Jimmy Manyi: Black CEOs bank accounts transformed not the companies

President of the Progressive Professionals Forum Jimmy Manyi tells Tim Modise that private sector corruption is worse than what is happening in the public sector through initiatives like ‘transfer pricing’ and that the media is colluding in its silence. He goes on to say that corporate South Africa is reluctant to transform and must be compelled to change through tougher legislation, while the Democratic Alliance will not transform except to elect Mmusi Maimane to help protect white privilege.

Jimmy Mzwanele Manyi is the President of the Progressive Professionals Forum and formerly the President of Black Management Forum. It’s a pleasure to talk to you, Jimmy.

Thank you Tim, and to your listeners as well.

What do you think of the black or race-based organisations? Do you believe that they’re still relevant now? You’re the former manager of Black Management yourself.

I think they’re more relevant now than ever before. The notion of non-racialism will not be achieved if we don’t focus on the development of black professionals, black middle class, and uplifting the poverty-stricken black masses that are sprawling all over the country. The issue of ‘black’ is even more pertinent now in order to achieve a non-racist South Africa.

The recent argument Mr Manyi, that the country should be focusing on economic growth rather than tinkering with the system, quotas, and who becomes empowered and who doesn’t.

Indeed, our position would also say something like that. Our Constitution isn’t naïve either. It is very clear that there must be measures to ensure that we uplift everybody so that everybody can play a fair game. I keep quoting President Lyndon Johnson (1963/1964) where he said, “You can’t take a man hobbled by chains for 100 years, set him free, then say you are free to compete, and believe you are being fair”. In order for us to be able to participate meaningfully and equally in this economy, there has to be a focused acceleration of development of black people in particular. Without that, we are just playing games.

How do you rate the outcomes of the past ten years of transformation charters? Are we now accelerating or did we slow the economic transformation?

To be quite honest with you, it’s a very disappointing picture. One would have thought that corporate South Africa in particular would have played ball and that they would have reciprocated the magnanimity of President Nelson Mandela. Unfortunately, they haven’t and now we have to keep tightening the screws every day because corporate South Africa is not playing games. In addition, we have some legislation, which also needs to be cleaned up. For example PPPF8, so that we can move the country forward. Indeed, when we look at the score now, we are from where we should be. Hence, the DTI in particular has been revising, amending, and reviewing their pieces of instruments to deal with this matter so indeed, we are not where we should be.

Do you think that the BBBEE codes for instance, that have just been introduced now should be much more stringently enforced?

I think so. Without enforcing them stringently, we’re just wasting time. I’m happy that we have those codes now and even the law itself is much tighter. Starting with the law, the law is now also criminalising fronting. People who are found fronting can expect imprisonment as well as many other repercussions so that is very good. Just to make sure, when you say you are a 51 percent black owner, you are indeed. You’re not just 51 percent on paper, but when it comes to the economic flow, you are maybe 15 percent, if that. The law is tightening. The codes are tightening. For instance, in the past years you used to have targets. Now you have particular thresholds, which, if you don’t meet them, you can’t start counting. For example, on the scorecard, we have three elements. The ownership element, in which you must score at least 40 percent of that 25 percent. On the skills, which has been increased from your three percent to six percent target was a very good thing to ensure that when we say ‘skills’ we’re not only forecasting the skilling of internal people, but we’re also bringing in internships. We are bringing in unemployed people as well, which is why the number has been increased to six percent. It’s a progressive thing. Lastly, on the enterprise development and procurement; that element is a priority element as well, to make sure that companies out there don’t deal with the good old white suppliers they’ve been dealing with over the years, but now they must also include the new black entrepreneurs.

Now you say that corporate South Africa has not come to the party for the past ten years. Why do you think that’s the case? If corporate South Africa didn’t come to the part in past, what makes you believe that this time around, it will come to the party in accelerating black economic empowerment?

