Decisive, ethical, value-based leaders needed

You are going to have to pin a confirmation bias ‘badge’ on this writer’s jacket, because he absolutely loved the tongue lashing that Pick ‘n Pay chairman, Gareth Ackerman, gave government policy makers during his introductory remarks to the retail giant’s 2020 AGM.

The future is bleak, uncertain

“It has been hard to stay positive about the future of South Africa for a long time now,” Ackerman said, singling out rolling blackouts; surging crime and the proliferation of criminal cartels; the breakdown of logistics capacity; the burning of trucks; and a diplomatic stand-off with South Africa’s biggest trading partners as obstacles that “quelled any thoughts of an early economic revival”. 

It has been some time since FAnews plunged into the world of the domestic economy and the country’s politics, but Ackerman’s words inspired us to revisit the topic. Why? Because the resilience and sustainability of financial services firms are inextricably tied to the economies in which these firms operate. This is even more relevant in the world of short-term insurance, where large underwriters rely on economic growth to give their gross written premium growth a boost. PS, non-life insurers struggle to fulfil their supporting role if the underlying economic and political constructs are shaky. 

It did not take long for Ackerman to single out emerging crises in the form of “recent government policy and legislative changes which are particularly concerning”. Regular FAnews readers should be experts on the country’s policy absurdity given our frequent interrogation of looming legislation such as the Employment Equity Amendment Act (EEAA) and National Health Insurance (NHI) Bill, to name but two. The Pick ‘n Pay chairman got the ball rolling with the EEAA, suggesting that the legislation would have the effect of making large numbers of qualified people unemployed. “This law is very probably unconstitutional and could ruin many productive companies and foreign investments on which the economy depends,” he said. 

Blunt policy instruments not necessary

Ackerman criticised government for introducing a blunt policy tool to try and force outcomes that the country’s large businesses were already working hard to achieve, “not because we have been instructed to do so, but because of the growing recognition that a diverse workforce and leadership is a strategic asset”. PS, for readers who are not familiar with the EEEA, it gives the Minister of Labour sweeping powers to set industry specific, race-based management level targets for firms employing 50 or more staff. Local businesses are not only incorporating diversity, equity and inclusion into their environmental, social and governance (ESG) plans but are striving to comply with the requirements in the country’s Broad-Based Black Economic Empowerment (B-BBEE) laws.

The discussion turned to another ill-thought policy that could create a banking crisis, send food prices ‘through the roof’ and worsen unemployment in the agriculture sector. “The new provision for race-based water rights has huge potential to impact food security, [as] there is no line of would-be black shareholders with the necessary capital to purchase the required equity in farms; this policy could ruin or close many of our farms and undermine the value of all existing farms,” Ackerman warned. “I cannot believe the government would propose policies that would close down productive farms and businesses, and in doing so increase food shortages and food prices”. 

Well, Mr. Ackerman, this craziness is quite common when government opts for centralised power over the good of citizens. Case in point, the NHI, as currently proposed, should eliminate the entire Medical Schemes industry. 

Political leadership in a shambles

Few would argue that South Africa’s political leadership is in a shambles. Presenting to the South African Underwriting Managers’ Association (SAUMA) 2023 Conference, award-winning journalist and political commentator Justice Malala pointed out that South Africans were justified in their scepticism of the current crop of leaders: all of us are wondering whether these leaders are on the job, or sleeping on the job. He reminded the audience of mostly short-term insurance professionals that South Africa’s political risk was elevated, and practically overwhelming. “Decisive, ethical and values-driven leadership matters; perhaps if South Africa had more decisive leadership, we would not be facing some of the scary issues that we face today,” he said. 

Malala offered a fast-paced and wide-ranging assessment of South Africa’s social and political environment circa July 2023. The big issues, in no particular order, were the 2024 National Elections; extreme weather and climate change; the threat of national grid failure; the so-called Phala Phala farmgate scandal; the country’s cosy relationship with Russia; and the inevitable growth in the number of political coalitions ‘in charge’ of local and provincial, and even national, government. “We have to confront these issues and talk about them because they lead to a crisis of confidence in our country,” he said, pointing to long-term slumps in both business and consumer confidence. In fact, the local business community has not been this concerned since the mid-1980s when the outlook for South Africa was incredibly gloomy. 

A bumpy election year looms…

You should brace for a bumpy 12-months as the country enters an election year. “You must be prepared to listen to all kinds of people who want your vote … much of what they promise will be populist [and] much of what emerges [between now and mid-year 2024] will not be serious policy,” Malala said. But the post-election prospects are not too rosy. 

According to Malala, it is increasingly likely that the ANC will lose its outright majority, forcing it into coalitions that would include one or other of the major opposition parties. He said an ANC / DA coalition would be great for business, but had little chance of coming to pass. The more likely scenario is an ANC / EFF ‘hook-up’ which would lead to further centralisation of political power. Either way, he expected the ANC to maintain control of policymaking. 

Malala picked up on some of the policy issues that subsequently made it into the Pick ‘n Pay chairman’s address. He indicated that B-BBEE policy would remain in focus and that recent talks about the “racialisation of water provision and water access was going to be a major issue”. But he was rather dismissive about the proposed centralisation of health care procurement: “The ANC has been talking about NHI since its Polokwane conference in 2007; there are going to be so many challenges of the current Bill, constitutional and otherwise, that we are unlikely to see an NHI anytime soon”. 

Ackerman’s address was not all doom and gloom. He welcomed recent signs of “a genuine shift in [government’s] attitude towards the private sector, and a move away from the heavy hand of the state” and hinted that progress was being made in areas like energy, logistics and safety and security. “I really hope what we are seeing in the collaboration between business representatives and government to address the electricity, transport, logistics and crime challenges is a fundamental change for the better … [and one that will] lead to a more considered, evidence-based approach to managing the economy and making policy across the whole of government,” he said. 

It is your duty to speak truth to power

One of few positives mentioned by Malala was that associations like SAUMA are able to speak truth to power and that the ongoing dialogue and engagement between government and the private sector was “very powerful”. He also celebrated the many South Africans who wanted to carve out a better life for family, friends and peers and were therefore working tirelessly to deliver a prosperous and successful society. He concluded that South Africa could turn things around despite the tough and often troubling political backdrop. 

And Ackerman concluded, “Pick n Pay was built during a period of enormous uncertainty in our country, at a time when it may have seemed foolhardy to keep believing in the possibility of a better future … [today’s] difficult times compel us to do what we can to help those with less, and we are constantly delighted by the investments our teams make in the various communities in which we trade”. 

Writer’s thoughts:

A plethora of near insurmountable economic, political and social obstacles have sent South Africa’s business and consumer confidence plummeting of late… Do you think the country can turn things around at the next election? Or are we too far down the slippery slope of societal decay? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts [email protected].

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