Why IDC supports CEO SleepOut – and Phakamile Mainganya’s challenge to Nedbank’s Mike Brown

LONDON — Chief Risk Officer of the IDC, Phakamile Mainganya, explains how the alignment between the value of the CEO SleepOut™ movement and those held by Nelson Mandela motivates his organisation to lend its full support to the initiative. In this interview he also shares how the IDC’s top executives are keen to use the occasion to engage with private – including his former boss, Nedbank CEO Mike Brown. – Alec Hogg

In this latest update of the CEO SleepOut™, we talk with Phakamile Mainganya who is the Chief Risk Officer at the Industrial Development Corporation of South Africa.

It’s lovely linking up with you, Phakamile. What is your involvement with the CEO SleepOut™?

Thanks Alec. We as the IDC have been involved with the SleepOut™ over the past three years since 2016 and we always look forward to taking part. It fits in quite well with our outlook and it supports our social investment programmes as IDC.

This year you are going to be going there yourself, sleeping out under the stars. Have you done anything like this before?

No, I haven’t done it before. I’m looking forward to this one. Four other colleagues from the IDC will be joining me, so we’re really looking forward to being together with all the other CEOs out there.

Phakamile Mainganya

It’s a unique experience, isn’t it, where you can get colleagues who otherwise would be talking to each other around a boardroom table – are you expecting something special to happen?

Yes, I am. First of all, just the sitting for this year’s SleepOut™ is quite unique and I wouldn’t have chosen a different way to do it on the centenary celebration of Madiba being at Liliesleaf farm and for us mostly as a public sector, we’re always looking forward to interacting with our fellow CEOs and colleagues from the private sector. Therefore, it’s an opportunity to talk to a broad spectrum of real decision makers out there in one sitting.

Yes, so apart from your own colleagues, others as well. Just an interesting point, in the public sector the pictures of the president, the deputy president and the head of that area for instance, I guess in your case would be the Minister of Economic Development, so that would be Ebrahim Patel. They are there almost as a reminder of what it’s all about, but what about Madiba (Nelson Mandela), how well is he remembered within the IDC?

Well, if you look at our ethos and values, we always remind our people to go back to the Madiba principles if I might say, of Ubuntu and of humility. Therefore, I would say the values and his outlook as we remember Madiba is part of what we aspire  to bring in our people and especially this year being the centenary we’re also going out there in other activities outside of the CEO SleepOut™ to remind all our people of what it meant to us to have Madiba with us all these years, which I think has been a blessing for us and South Africa. As we go through these challenging times as an organisation and as a country it’s really time to take stock and reflect on what Madiba meant to us. This is an opportunity, which gives us another angle to do that.

In addition, I guess whether we’ve actually lived up to his ideals.

Yes, it’s really an important point of reflection. Madiba was a giant. Maybe it’s that lifetime of perpetual strife, striving to really live up to his expectations given what he’s been through and what he aspired for the people of this country.

Lilliesleaf where we are going to be was very important in the whole Nelson Mandela story. I was reading a book about his life in the last couple of weeks just preparing for the big night and he was in jail at the time. He wasn’t arrested in Lilliesleaf, but he kept saying to his colleagues in the ANC, “Please destroy my documents, otherwise if they find the documents they might put me away for a long time”. The colleagues decided not to because they wanted to keep it for South Africa’s history, so it’s amazing that back then, 55 years ago, they were already realising what they were doing at Lilliesleaf was going to be hugely important for the country and its future.

Exactly and that story just reminds us of another angle of Madiba, his attention to detail and if you read about him, little things that he used to do whether it be making up his own bed or polishing his shoes, now with the story that you’re telling me for Madiba amid all that was going on during that time, for him to again remember the small aspects of his books, it could lead to them being arrested and to me that’s what I think about when I think about Madiba, his ability to have a broader view and to think about the small details that you wouldn’t necessarily equate with Madiba. That’s just the man he was.

Yes, that’s the mark of a great leader. They see the big picture but they don’t forget the detail. Within the IDC, for those who’ve never gotten close to what it does, what is your mandate?

Thanks for that question. We really have a broad mandate. Basically, to put it simply, we’re supposed to sponsor and develop industrial development in this country. In doing that, we’ve chosen to focus on job reach type of industrialisation. We’re going into those hard knocked sectors of the economy with our capital to see how we capitalise those industries that are key and relevant to South Africa and in the area we’re in now part of our mandate requires us to look into the future, into the new and upcoming industry.

Therefore, we’re thinking how we participate in the 4IR space and how we bring along our industries not to be left behind the Industrial Revolution. An opportunity like the SleepOut™ gives us an opportunity to interact and to explain and talk about our mandate with our other financial sector partners because it’s as big mandate, we can’t do it alone as the IDC with our balance sheet, but I think we do play a critical role as an agent in that mandate.

