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DAVOS — A friend who mixes in powerful circles urged my Davos adventure to include a meeting with Brand South Africa‘s CEO Kingsley Makhubela with whom he was enormously impressed. As you’ll hear from this interview, my pal was on the money. The former ambassador and Tourism DG, who capped his studies with a PhD two years ago, has his finger very close to the national pulse. In this frank discussion, he unpacks SA’s lessons from a lost decade and shares his determination to tap into the wave of optimism sweeping the country – including his plan to enlist the support of the previously neglected diaspora. – Alec Hogg
This podcast was made possible by BrightRock, the company that introduced the first ever needs-matched life insurance.
I’m Kingsley Makhubela and the Chief Executive of Brand South Africa.
And Kingsley, here in Davos again. How many times have you come to this conference?
Well since I’ve been in Brand South Africa, this is my third time but before, when I was at Foreign Ministry, I used to come here very often.
So you’ve been doing national service for quite some time.
I’ve had a great deal of exposure to the ins and outs of Davos.
You’ve just come from a briefing with the Deputy President and certainly, from other people who were there, it seems like the mood was good.
The mood was good. The Deputy President in the meeting carried a message similar to what he did during the briefing back home around issues of building capacity of sustained institution and in this regard, he was very specific (to give you an example of what’s going on) within Eskom as we would expect at other entities. 2. Around the question of the fiscal discipline: he addressed those issues and he addressed the question of policy uncertainty. Of course the other issue is around political certainty as a result of changes in elections because in a democracy, the outcome of a contested political terrain is always unpredictable, so he was able to deal with those issues that he hopes (moving forward), now that we have a leadership that has been elected, that people would rally behind this leadership. What was very important in that meeting was that the Deputy President was emphatic about dealing with corruption, particularly corruption within the state and state institutions.
He spoke quite openly around issues of state capture as something that needs to be managed and deal with the challenges that are there. He was quite emphatic in terms of dealing with issues of corruption and I think the message is clear to all state-owned entities, given what has happened to Eskom – that if you don’t have government systems, you are next.
Ramaphosa is insisting on a new Eskom Board before he leaves for Davos. Not negotiable. #Eskom
— Annika Larsen (@AnnikaLarsen1) January 20, 2018
Do you think that the foreigners are watching how corruption is dealt with? I just want to use the Brazilian example of Operation Carwash where three dozen formerly very powerful people are today, sitting in jail. Do you think that’s the kind of outcome that foreigners are wanting from us, or would a TRC type of progress perhaps work better?
No you wouldn’t have a TRC for corruption. Corruption is a criminal event and that’s why corruption needs to be nipped in the bud, and that was the message the Deputy President was delivering. We cannot procrastinate over people whose dealings are corrupt and institutions that are failing government. That message is quite clear and I guess that people who were sitting in the room (and whom I sat next to) – foreign investors in South Africa – were quite impressed with the message that he communicated and the examples that are there. These are people who are following events in South Africa as they happen, so they’re quite informed about what is going on in the country. They were really impressed with the action that has been taken thus far and of course, the hope is that moving forward there will be much more rigorous action and that would instil business confidence.
The only thing that we can’t afford to have is to have people who are standing… who are undecided whether they would come and invest once they see what the new leader is going to do. I think the Deputy President dispelled that kind of myth, that a new leader still has to wait. He has taken action even before moving into the position of President of the country. What he has done now, has instilled a lot of confidence in many people and of course, that’s a collective action of the candidate back home.
It’s a bit of a whirlwind, isn’t it, since the 18th of December (if you have a look at how quickly actions are being taken)? However, the big one is the Director of National Prosecution – Shaun Abrahams – his position, which needs to be filled.
With respect to issues around the court processes that are going on, we all noted the decision that has been taken by the High Court in Pretoria and apparently he’s appealing that process so we would see how that unfolds. The President is also appealing that decision of the North Gauteng High Court, so we’ll see what will happen to.
It’s a reflection of a democracy. You prefer to go through the processes of rule of law.
