Alec Hogg answers questions about South Africa after Election ’24
In a fund-raising talk for Rotary in Hermanus last week BizNews editor Alec Hogg answers the pressing questions of the BizNews tribe.
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Edited transcript ___STEADY_PAYWALL___
00:00:12:06 – 00:00:14:20
Question 1
I'm just curious what your take is on.
00:00:14:22 – 00:00:26:04
Question 1
Something that was governing all of our lives: a killing business, the economy, and Eskom. And how it's just sort of become a non-event. What do you think has happened?
00:00:26:06 – 00:00:54:16
Alec Hogg
Wonderful question. I had the privilege of meeting Nteto Nyati, CEO—sorry, the chairman of Eskom, some years ago. He came to our offices in Bryanston for an interview. Yeah, he wrote a really good book, Betting on a Darkie, I think it's called. He is a class act. So he was appointed as chairman of Eskom.
00:00:54:18 – 00:01:23:00
Alec Hogg
It was when Andre de Ruyter was there for the very first time you had Eskom engaging with its shareholder, i.e., the government. He tells me that, up to today, the previous meeting that Eskom had with the government was five years earlier. And Kitty, would you bring the media into the mix, and you have headlines where the one says it?
00:01:23:02 – 00:01:49:06
Alec Hogg
Headline writers like to read the stories, so they might be exaggerating a tad when they put those headlines together. But if you're on the other side of the headline, it's not very nice to read it. So you had this antagonism between the government and Eskom, which goes back many years, and a lack of support. He tells me, and we read that in Andre de Ruyter's book as well.
00:01:49:08 – 00:02:11:16
Alec Hogg
It was obvious what was happening, but there was no support from the state. You know, when the state started attacking Markus Jooste as a cohesive unit, they finally got that report together, which explained everything. And a day later, he shot himself because the game was up. It's a very similar thing to Eskom.
00:02:11:18 – 00:02:37:24
Alec Hogg
Now you have the whole might of the state moving in the same direction. System data is going to be at the, he'll be with us on the 12th of September. So he can say it all in his own words. But if you go to his track record, he took over from the Venter's company, Altron, at a time when it was not doing that well.
00:02:38:01 – 00:03:07:12
Alec Hogg
And he has been one of the great wealth creators for shareholders during the five or so years that he ran that business. He is a guy who's run the South African offices of Microsoft. He's been well educated but also went into the American corporate structure, working for a number of other multinationals in the United States.
00:03:07:14 – 00:03:31:09
Alec Hogg
And as I say, he's a class act. So I think you've got, on the one hand, when he came in, he said the problem here is that we tried to do it very much on our own. How do you, how do you, deal with the mafias that were just living on what the Guptas had pioneered if you don't have the support of the ISPs or the state apparatus?
00:03:31:11 – 00:03:55:18
Alec Hogg
So it's like I remember reading so many of the comments ahead of the election, and many members of the public said, "Oh, just wait for the 30th of May and we're going to have loadshedding. The game is going to be worse than ever." And as much as Mr. Nyati came out and said, "We are spending a fraction of the diesel that we were spending before, we are getting things together."
00:03:55:20 – 00:04:14:03
Alec Hogg
It's partly due to what Andre de Ruyter and Jan Oberholzer brought about, but it's also partly due to the fact that we actually did get our act together, genuinely speaking. And we never believed because, oh ye of little faith, you believed that 2024 was going to go the way that it would. No one could have called it.
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00:04:14:05 – 00:04:55:17
Alec Hogg
Now, who would've called 1994? Eskom at the moment is doing what it needs to do for now. We also have a massive injection from the private sector. Don't underestimate what the 12A—no, it's called 12E, a section of the Income Tax Act—where if you, as a private citizen, invest in a solar-powered company, you will get 25% back of all of your income tax reduction. It's a no-brainer.
00:04:55:17 – 00:05:10:20
Alec Hogg
We have quite a few partners who've been talking about this, our businesses. And you can go and watch the videos of Celtic Futures, and they explain how it is. You can then gear up for this, and why would they not do it if you get your ready bet and have a really good investment into the future?