A couple of things have caused it. Some of the issues are genuine and some aren’t. There are three key issues currently facing South Africa. One is the mismatches in the economy. For instance, if you look at the three categories – primary, secondary, and tertiary – and look at where the biggest growth has been, it has largely been on your tertiary sectors/financial services – all your IT space. This is where more high-end skills are utilised. Yet, at the primary level, there’s low growth, but that’s where you have more people. For example, in your agricultural sectors and mining etcetera, and many more people who need to be dealing with what’s more akin to manual labour. That’s where the greatest population is but that’s not where the growth is. That’s the mismatch, (which is a genuine issue) that companies are facing, which we need to deal with. With that mismatch, you also get another complexity of mechanisation, which takes out even more people who do manual labour. That’s a big thing, which we’re facing in the economic landscape. The next think we’re facing is corruption – both in the private sector and in the public sector. In fact, in the public sector it’s minimal compared to the private sector. In the public sector, you get things like kickbacks and inflation of tenders, etcetera. When we quantify them, they actually fizzle into nothing when you look at the kind of corruption happening in the private sector. Sometimes its coated in good names. Things like introduction fees, etcetera. It’s no longer kickbacks and introduction fees. You have price collusion. You have market sharing. You have inside trading and now the biggest monster is transfer pricing. None of these things are helping. Lastly, the other key issue that is also creating problems is the legacy of Apartheid. There are two key issues. One is racism. South Africa is still very much, a racist society. Black people are still a proxy for incompetence and the issue here is that the people being employed are still largely, white people and therefore, when they see black people they don’t see competent people. They just see people that make garage purchases. It is difficult for them to see merit in a black person, so that’s creating another serious barrier as well. You also have the colleges and the challenges we face in the economy around these colleges is that they are seen as being for people who have not made it to university, when they shouldn’t. They should be a dedicated stream that goes to these colleges so that people are properly skilled etcetera. Those people who go there and otherwise, wanted to go somewhere, failed there, and they just go to this. It’s not the people, who are passionate about being a plumber, or an electrician, etcetera. If you put all those things together, that is what hindering our country from moving forward. We have increased poverty with the unemployment and we have inequality. The three key issues are mismatches, corruption, and the legacy of apartheid as the cornerstones that hamstring our development.

I want to go back to the point of corruption. You are suggesting that corruption in the private sector is actually, much deeper and widespread than it is in the public sector. Many people would wonder how you make such a statement. They would say, “The public sector corruption is widely reported and is much more endemic than in the private sector.

That’s a fact of life. Let me give you some good examples. The construction industry, without going very far… the construction industry has R50bn that Government has been creamed of and in fact, they got off lightly with a very small fine. I think it was R1.5bn or something like that. That’s the one thing. It’s been a legacy of this thing. If we go to the bread issues and now we have the probe that we see around the banking, etcetera, and the current transfer pricing issue is the biggest scandal ever. It’s being coated and that’s the biggest mess that those people are doing to do capital flight. Corporate South Africa is not playing games. Corporate South Africa is (if you like) raping the country and they’re doing nothing to plough back. They sit with huge reserves and there is no relationship between the reserves that they have and their investment into the country. That is a big problem and I think Government should tighten their regulation around offshore listing. I think it was a big mistake to allow it to happen the way it did. If you ask me, I would be saying Government should be very careful and in fact, almost put a moratorium on offshore listing to make sure that you get the required commitment of the companies that are here and making most of their monies here.

You say transfer pricing is the biggest corporate scandal ever. How so?

The companies go and set up other marketing companies elsewhere and then they would take products here (particularly in mining) where they would sell to those companies at almost next to nothing. In the books here – locally – the earnings shown would be very deflated and it would attract much less tax, as it were. The companies out there then sell the products at the real price. When that money comes, the proportion that should have come to fiscus is lost because now, there will be all kinds of other money schemes to ensure that the money that is on that side… the company benefits, but without ploughing back into where the primary product originated. That’s what’s happening in the mining sector and this is the biggest problem. Certainly, there are other factors as well. For some reason, the media is not reporting. It doesn’t matter how many times a black business council goes to press conferences to complain about this. For some reason, the media are just waiting for some Government official to squander R10 and then that’s the headline, but the biggest challenge facing this country (the corporate sector not playing ball) is just under-reported.

