In snowy Davos, every year, big thinkers in business, politics, and civil society gather to pontificate on which way the winds of change are blowing. The verdict this time round? It’s a hurricane out there. But if we heed the warnings, it could help to usher in a better, smarter world.
By Alec Hogg
You didn’t need to spend January at the World Economic Forum in Davos to appreciate how fast the world is changing. But it helped. For those of us there, the message was delivered with the force of a vuvuzela.
The WEF’s annual meeting began with a communist leading the charge to preserve the world’s free enterprise system. And ended with the outgoing Number Two of capitalism’s biggest beneficiary warning us his USA is about to reverse roles with China and climb into a protectionist cave.
In between we got to hear how the Blockchain will transform financial services in the same way that the Internet revolutionised communication. And got an update on important progress in battery storage where costs are now falling fast, promising to close out the final Achilles heel of renewable energy.
Being invited to the annual gathering in Davos is the highlight of my year. It is the place where, consistently, the global agenda is set for the year ahead. This was my 13th successive participation, adding the benefit of the regular visitor who can track broad trends.
So how does WEF 2017 see this year?
What jumped out is the way long-held myths are being tested and discarded. The Davos meeting’s theme was responsive and responsible leadership. Appropriate given so little of it exists around the world right now.
As the Fourth Industrial Revolution takes hold, much of what we used to take for granted is now being disrupted. Politics is the most obvious, with populist leaders sweeping to power by feeding on the public’s distrust of the status quo and growing fears of the uncertain future.
Although the shock election of Donald Trump grabbed most attention, the disruption of the political status quo is not isolated either to the US or that part of life. Business, too, is being turned on its head with a shareholder focus now replaced by the paramountcy of “stakeholders”. The business of business is no longer to make a profit. Its primary goal has become to earn and retain a social licence.
Similarly education. After decades of following its own agenda – and ignoring the market’s needs – colleges and universities face an existential crisis. Having tired of not getting what they need, companies have been building their own in-house training campuses. They are producing thousands of graduates now preferred by companies as they have skills businesses can actually use.
The media, too, is in a crisis of change. The Edelman Trust Barometer, released on the first morning of the annual meeting, delivered a shocking early headline when chairman Richard Edelman described the results as an “implosion” with an astonishing 85% of the respondents no longer fully trusting the system.
Worst performer of the major categories was the media, which recorded a 5 point index plunge (to 43) with over half of those surveyed in 28 countries no longer believing what the mainstream organisations tell them. Most people today believe someone they know more than they do traditional media.
The second big headline to set the Davos 2017 mood was a sensational claim on income inequality by Oxfam’s head, Winnie Byanyima. She was subsequently besieged by journalists, but I did manage to catch up with her towards the end of the event and was rewarded with a feisty discussion that you can listen to on Biznews.
I was surprised by a few things she claimed, including the decision to rebase the comparison that caused such a stir: last year Oxfam said 62 billionaires owned as much as the bottom half – this year the number dropped to just eight. She admitted her intention was to “shock the leaders into action” on income inequality. Objective achieved.
And what of South Africa?
On a superficial level, Davos 2017 was successful for a team SA contingent ably led by Deputy President Cyril Ramaphosa, who was well supported by respected Finance Minister Pravin Gordhan. Cyril thrived in an atmosphere where he was surrounded by like-minded people, moving decisively and happily out of his controversial boss’s shadow.
Ramaphosa showed us why he was Nelson Mandela’s favourite and reminded us that the chairman of the country’s forgotten National Development Plan is very comfortable operating on the global stage. He was cheerful, warm, engaging and articulate. Cyril also participated in half a dozen formal WEF sessions where, unlike President Jacob Zuma, he looked completely at ease.
For someone who has watched Team SA closely for some years, the other distinguishing feature of Davos 2017 was strong cohesion there between business, labour and government. I cannot remember witnessing higher levels of trust between them.
But, sadly, that trust doesn’t extend far enough. Commentary to the Edelman Trust Barometer grouped the country in with other underperformers in a critical category: “In developing markets such as Brazil, Mexico and South Africa, trust in government collapsed in the past four years in the wake of scandals. Trust in government is now as much as 43 points below that of business.” Ouch.
*Alec Hogg is the founder and editor of Biznews.com
When there’s no wind or rain and playing conditions are perfect, to braai, or not to braai is not a question. It’s a must.
And when it comes to braaing with the in-laws, playing the host is inevitable and very stressful. Especially if you’re dealing with a Braai Master like many a seasoned father-in-law. Fire or charcoal? Firelighters or a little bit of grass, kindling and a match? And what should you do to gain and keep possession of the tongs?
Watch this clip produced by comedian Stuart Taylor to learn more about some of the dos and don’ts, and visit our YouTube Channel for more tips to Play the Bounce in life’s Big Change Moments.
A chance meeting at a snowy Swiss resort inspired a sudden shift in South Africa’s economic policy. As always, life’s unexpected paths open up when we least expect them. By Alec Hogg
The game of life has many forks in the road. Sometimes, we get opportunities to make conscious choices. But often things just happen. Things that end up having a massive impact.
At 17, one such event over which I had no influence pushed my life onto a different road. The expected path in lawyering was diverted through a shove into journalism, steering my future into an unexpected direction. One, as it turned out, ideally suited to my skill-set and temperament.
Unknown to many of its citizens, South Africa was the beneficiary of similar good fortune.
It happened in the beginning of 1992 when then President-in-waiting Nelson Mandela was invited along with FW de Klerk and Mangosuthu Buthelezi, to share the podium at the World Economic Forum in Davos, Switzerland.
Mandela arrived at the Alpine resort a devotee of socialism; a believer in economic policies applied so disastrously in the past couple of decades by Venezuela’s Chavez and Argentina’s Kirchners.
Mandela wasn’t shy to tell anyone prepared to listen, that nationalisation topped his economic agenda. If it was South African and moved, he said, the State was going to own it.
Western leaders agued vociferously with Mandela, trying their best to turn him away from that ruinous path. But their logic fell on deaf ears. Even though these policies had caused the economic collapse of the Soviet Union, Mandela – and the ANC – remained steadfast.
Yet when he returned after that week in Switzerland, Mandela had done a complete turnaround. The socialist dogma was replaced by a pragmatic, market-driven approach which served the nation well through the late 1990s and noughties.
His economic transformation came from one of those unexpected forks in the road.
Also on his first visit to Davos that year was one of Mandela’s own heroes, Vietnamese general turned politician Vo Van Kiet. Although he remained a staunch communist, the general was among the first in his nation to realise what worked in politics didn’t translate well economically.
We’ve tried what you are preaching, the Vietnamese Prime Minister told Mandela, and it leads to poverty and pain. Much better to keep political control, but free up the economy, encourage people to build businesses, create wealth and pay taxes. That’s the way to transform our society and uplift the poor.
Van Kiet is remembered as much in Vietnam nowadays for his approach to the economy as he is for soldiering. He is revered as the genius who inspired a system which has led to Vietnamese per capita wealth rising at an incredible compound growth rate of 12.8% a year for the past 22 years.
Sadly, for all the good initial intentions, South African leaders failed to follow through on the sound Vietnamese advice, allowing ideology to divert them somewhat.
As a result, South Africa’s GDP per capita has posted compound growth of just 2.7%. The relative impact has been dramatic. In 1992, the average earnings of a Vietnamese citizen was one 25th of a South African. Today it is one third.
But that would have been so much worse had Vo Van Kiet not been among the lower profile visitors to the 1992 World Economic Forum. Or had the former prisoner’s hero been unable to grab a few invaluable minutes to change the path for Nelson Mandela – and South Africa.
Another new road has opened up for South Africa. This one involves its battle against corruption, that insidious cancer which has been the root of such hardship and poverty in many developing countries.
During his first spell as Finance Minister, from 2009 to 2014, Pravin Gordhan tagged Government procurement as the key area where taxpayer money was being wasted or misappropriated. From inflated contracts for cronies and payments for services not provided through to simple mis-management, State resources were being diverted into the wrong pockets.
Gordhan worked hard at creating a central office to oversee the State’s purchases, but when he was demoted in 2014, his initiative lost momentum. Not as well known is that after his reappointment in the wake of the dramatic developments of December last year, this stalled plan was one of the first things Gordhan focused on.
His appointment of Kenneth Brown as head of the Office of the Chief Procurement Officer (OCPO) is one of those quiet moves that is starting to reverberate loudly. Such is Gordhan’s confidence in Brown, that in the February Budget the reinstated Finance Minister could announce that the nation would avoid a VAT increase Brown’s team would lick in the required R25-billion a year from savings on what the State spends.
A recent update from the OCPO suggests Gordhan’s confidence is well founded. For instance, national and provincial Government spends R10-billion a year on travel and subsistence. But despite pocketing R1-billion in commission, travel agents always charge the State top dollar and never pass on any negotiated discounts.
Another example is phones, where national and provincial Government spends R3.2-billion a year. Brown says a simple consolidation of the account is saving an immediate R400-million a year. Similarly, with the building of new schools, pretty much anything used to go – but now there’s a cap of R35-million on a 4 000 square metre school. And so it continues.