00:05:10:20 – 00:05:31:12
Alec Hogg
For many years, that was an innovation that the government brought through. It was something where the government said, "We're in trouble. How are we going to fix this? We need South Africans to invest in it." And I'll leave you with this last thought: South African companies have about 1.5 trillion rand on their balance sheets in cash. It's extraordinary
00:05:31:14 – 00:06:00:21
Alec Hogg:
There's money sitting there. They have not invested. Who would have invested in the last 30 years? The money is sitting in cash. The minute that the South African corporate sector starts believing that this is for real, you have yet another underpinning to the brighter future that South Africa has. We've got Eskom. Eskom seems to be right. We'll find out more from Nteto on the 12th.
00:06:00:23 – 00:06:42:23
Alec Hogg:
But the other big thing on this is that those little levers that can turn, those little dials that can be turned up, have been forgotten for so long. Oil and gas in South Africa. We've also got on the 12th. Here's the story you need to pay attention to: South Africa's gas finds. The DA's James Lorimer came with us to London, to an event in London, and told the international community about this issue. They're still not kind of buying it, but if you read any international media, you will find that the hottest oil and gas property right now is Namibia.
00:06:43:00 – 00:07:00:17
Alec Hogg:
It's the money that's going into there, and maybe it is mined, right? That's why Namibia is now saying to the rest of the world, "Yes, their visas, come to our country." Are you seeing that this week? The tide on the rest of that. Namibia is only a couple of million people.
00:07:00:19 – 00:07:22:01
Alec Hogg:
They are going to be the next Norway. Norway is the richest country on this. So Namibia is moving in that direction, but Namibia's gas finds this week. These massive gas finds. Well, if you know a little bit about our geography on the west coast of South Africa, the way that oil and gas works is it goes from a river.
00:07:22:03 – 00:07:52:16
Alec Hogg:
So the Orange River in this case, unfortunately, bends downwards instead of being straight. So as it bends downwards, that's how your boundary for your ocean is vacated. And if you could imagine Namibia on the top and South Africa below it, the Orange River comes around. It bends downwards. All of the gas fields are in this area, where the rest of the world just wants a piece.
00:07:52:18 – 00:08:31:05
Alec Hogg:
So to the south of that there's very little exploration. Why? Because South Africa's legislation has been so bad. Zuma wanted 80% for the state and only 20% for you, or 30% for those who were prepared to come and seek your gas wells or sink a well. With a more sensible policy, the whole geology from the area where Namibia has its gas finds all the way down the west coast to Cape Town, we have a long way to go, but it's exactly the same geology and exactly the same potential.
00:08:31:07 – 00:08:54:21
Alec Hogg:
When they sink a gas well or an oil well in the world anywhere, the chances of getting something are one in ten. In Namibia, it's nine in ten. Those are the realities. We've got the stuff here off the southern Cape coast as well, and with the East Coast, there is a lot of it. But on the 12th, we've got Don Ncube coming.
00:08:54:21 – 00:09:22:21
Alec Hogg:
Don was one of the original entrepreneurs who brought black business into South Africa back in the early 90s. He was the very first black director of Anglo American. He started a company called Real Africa Holdings. You might recall it; it made billions of rands. And unlike the other guys who hang on to it and use the money for themselves, he said this was an empowerment vehicle.
00:09:22:21 – 00:09:45:03
Alec Hogg:
So he liquidated it and gave the money to all the thousands of people who had participated, or the black people who participated, getting a big hit star. Don is the chairman of a company called Kinetco, which, as James Lorimer tells me, is the only business that he's ever revisited. He's got shares in Kinetco listed in Australia.
00:09:45:05 – 00:10:08:00
Alec Hogg:
Kinetco has got the license to exploit gas in Mpumalanga. And as good as Namibia is with its nine out of ten, Kinetco hits ten out of ten when it puts down a gas well. James reckons the gas boom that is coming for South Africa, he likens it to the gold boom in the Witwatersrand or the diamond boom in Kimberley. But what stopped it? Stupid legislation from a government with absolute power and absolute corruption.
00:10:08:01 – 00:10:24:06
Alec Hogg:
Yes.
00:10:25:05 – 00:10:28:05
Question 2:
And it's crazy.
00:10:28:07 – 00:10:34:18
Alec Hogg:
Sorry to come to the microphone with.
00:10:34:20 – 00:10:59:00
Question 2:
South Africa's greylisted right. How long will it take, do you think, for South Africa to get itself in order so that when we need to borrow money, the lenders will be very apprehensive, we imagine, because of the greylisting?