We’re a country based on the rule of law. That’s fundamental in terms of our values and we have to respect that. I’ll be worried if anyone comes in and disregards decisions of the court or disregards the processes of our justice system that we need to deal with. Having said that, I think there’s a recognition that you can’t have a filibuster in the judiciary system and delaying taking key decisions when the country is burning. That’s why you’ve seen this action that has been taken by cabinet around Eskom instead of running the whole filibuster program that a lot of people within Eskom were trying to do. We hope there will be decisive action without undermining the rule of law. All of us would be very concerned if there’s a total disregard to the decisions of the judiciary in the country.
But even within the NDPP, there has now been action as well with the head who was seen as an obstacle by some on suspension. Things are happening. Asset Forfeiture Unit is getting busy, so the whirlwind continues.
The decisions that have been taken to start instituting some legal action against the allegations made against a host of people, can only augur well for the country. I think it sends a clear message that you can’t carry on getting involved in these corrupt activities and get away with it. With the justice system, unfortunately the wheel grinds very slowly although we hope it will be faster because the credibility of the country is being ruined in the process. I think everyone understands the urgency of dealing with this issue, like yesterday.
That’s a critical point that you’ve mentioned now, from an external point of view (and we’ll talk about that in a moment). Internally, Team South Africa, looking here in Davos, has been as cohesive as I’ve seen it – probably more cohesive than in any year since 2010. Do you think that this is something that is a honeymoon or are we perhaps, finally starting to sing off the same hymn sheet?
Actually, traditionally, with respect to our external activity, Team South Africa has been united. In the past, there’s been a lot of consultation around the message, “What do we take to Davos?” and there’s been an agreement. You will see now (and you’ve probably seen in the past), some of the messages have been communicated by business so there’s been a bit of a cohesive approach with respect to Davos and we are also glad. There are things that are dividing all the stakeholders that are coming to Davos. There’s no agreement on everything but there’s an agreement on key things that we all need to do and we’re here, and I think we’re focusing on all those things that we agreed to do once we’re here.
You guys have been coming here a long time and there’s been a lot of grumbling over previous years. This year, there’s no grumbling. This year, they’re smiling.
The difference is around the fact that there’s a lot of optimism about what has happened to Eskom. The decision that was taken by the cabinet with respect to Eskom has really emboldened a lot of people. It has armed a lot of people that finally, we’re starting to act. The mood is quite high, even with respect to the communication and understandably so because there are examples that are starting to be shown. People came here with examples and all of us are talking about Eskom. Is it only Eskom or are we having challenges of governance? The answer is ‘no’. There’ve been other state institutions that have been cited as having problems of governance, so the expectation is that what happens in Eskom will serve as an example to strengthen capacity of state institutions. We’re here on a very positive note compared to the past.
I was talking to a leading foreign investor in South Africa in London last week. They were talking about leaving the country and that would have been a significant decision for their board to make. The message that they left the meeting with was that with the change in the political arena, it’s a bit like giving up the Comrades Marathon when you’ve got 100 metres to go. Do you think that’s a fair assessment?
It’s a fair assessment because people have started tangible action. I think that moving forward, people are going to start seeing tangible action and we can’t be coming to Davos and saying, “Take action with one entity and not correct the entire governance issue” and expect to inspire confidence. We’re going to inspire confidence based on concrete actions that are being taken and moving forward I think people are going to look at that. I think every little step that we make would go a long way to instil confidence amongst people. In terms of our own capacity, to rise to the challenges that we’re having and address them in a transparent manner and yet, still operating within the same framework of the rule of law.
Brand South Africa: your job really is to bring investment into the country to make sure that the brand of the country is high. It’s been a tough job over the past few years.
Let me tell you. I usually tell people that last year was the best year – 2017 was the best year – and it was the best because we have approached the question of the Nation Brand from a totally different perspective. Last year was been a year where most of our institutions of government have come of age. We started to understand as South Africans the limitation and strength of the institutions of state. We started to understand our rights – how we can stand up and challenge certain things that are happening within government and within the state institutions. I think people are much more informed, moving forward and for me, that’s the best thing because it strengthens democracy. Democracy must be based on people understanding what they’re entitled to and their responsibility in the process, I see it as being the best for us.
