DUBLIN â As Wednesdayâs election draws near, everyone is talking about what the final tally will look like. In this weekâs episode, Alec Hogg shares what he thinks the results may look like and what heâs been watching this election cycle. He shares his optimism about the DAâs on-the-ground campaign and the choices South Africans will make. I talk EFF, looking at how the ANC has been losing vote share to the EFF and what that may mean for South Africaâs political future. We also discuss the Berkshire Hathaway AGM, which Alec makes a point of attending – either live or virtually – every year. – Felicity Duncan
Hello and welcome to this weekâs episode of The Editorâs Desk here on Biznews Radio. Iâm Felicity Duncan. With me, is Alec Hogg. Well Alec, youâre back in South Africa. You are getting settled in and you have picked a very interesting week to return home. We have got the Elections coming up on Wednesday and it really is all that anybody is talking about right now.
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It is indeed one. One of the things that is nice about being home is you do start understanding the stuff that you take for granted when you live in a place day-to-day, is actually quite a privilege, like this amazing weather. We talk a lot about it when we are in other parts of the world that Johannesburg in particular has got incredible weather but the climate on the whole election is very hot at the moment. You bump into people and everybody has got an opinion. Everybody tells you why they are going to vote for this one or that one, and of course weâve got our poll – weâve called it The Late Final poll that we put up on the site today – our survey.
The last time we did a survey was a month ago. So, we thought what we would do is we do a survey a month ago finding out what the Biznews Community felt about the election, and then just before the election which was exactly a month later, weâve opened the second one. You know Felicity, we have had almost 2,000 people who have gone in and filled in the form in the first two hours this morning. Itâs extraordinary how engaged the Biznews Community is about this election. The results seem to be very similar to the last one. Tactical votes in a large degree. There is a surprising amount of support for the Capitalist Party. In the first-time round about 20% of our community wanted to. This time itâs a little lower but not that much lower.
They have not fallen off the radar. So, it seems some people – certainly, from those we serve – are thinking that these bright young folk going into parliament will be a good thing. By far, the majority of our audience are DA Supporters and in particular when it comes the Provincial area where theyâre 90% are going to be voting for the DA. Of course, Biznews is a different community. Itâs people who think about their money. Itâs perhaps a better informed community when it comes to economic and financial issues and that would be swaying them rather than whatâs happening at a social level and remember most of the people who read Biznews are employed. When we have 35% of South Africans unemployed, we canât say by any stretch of the imagination that what we are going to be seeing in this election from our survey is going to be reflective of the country as a whole. So weâre giving one little flash point or one little point in time from a part of the community but it is going to be interesting. You however, have been looking at it certainly from the emails last week when we were busy unpacking boxes and getting on planes and fetching dogs, looking at things maybe from a different perspective.
Yes I have been going through the national polls. So, thereâve been quite a few of them. The Institute of Race Relations did one. Ipsos has done a couple of polls actually over the last few months and I was just taking a look at these. Now obviously polls, you know you have just correctly identified a weakness in the Biznews poll, which is that itâs a very specific community, but even nationally represented polls are subject to a degree of uncertainty, right. Some of the polls can be quite high. So, e.g., I think it was the IRR Poll⌠their Gauteng results were they had a 6% margin of error which means they could be wrong in either direction by 6% which is a lot. So, you know these pollsâŚalways, you have to take with a grain of salt. The point estimates that you get are never certain, right. Theyâre a best guess.
So, weâve got to think about polls as (not with a capital T for truth) but as an indicator. Now, one of the things that I thought was most interesting was that consistently, all of the polls that I looked at showed very clearly two things. First of all, they showed the ANC losing vote share. Right? So, the ANC polling lower than it did in the one before and it was lower in that election and in the one before. Theyâve been steadily losing vote. It still looks like theyâre going to be about 60%, but it is less than it used to be.