After his demotion in 2014, 66-year-old Pravin Gordhan must have been sorely tempted to swap his suits for a rocking chair. But he hung in there. And Nenegate, over which he had zero influence, threw him onto a different path. That opened the way for a renewed attack on corruption through championing the efforts of a rejuvenated Kenneth Brown.
Life has a funny way of doing that. New avenues open up in the most unexpected ways . Sometimes, as with Pravin Gordhan, it’s a case of simply hanging in there, just showing up. Because we never do know what tomorrow might bring.
* Alec Hogg is the founder and editor of Biznews.com
* The opinions expressed in this piece are the writer’s own and don’t necessarily reflect the views of BrightRock.
A playlist of tracks that prove the rich diversity and power of our home-grown music.
South African music rocks. And pops, and kicks, and jams, and sings, and dances.
We all know this, because humankind began right here at the edge of the continent, and music is one of the things that makes us human.
No-one needs an excuse to switch on South African music and pump up the volume, but it’s always good to have an occasion that calls for a celebration.
In this case, it’s the SABC’s landmark decision to institute a 90% SA music policy on its radio stations. So here’s our playlist, in no particular order, to get the party started.
“Mannenberg” by Abdullah Ibrahim. Salty as the Atlantic sea-breeze, this bittersweet jazz-suite exquisitely captures the joys and pains of life on the southern tip.
Set to a relentless and mesmerising Marabi rhythm, its only lyrics are a defiant cry of resilience: “Julle kan maar New York toe gaan, maar ons bly hier in Mannenberg!”
“Take Yours, I’ll take Mine” by Matthew Mole. A finger-plucking-good, deliriously infectious banjo-pop anthem that will reel around in your head for days.
“Lisa se Klavier” by Koos Kombuis. Koos, real name Andre Le Toit, made up a name for himself during the Voëlvry Alternatiewe Afrikaner music revolution of the 1980s.
This is his masterpiece, an achingly sublime piano-and-guitar ballad that beautifully evokes the melancholy introspection of the darkest hour before the dawn.
“Joy” by The Soil. When you get right down to it, there are really only two types of songs: songs of longing, and songs of jubilation.
This is one of the latter, a blissful acapella hymn in three-part harmony, swimming with upbeat energy and serving as a reminder that the roots of contemporary pop lie deeply embedded in the broad church of Gospel.
“Moonwalk Away” by Goldfish. One giant leap for South African electronic dance music, this quirky club hit pays tribute to the first lunar landing with a fusion of synthesised beats and soundbites from Mission Control, overlaid with a soaring, spaced-out vocal in no known earthly language.
“Christopher” by Nakhane Touré. A giddy, light-headed love-song that glides to a pan-African beat and a joyous falsetto vocal, by a young Johannesburg artist who is crossing boundaries at home and abroad.
“Nkalakatha”, by Mandoza. Pump this thumping, swaggering kwaito track into the air in any South African setting, from a rugby stadium to a suburban braai to an election rally, and you’ll have an instant party on your hands, as well as a number of objectors yelling at you to switch it off, because they’ve heard it a million times before.
But then they too will throw their hands up and slide into the groove. This, after all, is our alternative National Anthem.
“Rain Rain Beautiful Rain” by Ladysmith Black Mambazo. Rain is heaven’s music, and this lovely song, by the isicathamiya group who made Paul Simon famous, is a prayer and a celebration, straight from the heart and straight to the soul.
“Pluto (Remember You)” by DJ Clock and Beatenberg. This easygoing, trip-stepping pop song ebbs and flows with the buoyancy of an ocean wave, seducing a variety of South African musical styles into its hypnotic slipstream.
“Weeping” by Bright Blue. A hymn of social conscience from a time of “fear and fire and guns”, this 80s classic carries the spirit of hope in its sweeping, plaintive melody, as it builds up to the subtle shimmer of a refrain from Nkosi Sikelel’ iAfrika.
*For further exploration, tune into “Tune Me What”, a podcast of the best of South African music, presented by Brett Lock and Leon Lazarus. http://tunemewhat.com.
The world turns at a different pace in the middle of nowhere, where a stranger, for a change, is someone you can trust. A true story of a chance transaction. By Gus Silber
I had always known there was a little town called Ladismith, which I had naturally assumed to be an incorrect spelling of Ladysmith.
The town with the proper spelling, of course, is in north-west KwaZulu-Natal.
The town with the slight mistake, I can now reveal, is in the Klein Karoo region of the Western Cape province, just off the R62 between Montagu and Calitzdorp. It is a long way, and at some point you have to stop to fill up and get something to eat. So we stopped in Ladismith.
There is a petrol station in the main street, which appears to be the main attraction in Ladismith, judging from the number of cars and bakkies that were there. A storm was about to break, the sun forcing its way through barrages of rolling cloud to paint the light in a silvery glow.
There were three flags flying on tall masts, their lanyards clinking in the gusts, a French and a British and a South African. The rainbow flag was threadbare and serrated at the edges, as if it had been rescued from a battle.
I strolled across the road, waiting for the schoolchildren on their bicycles to pass, and I walked into a shop called Karoo Vine, which had a giant green bottle of wine as its monument, and a chalkboard advertising Wyn Wine Port Olywe Olives Cheese Kaas Nuts Biltong. I wasn’t really looking to buy. I just wanted to stretch my legs a little.
The lady behind the counter looked up and greeted me with a tra-la-la of the purest Afrikaans I had heard in a long time. “Vriendelike welkom, Meneer,” she said, sticking prices on goods with slim, elegant fingers, “en hoe gaan dit met U vandag?”
I was taken aback for a moment, because the default in-store greeting in the city where I come from is an icy glare and a thin-lipped nod that lets you know you’ve just been profiled as a potential shoplifter. Then I regained my composure and answered the lady in the purest Afrikaans I could muster.
“Nee, dit gaan baie goed, dankie, Mevrou, en met U?”
We had a brief conversation about where I had travelled from and what I was doing in Ladismith, and then she gestured at the shelves and invited me to make myself at home. I felt like buying something after all.
I picked a packet of droë perskes and a dried peach roll and some Karoo biltong, and I took them to the counter and put them down.
The lady smiled her thanks and added up the tally, which was R54 exactly. I handed her my credit card. Her shoulders sank, and she sadly shook her head.
“O, ek is jammer, Meneer, maar ons neem nie kaartjies nie.” She pointed at a small sign saying Jammer Geen Kaarte No Cards Accepted on the side of the cash register.
I did not have any cash on me, so I smiled my apologies and turned around to put the goods back on the shelves. Then she quickly added: “Maar U is baie welkom om met ‘n EFT te betaal, Meneer.”
I suddenly forgot the Afrikaans for “really”, and I said, “really?” She laughed and said people who came to her shop from afar often paid her by Electronic Funds Transfer, and in all the time she had been running the shop, she had never once had someone not pay her after promising that they would. “Really?” I said.
And she wrote down her bank details on a small piece of paper, with R54 and her name, which was Elsa, and her cellphone number below.
She wrapped up the perskes and the peaches and the biltong and wished me ‘n wonderlike dag en ‘n veilige reis verder.
I walked out into the main street of Ladismith, in the Klein Karoo, between Montagu and Calitzdorp, and I saw the rainbow flag flying, and the clouds passing overhead. And I thought to myself, this is a good place, with good people. And I wasn’t just thinking about Ladismith.
*In case you’re wondering, yes, I did EFT Elsa the R54 when I got back to Johannesburg.
** The opinions expressed in this piece are the writer’s own and don’t necessarily reflect the views of BrightRock.
In the age before information broke free, few of us would have even heard of Nkandla. Now, whispers grow into roars through the power of social media. Welcome to the Second Renaissance of humanity. By Alec Hogg
One memorable evening during our farming semi-sabbatical, I tumbled onto the meaning of modern life. Well, if not exactly some deeply philosophical meaning, at least an appreciation of what makes our modern wired generation so different to their parents.
Friends from the city were staying over. After a few bottles of wine, as it does, the conversation moved onto weighty subjects. Soon we were debating the most important thing to transform the world.
In polite language, it was a vibrant discussion. And as tends to happen at such emotional times, my wife’s sharp shin kicks were a reminder of a host’s required decorum.
But this time the bruises were happily accepted. Because as my case was argued, it suddenly dawned that everything I’d ever been thinking about this Information Age was true. Things really are different. The world has become a very different place.
Quite simply, it’s because mankind is now differently networked.
When I was growing up, folks phoned each other on their expensive landlines. When pals were far away pals, it was handwritten letters. Even the serious stuff. My in-laws courted that way for two years before moving to the same country.
This forgotten way of life was especially prevalent in smaller towns. There, one’s reality was shaped by books, encyclopaedias, newspapers. People trusted what they got from within local circles. Bank managers, church ministers, a local doctor, accountants, the headmaster – these were the pillars of society.
Those who governed were far away, occupying themselves with stuff too important for the rest of society to reflect over, let alone question. For most of humanity, out of sight really was was out of mind. Life was blinkered, but a lot simpler.
