Ramaphosa has named his Cabinet and we now have some insight into what the president is thinking and where he is heading. In this week’s episode, Alec Hogg and I discuss the Cabinet appointments and reflect on what they may mean for the country. We also ask some serious questions about the future of the DA, which struggled in this year’s national election. After a disappointing showing, where is the DA headed next and how can it get back on track? We also take a look at another struggling institution: Tesla, which has seen its share price fall by 50% or so this year. We ask, has the visionary Elon Musk run out of road? – Felicity Duncan
Hello and welcome to this week’s episode of The Editor’s Desk here on Biznews Radio with me, Felicity Duncan and of course our editor in chief here at Biznews Alec Hogg.
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Now, Alec last week we talked a little bit about what was then the impending announcement of Cyril Ramaphosa’s cabinet. We talked a little bit about what we wanted to see, what would be an encouraging sign and some of the important portfolios, continuity with Pravin Gordhan and with Tito Mboweni, and those kinds of things. We now know what the cabinet looks like. We know how much it’s shrunk, as was promised. And there were a couple of interesting appointments. The appointment of Patricia De Lille in particular I thought was quite interesting. And of course Thoko Didiza in the land portfolio. So there’s a lot to chew on. And I wanted to get your take. Looking at the announcement, what do you think? What is encouraging, what is concerning, what should people be thinking about?
It was interesting in fact, it was our very first going live to a major event for Biznews Radio. So that was also a little landmark for us. And we got the tech right, and it all worked and we got quite a few people tuning in. So that was great.
Looking at it, at the individuals, and that’s always what you do in a cabinet – what are your options? Ramaphosa, remember can only bring in two people from outside of the top 30. So, you’re going to have to get – for a cabinet ministry – you’re going to have to get very well voted in on the national executive committee. The ANC has got all these rules and traditions that just can’t be avoided. So, what he did was interesting as you mentioned with Patricia De Lille, but that’s a little bit of a long play. Doubtless, they are still smarting at the fact that the DA is running the Western Cape and I think from a strategic point of view the ANC doesn’t want to allow the DA to continue to build this, it’s almost like a prospectus that they, have showing the Western Cape is the most efficiently run province, and give us a chance elsewhere . And they came fairly close in a couple of the provinces in this last election and there is no doubt that Ramaphosa and the brains trust thought about this carefully and are now going to find some way of at least attacking the official opposition in their heartland. So, bringing Patricia De Lille into the fray means that they will be bringing a chunk of voters from that part of the of the country. So, very shrewd long-term move.
The other big moves that, on reflection were interesting, you mentioned Thoko Didiza. She’s highly respected within the ANC. She was the candidate premier for Tshwane for the ANC and she didn’t quite swing it in the last election. But she was almost parachuted in there to try and win the city, which they eventually lost to the coalition parties. But it’s likely that – this is a very, very difficult portfolio – and it’s likely that somebody with her humanity and feel will be best placed for doing it. So, that was an interesting appointment.
The other appointments that are of relevance to the business community were Gwede Mantashe, now not only getting mining, which he’s been running, but also energy and that’s going to be the big story in the future. I know we’ve spoken about it a lot – the big move this week was when Shell joined Total in exploring for oil just over the southern coast – well gas which becomes oil, gas to liquid anyway – after that big Total strike that they found. So, Shell are going next door in the bloc. And they’ll be looking for gas there as well. Energy is going to be a big story in South Africa in the years ahead, very big. So putting that together with mining under Gwede Mantashe as a steady hand is a good development. A lot of people outside of the ANC and perhaps observers with superficial knowledge are unhappy about Mantashe given that he has deep links with the South African Communist Party. But in many ways it’s more organisational than ideological nowadays. The communists are not the old Soviets they used to be. And the one thing about Mantashe is that he is a straight shooter and the mining guys like him a lot. So they were very happy. The mining sector after a difficult period in the Zuma administration, to have him as their minister and they were very happy that he came back again. So that’s a good point.
Ebrahim Patel is a very efficient and incorruptible Minister. I know him very well, I’ve known him for nearly 30 years now. And it was good to see his portfolio being expanded despite the fact that he did run economic affairs in the Zuma cabinet. He wasn’t part of Zuma’s inner grouping by any means. So it’s good to see him getting the trade and industry portfolio as well. That, I think you can imagine, is going to give quite a bit of life there. And then the other two major portfolios that you mentioned earlier Tito Mboweni on finance. There was a question mark over it because of his independence and Pravin Gordhan continuing with state enterprises.
There were question marks there internally because his health hasn’t been great and he is getting on a bit. On the other hand, you had the EFF who were threatening Ramaphosa – that he should not put Gordhan back into the cabinet and thankfully Ramaphosa ignored that. So cabinet-wise I think it’s about as good as we could have hoped for.
