketing. Most clients come through word of mouth.
We’re looking to grow this by improving the technology all the time. One of the key challenges, though, is client acquisition. To do this, we need to spend some marketing dollars, which is why we’re doing a capital raise. We want to grow faster than the 30,000 clients we have right now. Ultimately, we want to expand to small businesses because that’s really the gap in the market.
Banks tend to focus on very big businesses or retail, but they overlook the SME market, which generates more jobs than any other part of the economy. We want to be a force for good in the country. So, we’ve got to get the capital raise done to spend money on marketing and customer acquisition.
Bronwyn Nielsen (11:26.076):
It’s incredibly difficult in a space dominated by four or five large financial institutions. What are you offering that differentiates you?
Michael Jordaan (11:39.728):
What differentiates us is that we don’t pay anybody. You won’t see a Bank Zero employee on this podcast or any marketing. So, what we save on marketing dollars, we pass on to clients in the form of zero fees. That’s our differentiator. The account is completely free—no debit order, no EFT fees. All we ask is that clients be self-servicing. You can’t call us—there’s no call center. All interactions are done via the app, so it’s ideal for people who want to self-serve, and for that, we give them a completely free account.
Of course, we have small technology fees for things like cards and, eventually, loans, but the current account itself is zero fee.
Bronwyn Nielsen (12:35.798):
That sounds incredibly innovative. You’re really focusing on a specific target market, and it’s about clients who are tech-savvy and can self-serve.
Let’s move on from Bank Zero for a moment and talk about your other investments. You’ve got this diverse portfolio in your private equity business—what excites you the most right now?
Michael Jordaan (12:58.984):
The most exciting thing for me, Bronwyn, is that it’s a time of extraordinary change. A lot of businesses are facing disruption, and it’s happening at a faster rate than ever before, thanks to technology. We’re also seeing huge movements, with large parts of the economy moving to platforms, and artificial intelligence (AI) is going to have an even bigger impact than the internet did.
So, what excites me are companies that are embracing these changes and running toward them, instead of being afraid. I invest in a range of different companies, from fintech to edtech to insurtech, and in each case, we’re looking at how technology can provide a better customer experience, a cheaper product, or even a more scalable solution.
I get particularly excited about companies that are solving big problems in society. One of my investments is in a company called Rain, which is trying to provide more affordable data, something we know South Africans need.
Another exciting area is energy. We’re on the cusp of an energy revolution with solar, wind, and even storage technologies like batteries becoming cheaper. I think in the next decade, the energy landscape is going to change dramatically, and we’ll see more private-sector involvement, which will also reduce our reliance on fossil fuels.
Bronwyn Nielsen (14:20.764):
That’s so relevant. You touched on two very important areas: connectivity and energy. Both are pivotal for the country’s growth. When it comes to energy, we’ve talked about the crisis that has plagued South Africa—what’s your view on how the private sector can step in to solve the problem? And what role do you see for government in this?
Michael Jordaan (14:46.182):
Well, firstly, I think the private sector is already stepping in. You see it with the significant amount of solar panels on residential and commercial rooftops. This is great, but it’s not enough. What we need is grid-scale solutions, and that’s starting to happen too. The government has finally allowed the private sector to build larger projects, and this will help alleviate the load on Eskom.
But it’s important to note that the government still plays a critical role in the transmission network. We need to ensure that Eskom’s grid remains intact and continues to operate effectively, even as we transition to renewables. So, it’s a partnership. The private sector is doing what it can by investing in generation capacity, but the government still needs to maintain and upgrade the infrastructure to make sure that energy can get where it’s needed.
The other area where the private sector can contribute is in battery storage. Solar and wind are intermittent—when the sun doesn’t shine or the wind doesn’t blow, you still need power. Batteries can help store energy for those times, and we’re starting to see significant advancements in this technology. This is something I’m watching closely.
Bronwyn Nielsen (16:08.358):
So, in terms of your portfolio, are you actively looking to invest more in the energy sector?
Michael Jordaan (16:15.852):
Absolutely. In fact, I’ve already made some investments in energy. I believe the next decade will be defined by two big shifts: the digitization of many industries and the energy transition. If you want to talk about growth opportunities, that’s where they are.
The world is moving toward a cleaner, more sustainable future. Companies that are helping to drive this change—whether it’s through renewable energy, storage, or even electric vehicles—are the ones I’m interested in. It’s exciting to see these innovations happening, not just globally, but right here in South Africa too. We’ve got incredible potential, particularly when it comes to solar.
Bronwyn Nielsen (16:53.548):
I can hear your enthusiasm, Michael. It’s evident that you’re looking ahead and focusing on growth and sustainability, which are key themes for the future.
Let’s pivot slightly—what advice would you give to young entrepreneurs who are entering this very complex and challenging business environment?
Michael Jordaan (17:14.662):
My advice to young entrepreneurs is pretty straightforward: just start. I think a lot of people overthink things—they come up with elaborate business plans, they try to perfect everything before they launch, and they get stuck. The reality is, you learn by doing. So, my first piece of advice is to get started and iterate as you go along. You’re going to make mistakes, but that’s okay; just make sure you learn from them.
Secondly, focus on solving real problems. If you’re creating a product or service that genuinely solves a pain point for people, you’re much more likely to succeed. Don’t just chase trends—look for where you can make a difference.
Lastly, surround yourself with the right people. No one succeeds alone, and having a strong team, mentors, and advisers can make all the difference. Collaboration is key, and I think that’s often overlooked by entrepreneurs who try to do everything themselves. So, be open to learning from others and build a network of people who can support you.
Bronwyn Nielsen (18:10.478):
That’s great advice. Michael, just to wrap up—what’s next for you? You’re obviously very involved with your investments, but do you have any new ventures on the horizon?
Michael Jordaan (18:23.584):
I’m always looking for new opportunities, Bronwyn. Right now, I’m focused on scaling the businesses I’m already involved with, especially Bank Zero and my investments in the energy and tech spaces. But I’m also keeping an eye on what’s happening globally. The world is changing so quickly, and I think it’s important to stay agile.
One area I’m increasingly interested in is artificial intelligence. We’re only just beginning to scratch the surface of what AI can do, and I believe it’s going to have a massive impact on many industries. So, I’ll definitely be looking at how AI can be leveraged within my existing portfolio and possibly for new ventures as well.
But for now, my main focus is on making sure that the businesses I’m involved with are set up for success in this rapidly changing environment. It’s a really exciting time to be in business, despite the challenges.
Bronwyn Nielsen (19:15.598):
Well, Michael, it’s been fascinating to hear your insights today. Thank you so much for sharing your thoughts with us. We wish you all the best with your ventures, and hopefully, we’ll be chatting again soon about your successes.
Michael Jordaan (19:26.986):
Thanks, Bronwyn. It was a pleasure to be here.
Bronwyn Nielsen (19:30.458):
And that was Michael Jordaan sharing his insights on everything from South Africa’s growth potential to the future of energy and technology. Thanks for watching.
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