Alec Hogg
00:10:59:02 – 00:11:29:07
Okay, so the gray listings are a very interesting scenario. We know that there's a lot of politics in it as well. FATF, which is based in Switzerland, is a multilateral body with lots of people involved in it. We know that our country has been much more open to facilitating funding for radical groups in the Middle East.
Alec Hogg
00:11:29:09 – 00:12:07:01
We know from our former foreign minister and the policies that we propagated on the global stage. We also know that this is a very, very serious issue, and it's been building in this country for decades. It's so very interesting. You know, in 2016, 2015-2016, before we decided that it was probably a good idea to live in another country for a while, what was happening in this country was pretty frightening.
Alec Hogg
00:12:07:03 – 00:12:15:11
If you were in the media, you knew it, and we published it continuously. We were privy to a lot of information that we didn't publish, but the basics were that the Guptas were sending money via Transnet deals in China, via deals with anyone else in the world. They were sending money outside of this country at an alarming rate, rubber-stamped along the way by friends within the Reserve Bank.
Alec Hogg
00:12:48:22 – 00:13:10:01
So that was where we were coming from as an international community. It took a heck of a long time to act on this. We know that Peter Hain did an incredible job in Britain, and he is a South African. Although he's been a member of the British cabinet and lives in Britain, he still feels very strongly about this. The apartheid activist was forced to leave the country, and that's why he left. But he stood up in the House of Lords when no one was interested and started attacking the Guptas and the corruption. So those pennies took a long time to drop.
Alec Hogg
00:13:10:05 – 00:13:43:10
When they dropped, the state finally took action. As often happens in bureaucracies, there was a long delay, and by the time the Guptas were gone and Zuma was gone, we were starting to make progress on it. The Treasury is very transparent about the process. You can get the chapter and verse on where we are in fixing ourselves and how far along the process we are. So, there's a process. It took a long time for us to get onto the gray list. It won't happen that we get off it automatically.
Alec Hogg
00:13:43:12 – 00:14:06:11
I remember initially the Treasury guys said it should be last year. Well, it's taken longer than they thought, but we are moving in the right direction. Even in the darkest days, there were two government institutions that were unimpeachable: the Treasury and the Reserve Bank. That's why Zuma tried to take over the Treasury on December 15, 2015. If you recall, "Nenegate" and all of that.
Alec Hogg
00:14:06:16 – 00:14:34:20
What people forget is that Des van Rooyen walked in with two Gupta lackeys to make sure the money got out of our Treasury. The other institution was the Reserve Bank. Despite the worst, these two institutions have been bulwarks. We can draw on that. We can also draw on the role that civil society has played over this period. And going back to what Magnus said about Peter Lynch, with gray listing, we are going in the right direction. So, it will take time. We just need to be a little patient on that.
Question 1
00:15:34:07 – 00:15:36:05
Good running, I think.
Alec Hogg
00:15:36:09 – 00:15:39:18
Sorry, we spoke briefly.
Question 1
00:15:39:20 – 00:15:42:19
Oil and gas. Let's move.
Alec Hogg
00:15:42:21 – 00:15:51:14
Towards the main topic. It seems that the Western Cape is…
Question 1
00:15:51:14 – 00:15:56:22
…under attack from Judy, Bahamas.
Alec Hogg
00:15:56:24 – 00:15:59:02
…with respect to all the capitalists sitting in…
Question 1
00:15:59:02 – 00:16:05:14
The room, I think if we look at. But Tom up would just pick it back Bay.
Alec Hogg
00:16:05:14 – 00:16:10:12
It opposes that bombing application. They for Montego is.
Question 1
00:16:10:14 – 00:16:14:00
Just around the corner, up the mountain.
Alec Hogg
00:16:14:02 – 00:16:18:11
Maybe if there's a prospecting application.
Question 1
00:16:18:11 – 00:16:19:18
For gold.
Alec Hogg
00:16:19:20 – 00:16:23:12
That, as that last week, the 15th.
Question 1
00:16:23:14 – 00:16:28:09
We submitted comments to the initial bar reports.
Question 1
00:16:29:13 – 00:16:34:23
So that's in our back garden. I'd like your comments and opinion on.