I was hoping that Cyril would bring in, of his two outsiders as it were, that he would bring in Maria Ramos, who I really tipped strongly to get a cabinet post. But, who knows what happens behind the scenes in these things and she didn’t make it and he instead brought in Patricia De Lille and of course elevated Ebrahim Patel who was quite a long way down in the lists and as a result wouldn’t have really been in line for such a huge portfolio. So, interesting times and you’ve got to say, well done. There’s some of those Zuptoids to be found. I didn’t see them initially but to be found among the deputy ministers, but in relatively junior portfolios and it’s almost like a phasing out approach. The big story, of course, for lots of people, is the deputy president, David Mabuza, being reappointed as deputy president. He’s got – as we published this week with yet another letter of accusations – he’s got a tough time ahead of him. And deputy presidents are not really that powerful. Of course they are a heartbeat away from the presidency but in the operational affairs of the country not that awful. So it’ll be interesting to see how that whole thing develops. But I guess Ramaphosa picks his battles and he probably felt that wasn’t the right time to pick that one just yet.
It’s very interesting and I think you’re right that there’s a lot to be happy about, a lot of positive stuff that came out of the cabinet announcements. Now, you mentioned a little bit there about the DA and their progress in the Western Cape. And I wanted to pick up a little on that because I’ve had some interesting conversations over the last few weeks with a few of our members – our premium members – about just where the DA is headed now. This year, 2019, is its sixtieth anniversary – founded in 1959 – at the time it was the United Party, back in the day. Consistently, since then, through many name changes, the DA has stood for classical liberal values and it’s one of the oldest, at this point, one of the oldest running continuous political parties in Africa. So, there’s a real history there and there’s a lot of achievements that they can list looking back over those 60 years.
But this election, I think was a difficult one for them. They actually lost – at the national level – a little market share, call it, vote share. Although as you rightly point out they did pretty well at the provincial level. But where is the DA headed? You know, during the campaign you mentioned that you found a lot of their sloganeering and a lot of their approach to be very negative. They were campaigning a lot on not being the ANC instead of being a positive alternative, instead of providing a vision. They were really negative campaigning. And looking ahead, where is the DA headed? How are they going to build up to a party that can really compete at the national level, that can achieve that 50 plus percent of the vote and form a government?
I’ve been reflecting a lot on that and I think the Biznews community has as well. But you are going to draw on your personal experience and I remember, Felicity, it must be 20 years ago going to an event that Helen Zille was hosting at the Carlton Centre.
In fact, I think it was the old Carlton Hotel – it’s that long ago, that’s long since gone into disrepair. And I remember her. I chatted with her afterwards. I was at the Rand Daily Mail where she was the political correspondent and a real firebrand and extremely courageous. One of those icons that the rest of us looked up to and we had a conversation afterwards, a private off-the-record conversation, and she said to me that – you look around you and a lot of white faces there – she said, our future is the day where you’re not going to see white faces in the DA’s front line, that we’re going to be bringing in people who represent, better represent the population of the country.
And that was her strategy and she achieved it brilliantly. If you look back on it now with the fact that you do have a very strong group of black, particularly black African politicians, young politicians who’ve come in. But along the way it’s almost like sometimes the values of the party, the values that she really ascribes to, got a bit lost.
When I heard Mmusi Maimane for the first time in an open presentation, I was so impressed with this man, because he gave a vision of hope. This was before Zuma had got into his rapacious corrupt mode to the degree that we all knew about it, and Mmusi was not fighting, they weren’t fighting Zuma, they were fighting for greater hope in South Africa. How do you get the economy going, do the right things? And, you know, the funny thing is voters are not stupid. I know Malema and co. call the ANC voters “voting cattle.” That’s not true. Voters do think carefully and they do vote for what is right for them.
And in this case you just got the feeling that here was a guy in a political party – the official opposition – who is presenting the right kind of story, a story of hope, and then in this election it was almost like they ran out of ideas. They’ve been fighting the anti-Zuma campaign for so long that the DA didn’t seem to know or had forgotten about its real purpose, which was to offer an alternative to the socialist-influenced economic policies that the ANC has got, the developmental state, for instance, the DA has got a different approach, should have a different approach.
And they lost their way. They went back to a campaign that the party had many many years ago when Tony Leon was still around, in the 90s, in the 94 campaign, where it was all about driving fear. And perhaps they felt that succeeded, to a degree, that it was worth trying again. They’ve learned though, certainly from what we’ve read of what Helen Zille has had to say recently, that they did lose their way. They were drawn into race-baiting and racially driven campaigning.