Now the second interesting thing is the growth in the EFF. Now again, it depends on which poll you are looking at but it looks like the EFF is almost set to double what it got in the 2014 Elections. So, growing from about 6%- 7% to about somewhere between the 10 â 15% range depending on which poll you are looking at. That is a really big shift and it seems to suggest a lot of ANC voters are either not voting or heading to the EFF.Â
So, what that means is if the ANC doesnât get things right in this election, they are facing a real serious problem. If they stay on this trend, theyâre are going to continue to shed voters who will be picked up by the EFF especially the disillusioned and unemployed and that means that down the line, the ANC is going to have to build a coalition government because that is how South Africa forms itâs governments and once you have a coalition government that really changes politics for the country because weâre longer looking at one leading party â youâre looking at a much more negotiated compromised version of policy – so, this election is just absolutely essential I think for the ANC. This is the opportunity for them to turn around what has been a falling vote share over the last about 10 years.
It is fascinating the way that you unpack it there because there is a sense that many people who would have voted for the ANC because of the need to have a strong government from an economic perspective are not doing so this time and the reason theyâre not doing so this time is because those lists contain some very compromised names. So, what a vote for the ANC – although it is a vote for Ramaphosa and Iâm sure that many DA voters would be supportive of Ramaphosa and the way that he is planning to take the country into the future and they might well have given him their support â but what will block them and what will stop them are those lists.
On the lists you have got Mokonyane, who was outed in the whole Bosasa scandal. Youâve got David Mahlobo who is about as corrupt as you could hope for and all the evidence is there but theyâre still on the ANC lists. So, any rational person voting their conscience looks at this and is saying to themselves, âHang on a minute. Am I really going to be voting for Ramaphosa by doing this or am I also going to be voting for these miscreants?â So, my sense of the whole thing is that the ANC (I agree with you) is that all the indications are that it will have a majority but then comes the test because in 5 yearsâ time, will it be able to pull in the national vote almost? People from all sides of the spectrum, and not just the loyalist who will then be able to say, âThis is the party of Mandela. This is the party that I would support the best for the country into the futureâ. And thatâs going to be âhow does the great transition within the ANC occurâ? Is it going to occur internally, which is the way that will have the least disruption where they can get rid of the bad eggs or is it going to require a split?â
So, politics is fascinating. The frustration for people who come from our background in the business community where facts really are easy to see, theyâre numerical, and sure, people can play with numbers but if you look at the number long and hard enough you can discern what the facts are. But the reality of this for us, is that the economy is in a developing country is based on what happens in the political environment and the political environment in South Africa is extremely fluid at the moment.
Iâm excited about everything. Iâm excited that it is a democracy – that you can have a freedom of press. Everybody is allowed to express their own opinions. We have this young vibrant political environment where sure, some of the young people are not coming out to vote but most of the population is extremely engaged in what is going on and is likely to punish the ANC to a degree for the corruption that happened in the past, giving however that last card to Ramaphosa to say, âOkay, now fix it: or theyâll really get a hiding in the next Election. It is interesting to see how the whole thing is developing.
Absolutely, and you are right. The ANC has always been a big tent party right, that takes people from a lot of different sections of society and brings them together and the ANC has managed to do that by of course being the Party of Liberation, having a long and very deep history in South Africa and having some major political achievements. As we go to this election, youâre right. This is the moment where the ANC decides what itâs future is going to look like. Whether itâs going to be a clean, functional ruling party or going to be a servitor of special interest that gets punished in the polls.
Indeed. Itâs a bit early for the ANC to lose power. But if they donât fix it this time, Iâm almost, I would underwrite that the South African population wonât give them another chance. So, itâs kind of last chance saloon for Ramaphosa and Co.
Yes, I agree with you and I think they will definitely, Iâm pretty sure they will get the majority this time but itâs really setting up their future. I think thatâs right. But now, somebody else that is looking to the future is Warren Buffet. I know that he has paid some close attention to the Berkshire Hathaway Annual General Meeting this weekend and we really saw strong evidence of Buffetsâ succession planning.