Even after moving to the big city, my own mind only really started opening after reading John Naisbitt’s 1982 masterpiece, Megatrends. The result of a decade’s research, it predicted 10 major changes that would flagpost our collective future. Mostly it explained how free flowing information was about to transform our lives. Preaching the reality that while ignorance feeds stagnation, information stimulates progress.
It was that message that encouraged my dedication to journalism. Until reading Naisbitt, I’d planned to spend a few years as a newspaper reporter to learn about the business world before moving into an area offering potential.
But after Megatrends, it seems I’d fallen into exactly the right place. If information was going to change the world, then surely there could be no better place to be than at its focus hub? That decision sent me onto a never regretted path of lifelong learning. On such small things lives turn.
It has been an amazing few decades. Paul Merson explains the transformation well in his entertaining autobiography “How NOT to be a professional footballer.” Hell-raising Merson reckons were he born 20 years later, his affection for drugs and alcohol would have killed his career before it even began.
Dalliances which in Merson’s heyday remained secret would today become public in minutes, thanks to smart phones and social media. So Merson’s favourite pasttimes, like snorting cocaine off an obliging breast in the back of a London cab, would have terminated his career overnight.
Travails of South Africa’s deeply compromised President Jacob Zuma offer another example of how the world has changed. One of the reasons why the 74-year-old is baffled by the fact that everyone else is so agitated by his antics.
In a different era, the world would never have discovered the overindulgence of Nkandla; known about, much less questioned, Zuma’s close friendship with the Guptas; discovered his dodgy deals with African dictators; or been aware of Zuma’s penchant for trading favours for cash.
Entrepreneurial politicians have been a curse on the public service long before Cicero got decapitated for opposing them in 43BC. But in our age of Twitter, Facebook and Instagram, getting away with devious behaviour is tough.
Take the woman who opened the first crack in the previously impregnable partnership between Zuma and the Guptas.
Deliciously named ANC stalwart Vytjie Mentor spilt the beans about the Gupta role in appointing Zuma’s cabinet when posting an otherwise innocuous reply to a Facebook friend. Only after her comment went viral did Ms Mentor appreciate the relevance of her experience, realising hers wasn’t an isolated example.
Returning to our shin-kicked dinner party, developments like Vygie’s help me believe the bragging rights are mine. Not only has the Information Age transformed the world. But it has also changed our lives very much for the better.
Inverting shows us how.
Imagine that instead of being a Constitutional Democracy, South Africa were governed like its biggest BRICS partner. There is no Facebook in China, nor Google. Every news organisation there, every journalist, is licenced. And all content passes through one of the Government appointed censors in situ in the newsroom. Outside the formal media, any online commentator regarded as even slightly subversive is immediately blocked and often jailed.
To use a recent example, Chinese citizens remain blissfully unaware of the #PanamaPapers, the global scandal sparked by the leak of 11.5m secret client documents from a dodgy law firm. Among those implicated are family members of China’s President Xi. Geddit?
Given our often unappreciated level of freedom, this stuff can be difficult for South Africans to absorb. For all its well documented faults, this is one of a minority of the earth’s inhabitants where a vibrant media applies every ounce of freedom enshrined in the nation’s supreme legal document.
Those who prefer operating in the shadows would love a return to the old world where information was controlled. Life, as mentioned earlier, was a lot simpler. But it was also very unfair. Open societies are complex and challenging. Free flowing information, however, endows huge benefits.
A famous South African export, Oxford University Professor Ian Goldin, is putting the final touches into a new book called The Second Renaissance. His thesis is that the explosion of accessible knowledge has been unleashing human ingenuity on a scale last seen during the original Renaissance.
This time, though, instead of a small pocket in Europe having the lock on creativity, the modern Michelangelo might come from Orange Farm, the new Da Vinci from Vosloorus.
When information flows freely, truth enjoys a deserved premium. Rebalancing the scales of life ensure equal opportunities are available to everyone everywhere. That, surely, is the best way to address the global scourge of inequality where assets owned by just 62 multi billionaires equate the collective wealth of mankind’s poorest 3.5 billion.
Shortly after his return from the 16th annual World Economic Forum in Davos (#WEF16), Switzerland, award winning journalist Alec Hogg shared some thought-provoking take-outs during a breakfast for BrightRock’s Laureate advisers. Watch the video of Alec’s presentation or read the transcription below, and don’t miss the interesting conversation that followed afterwards between him and former 702 radio presenter and MC David O’Sullivan, which can be viewed at this link.
Well …it’s really a privilege to be talking to you today. To be going through the feedback from this year’s World Economic Forum. In fact they called me … they … I was accused of being … of spreading lies and mischief. And I see mischief is …it’s the old … my … my old homeboy from Newcastle, Mac Maharaj, used to love talking about mischievous journalists. Well, something had happened at the World Economic Forum this year lead to the Presidency … calling me mischievous; so it is a badge of honour. It’s the second in the last three months in fact that they had a go at me. The previous one was when Cyril Ramaphosa was talking about creating five million jobs. And I mentioned it in editorial that if he were to create five million jobs by 2020 that meant … every month from here until 2020 as many jobs would have to be created as are currently employed First National, ABSA, Nedbank and Standard Bank – every month. To which he said that it wasn’t jobs he was talking about; it was job opportunities. Which I then discovered was if you give a guy a pick and shovel for a day that’s a job opportunity. Politics… Anyway, let’s move on to the World Economic Forum. It’s the 46th time that I’ve been to Davos. Sorry, the 46th time the WEF has had their presentations in Davos; the 13th time that I’ve been there and most of my visits have been very pleasant. South Africa has punched way above its weight. In 1993 … was the first time I went there. We were the belle of the ball just before the election in ’94 and then again in 2010 just before the FIFA World Cup; South Africa was really doing extremely well. At that point in time Trevor Manuel in 2010 was leading the delegation. In 1993 it was a very strong delegation just ahead of the elections in ’94.
This time around it was very different. The South African Delegation was invisible and I’ll give you some of the reasons for that in just a moment. Just a little bit of background: The World Economic Forum brings together 2500 leaders from around the world from business, government and academia. And in essence what happens during these five days is they set the economic agenda for the world for the next 12 months. It started in 19971 at a little place called Davos. It’s a picture postcard town in Switzerland. The decision to have the very first event in ‘71 in Davos was transformative for the town. When you go there today you will see many five star hotels in what was really a little village. In fact it is quite reflective of Europe itself. And the religious issues that they had in Europe that we in South Africa being a new world country in many ways don’t really relate to. But in Davos you’ve got 12 000 people roughly live there. There are two towns in one town. One’s called Davos Platz that’s where the Protestants live, you know the wild livers, they have the casinos in Platz, they have their own schools, and they have their own churches. And then Dorf is where the Catholics live and they have their own churches and schools. And indeed both have their own railway stations even in a little town of 12 000. So it’s quite an interesting place. And every year that I’ve been there and every time that I’ve had the opportunity of visiting and spending five days I’ve realised that it is a place to open minds.
And this is a lovely story. In 1992 on the stage you see Nelson Mandela and FW De Klerk and on the screen behind them is Mangosuthu Buthelezi. Now in 1992 Mandela had recently been released from prison. He went to Davos with an agenda to nationalise everything. At the time I was working on SABC television. I can remember speaking with a lot of the ANC leaders. You know it was just Thabo then it wasn’t Mr Mbeki. It was just Tito then it wasn’t Mr Governor. It certainly was Trevor and Jay. These guys had never been to the SABC before so they quite enjoyed the green room where we had pretty good whiskey and they’d never drunk SABC whiskey and they made sure that they had their fill because they had been banned for all these years. But they were very much on a nationalise everything agenda. A bit like Julius Malema today. He was going to nationalise all the banks. He’s going to nationalise all the mines. That’s the starting point for him. It was very similar there. So Mandela went to Davos in 1992. The first time that he, De Klerk and Buthelezi shared the same stage. And when he returned from Davos he came with a completely different economic agenda. Nationalisation was off the table. It was all about a mixed economy. It was about the country pretty much that we see today. What happened, well, lots of people in Switzerland say that the western world got hold of him and that they convinced him that everything he had believed in was wrong. In fact it wasn’t so. There was a man named Võ Văn Kiệt. A very fascinating human being if you’d like to go and look him up. He was a general in the Viet Cong army and he had become, recently, the Prime Minister of Vietnam. He was one of Nelson Mandela’s heroes because if you’re sitting in Robben Island and the West has put you there and the West is supporting those that you are fighting with [then] clearly you would like to support those who are giving the West a hiding – which the Vietnamese were doing, or had done, against the United States.
So when Mr Võ Văn Kiệt got hold of Mr Nelson Mandela in Davos he said to him that this idea you have of following the Soviet route is flawed. We’ve tried it in Vietnam and we have been in desperate trouble. But I am now introducing a reform agenda in Vietnam. And this reform agenda is making … the Communist Party which I lead still runs the country … but the economy is completely free enterprise. And it’s a very similar model to the one that the Chinese used and one that Mandela came back to South Africa with. So, if you think it’s expensive to send our politicians to Davos just imagine how expensive it would have been had Mr Võ Văn Kiệt not had that conversation with Nelson Mandela in 1992.