And they are going to go back to a more broader approach. And I think that’s going to be good for the DA. And it’s all also very good to reflect and to reboot because they’ve got a far different kettle of fish now in the ruling party with Ramaphosa running it, putting highly competent people into very important posts in government. You’re going to see the impact of that.
You have to see the impact of that when you take the village idiot away and you put a person who is a servant leader as Ramaphosa has made his number one priority. Then you do find that the whole system does improve. So the DA has to find a new way, an alternative. And from what we read of what Helen Zille was saying, that they are reflecting and they’re probably going to go back to the stuff that made them so impressive and gave them all those gains some time back. And that’s where Mmusi Maimane is happiest. That’s where he’s most comfortable, when he talks about hope, when he talks about the future, when he uplifts people – he’s a very uplifting speaker, almost Obama-esque in certain instances. That’s his natural strong suit. Somebody mis-advised him quite bad in his last campaign.
Yeah, very sad to see and I think you’re right that they lost their way and hopefully they can find it again over the next five years, ahead of our next election.
Now, another company or rather, a company that seems to have lost its way is Tesla. We haven’t spoken about it for a while and there’s been a lot going on there. But I think you can sum up the problems quite nicely by noting the fact that the Tesla share price is now down to $185 and it was well above the $300 mark last year – a massive decrease in the share price. Really, it’s down about 50 percent, actually, depending on where you take it from. Just a real loss of faith in the company by investors who have stood by it for a long time. And the reason for that is pretty clear. We’ve just seen frozen or slumping demand across all of its product lines and ongoing struggles with production to meet even the demand that’s there. And it’s just… it’s very sad to see, you know. Tesla was always a bit of a gamble. You were gambling on the fact that it would become a successful car company quickly enough to beat its cash burn. It was a high-growth company, it was burning a lot of cash and you just had to hope that they would hit profitability before they ran out of cash or ran out of the ability to raise more cash in capital markets. And at this point, I think, that’s starting to look like even more of a tough gamble than it was historically. You know , it’s sad to see, because I think it’s an exciting company. But there it is, just a real collapse over the last six months.
Well, it is indeed. And it’s one of those that we were quite fortunate on in our global portfolio because we owned it. We did very well out of Tesla. Elon Musk was seemingly doing all the right things. They had the world at their feet and then he started going wacky. And when he went wacky and we spoke about it, you and I a number of times eventually. And you were the first one to point this out and say, hang on, something funny’s going on with Tesla.
And I didn’t, I didn’t quite buy it until, eventually he really had that infamous conference call with investors, where he cut off Wall Street or the guys who were asking the sensible questions, and then gave 20 minutes to a very flaky YouTube blogger or vlogger as they call it, who then dominated the conversation through his praising Elon Musk. It was quite… it was quite bizarre. And at that point we took the view that hang on, there is something really strange going on with this company. We sold the shares around about 320 or 330 dollars, which today, of course looks like genius. It wasn’t really, it was just taking taking note of what was happening at the time.
That was prior to that crazy tweet about how he was selling the company to the Saudis at 420 and all of that stuff. He’s a genius. There’s no question that Elon Musk has been blessed with a fine brain – probably grown in Pretoria, as we well know, by all that time in the library as a kid. But on the other hand, he has also been cursed with a massive ego, which tends to say only he can get it right. And there’ve been many instances of this.
When you read through what happened with General Motors in the early days – the man who founded General Motors and created it and built it in the early years had to leave because the company was almost bankrupt. It was only when Sloan came in and sorted it out that General Motors became the mega business that it is today.
So, the qualities that it takes to create a business, an innovative business like Tesla, or a disruptive business, are not necessarily the same qualities for the chief executive to run that business into the future. You need to get your feet on the ground and you need a Jim Collins Good-to-Great type of chief executive – low profile, low ego. Understanding the nuts and bolts and the detail and an understanding, as well, that God didn’t bless one person with the monopoly on what is right.
In fact, the best way to find that out is by having a collaborative approach towards the problems, particularly in a young company that’s evolving and who knows where this is going to end up. There’s a lot of rumours going around. Again the perennial rumour that Apple is going to be buying them. There was a report I saw from one of the analysts on Wall Street to say that they see the stock at below 10 dollars, so if there is a belief, a perception that Tesla could get to as low as that, then you can be pretty sure that the Apple brains trust are not going to go in and buy it at $185 dollars a share.
The true value, excluding Elon Musk in that business, is probably closer to ten dollars than one hundred and eighty five dollars, which it is at the moment. I guess unless you believe that Musk is going to pull off a miracle – and he now seems to be a lot more interested in SpaceX anyway – then you can’t really be buying Tesla shares even at this level.