Yes, this is a special weekend for me, Felicity. For many years, I would make the trek to Omaha and then Warren had the brilliant idea despite having resisted it for a long time of allowing Yahoo! Finance to broadcast, to stream the event. And that ensured that people like me can cover it much better by just being in front of the computer. The problem that when you were in that arena – and itâs a huge baseball arena/stadium/enclosed indoor â but the sound isnât that great. Itâs not made for acoustics. Itâs made for basketball – sorry – not baseball. So, I would be sitting up there in the Skybox trying to catch every third word. It really was poor as far as the acoustics of course. When youâre looking at it on streaming, you get to hear everything.
So, first of all itâs a far better opportunity. But secondly, what we have done this year is that I have gone and recorded the whole thing and now Iâm breaking it down into biteable chunks. So, instead of having to listen for 5 hours to get to the interesting stuff, Iâve done that. So, Iâm going through⌠cutting little pieces on the fascinating areas that Buffett and Munger spoke about. Remember that they answer questions for five hours and those questions are all posed. They donât know what the questions are so itâs spontaneous answers and thatâs really what makes this such an amazing occasion. Again, a record crowd of over 40,000 people in Omaha this weekend. But what came out this time around is that Warren who is 88 and Charlie who is 95 are now paying a lot more attention to succession planning.
In the past say over 10- 12 years ago when I was there, when people would ask about succession, they dismissed it. They really did not pay much attention. This time they were handling quite a few questions to Ajit Jain and to Greg Abel who are the two Operational Heads and one of the two of them will become the next CEO of the company. But Warren Buffett is a very unusual person in that he is both the CEO of the 60 odd subsidiaries plus the Head of Investments. So, on the one hand for his operational side he has got Ajit and Greg. On the investment side, heâs got  Todd Weschler and Ted Coombes but what is interesting here is while he was happy to allow shareholders to engage and expose the two operational heads, he was not prepared to allow Todd and Ted to answer questions.
In fact, he said they will remain part of the Brains Trust within Berkshire and he is not going to expose them and they are not going to be telling the world why they bought shares – individual shares. We are a collective he said, and I will talk to it but itâs like they will stay under the radar, which is probably what they prefer, and as investors they probably prefer that. The big story of course, coming out on that side was the investment into Amazon given that Buffett has for years said that he does not invest in companies where he canât see what the future is going to be in the next five years. He needed almost a way that he could work out what the profits would be within the next five years. Now, heâs changed that a little by investing in Apple but an investment in Amazon which has got an unheard of price-to-earnings ratio, is not something you would expect from Berkshire Hathaway.
He did explain that it was one of the two. He didnât say which one but it was one of the two – Todd or Ted – who made the investment and they looked at it as a value proposition, but he didnât go in and justify why the Amazon bet was made. Itâs all very interesting. Itâs five amazing hours for the capitalists or for people who believe in a capitalist system or a free enterprise system. As Buffett says, :Iâm a card-carrying capitalistâ but on the other hand he is also very mindful that it does need some support and some help and some moral undertone to make the whole system function. So, heâs not a blind capitalist if you like. He understands that it is the best system that we have and itâs the one thatâs made America great. But on the other hand, it is also something that you need to aware of and cautious of.
One of the questions I loved – because remember, Buffett is a Democrat and he was asked, âHow can you align the party where there are many candidates for the Presidential election who are saying that capitalism doesnât not work and in fact, theyâre pretty socialistic – certainly in the American sense. And he said, âHe doesnât believe that America will go socialist in 2020 or 2040 or 2060 or 2080. Because at the end of the day, it has come from zero percent of Global GDP in 1800 to 26/7% of GDP today with only 5% of the population and the reason for that is the most efficient system for distributing goods and services is the Free Enterprise system and he does not think that any Americans will abandon that.