Opening minds is a very big part of the whole forum because these 2500 people who are there are literally the power mongers of the world. You have Nobel Prize winners there; you have at least half of the leaders of the G20 [there]. And when you are in a room as an A-type personality, as judging by the awards that were given out a bit earlier a few of you are, A-type personalities like to achieve and they also like to tell other people their opinions and you can imagine if you’ve got these from all over the world in one place at the same time it is quite a lot of talking. But increasingly when you have esteemed people from other countries you also tend to listen and remember God did give us two ears and one mouth for a reason.
The networking I would say is another big part of the World Economic Forum. That’s a picture I took this year of Pravin Gordhan together with Martin Wolf who is one of the leading columnists in the world. He writes a column on economics for The Financial Times of London. He is also a big star in Davos. He facilitates many of the very big sessions there and a thought leader in his own right.
This was an event that Pravin gave … one of the few … In fact I think it was the only near public event that South Africa’s delegation in Davos gave this year. It was to a group of senior journalists from around the world and in this Pravin Gordhan gave us an outline of how he sees the economy in 2016. To give you an understanding of how well this was received or how much interest was in this, given the state of South Africa as we know what happened with our weekend special finance minister on the 9th of December, there were 65 000 views of the video on our website that we embedded. Quite incredible. The World Economic Forum said they’d never seen anything like this for an economic briefing. Clearly Pravin Gordhan did speak from the heart and he made some very pointed statements. But he was fighting a rear-guard action because the country’s reputation took three very big hits before the forum started this year. All of them from organisations who tend to use this showpiece as an opportunity to amplify the announcements that they are saying.
The first of these was this newspaper article which appeared in the second biggest newspaper in Switzerland. It was distributed for free to delegates of the World Economic Forum and it reads … as you can see it’s a full page on Jacob Zuma and a very unflattering photograph which … under the headline ‘A toxic president’.
Next came the International Monetary Fund’s release of its latest economic forecasts. In October it had put a forecast for South Africa of 1.3% economic growth. Of course it didn’t just talk about South Africa; it talked about the whole world. In the whole world it expects to grow 3.4%. South Africa 1.3% in October. In January it adjusted that growth rate to 0.7%. So it halved our economic growth rate because of what happened in December. If you think the blunder, the Nene-gate as we call it, was expensive, well, the International Monetary Fund confirms that.
The third big hit that the country took was from the Edelman’s Trust barometer. This is a survey that is done around the world. Edelman is a big investor relations and public relations company based in New York. A global business. They interview 33 000 people from various countries and they like to work out in those interviews the trust of the public in government, business and the media. [laughing]. I’m not going to tell you about the media because that’s been on a slide for long, long time. Business is actually surprisingly stable but government or trust in government is declining all over the world. Richard Edelman, who made the presentation, said to us that in certain developing countries it has now fallen to a catastrophic level. His words, not mine. He disclosed that in Brazil … he highlighted two of these countries … in Brazil the trust was 21% i.e. the public of Brazil 21% of them have trust in the government and they’re trying to impeach their president at the moment. In South Africa the figure was 16%. So considering those results … and the interviews of those were based before Nene-gate in December … it wasn’t really a place where you’d expect Team South Africa to be proudly flying the flag.
The impact of these three issues on the South African cause was graphically illustrated on the second day of the World Economic Forum when there’s traditionally a high profile Africa investment session. Now in Davos, at any one time, you have a selection of five to ten different places you can go to. And this session on Africa, over the years, has become increasingly popular. In fact if you don’t arrive there 15 to 20 minutes before you can’t get in or you haven’t been able to get in in past years. There’s been … I remember one year arriving a little bit too late and there was such a long queue that I just never … I never got in to see it. South Africa has always been the centrepiece of this particular session which is televised live and between South Africa and Nigeria you would find that most of the attention is being focused. This year, however, President Zuma pulled out. He says ‘a few days before’; my information was ‘at the last minute’. He offered Pravin Gordhan to come in his place. Pravin Gordhan was unacceptable to the President of Ethiopia who didn’t want to be downgraded or have the session downgraded. And as a consequence there was no South African representation there and the Paul Kagame from Rwanda was a last minute replacement for Zuma and it looked it. The audience unlike in previous years which was absolutely chock-and-block … you could see that I turned around in my seat and took a photograph … as you can see rather disengaged and quite a few empty seats. So, the opportunity that South Africa had given the first three blows was perhaps missed. On the other hand there was a wonderful cartoon by Zapiro which showed one with the president being present and the one with the President not being present and said well which of these two scenarios is better for the country – suggesting the second one was. We did have a statement from the presidency to say that he had met with the Swedish Prime Minister that morning, Stefan Löfven, one of the last socialists who’s still in office.
The consequence of that was after I had reported it I was accused of mischief and spreading lies; there was no real explanation of what was going on. Unlike every previous time that I’ve been in Davos this year Zuma restricted his engagements to tightly controlled invitation-only audiences where the agenda was one-way delivery. The Presidency issued a statement after Davos claiming it had been a great success. Having been there I would suggest that wasn’t completely true. And also the #ZumaMustFall even made it to Davos; there were a few people demonstrating outside the area Brand South Africa had taken over. Quite extraordinary. But, it wasn’t all bad for South Africa. There were some South Africans who really shone and continued to shine on the global stage and indeed at the World Economic Forum.
As I mentioned earlier Davos is used to amplify announcements like the International Monetary Fund updating its economic forecast and various others. Amongst these is a lady you might recognize she was the deputy president of South Africa, Pumzile Mlambo-Ngcuka, who left the country after her husband who you might remember was with the NPA and said that we have a prima facie case against Jacob Zuma who at the time the Deputy President. And he was then accused of being an apartheid spy. He, Bulelani Ngcuka is his name, and Pumzile after the transition from the Mbeki administration left the country. She went and did a doctorate in Mobile Technology; mobile meaning cell phones. And she’s now one of the top five at the United Nations. In fact she’s here later this week and I hope to see her either on Friday or Monday on her visit to South Africa. She runs the women’s stream at the UN – hugely successfully – and with her knowledge and understanding of mobile technology, she’s put together a program called ‘He for She’, which is bringing males who support gender equality. And really Pumzile is one of our superstars out there in the rest of the world and doing extremely well at it. What she announced in Davos this year was gender equality … her strategy … she’s brought in ten companies. Ten global companies that she’s now got on board and they are going to assist in forwarding … she’s leveraging basically their bases and those companies include Unilever, McKinsey, Barclays, Vodafone, PWC, so these are heavyweight business and their CEOs were all there to support her in this and they promised that by 2020 they will have gender equality in executive ranks and in the boardroom. Extraordinary, from a South African who’s driving that.
Other statements that were amplified and are continuing to reverberate long after Davos include income inequality. You might have seen what Thomas Piketty, the French economist, has been proposing. Well, he and many others have been picking up on an organisation called Oxfam whose Kenyan head for International Affairs, Winnie Byanyima, is again one of the star attractions in Davos. This year she disclosed, quite a spectacular statistic, that half the people on earth, in other words 3.5 billion people, their wealth is equivalent to the wealth that is owned now by 62 people. So the richest 62 people have got as much wealth as the bottom 3.5 billion. That’s in itself is quite extraordinary but it’s come from 388, five years ago. So the rich are getting richer. What they are doing about it now is interesting. Some of the targets are tax havens and all the politicians … you might have seen recently a settlement between Google and the British Government for a £130 million in taxes that was not on the table. These multi nationals are being forced to pay more taxes but as far as you guys are concerned particularly for your clients if they have funds in tax havens I would strongly recommend that you tell them not to try and hide it. These are … increasingly the tax havens are being attacked not just by one or two governments but by all governments and it’s on the politically popular platform of income inequality.
Other issues that are under threat at the moment on income inequality is intellectual property. The laws on intellectual property at the moment trump human rights laws and there’s a groundswell of opinion to say that that can’t be right.
The other big trend or the other big thing that the World Economic Forum does is identify trends early. This is a picture that I took two years ago and the guy on the right is one who is important. He’s name is Erik Brynjolfsson. He is a professor at MIT and he wrote a book, called ‘The Second Machine Age’, together with another professor at MIT – which is by the way the most difficult university in the world to get into – his name is Andrew McAfee. And the two of these guys essentially went and had a look at things that robots weren’t supposed to be able to do but were doing. Because as we know for well over a decade now artificial intelligence and robotics has been taking over many of the jobs that human beings did in the past but there are certain jobs that human beings just would always be doing; like driving a car. Wrong. They investigated Google’s driverless cars initiative and discovered that there were now literally hundreds and thousands of kilometres that Google driverless cars had been driving around on Californian roads. Completely safe, well, not completely safe; they had had seven accidents in this time in all these years. Six of them they were rear-ended and one of them was a Google employee who decided to take over the driving of the car himself. [Laughing]. The developments that they identified in 2014 have accelerated and continue to accelerate. It’s all about artificial intelligence, 3D-printing, technology getting smarter and smarter. And if you understand the way that mankind has evolved you would then easily be able to identify with what Klaus Schwab, who is the man who created the World Economic Forum, called this year’s event, which was ‘The Fourth Industrial Revolution’.