On the political front, notwithstanding the problems and challenges that the country faces, people would say, “At least there is some transformation taking place there” because we’ve seen the emergence of young black political leadership and we have two big opposition parties, led by young black people. Julius Malema leading the Economic Freedom Fighters and Mmusi Maimane leading the Democratic Alliance. What are your views of these two young men?

The word ‘transformation’ in South Africa is used very loosely and can create very misleading situations. Let’s tackle them one at a time. Firstly, I think if anyone thinks that what has happened with the DA is transformation, they’re making a very big mistake. There is no transformation there. I think this whole concept of multiracialism versus non-racialism must really be unpacked. The DA isn’t a non-racial organisation. The DA is a multiracial organisation. They have blacks. They have whites. Currently, it isn’t a non-racial organisation. It is a racist organisation, which puts black people there to drive the white culture of the DA, as it were. We have policies and programs in the DA that are completely naïve. Even with their latest Values Charter and all their documents with their completely colour-blind approach. They call it ‘opportunity for all’. With all those things put together, what they’re aiming to do is not to tinker with the white privileges. It’s to preserve white privilege and to make sure that black people are not fast tracked. What you have is a situation where if you’re 100 steps behind within the DA environment, you will stay 100 steps behind. The DA has no program that addresses inequality. All they’re saying is that, “If you are 100 steps behind, we’ll develop you where you are. The guy who is 100 steps ahead will be developed where he is. The gap between the one and the 100 is maintained”. Mmusi Maimane is just pushing that kind of agenda. There’s nothing noble about what has happened. That’s not transformation. If anything, in fact, it’s a delay of transformation because he’s given it a soft face as if you are embracing South Africa when in fact; it’s the best form of preservation. It’s almost similar to what you get in the corporate environment where you just get a black Chairman. In fact, I’ve stopped becoming excited with the appointment of black Chairmen and black CEO’s because instead of them transforming those organisations, they become shields. The only things that are transformed are the bank accounts. Those bank accounts get massive transformations, but the guys in those positions do absolutely nothing. Tim, I can challenge you right now to say, “Give me one black Chairman or CEO who is in a JSE listed company and tell me the before and after picture since that person got in”. Trust me you will not be able to outbid me on that one. This is because people allow themselves to be used (I don’t know why), both on the political front and in the corporate environment as well, which is quite a shame. I think it’s important that when you say ‘transformation’, it must be understood that what we mean is that transformation should mean a completely different way of doing things and an inclusive approach. We are not saying people should not be whom they are. I’m an African person. I must continue to be an African. A white person must continue to be a white person. Then we must see the best of both in all of us and move forward. There should be no one trying to steamroll and inculcate their system on the other, which is what’s happening in the DA. The inculcation of the white culture is not happening there, instead of embracing all cultures and having a non-racial outlook – something they don’t have. That’s the challenge we’re facing around transformation. People think it’s the mere fact that they have black people in control. You can have 100 black persons in management and you can have an untransformed organisation in my book.

In conclusion then, what is the way out, Jimmy? What’s the way forward?

From a public sector point of view, I really think that the Values Document that we have in the way of Batho Pele is very brilliant, but is poorly marketed. That needs to be marketed much more innovatively. If you look at that document of Batho Pele, it has all the elements that you need to make sure that we’re taking the country forward. If Batho Pele can really be the culture of public service and in particular, the issue of consequence management, one of the biggest challenges we have in the private sector is ‘no consequences’. People don’t deliver and when they don’t deliver, they report about it and it’s a long story, but you never hear about what happens to people who have not delivered. The issue of consequence management is key for the public sector. For the private sector, I think we need to make sure that the ethics must come to the next level as opposed to people making sure that they’ve covered themselves, they fortified, and the followed process. What they’ve done in the private sector is that they’ve perfected corruption. They’ve made sure that all the processes are followed. The result is corruption, but it’s just well codified and processes are followed, but there’s still a corrupt practice, nonetheless. As soon as the private sector understands that that is not being competitive, that [inaudible 0:19:31.4] players because now, it’s the ‘old boys’ club’ that must continue. If a new player doesn’t fit into the rules and you’re unable to be part of this thing, you get co-option, but no real transformation so people must really be much more ethical for this country to move forward.

Jimmy Mzwanele Manyi, thanks very much for talking to us here on Transformation.