Alec Hogg
00:16:35:01 – 00:17:01:23
That in the Western Cape, please. I must say, I just love the Western Cape. Yeah. Taking interest, this active citizenry. If you translate what is happening here to what happened to that Eastern Cape, there is a poor guy called John, and not John Thompson. He married someone who was at school with a school kid, and Cheryl Thompson, Sarah Thompson, Faron Thompson.
Alec Hogg
00:17:01:24 – 00:17:29:09
What's his name? John. Anyway, this poor guy. He's in an NGO and he's been fighting just south of the KZN border. There have been murders and the Australian man is in there ripping the place to pieces. The people in the Western Cape get it. If you have active citizens like Gary, who could get that it's very close to your heart, you could stop anything. But if you have inaction, anything can happen. So I think that the junior miners being what they are, obviously, you know, there's another word for a crook. The Aussies tell me this. It's called the Perth entrepreneur.
Alec Hogg
00:17:29:11 – 00:17:57:08
So if you see that the company that's coming is listed in Perth by word, just don't stop. We have strong laws in our country. We have probably amongst the best laws in the world, but for 30 years we didn't apply them. You have NGOs that will stand up against the worst abuses. But that's only if those in the area kick in the Western Cape. It's a different world, a different part of the country. I'm so privileged to be living here because it is so different to a well, you know what? If you can't do anything about it, just let it go. Yeah, you know, you can do something about that. You do. So I wouldn't put money on those miners getting those licenses through.
Question 1
00:18:43:02 – 00:18:48:21
You see, I didn't see going to some light to the government of national unity.
Alec Hogg
00:18:48:23 – 00:18:56:12
Is not that look, I mean, obviously Nostradamus knew that.
Alec Hogg
00:18:56:14 – 00:19:22:22
But so far, so good. You know, we used to be the country where the. I think it was just Manchester that the worst never happens, but the best never happens either. And we worry ourselves sick, you know. Do you know what happened in the city? And I just go to those who that beautiful other thing that I mean what is blood spoken who were one this and they'd be perfect.
Alec Hogg
00:19:22:24 – 00:19:44:01
So they go to the Olympics. They play the first game, they lose. They play the second game, they lose. You see, the third game was an impossible task to beat Japan by 25 points, but they beat them by 40-9, I think it was. Yeah. So they make it into the quarterfinals last night. Most people expected them to play New Zealand.
Alec Hogg
00:19:44:03 – 00:19:52:18
You know, these useless blitz poker, whatever that means. In it, we did it.
Alec Hogg
00:19:52:20 – 00:20:10:16
We might just have a medal. You know, it was three medals in total, and most of them came scot-free, but two of them came for one person. So we might just get the good book of winning us a medal. That going for frights in the cities that may or may not win. But at least they got a shot at the gold or the bronze.
Alec Hogg
00:20:10:18 – 00:20:23:01
Now, for a country that got three medals in the last Olympics, this is quite cool. I don't know, I just believe that's…
Alec Hogg
00:20:23:03 – 00:20:47:07
In 2017, an updated biography came out on Cyril Ramaphosa. And in my misguided wisdom, because he hadn't yet taken over as president, I thought, well, it would be a good idea to do an audiobook, which I've never done before on this biography, which is thick. So a lot to the publishers and to the author.
00:20:47:08 – 00:21:04:19
Alec Hogg
They said, "No, fine, you can do it, no problem." And it took me three months to do the audiobook. Done. And if you've done it before, you know you need to be professional. Next time, because if you make a little mistake, you have to start again and then rewind, and the tech is not that good.
00:21:04:19 – 00:21:35:13
Alec Hogg
Anyway, after spending three months reading Ramaphosa's biography, I think I know a little bit about this guy. What I would sum it up with is that he loves the collective consensus. He doesn't like fighting with people. He's got this fake smile. You see that guy? He smiles, and you think, well, maybe there's something more to him.
00:21:35:15 – 00:22:04:18
Alec Hogg
So he's in a sweet spot where he has the support of smart people. Do you remember the upgrading that the intellect or the IQ upgrading of the South African cabinet has been dramatic? After this election saga, we got the wind behind us for a change.