The first industrial revolution was something we well know. The centre of the world then was Manchester. Some people who follow football still think it’s the centre of the world. Not so much after last weekend. But Manchester was where the first industrial revolution started; where people left the fields and started going into the cities. You might recall, around this time, there was a fellow by the name of Ned Ludd. And Ned and his followers didn’t like the fact that machines were taking over their jobs so they got the old-fashioned version of a ‘bobbejaanspanner’ and they went and smashed up some machines. There were a few shootings. Those days the police were not quite as restrained as they are today and Ned Ludd and his followers are forever remembered as luddites. So, when you are called a Luddite by somebody who thinks they are intelligent they are actually insulting you if you believe modernity is a good thing; if you believe that technology should go forward. However, if they call you a Luddite and you think all this world development is not a good thing then you should actually be pushing out your chest.
The second industrial revolution came in the early 1900s with the discovery of electricity. So you had steam for the first one and then you had electricity for the second one. The interesting thing about this is that half of the world, half of the world, is still in a second industrial revolution so they haven’t even had electricity in many countries. Those 3.5 billion people who have the same amount of money as the top 62 don’t have electricity which kind of tells you something. Interesting development.
The third industrial revolution began more recently. That was the computing power. We all know what life was like, or most of us in this room know, before computers. Before excel spreadsheets, before or rather in the days of telexes when I started. Does anyone remember what a telex is? Fax machines? And as the development of the third industrial revolution went through it was of course accelerated by Tim Berners-Lee who discovered this wonderful thing called the internet. On this one as well half of the world’s population is still not there. In South Africa, wherever you want to look at us, we’re in the top half because we do have the internet and we do have access to computing power.
But now we’re into the fourth industrial revolution and this is where it’s starting; with the ubiquitous internet. What does that mean? It’s a big word but it just means that in my hand, in all of our hands with a smartphone … and I don’t even have an iPhone 6 yet … but my smartphone is as powerful as all of NASA’s computers with which they put a man on the moon in 1963. And as a consequence of that you probably have all of their computer power, all of the computing power IBM had at the time and plus all of the Russians as well and it’s just in your cell phone through a thing called Moore’s Law. If you haven’t heard of Moore’s Law, it’s a professor who in 1965 wrote an article for Fortune Magazine where he said that his analyses of what’s happened in the past few years suggests that computing power will double every year at the same price. Now the exponentiality of that has a massive impact on development, on human development, and we’re seeing Moore’s law now being enacted right across many parts of the world we’re living in. An expert in the fourth industrial revolution is Ian Golding. He is a South African. He is a professor at Oxford University. You see there were some of our guys really flying the flag very high there. And he’s got a book called ‘The Second Renaissance’ which comes out in May. The renaissance you might remember was the period in history from 1450 that transformed the world. Leonardo da Vinci, Galileo, Copernicus, even Martin Luther – the cleric who rebelled against the church at the time – they all came from the renaissance. He believes that the second renaissance, or the fourth industrial revolution, is all about a battle of ideas as exactly it did happen during the first renaissance. How did that happen? There was a guy called Johan Guttenberg, who lived in Germany, who in 1450 invented the Guttenberg press. Up to that point you could have taken all the books in the world, all the knowledge in the world, and put into one big wagon. After the Guttenberg press was invented, which is the invention on moveable type, you started producing books and lots of knowledge. So for the next 250 years you had this explosion of knowledge but it was still only in a tiny little corner of Europe where it began. His thesis is that the knowledge is now exploding through that very same smartphone that we have. Everybody on earth has access to the same information simultaneously. If you want to become the world’s best lawyer the only thing that’s stopping you is your own initiative. You can tap into Yale University, you can tap into Harvard, and you can go into even MIT. Many universities around the world will give you free access to as much learning as you can take. That is the reality and he says that the next Michelangelo could be sitting in a shack in Orange Farm. The next Copernicus could be beavering away on his smartphone in Nairobi. And this to his view, to Ian Golding’s view, is a massive advantage to people previously excluded.
Just by way of a stat that really jumps home to me, and should to you, economies generally should be the size of the globe that their populations are. And we’re seeing this happening in Asia. Asia’s got 60% of the world’s population. Asia’s share of global GDP is slowly edging up towards it. Europe has got about 12% of the world’s population; its share of GDP is slowly edging down towards 12%. Africa has 13% of the world’s population; it has 3% of the world’s GDP or wealth. Now the only similar example that we have in history was in the United States of America between 1870 and 1915 – the golden era of the Unites States economy where it grew at a growth rate of 4.4%. Projections for Africa, despite the oil price falling and the exposure that this continent has to Africa, are that it will grow 5% or more for the next 30 to 40 years much like we’ve seen from China. During that period of time the United States created six of the ten richest people in history. So you have two very interesting things happening here: You have a rebalancing of the world’s wealth through the initiative of individuals because they have access to information. And the second thing you have is a continent that is really so far behind, i.e. Africa, but has just as many smart people as anywhere else in the world that is now getting the opportunity to leapfrog. Africa itself has a lot of issues. I see there are worries that a quarter of the Zimbabwean population will starve this year because of the drought. The president of Rwanda wants a third term despite in the constitution only having two terms and so on.
But there’s also lots of very good news if you’re start looking at places like Ghana. Even today one of the worst of the examples on this continent is Chad but the president of Chad has announced although he took power in a coupe 25 years ago and he’s announced that after this election that he’s probably going to win – because he’ll probably rig the votes again – the next guy is going to have his time limited to two terms maximum. So there is progress wherever you might look.
The problem about the second renaissance or the fourth industrial revolution is two-fold: Status Quo kicks back against it; people don’t like this kind of thing. If you’re a beneficiary of the Status Quo like the church was during the renaissance, like kings and queens were during that time you didn’t want things to change. That’s part of the human condition. And we are expecting to see lots of kickback. We’re already seeing that in the United States with the kind of people that they want to vote into power there. People are very unhappy, there’s more extremism. We’re seeing the extremism growing in certain parts of the world. There’s a lot of that attention in Davos about the Middle-East; about immigration into Europe.
But the second big thing about it, as much I’ve given you the bright side that everyone has access to information, it also is a very dark side in that anything that is done by rote or rules-based; done by rote, we think that is easy to understand people who are manufacturing bring a robot in to change it. Rules-based, something we don’t really think about, white collar. People who are doing accounting, tax advising, that machines – artificial intelligence – can do better. Those jobs are at threat. What isn’t at threat are those who deal in human relationships which I guess, for once in your life, you can actually say: ‘Okay I got a tough job but it’s actually one that isn’t going to go away.’ Whereas there are many, many other jobs … in the United States there are no tax advisors left. Literally no tax advisors because you just buy a program because it is rules-based and the program would tell you how much tax you should pay. The US has calculated that 47% of its existing jobs will disappear in the next 20 years. And the UK has worked out that one third of its jobs will disappear. And just to give you a little touch of this; in future if you are going to buy a pair of shoes you won’t be going into a shop that sells shoes imported from China in some large factory you will in fact go around the corner to a 3D-printer which will print out your pair of shoes exactly to fit your feet. So the changes are dramatic and they’re happening and the emphases, the new emphasis, now is on re-skilling and entrepreneurship. Entrepreneurship as you know has been very difficult for many years. As an entrepreneur myself I sometimes get terribly frustrated by the obstacles and I know you would share that concern with me but more and more this is becoming the way into the future.
Just to go into the kind of the last little bits of the World Economic Forum; what does 2016 hold? This is the closing economic panel. The one I love going to because after five days of engagement and interaction, people would like to know where the economy is going to. Christine Lagarde, she’s the lady with grey hair in the middle there, the very impressive managing director of the International Monetary Fund; is one of the brightest stars in Davos. Her thesis is that the big threat that many worry about – the hard landing of China – remember China is the place that’s actually pulled the rest of the economy for the last 10 years and that its economy is going to hit troubled times. She doesn’t believe that that’s likely. And George Soros, was in Davos this year as well, he’s now 85 and one of the great thinkers of the world, he was agreed with her that China has the resources to pull itself out and not to have a hard landing. Not so easy in Europe. The bright spot for the world though is Britain and India and Argentina. And perhaps in our question time we can talk about that a little more.
Where the issue does come in for China though is that they are trying to do three things at once. Three transformations at once. And amongst those, the three ones are… overlaid by President Xi… you know when he went to India, his name is X I, they called Mr Eleven. President Xi has a war on corruption. In fact if you are a billionaire in China and you’ve been doing it through dodgy business you kind of disappear. Simply disappear. That happens, when you read the Financial Times of London as I do, you’ll see quite often that Chinese business people who have a global presence just don’t … you just don’t hear from them anymore. So the war on corruption is very real in China and very aggressive. They do however have to move their economy from manufacturing to services. They’re moving it from export driven to internal and they’re trying to move it from investment to consumption. Those are huge challenges and issues that they are going to be dealing with into the future.