For the first time, the powers of the Public Protectors have been cleared. The functions of the Constitutional Court are being understood. Not only that: even within the Criminal Justice System. How many ordinary South Africans now understand the concept called dolus eventualis? It’s because of seeing our democracy/our justice system in action so a lot of us are quite knowledgeable in that if we do certain things with certain intentions, the consequences will be so high. I’m saying that our institutions have come of age. They’re being tested. In some areas, it has taken the country years for these institutions to come of age. In our case, we’ve been very lucky. This last year, I must say that it was very good for us.
So we’ve been stress-tested and not found wanting.
With democracy we depend on institutions. Individuals will come and go but individuals will test institutions to the limit and would actually even try to prove the function of institutions. Institutions will be there forever, for generations to come and we need to develop that precedence of our institutions’ function so last year has been the best for us in terms of the institutions of democracy – how a democracy is matured. I’m really convinced that there’s no possibility in South Africa for any form of dictatorship, given the strong institutions. Are these institutions strong enough and underlying enough? I don’t think so. I think we need to do more to build the capacity and strengthen them and to make them act with necessary precision, given the challenges that we may have, moving forward.
There are some who would say we came very close to that dictatorship – that there were only a few votes between us.
I don’t think there’s a possibility of a dictatorship. I think the rule of law in the Constitution would have held and that’s what the checks and balances are, so that there’s no abuse by any arm of the State. This institution must function independently and be able to restore the credibility of our democracy.
The reality is that the system has been stress-tested and where bulwarks need to be added, they shall be, no doubt.
Absolutely. The system has been tested. Our democracy was tested – it’s true – in the last few years but I think we’ve come out of this thing untainted. We’ve come out of this thing with much more knowledge and much more education to ordinary people, institutions, and businesses about the rights of individuals. We came out very strong as a country and I think these are the institutions that we are going to rely on. I’m glad that I live in a country where, even if I want to take the most senior person in government to court, I can do that without any fear. I think that augurs well for the future.
Indeed. Just to have a look at the mood in Davos about South Africa; we rank poorly on most of the ratings but the most concerning of them all, was the Edelman’s Trust Barometer where South Africa is second-last but America has gone below South Africa. They call it ‘trust imploding’ in America. However, they used us as the benchmark. ‘You’re even worse than South Africa’ was the way that it was discussed. From a Brand South Africa point of view and from a South African citizen’s perspective, that’s something that has to be put right.
Let me tell you. We look at different indices that are conducted around the country. We look at the World Bank. We look at the WEF. We look at different indices. If you look at all of them, the say something totally different. It depends on the methodology of the research. Where we’re sitting as Brand South Africa, we don’t want to be complacent. Anything that comes up very negatively: we want to go to the root causes of those issues and I’m glad that in November, for the very first time since I was in Brand South Africa, the cabinet has allowed us to come and make presentations around these indices. We were able to go to the cabinet with a research team and provide poignant issues that are creating these downgrades or this pessimistic mood.
In order to address our challenges (because we shouldn’t run away from our challenges and I got the impression that the cabinet listened to us), we were able to make some recommendations even post the ANC election about how we need to behave. I’m glad some of those things that are happening here are part of what we recommended to deal with moving forward and instilling confidence. Whoever is elected in the ANC, we recommended that that person should be able to come in and instil confidence because this was the major platform that was coming up after the ANC conference. The next platform is the Mining Indaba. We need to go to the Mining Indaba again to articulate confidence in terms of the people who are involved in the mining sector. The mining sector is our bread and butter basket.
We can’t afford to mess it up, so we need to go there with a clear message on how we’re going to deal with some of the challenges, particularly regulatory challenges that we have in the sector. I hope the political leadership is looking at those issues. We’ve made those proposals.
From what you’ve said earlier, the Deputy President did raise the uncertainty of regulation and legislation as a key issue. There’s no secret that the incumbent Mining Minister is not highly regarded in the international community because of his relationship with the Guptas and more. We can’t beat around that bush. How do you reconcile the two?