00:22:04:20 – 00:22:31:07
Alec Hogg
Will the ANC survive? Another thing that Ramaphosa is really good at is putting his people in the right place at the NEC. He does. He controls it. Think of this just like a real basic thing. You are the leader of the Conservative Party in the UK. You go from 57% of the vote to 40% of the vote. What are your chances of surviving? Well, -100. He's gone from 50% of the vote to 40% of the vote and is being cheered. No vote of no confidence in the NEC. Why? Because he's got his people, but he's got constitutionalists and they know what the alternative is. So will they survive? They've survived up until that point.
00:22:55:21 – 00:23:24:03
Alec Hogg
Will they survive thereafter? I'm not a member of the NEC, but that's the potential. We mustn't get carried away in South Africa because we never know what's going to happen tomorrow. But at least we don't have to get ourselves into a little pity party and slashing of wrists when we talk to our grandkids or our children and say, "You can't stay in this country. It's a trash country," as Donald Trump calls it.
00:23:24:03 – 00:23:48:20
Alec Hogg
We get to a bit of a challenge with Trump. That's all. I bring America, not the rest. But the world is a crazy place. You know, I was in Washington. Jeanette and I were in Washington two weeks ago. There, on every street, there's at least one crazy person screaming and shouting, a homeless person screaming and shouting.
00:23:48:22 – 00:24:06:12
Alec Hogg
Then I asked my American friend, who is South African by birth, but who's got a house in Hermanus as well, but lives in California now. He came down to Washington to spend a bit of time with us. I said to him, "What's going on here?" He said, "Well, when Reagan was president, how many years ago that is, he decided he wanted to cut spending on all the mental institutions. Now there is no space in mental institutions anymore. So crazy people are now homeless and in Washington, you know, pretty comfortably."
00:24:06:12 – 00:24:32:12
Alec Hogg
But it's not like all the artists used to go from Johannesburg to Durban in winter because it was more comfortable, as you would say. The thing in Washington, another thing that struck me, you know, you've mentioned capitalism. Yeah, capitalism is not a great system, but as Winston Churchill said, or maybe it was about democracy, but you could have said it about capitalism: it's the best we've got. At least people are motivated to do the right thing.
00:24:32:14 – 00:24:54:03
Alec Hogg
But in the US today, you stand in a queue for ten minutes at one of the Smithsonian's. You get to the front of the queue, you put in your order for two cups of coffee, and they ask you for your card. What comes up on your card? And it's not just at the Smithsonian. At every single outlet that we went to in Washington, it's "What tip are you going to leave? 15%, 18%, 20%?" for the till boy.
00:24:54:05 – 00:25:14:20
Alec Hogg
And there is a little thing underneath where you can say no. But boy, if you press no, then you know what kind of service you're going to get. So that is capitalism gone nuts. So sometimes we've got to just thank ourselves that we are in a country that has challenges, but we do think of other people because we have to. When the overspent municipality has the right penguins, it's all the gift of the people who voted for them. We don't care about the guys into it.
00:25:50:21 – 00:26:17:17
Alec Hogg
It's actually probably going the other way and saying, "If we don't have a society where everybody is happy, we're going to have trouble, so let's address it." America is not like that. It's either command or you chant. We went to the curious shops in Washington DC, which is the black-majority city in the United States, partly because 30% of Americans are black.
00:26:17:19 – 00:26:47:04
Alec Hogg
So Washington is full of government employees, a disproportionate number of people. You walk into the souvenir shop and what caps do you see? "Make America Great Again," "Trump 2024," "I Love Donald Trump." Very few Biden caps. You get a sense of, "Yeah, you know what?" But it's a divided society. You buy those caps to wear them to show the other people that you are on this side or that side. Our society is, by comparison, a very different place to live than many other societies in the world.
00:26:47:04 – 00:27:10:04
Alec Hogg
And of course, when you then just start thinking about what's happening in Europe, and you come back and you think we are quite far away from where the Dukes might start forwarding your data. You realize that there are fairly good reasons for optimism.
00:27:10:04 – 00:27:41:09
Alec Hogg
So yeah, I mean, it's, you know, I mean, jeez guys, Hermanus, we should be getting on our knees every night and thanking God for what we have and how we're living in this part of the country, because not only are we privileged to be there, but it is a beacon for how it can be and how it should be, and how it may be for the whole nation in future.
00:27:41:11 – 00:27:41:18
Alec Hogg
Thank you.
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