The other thing is something Lagarde calls asynchronistic monetary policy; I had to look up the word. What it means is when you synchronise things that it all works together. Asynchronistic means in different speeds. In America they are pulling the money out of the system; and in Europe and Japan they’re still putting money into the system. So that could help generally for the world and that’s probably why the International Monetary Fund says that they still looking at 3.5%/3.4% growth this year.
Britain, those of you who have connections and I think many people in this country do with Britain. The big story there is Grexit. Last year we had Grexit. Greece’s exit from the European Union which was averted at the 11th hour. Now the Brits are going to be voting later this year on a potential exit there. The British who are the fastest growing economy in Europe and who are on track to overtake Germany in the next 25 years as the biggest economy in Europe; they don’t want to be aligned with economic policies in Europe. They say that those economic policies are doomed to fail and as a consequence they want to be part of Europe but be told not what to do. That’s a very tricky place to be. If you follow the media in the UK you’ll see the likelihood at the moment anyway is that the British will vote to go out of the European Union which has all kinds of implications of not having the free trade. But it is an issue and a development that needs to be looked at from a global perspective.
Just to sum it all up from a South African side; we didn’t shine in Davos but then again if you had to look at the performance of our share price, the Rand, in the month or so running up to Davos it was very hard to see how we were going to shine.
The good news about that is, and I would like to end off here by giving you a couple of the things that Pravin Gordhan said in his economic briefing. The good news is that it does appear as though finally sense is starting to prevail within the economic management of this country. We’ll know for sure tomorrow? Tonight? At the State of the Nation. I would urge you to try and stay awake through it and to absorb the reality of what’s being said in there. If not you can always go into BizNews tomorrow and pick up the highlights. And then the budget speech next Wednesday where Pravin Gordhan has promised us that he’s going to give us some pleasant surprises. That’s not pleasant surprises in that the taxes are going to go down; Pleasant surprises in that things will be done to avert, hopefully, a junk status for South Africa’s debt. To go into Junk status would be a very serious problem for this country.
But I will end with this: Pravin said: “We’ve got to take a harder look at the challenges and how we’re going to deal with them. Tough questions have been asked within government about what we need to do differently. We need tough reforms on education and the skills area. We need to create co-investment with the private sector. There are a significant number of us within the ANC who want to restore our integrity.”
Because sometimes, you have to take a moment to count the ways. Here are some of the things we love about this land of constant change
1) The Constitution. Because you need a strong constitution to stomach the bitter-sweet, rollercoaster ride that’s life on Africa’s southern tip.
2) Table Mountain. You rock.
3) Joburg. The gold below, the sky above, the forest in-between. But more than all of that, people make this city.
4) The Karoo. It’s not the middle of nowhere. It’s the middle of everywhere. In a desert that was once a sea, the silence sings. The echo is the beating of your own heart.
5) The bushveld. Every South African has two homes. The place that they live in, and the bushveld.
6) The Cradle of Humankind. Time travel is possible, but only to the past. Journey here, meet your ancient self, and go back to the future, wiser, humbler, and more human.
7) The Free State. The land is flat and golden, the heavens deep and vast. To travel here is to put yourself in a free state of mind.
8) The Pier, Umhlanga. It’s just a short walk on mosaic tiles to see the raging waves, but in its architecture of whale rib-bones or elephant tusks, it is a pier without peer in all the world.
9) “Mannenberg”, by Abdullah Ibrahim. This bittersweet suite, salty as the sea-breeze, with its infinite, hypnotic loop of joy and pain, is the other national anthem of South Africa.
10) The vuvuzela. In a stadium or on a protest march, a massed bank of plastic trumpets in the ever-so-slightly off-key of B flat can make the walls come tumbling down.
11) Scarabaeus viettei. The dung beetle. Always on a roll, this tough-shelled, elegantly-limbed backwards-walking recycler is an inspiration to us all.
12) The Union Buildings. The sweep of Nelson Mandela’s hands, spanning the perfect symmetry of those slender domes, in a beautiful, well-kept garden, makes this the most gracious government building in the world.
13) Moerkoffie. Strong, bitter, campfire-hot. “Moer”, in this context, means “to grind”, so it’s okay to say it out loud in polite company.
14) Moses Mabhida Stadium. The most spectacular aesthetic legacy of the 2010 World Cup, a vision of grace and fluidity that brings the double-helix of DNA to mind.
15) Seffrican. The language. A spicy potjiekos of all 11 official tongues, with some hand gestures thrown in for good measure. Skorokoro, babelaas, sharp-sharp, heita, ja no well fine. Eish.
16) The bosberaad. Also known as the Indaba and the Lekgotla. A gathering of people in the bush, to discuss strategic matters, resolve pressing problems, build team spirit, and attempt to recover from the hangover of last night’s braai.
17) The hadeda ibis. The great grey vuvuzela of the Joburg skies. A raucous, squawking reminder to wake up, get out of bed, and find something to throw at the hadeda.
18) The Eastern Cape. Frontier land. The light here shines with the quality of benediction. A province of wild, intense beauty that stirs the soul.
19) T-Shirt Fridays. The tradition of wearing a national team T-shirt to work on the Friday before a big game, earning you the right to complain about the terrible performance of the ref on the Monday after.
20) The Protea. Our national flower. Famously, when under fire, it burns to the ground and then returns, stronger and more resilient than before. A useful metaphor for our national cricket team.
21) The pronk. The sight of a springbok pronking, back arched, all four limbs in the air, bounding exuberantly, is one of the most breathtaking spectacles in the wild and on the rugby pitch.
22) The Canis Africanis. A canis so nice they named it twice, the Africanis is a noble, hardy breed with a lineage of loyal companionship that dates back thousands of years. Please, humans, stop calling it a cross-German Shepherd. It’s actually a very happy Africanis, a breed all of its own.
23) The Southern Cross. Strictly speaking, the signature constellation of the southern skies doesn’t belong to us alone. The Kiwis even have the brazen gall to emblazon it on their flag. But the crux of the matter is, we see the Crux more clearly, because it reminds us where the heart and the home is. Here, South, in Africa.
Seizing bold opportunities in a fast-changing world, a new breed of South African entrepreneurs is making the most of their sought-after skills in London, while retaining their ties to home. It’s called arbitrage, and it’s a new way of making a living in the networked global economy. By Alec Hogg
There’s not much to see when you visit the Johannesburg Stock Exchange nowadays. A modern building in the heart of Sandton, its nine stories are stuffed with techies and compliance officers, administrators and managers. Those who make the SA market’s heart beat are based off-site, connecting to the nerve centre via electronic networks.
This wasn’t always the case. Until technology took over, the JSE pounded with energy and excitement. It even had a public viewing gallery, where you could watch brokers operating banks of phones in a theatre-like basement looking down on the “floor”.
On the packed stage below, traders jostled, shouting out prices at which they would buy or sell, confirming trades with a wink or a handshake. Perched above them were markers manually chalking up prices of the latest deals alongside names of listed companies.
These chalked-up changes were, in turn, recorded by Reuters staff who tapped them out to dedicated telex machines with in-built bells that rang when particularly important transactions were done.
Back then stockbrokers specialised in particular shares or sectors. The best paid were sharp-witted traders with calculators for minds who traded the gaps between stocks priced in Rands and Pounds, traded simultaneously in Johannesburg and London. The arbitrage guys.
Economists define arbitrage as taking advantage of a price difference between two or more markets. The arbitrage traders on the old JSE could spot a pocket of profit quicker than a Great White smells a distressed seal.
But it is an era is now long gone. In the same way as technology killed the “open outcry” in stock markets, it also eliminated profitable arbitrage of stocks quoted in different currencies. The currency and pricing translation is now simultaneous.
The practice of arbitrage, however, still survives in wider applications. I came across a number of these when visiting South Africans in London last month, hearing how they do business there.
It was also part of my own on-the ground research. You don’t need too many R80 cups of London tea to realise there’s a major dislocation between what your money buys in South Africa and in the UK.
The most obvious arbitrage is seen all over South West London, an enclave created by the concentration of hundreds of thousand SA émigrés. There are specialised shops on every street, carrying biltong, rusks, Mrs. Ball’s chutney and other SA “delicacies” – and judging by the prices, those going through the hassle of importing these products get well rewarded.
My interviews with some inspiring expats, though, exposed how most our countrymen have been arbitraging something far more valuable – themselves. And it is this asset, the combination of elbow grease and intellectual capital, which has drawn so many of them to the UK. Temporarily, most of them they hope. One thing you cannot arbitrage is the weather.
My favourite aunt, Trisha, was an early adopter. An entrepreneurial nursing matron, she left the hospitals a couple decades back to start one of SA’s first labour broking services for nurses. But after some years of everyone winning – nurses were paid more, private clients got a better service – the red tape became too onerous.
So Trisha decided to arbitrage herself, travelling to the UK where she soon found assignments caring for the elderly or ill, a fair chunk of celebrities among them. My aunt spent years travelling back and forth to Britain, squirreling away her hard-earned pounds. Last year she had enough of a nest egg to return home, building her own little house on the prairie in the non-metropolis of Porterville.