The issue that we’re talking about is the policy certainty. Remember, policy development is a long process that includes cabinet. There’s no single individual who’d be able to develop a policy and pass it. The requirement is that it must go through cabinet. We hope that moving forward, now that the decision has been taken – not only by the President and even the ruling party conference to deal with the space of policy uncertainty – that moving forward, there will be certainty that there’ll be clarity in terms of policies. People will know where they stand. Let me explain the question of policy certainty. It doesn’t mean that we must agree with whomever is saying something but at least, we need to tell people where we stand and where we don’t so that they understand that to interface with us, this is where we are. This is the level of tolerance that we have and this is what we can’t tolerate.
We need to clarify that. They will respect us: not on the basis of agreeing with them, but that we are able to tell them that we disagree with them in terms of this and we’ll implement policies that are in the best interest of our country.
The MPRDA is a good place to start and that’s what I’m hearing from you – that with the Mining Indaba, some message needs to go out.
Exactly. That’s what we propose. We propose messaging for this at Davos and Mining Indaba is the next platform where we need to articulate clear messages. I hope people are developing a message for the Mining Indaba that would deal with the question of policy uncertainty.
What about China? Clearly China is playing an increasingly important role in leadership globally, and it is a country that is close to South Africa through the BRICS relationship. Are you from Brand South Africa making any special effort to articulate the rebound (if you like) of South Africa to the Chinese friends?
Last year, you will recall Xi Jinping, the President of China took the centre stage during the opening session here and he spoke about globalisation. He articulated, so clearly, the interdependency of the world so you can see that in terms of the Chinese behaviour and the policies they are formulating, that they are very much embracing what’s going on. We need to put ourselves much closer to that. It’s not only us. Countries in the developed north are moving towards China because they realise China is the emerging power. If you look at the projected growth of the Chinese economy, a lot of economies are starting to say that in the next 20 years or so, China will be the world’s biggest economy. Now with China being the world’s biggest economy, how do we piggyback on that as we move forward. Given the economies of scales that they have, how do we leverage on that?
Given the demand for certain mineral resources that we have, how do we ensure that we get access and a foothold into the Chinese market? At the political level, the relationship between us and China is quite wonderful. As Brand South Africa, we’re really trying to showcase what the country can do and what the potential is for the country in the Chinese market because they’ve been very ignorant about the dynamics in South Africa and what South Africa possesses. Chinese are thirsty for knowledge. You’ll see them within the tourism sectors, that we get a large number of Chinese tourists visiting the country and they’re high spenders. In the past they were regarded as very low spenders but they’re high spenders, so we really need to leverage this area of the Chinese boom that they’re seeing.
The other good news for Southern Africa has been the election in Zimbabwe of a President who has a reformist agenda and is looking to get back into the global community. Certainly you would know. Zimbabweans who have gone home from South Africa (I know a lot of people who have done that): is the fact that the region itself is going to benefit from President Mnangagwa perhaps something that you could also use as a pull-point or do you see that as outside of your remit?
The economy of Zimbabwe is intricately linked to our own economy. We’ve benefited a lot from Zimbabwean professionals working in South Africa so the changes in Zimbabwe really augur well. Not only for Zimbabwe, but also for the entire Southern African region. Given these changes that have taken place in the recent past, what was critically important was the announcement of President Mnangagwa on the rule of law and really to start redressing some of the land that was taken away from the white settlers. This land became idle and unproductive and I think that’s where we can learn a lesson from a big voice that is urging the country to take land without compensation. To have the capacity to utilise that land, the Deputy President has been quite emphatic that the land redistribution in our country will be done in a sustainable manner and will be done within the rule of law.
We’re not going to arbitrarily act because we’ve learned our lesson across the border and the Zimbabweans are starting to address their own mistakes that they committed years ago. Are we going to start making the same mistake again? I think there are lessons to learn from there but the coming of Zimbabwe and the acceptance of Zimbabwe within the global community would help it a great deal. It would help to foster investment in that country, particular with some of the challenges that we have in that region. We’ll certainly benefit from a stable Zimbabwe and a Zimbabwe that is economically active within the Southern African region.
