6
NEWS & OPINION
31 May 2017
MONEY,
MONEY,
MONEY
INSIDER CHRONICLES
TIM HUGHES
Non-executive Director,
Warwick Wealth
Whither or wither
South Africa?
F
ormer Finance Minister Derek Keys told
me in 1994 the best thing he ever did was to
arrange for the then ANC economic policy
unit to travel to foreign capitals, particularly of
communist countries, to better understand how
modern economies are run by fi nance ministries and
central banks. What emerged from the ANC global
fact-fi nding mission was a better understanding of
how global markets operate, an appreciation of the
vagaries of fi nancial markets and stock exchanges, but
most of all, he claimed, they returned with a message
from the Chinese government: “Keep the state sector
small, empower business and uplift the poor.”
While these lessons were applied to some degree
under the earliest post-apartheid administrations of
Nelson Mandela and Th abo Mbeki, they are lost on the
current administration. Today, politics has trumped
economics and South Africa is the poorer for it.
Politics in South Africa is brutal, cut-throat,
uncompromising and its consequences impact
directly on the wealth of its people. President Jacob
Zuma has raised the stakes in a do-or-die political
poker game that called the bluff of those who thought
they had trumped his bid to wrestle control of the
Treasury. Th is midnight manoeuvre was part of
a grander strategy to loosen the purse strings to
increase state expenditure, fund under-performing
state-owned enterprises and to launch the proposed
nuclear build programme, all in the name of radical
economic transformation.
Th e President’s ‘night of the long knives’ that
brought about the ousting of his former close ally,
Pravin Gordhan, saw Zuma emerge as a political
victor, but at the cost of all South Africans. Th e reason
for this is economic in nature. South Africa is fully-
integrated into the global economy and consequently,
political actions have economic r eactions with
Newtonian certainty. Just as international factors, or
external shocks, such as the
sub-prime lending crisis impact
our economy directly, conversely,
the governance of South Africa’s economy
is watched closely by the international fi nancial
community, which is compelled to react, in this
case, negatively.
Pragmatists within the ANC have more in
common in policy terms with the DA, COPE, the
IFP, UDM and ACDP. Populists within the party are
a very few degrees of separation from the Economic
Freedom Fighters. Th is is not to suggest that the
ANC is poised for another fratricidal split. History
has shown that splits weaken the splitters. Th e South
African electoral system, based on proportional
representation party lists, militates against coalitions,
so an alliance of ANC populists with the EFF is
not possible in the current dispensation, nor is a
grand alliance of ANC pragmatists and the current
Parliamentary opposition.
Th e only arena to reform the party and thus
determine the immediate future of our country is
from within the ANC. Th is does not mean that the
rest of the country should disengage from politics.
On the contrary, two factors will sway the ANC
towards the election of a more pragmatic leadership
at its national conference in December 2017. Th e fi rst
is popular opposition, more so than Parliamentary
opposition. When blue collar workers, line-up on the
streets with businesspeople, teachers, professionals,
students and unemployed township dwellers as they
did on Friday 7 April, it sends the clearest signal to
politicians. Th e other infl uential factor is the fi nancial
markets, local and international, who care less about
political strife, but will reward good leadership with
investment and punish bad in equal measure.
Th e people and the ratings agencies have spoken-
it is time for change.
£184.58
The average maximum hourly rate a fi nancial
adviser can charge across the UK, according
to the Financial Conduct Authority.
$11.6m
BP CEO Bob Dudley’s total pay package for
2016 – as stated in the company’s annual
report after it was cut by 40%, following a
shareholder revolt.
$823bn
The amount investors put into American
Investment Management Company
Vanguard’s funds. The rest of the mutual fund
industry (of more than 4 000 fi rms in total
combined), took in only $97bn during the
same period.
R72.2m
What MTN’s Executive Chairman, Phuthuma
Nhleko received in pay and bonuses last
year, after he negotiated a reduced fi ne with
Nigerian regulators. This is according to the
company’s annual report.
R191m
The value of special restricted share awards
granted by Barclays Africa to “retain skills
critical during the Barclays Plc sell-down and
beyond”. This is according to the company’s
Remuneration Report that forms part of its
2016 Integrated Report.