Thomas is a more recent convert to the arbitrage process. A highly qualified marketing specialist, in his mid 50s he gave up the rat race and retired to his dream home on the KZN north coast. But last year a global group threw out a challenge he found impossible to resist. And, delighted by London’s indifference to his race or age (it’s dictum: “just do the job”) Thomas, now 60, is deeply into his second career.
Although Thomas and his partner have found a London house with a garden for themselves and three dogs, using devalued Rands means it couldn’t compare with their palace in Ballito. But there’s a new Five Year Plan, at the end of which they will have the choice of moving into the British countryside or back home.
Thomas is arbitraging himself, earning a multiple of what an employer could afford to pay him in South Africa. In the process, creating options he wouldn’t previously have dreamed about.
Robby, on the other hand, is an entrepreneur who used to focus on the lower end of South Africa’s property sector. Because the pickings are less, this sector of the market is neglected by property professionals around the world. It is also highly specialised, with success built on knowledge that can only be gained through experience.
At home in SA, Robby was focusing on properties of between R150 000 and R500 000. In the UK, the same segment starts around £50 000 – that’s R1-million when converted to Rands. Provided you apply the same processes, Robby reckoned, there was a multiple to be earned from the same effort.
Having been in his new base for almost a decade, Robby has proved the point. His company now manages a R140-million portfolio which holds around 60 properties at any point, buying or selling 20 a month. He has been able to use this base to expand up the food chain. When we visited, Robby was in the process of finalizing a £3-million home development, a price point beyond his reach in Johannesburg.
Although Trisha, Thomas, Robby and many others have applied the concept of arbitrage by physically relocating, they’ve only touched one slice of the opportunity of leveraging SA’s low cost base into countries like the UK.
Using the networked economy to build something digital here and sell it “over there” is an equally obvious opportunity. Getting onto that path requires no more than a rudimentary appreciation of arbitrage. Once you “get” it, add a touch creativity and a little risk capital, and the world can become your oyster.
This article first appeared in The Comet, an online newsletter by BrightRock, provider of the first-ever life insurance that changes as your life changes. The opinions expressed in this piece are the writer’s own and don’t necessarily reflect the views of BrightRock.
Twenty years after the start of democracy, we’re still struggling to fix old inequities and grow the economy. What will it take to make things work? A little of the same radical thinking that made E = MC².
The Americans have a wonderful way of extracting wisdom from their society’s best. They use something called the Commencement Address, a motivational speech by an invited guest to graduating college students. The more prestigious the university, the more that’s expected of the presenter. California’s Stanford is among the leaders. This year its Commencement Address was by Bill and Melinda Gates.
In 2013 it was New York Mayor, Michael Bloomberg.
But the most famous of all was the 2005 masterpiece by Apple’s founder, the late Steve Jobs.
The YouTube video of that 14-minute speech has been downloaded more than eight million times. It’s a must-watch for anyone seeking a burst of inspiration.
Most Commencement Addresses offer advice to the rising generation on the right things to do. But occasionally someone takes the opposite approach, using inversion to advise what not to do.
Specifically, super-rational vice chairman of Berkshire Hathaway and Warren Buffett’s business partner for 54 years, the inimitable Charlie Munger.
There are two ways, Munger says, of finding the solution to the most difficult problems. The first is to explain it to someone who simply nods in response.
It’s what Munger calls the Orangutan Method. If you enter an orangutan’s cage, give him a banana and explain the problem to him, when you leave the orangutan will still be eating the banana. But you’ll be a little closer to the solution.
The second is encapsulated in his 1986 Commencement Speech to his alma mater, the Harvard School. Drawing on the experience of the great algebraist Carl Jacobi, he urged the graduating class to “Invert, always invert.
What Munger (and Jacobi) meant was that even the toughest problem can be solved if approached backwards. That the solution often emerges after trying to discredit your assumptions.
Munger used namesake Charles Darwin as an example of one who wasn’t afraid to attack theories he cherished. And, in the memorable Harvard address, quotes Albert Einstein who put his string of successful theories down to, “curiosity, concentration, perseverance and self-criticism – the testing and destruction of his own wellloved ideas.”
Right now, South Africa could do with a generous application of Einstein’s approach. After Nazi Germany, this country comes closest to world champion of social engineering.
First we had Apartheid, present since European settlers arrived in the 1600s but institutionalised after DF Malan’s National Party took power in 1948. The essence of which was discrimination based on the colour of a person’s skin.
Soon after democracy arrived in 1994, the nation celebrated its new Constitution, the most admired on earth. This provided a foundation from which to unleash human potential. The ultimate law of the land. The blueprint for a democratic, non-racial, nonsexist, happy and prosperous nation.
But no sooner was this magnificent document unveiled than the social engineers got back to work.
We were told the past needed redressing. Those one tenth of South Africans who benefitted under the old regime needed to be put in their place in the new. They must give back their ill-gotten gains. And stand aside for previously disadvantaged brethren.
On sports fields, at universities, in business. Everywhere, the New South Africa was to reflect the “demographics”. Leaders of the previously advantaged population group (ie whites) supported these calls. Under their stewardship, shareholders of public companies gave away hundreds of billions to Black Economic Empowerment schemes.
Sports administrators applied racial quotas to select national teams. White graduates, realising they weren’t wanted, sought employment outside the country.
We all knew it was against what had been written in the Constitution. But redress was required. And this was the way everyone agreed it should happen.
Two decades later, we have a serious problem. Those who made the transfers of wealth believed it was a one-off. A temporary adjustment to hasten normalisation of the new democratic society. Those in charge of the redressing see things differently.
For them, those initial BEE deals were only the beginning. The previously accepted principle of once empowered, always empowered has been tossed aside. The agreed Sunset Clause in Affirmative Action, too, has vanished.
Twenty years after democracy dawned, new laws are being enacted to ensure the transfer of wealth is continuous and accelerated. In effect, they will entrench a situation where the previously advantaged, judged purely on the colour of their skin, become permanently disadvantaged.
Based on the ridiculous premise that the 90% majority need protection from a 10% minority. Social engineering at its most repugnant. But this time, so warped that even its protagonists fail to provide any rational argument.
The biggest problem with all of this is no matter how hard they toil, the former “haves” are too few to generate enough to make any difference to lives of the previous “have nots”.
Racially driven legislation might sate vengeful instincts of those with longterm grudges. But it does not address the nation’s underlying jobless problem. No country in history has borne as high a level of unemployment for as long. During the US’s fabled Great Depression, unemployment only briefly exceeded 20%.
South Africa’s has remained stubbornly above 25% for many years.
THIS OBSESSION WITH RACE IS ONE OF THE BIG THINGS HOBBLING A POTENTIALLY PROSPEROUS NATION. ANOTHER IS THE LEAST FLEXIBLE LABOUR LAWS IN THE WORLD, A CORNERSTONE OF THE RULING POLITICAL PARTY’S ANTIBUSINESS PHILOSOPHY.
Something that’s ingrained into its mostly Socialist-trained leadership. A gremlin lying so deep these otherwise rational beings remained blinkered to abundant evidence of the economic destruction their dogma has wrought everywhere applied.
Insanity is described as doing the same thing over while expecting a different outcome. South Africa is a near perfect example of this. Our leaders talk about creating jobs. They delude themselves with unrealistic economic growth targets.
But instead of smelling the coffee when the predictions are undershot, repeat the same, tired rhetoric, believing this time it will be different.
What the nation needs right now is a large dose of Einstein with some Munger and Darwin thrown in. A backward examination of its problem. A “testing and destruction of wellloved ideas.”
That will liberate solutions which can restart the country’s motor. And unshackle the best Constitution on earth. Allowing it to unleash human potential champing at our collective bit.
* Alec Hogg is the founder and editor of Biznews.com. He presents Power Lunch on CNBC Africa daily from noon (DSTV channel 410).
** This article first appeared in The Comet, an online newsletter by BrightRock, provider of the first-ever life insurance that changes as your life changes. The opinions expressed in this article are the writer’s own and don’t necessarily reflect the views of BrightRock.
The gloom clouding the global economy is lifting, as we get set to head for sunnier climes. That’s good news for Africa, although we’ve still got a lot of catching up to do, reports Alec Hogg from Davos
To the outside world, the annual gathering of 2,500 business and political leaders at Davos in the Swiss Alps is about big themes, selfimportant people and lots of talk. Inside the tightly secured Congress Centre, it’s rather different.
Participants are served a smorgasbord of high-octane knowledge. Unmatched networking is on tap. And for those who listen closely, they receive a unique insight into the coming year’s global economic agenda.
This was my 10th successive participation in Davos. It was also my best yet. After five years of gloom, the mood has lifted.
American confidence is back to pre-2008. They’ve been buoyed by the way their money creation strategy they call Quantitative Easing (QE) lifted a moribund economy.
Underlying it all was the invention and wide application of hydraulic fracturing on the nation’s enormous shale gas reserves. Fracking has transformed the US’s energy equation with electricity and gas prices having halved since 2006.
With their costs having fallen so sharply, Americans are actively pursuing “reshoring”, bringing back manufacturing that was previously “off-shored” to cheaper locations.
After a decade and a half of flat lining, the Japanese version of QE (“Abenomics”) has dispatched deflation. Europe’s four sickies – Greece, Spain, Portugal and Ireland – are out of intensive care.