So if you were to sum up the challenges and the future?
The biggest challenge that we have in South Africa is not the policy formulation. It’s the policy implementation. We need to focus on implementing key decisions/policy decisions. You will recall that in the last few years, people have been speaking about dealing with corruption. Everyone recognises it but the implementation has been a huge challenge. The policy uncertainties and people dealing with policies without implementation: I think we must move to implementing these policies. Once we implement what we are having on the table now, I think it will go a long way to inspire confidence. Remember, policy suggests a hypothesis. They only become real once they start testing the implementation and then, if you realise the implementations are having unintended consequences, you can always go to the drawing board but you can’t keep on formulating policies without implementation.
That’s one thing. The second thing… the challenges that I see moving forward, is in the developed north – the shift to the far right creates a big challenge for all of us because unfortunately, the shift to the far right is quite prevalent in developed countries that are supposed to play their role in mitigating some of the challenges that we’re seeing around the world. Mitigating the challenges of environmental degradation, for example. In Cape Town, we have a serious water problem. You can see the water patterns are changing. It really affects us. It hits us directly so you need countries of the north to be sensitive to those issues and they will not be sensitive with a shift to the far right. Imagine that you have seven countries that are unable to form governments now because they’re being held to ransom by these far-right tendencies that are starting to emerge and there’s a bigger strait in terms of the whole international situation.
I’m not sure that developed countries actually play their roles in terms of helping the developing countries to leapfrog the technological gap and to be able to all move to the Fourth Industrial Revolution without anyone left behind. Those are the challenges, moving forward.
And from your own perspective; you’ve been with Brand South Africa awhile now. Are you looking to go back into mainstream/national service, which as you said earlier, you’ve been doing for some years?
I think the space where I am now…I can make a bigger contribution to deal with issues of analysis of the indices and to be able to advise government. Fortunately, since I’ve been in South Africa, I’ve received my PhD in Political Science and I hope to use the skills that I’m developing to further robustly critique these reports that are coming up and be able to distil out of these reports things that we need to address as a nation, because we really can’t sweep this thing underneath the carpet as it will come back to haunt generations to come. We need to do our share now to deal with issues that we’re identifying and to build a solid foundation for future generations. I think I can still make a contribution within Brand South Africa.
And finally, just a little bit from left field: you do have Brand South Africa presence around the world. You would no doubt, come into contact with what some people call the tenth province – the diaspora. Is the country tapping into that as aggressively as it could?
We are. Last year we went to visit Australia. We went to Sydney and Melbourne to interact with South Africans who are there. Previously I was told that they are the most hostile but I can tell you; once we arrive there, they are the best resource. They are willing to do their share. This March I’m going to Perth and I think another state, to speak to the South African diaspora to see how they can help in building the reputation of the nation and really help us to build our country. We’re doing the same thing in countries like the United Kingdom. We’re doing the same in the U.S. We just have very limited missions as Brand South Africa but we’re working with our embassies around the world to deal with issues of the diaspora and see how we can leverage on that. The diaspora in most instance, as you know, are a good resource for the country.
They send remittances back to the country but they are also good brand ambassadors when they understand the dynamics the country’s facing – the potential the country has. They can articulate that quite strongly, so it’s an area that we’re going to constantly keep on tapping. As I said I’m going to Australia this March to carry on the discussion that we’ve had with South Africans that are living there.
And every time the Americans refer to their greatest entrepreneur Elon Musk as ‘the South African, Elon Musk’ it can only do the country a little bit of good.
Absolutely. It’s not only Elon Musk. If you look at a lot of sporting personalities…
And Trevor Noah. He’s doing a wonderful job.
Branden Grace is a golfer who is doing fantastically well. Our field and track athletes – Wayde van Niekerk, etc. – are really building the profit of the nation’s brand. Of course in the last few weeks, we’ve lost two prominent individuals – Professor Kgositsile and the other day, Hugh Masekela – who have been good ambassadors for the nation brand, but we should all do our share. We have a lot of South Africans in the diaspora who are willing to play a role in building our country because they still find some level of affinity and identity with the country.
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