NOMPU SIZIBA: It’s day three [Thursday] of the World Economic Forum meeting in Davos, Switzerland, and of course we’ve been tracking developments in the key issues being discussed there.
Earlier my colleague and Moneyweb editor Ryk van Niekerk caught up with Bonang Mohale, the CEO of Business Leadership South Africa.
RYK VAN NIEKERK: The annual general meeting of the World Economic Forum in Davos is drawing to a close. South Africa has sent a big delegation to Davos, headed by President Cyril Ramaphosa, and its main objective is to market South Africa as an investment destination.
On the line from a freezing Davos is Bonang Mohale, the CEO of Business Leadership South Africa. Bonang, thank you for speaking to us. Do you think Team South Africa will bring back more money than you left with?
BONANG MOHALE: There is absolutely no doubt [of that], because we have a good story to tell. In fact, we’ve got five bold messages we are sharing with this 48th summit, with 3 500 delegates occupying all 39 hotels, and more than 15 000 people.
The first message has to do with this notion of inclusive social economic growth. The second one has to do with Eskom, because of the size of its debt. The third is government institutions that need to be fixed, especially because the debt has become inordinate. So, for instance, about 700 state-owned enterprises and companies that have traded recklessly; a lot of this liability is much greater than indeed their assets. The last two are investment. The president has set up a target of US$100 billion for for five years, R20 billion per year on average, we are creating ahead of that.
In fact, the investment summit not only had R296 billion placed and committed and approved by the board, but that number continues to grow and we have implored our 86 CEOs to front and match that, dollar for dollar. So we have another US$100 billion domestic direct investment that will be driven by a South African company.
The last one is the independence of the South African Reserve Bank, because it derives its mandate from the Constitution. Our Constitution is quite explicit, because it talks about balance and sustainable growth.
RYK VAN NIEKERK: I just want to come back to the messages put on the table for the potential investors in Davos. Can you maybe elaborate on the message you have regarding the Eskom situation, because it seems to be a significant threat to the way and ability for businesses to actually grow in South Africa?
BONANG MOHALE: Our message around Eskom is very simple. We are saying it is a state-owned enterprise, it’s the biggest of the state-owned enterprises, the fourth-largest utility in the world, the only one that is still doing generation, distribution and transmission all rolled into one entity, when most similar entities in the world have broken up into three separately-listed entities. Its debt now, at R471 billion, has probably consumed the majority of the more than R760 billion government guarantees. So simply the debt of Eskom has now become permanent. It has absolutely no way of trading itself out of this debt in this lifetime. That’s why it behoves all of us as social partners to ensure that Eskom keeps the lights on because for every day that the lights are off it costs the South African economy R50 billion. Therefore there is no way that the South African government would let Eskom go under. That’s the message we are sending, and it will be fixed.
We have a new board, new executives. All the executives that were even remotely implicated in the State of Capture report have been fired and [there’s] a new turnaround strategy. And, as you saw, the president over and above that has also appointed a sustainability task team that advises him about its current plan, about the possibility of there being a default, but also lastly to ensure that the president is absolutely appraised and he provides the necessary sponsorship to ensure that the tough decisions that must be taken and the pain that must be taken by government, by labour, by business, is indeed well considered and worth the effort.
RYK VAN NIEKERK: What has been the attitude from potential investors?
BONANG MOHALE: In fact, we are pleasantly surprised that we have been so well received. Everywhere that South Africa has called a meeting we are over-subscribed. Last night was the grand SA-hosted dinner, which we normally have. This one was a breakfast hosted by Absa’s Maria Ramos. Again, every solitary one of the foreign direct investors, the analysts, so desperately want South Africa to succeed. They are betting with us. In fact, they are trading with us in the fire. They understand that the past nine years has been an absolute, total catastrophe, that in fact had we continued on the growth trajectory, the shape of that curve of the Nelson Mandela administration, Thabo Mbeki, 43 consecutive quarters of positive GDP growth would have meant an extra trillion South African rand, would have doubled our GDP growth, and would have halved our unemployment. Imagine 16% unemployment, when at the moment it’s [above] 27 percentage points.
RYK VAN NIEKERK: There was a big delegation from the private sector – of course, including you. Are the government and the private sector on the same hymn sheet when investors are being approached?
BONANG MOHALE: We have been on the same hymn sheet for some time now, and I must tell you that the business delegation is unbelievable. The government, all the cabinet ministers, the senior ones, even the Minister of Health Dr Aaron Motsoaledi, is here. The Minister of Labour, Mildred Oliphant, the Minister of Finance – naturally because this is his perch, as it were. President Cyril Ramaphosa is ably leading us, and we are really confronting some of the things that are being spoken about honestly, openly and transparently.
RYK VAN NIEKERK: While Davos was happening we’ve had some startling revelations before the Zondo Commission into state capture. Was corruption and state capture a thing at Davos?
BONANG MOHALE: Yes, it was. But I must tell you that the messages we are getting from the global leaders is that South Africa is talking honestly and openly about its challenges of state capture, which has been siphoning off, on average, a R100 billion out of the economy. Imagine how many people’s [abhorrent] toilets would have eliminated in rural schools, how many indigent students would have been educated in institutions of higher learning, how many new schools would have been built, how many hospitals would have been built, how much service delivery could have been afforded, especially in the township economies, but also how many RDP houses would have been built.
So honestly, in simple English, the past immediate administration has taken us back at least 20 years. You know, it takes three hours to break a house; it takes 20 years to build it. But fortunately we are eager, able and willing to address it very seriously and make sure that South Africa occupies its rightful place among a community of nations. So, if anything, they are absolutely bewildered that we are indeed debating this, we are talking about it.
We have instituted an independent judicial commission of inquiry into state capture, chaired by Deputy Chief Justice Raymond Zondo. The hawks are now acting, the South African police service is taking action against bribery, stealing and cheating. Corruption has robbed the poor disproportionately. The Hawks had to be taken to court to do their job. Now it seems like the new dawn has arrived and indeed there is a new mood, a new energy. And South Africans for the second successive year are now walking tall, proud to be South Africans confronting our challenges head-on with absolute singularity of purpose. We are having critical, crucial but nonetheless courageous conversations that we must have as a people with great natural endowments.
RYK VAN NIEKERK: Just lastly, I see the temperatures in Davos are pretty low. They are going to peak at -9° Celsius tonight. How is the weather there? I just want to tell you that it’s an absolutely perfect day in Johannesburg today.
BONANG MOHALE: I understand you guys are suffering somewhat of a heat wave. Here it’s really cold. The snow is about 1.7 metres high in some places. We don’t go anywhere without a thick jacket to make sure that we ward off the cold.
Outside it is magnificently beautiful, it is truly the Swiss Alps at its absolute best, and the sun is shining and there’s a bit of snow beginning to come down. But the Swiss are organised. They are systematic and we feel absolutely cared for, safe, and people everywhere we go are just eager to hear the South Africa story.