There’s steady 7% plus growth from China; the promise from India that its 5% will jump to 8% after May’s national election; and Brazil is reaping growth benefits from a massive privatisation programme.
Overlay all of this on the determination to keep interest rates at historically low levels and there’s a clear message from Davos:
THE GLOBAL ECONOMY IS RECOVERING WELL AND IS SET FOR ITS BEST GROWTH IN AT LEAST SIX YEARS.
This is good news for SA. Because more than half the country’s economy activity relies on global trade, when the world is healthy, we flourish.
The country is also a beneficiary of continental catch-up. Africa being so far behind is an economic benefit in an age when globalisation means innovation spreads fast.
THERE ARE SO MANY AREAS WHERE STRONG PRODUCTIVITY AND HENCE ECONOMIC GROWTH IS GENERATED SIMPLY BY APPLYING STUFF INVENTED AND PROVED ELSEWHERE. THERE IS PLENTY OF THIS LOW HANGING FRUIT. 2014 WILL ALSO BE A GOOD YEAR FOR AFRICA.
But despite this bonhomie, I left Davos with a sense of foreboding. In the short-term, all is well. But great challenges are emerging.
There is still no answer to where QE ends. The debt still being created has to be dealt with one day. Either repaid. Or wiped away through massive reflation. Both options carry huge risks. And nobody is talking about it right now.
The other elephant in the room is how economies are growing, but jobs are not.
I spent a fair amount of time in Davos listening to the great thinker, Tom Friedman, author of best-selling The World is Flat and other forward-looking books. The world’s most influential newspaper columnist believes we’re entering a period of massive disruption.
Globalisation is meeting technological innovation. That is pushing us from connectivity to hyper-connectivity. With enormous consequences.
Friedman is pointing his readers towards The Second Machine Age, a breakthrough book that was the talk of Davos this year. Its thesis is that during the First Machine Age – the Industrial Revolution – the world of work changed dramatically. Horses were replaced by cars. Factory workers by machines.
The Second Machine Age, they say, will have an equally dramatic impact. Robots and machines are wiping out millions of factory worker jobs. China estimates that 25m of its manufacturing jobs evaporated as machines have moved in.
One estimate I was given at Davos was that a plant that employed 100 people in the 1980s, will today have jobs for no more than 10.
The future of work, one of my interviewees quipped, is a man and a dog. The man to feed the dog; the dog to guard the machine.
The duo use many examples to prove their point. Like Intuit’s $39 tax software which has virtually wiped out the US’s tax advice industry. And free, on-demand legal documents that have sliced massive chunks from lawyers’ fee earnings.
The obvious conclusion of what’s termed the battle between Man and Computers is that the bar is being raised. To thrive, people will need to contribute more. What you might know is no longer relevant because Google knows more. It’s how you apply that knowledge.
Lifelong learning is no longer optional. The good news is that never before has there been as much access to information for those seeking to better themselves. The challenge lies with the mid-level, midambitious that reject the idea of lifelong learning. Like slow horses of yore, they will be the first the system discards.
The most sensible suggestion in Davos of how to address the issue was offered by the petite President of Korea, Geun-hye Park. In an inspiring Plenary she urged fellow national leaders to find practical ways of encouraging entrepreneurship.
Not just by cutting red tape, but purposefully pushing people to take business risks. And supporting the inevitable by, for instance, re-establishing credit records of bankrupt entrepreneurs so they can try again.
President Park says Koreans understand how innovation is transforming the world of work. Their strategy, she says, is to transform Korea into a Creative Economy. One with millions of new jobs flowing from unleashing its human potential which, happens by establishing hundreds of thousands of small entrepreneurs.
By comparison South Africa’s strategy is based on reestablishing an Industrial Base. It looks archaic. I managed to get a copy of the Brynjolfsson/McAfee book into the hands of the architect of this strategy, SA’s Trade and Industry Minister Rob Davies. Two days later his office sent a mail to say he’d read it. Hopefully it’s being passed around the Cabinet.
*Alec Hogg is the founder and publisher of Biznews. com. He presents Power Lunch daily on CNBC Africa.
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What will it take to get South Africa working? Let’s begin by taking a long, hard look at our labour laws, as we seek to unlock this nation’s potential for greatness.
I wish it were not so, but evil does exist. It’s pretty much everywhere. And personified in human beings.
What may surprise you, though, is evil people are not born that way. Nor are they necessarily possessed by demons. For the most part, the evil among us are ill. Sick with the mental disease of narcissism. An affliction which makes their deranged minds believe they actually “know” the answers.
Think of the most evil people in recent history. Those who used powerful personalities and their ability to manipulate to impose Grand Plans. Adolf Hitler. Hendrik Verwoerd. Stalin. Mao Tse Tung.
One thing they had in common was an absolute certainty that they knew the answer. They alone understood what mankind required. And they would make sure we’d get it, no matter how many fresh graves needed to be dug.
On the other side, there is also overwhelming evidence that man is fundamentally good. For the most part, that weight of numbers overwhelms the evil which narcissists might do. We may move temporarily in the wrong direction, but eventually change course when unintended consequences trip us up.
Life is enormously complex and full of curve balls, ever changing, evolving, transforming. Nobody really “knows”, which is why an open mind is a key to successful living. Something which encourages adjustment to change – life’s only constant.
For the most part, that’s what happens. Except, it seems, with South Africa’s Labour Laws.
Life is enormously complex and full of curve balls, ever changing, evolving, transforming.
Back in the mid-1990s, well-intentioned politicians unwittingly visited the curse of idealistic First World labour legislation upon our nation. They looked to the old West Germany for guidance and pushed through laws the Germans have since abandoned as impractical.
For reasons impossible to fathom, our government keeps deluding itself that this broken model works. Ever since the new laws were introduced, unemployment has been steadily climbing as
companies replace workers with machines. Or outsource the job of making things to China? Or other fast-growing economies whose politicians possess smaller egos and greater intellect?
None of this is news. Nor is the fact that SA’s labour legislation is the most inflexible on earth. Once again in the 2013 edition, on labour laws we ranked stone last of 146 countries in the WEF’s Global Competitiveness report.
The evidence could hardly by more overwhelming. Yet our ruling political party continues to defend the indefensible.
I’ve even witnessed our totally underwhelming Labour Minister Mildred Oliphant claim, in Davos of all places, that SA has the most caring labour laws in the world.
What can possibly be “caring” about laws that kill hope? Laws that block the unleashing of human potential and force young matriculated women to find a sugar daddy or become a prostitute?
An executive at a major mining group told me that after a platinum miner recently fired a couple hundred illegal strikers, it received 40 000 applicants for those positions.
It all smacks of Mbeki disavowing Aids. What more evidence do our overfed politicians need?
Baffled, I’ve been questioning a lot of people about all this. Loane Sharp, senior labour economist at JSE-listed recruitment company Adcorp, came up with the best explanation.
He reckons after the ANC swept to power in 1994, it lacked suitable candidates for Parliament so drew heavily on the ranks of its tripartite alliance partner Cosatu. So, overnight, we made lawmakers from resentful trade unionists possessing an inherent suspicion of business and the market economy.
People who still believe Marx, Engels, Lenin et al “knew” the solution despite all evidence to the contrary.
On the other side of the fence, organised business voted with its feet by shovelling money abroad, and took the easier path of shutting up and abdicating any responsibility.
That handed the one-eyed legislators a free ride with the labour law book. setting off a destructive cycle that balloons of Parliamentary hot air that won’t reverse.
So where to from here?
Rolling back the crazy labour legislation is politically impossible.
Even if President Jacob Zuma were secure in his power base, which he isn’t, JZ would never have the courage to permanently alienate his beloved trade union partners.
The inventive Mr Sharp, however, suggested an alternative that would let everyone save face and gets the job done: Establish a Commission of Inquiry into the Labour Market.
Once a Commission of Inquiry has started, says Sharp, it’s impossible for any meddling narcissist to continue debilitating the labour economy. And once its findings have been published, because we’re a Constitutional Democracy, they pretty much have to be implemented.
Commissions have the advantage of being chaired by Judges, not politicians. These worthy, educated souls are trained to sift through all the relevant information and not pick sides. Once they have done so, they reach the obvious conclusion that we made, or didn’t make, serious mistakes and fix them if necessary.
Some years ago, I had a fascinating interview with a Goldman Sachs director who had previously been the Finance Minister of Spain. By the late 1970s, he said, the Spanish knew their country needed radical economic restructuring, but doing so would be political suicide for anyone pulling the trigger. He explained that they addressed the dilemma by joining the European Union in 1986. The EU gave politicians the breathing space to implement muchneeded reforms – and to use Brussels as the scapegoat.
That way they saved face, their jobs and the country. A Commission of Inquiry for South African unions would be similar to the EU’s role in Spain.
Now all we need is for someone to open the minds of Jacob Zuma and his cohorts.
* Alec Hogg is a writer and broadcaster who founded Moneyweb. He now runs BizNews, at biznewz.com. The opinions expressed in this column are his own and don’t necessarily reflect the views of BrightRock.