It’s an interesting point you’ve made there. At the SleepOut™, there are chief executives from right across the spectrum, big companies, small companies, but people who don’t tend to mix with each other. We’re all busy with our own lives as it were, yet this is an opportunity to coalesce around something that is important to the country and makes us realise what it’s all about and that is in helping others, I guess.

That’s correct Alec and in that space I’m really looking forward to see all our big banks’ CEOs participating, I hope they do. Our DFI CEOs as well, other development finance institutions in South Africa. You know, with what our ministers are talking about, especially issues around coming up with solutions, both of us,  private and public sector in terms of what are the practical solutions as an example to turn around the SOEs and events like this give us an opportunity to talk in a free space about some of these solutions. It’s out of these engagements that practical solutions, bonds, and friendships are created.

Yes, without trust you can’t even get to the first base when it comes to working together. I have a sense of who you’re going to be challenging, but just before we go there, your job looking after risk as the top executive; that sounds like something that must’ve become terribly busy lately. The risk around the world has become more extreme and investment risk nowadays is a lot more challenging that it has been in decades.

Oh, definitely especially in a space like this, which involves dealing with public money, it’s even more challenging. We have to look at both the commercial aspects of transactions and the fiduciary. We always bear in mind that we are custodians of public money, so in everything we do we have to always bear in mind that when we invest in something there is a high probability that that money will come back. Therefore, we really do try our best to support industries that have a real economic possibility of being profitable and of creating jobs.

Again, in the frail environment that we are in it’s a complex task. I can’t say that enough, but I think we’re really blessed I could say, in that more or less we think we have been able to handle public money in an upright manner. Additionally, our mandate I would say as the IDC does give us that room to take a bit more risk than commercial banks would do, so we try to push with the resources that we have within that mandate, within our risk appetite levels.

I’m glad you made that point. I worked at the SABC for a few years just after Madiba came out of jail and it permeated every decision we made. We were a public sector organisation, which is very different. Most of my career’s been in the private sector, but it’s very different in the decisions that you make. You always have the sense that you’re working for the public, for the citizens of the country don’t you, not like in the private sector where well, if you can make a profit out of it shareholders will be happy and I don’t think that people in the private sector quite get how important that mandate is taken.

Exactly, you know each thing or each transaction that we consider has so many multiple objectives in it and we’re not always understood as to why we would do a particular transaction depending on where you come from and how you look at it. As you say, one could simply say, “But, this thing won’t make money, why are you funding it?” but for us it’s broader than that. It could be, like I said, we were capitalising a new industry; it could be that we’re taking the first risks so that the other funders may come behind us.

It’s not always about profit for us and that is never clearly understood and the more that we talk about that, the more people can understand our money and get the context of why we do certain things, but the overriding thing for us is that in everything we do, we must be acting within our mandate in terms of the IDC act and in terms of the directives of our corporate compact with our shareholders. That is the overriding criteria for us; we must stay within those parameters.

The IDC has always been a great nursery for chief executives or for entrepreneurs later on and not just in creating businesses within the country, but also training people for a different role perhaps in future. However, as far as your challenges are concerned, who would you like to challenge on the 11th of July?

I really want to challenge Patrick Dlamini who is the CEO of the DBSA to come and join us. We have many unfinished conversations to finish over there.

I’ll join you with Patrick. I have some unfinished conversations with him too, so that’ll be a good one. Who else would you like to twist their arm to come and join us?

Mike Brown of Nedbank, Sim Tshabalala of Standard Bank and Maria Ramos of Absa must also come, Investec, RMB; we want to see all those CEOs coming.

Phakamile, that’s great. I just have to make an excuse on Maria’s behalf because she’s a staunch supporter of the sleepout movement and this year is the day and I think it’s something that South Africans will be celebrating, it’s on the 11th of July and I think they’ve also picked it because it’s such a historic day where Absa becomes South African again. So they have all of their own celebrations around that and being the CEO we’ll let her off, but as for the others I’m sure they haven’t as good an excuse.

All right, thanks Alec, I’m sure they will come.

Well, it’s very good talking to the Chief Risk Officer of the IDC, Phakamile Mainganya and as you can hear he’s made some pretty serious challenges there to chief executives of the major banks in South Africa and also to one of the leading lights of South Africa’s development institutions, the Chief Executive of DBSA, Patrick Dlamini, a long-time participant at the World Economic Forum in Davos and that’s what I meant when I said to Phakamile that we have some unfinished conversations. It seems like at Davos you keep running around, you just never have enough time and hopefully on the 11th of July we’re all going to have time to talk about the future and to tap into the spirit of Lilliesleaf.

This has been the CEO SleepOut™, until the next time, Cheerio.

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