Tito Mboweni inherits Africa’s recession-hit country as president Cyril Ramaphosa chases growth.

If the performance of South Africa’s currency in the week since Tito Mboweni was picked as finance minister is any good, Africa’s only economy in official recession might be on to a good thing.
The rand, Africa’s most freely-traded currency, gained more than 5% against the dollar in the week since the former central bank governor replaced Nhlanhla Nene who quit after lying about his dealings with a business family, the Guptas, accused of bribing government officials including former President Jacob Zuma.
The former labor minister brings a no-nonsense approach analysts say will be needed to take Africa’s second-largest economy out of a largely self-inflicted second recession in less than a decade amid graft allegations. He will need to rein in government spending, six months before elections that may drop the ruling African National Congress’ (ANC) support below half for the first time since the dawn of democracy in 1994.
“Fiercely independent and often regarded as a bit of a maverick, Mr Mboweni is nevertheless likely to emerge as one of Mr Ramaphosa’s more inspired decisions,’’ says Gary van Staden, analyst at Cape Town-based NKC Research.
<blockquote>“He is certainly among the more highly-regarded choices the president could have made and we expect him to add momentum to the decisions of the job summit and economic stimulus package.’’</blockquote>
Mboweni served four years as labor minister in former President Nelson Mandela’s government where he developed the first post-apartheid labor law. At the South African Reserve Bank, where he was the country’s first black governor, Mboweni spent a decade, and built a reputation as a conservative banker and defender of the country’s newly-adopted inflation-targeting regime.
His major achievement was building the country’s foreign exchange reserves from less than $10 billion to $40 billion when he left in 2009 after two terms deemed by most as successful.
<a href="http://www.forbesafrica.com/woman/2018/06/16/one-on-one-with-naledi-pandor-sa-minister-of-higher-education/" target="_blank" rel="noopener">READ MORE: One on One With Naledi Pandor SA Minister of Higher Education</a>
“The economy is now in a safe pair of hands. It is someone senior both in the ANC and in the government as he served as a minister of labor previously. What is also important is we have ratings agencies watching us and this will bode well for them,’’ says independent economist Mike Schussler.
Mboweni takes charge of an economy that was in recession in the first six months of the year, hobbled by nine years of poor management under Zuma which left business confidence shattered. With the economy barely growing during the period, the country lost its investment grade rating from Standard &amp; Poor’s (S&amp;P) and Fitch Ratings.
Only Moody’s maintained its rating above junk and the company deferred a decision after Mboweni’s appointment, fanning hopes it will give him time to mend the country’s finances and present a credible growth plan.
But economists say it might be too late for a country that needs to cut spending while chasing economic growth.
“I am afraid we have overplayed our hand on the numbers,’’ says Dawie Roodt, an economist at Efficient Group in Johannesburg.
“The fiscal numbers are unsustainable and the debt numbers in particular are terrible. From a numbers point of view, I am afraid this is a downgrade.’’
The new minister has a full problem tray as he comes in: unemployment is sitting at 27.2% as companies grapple with soaring costs inflated by a weak rand, falling government revenues in a country where 17 million people depend on government grants, and weak business confidence.
But his appointment may provide the turning point the country desperately requires, according to Van Staden.
“The former Reserve Bank governor can be a difficult personality, but his skillset and deep understanding of financial markets are likely to see him embrace a market-orientated policy framework with a no-nonsense attitude and dedication to economic growth and social development. We expect the appointment to have a positive impact on the credibility of the Ramaphosa administration.’’
It is credibility Ramaphosa has been building and one he will need quickly, according to Ravi Bhatia, a director at S&amp;P which rates the country’s debt junk with a stable outlook. Its next rating decision is scheduled to be announced on November 23.
“He will have to get up to speed quite quickly,’’ Bhatia said pointing to the country’s Medium Term Budget Policy statement released in October. “He will have to push through measures that will deliver growth. We want to see growth being delivered and the fiscal line being controlled.’’
&#8211; Godfrey Mutizwa

Tito Mboweni sworn in as new finance minister in South Africa

Could Tito Mboweni Be The Turning Point?

South Africa’s African National Congress (ANC) is mired in a serious leadership crisis, and President Jacob Zuma faces an ignominious end to his political career. The 74-year-old has refused to take responsibility amid corruption and conspiracy charges. Having been <a href="https://theconversation.com/cyril-ramaphosa-prepares-to-confront-south-africas-bleak-future-89410" target="_blank" rel="noopener">replaced as party president by Cyril Ramaphosa</a> in December 2017, he faced the choice between resigning or taking his chances with a no-confidence vote in parliament. After days of mouting pressure, he <a href="http://www.bbc.co.uk/news/world-africa-43066443" target="_blank" rel="noopener">finally walked</a>.
The whole episode carries more than an echo of recent events in neighbouring Zimbabwe, where a bloodless military coup removed President Robert Mugabe but left his ruling ZANU-PF party in power, while the coup’s leaders were rewarded with cabinet posts.
The global public seems glued to every move in South Africa’s political drama. But is the attention actually warranted? Is the country really at one of its most momentous crossroads yet? That will only be clear with hindsight.
Perhaps Zuma’s removal will help transform South Africa’s political culture and regenerate the ANC, which is still stuck in its old anti-apartheid/Mandela mode. If it revives the ruling party and ends the era of old men clinging to power and acting with impunity, Zuma’s departure will be one of the great Rubicons in South Africa’s post-apartheid history.
<a href="http://www.forbesafrica.com/politics/2017/11/21/lessons-south-africas-jacob-zuma-robert-mugabes-misfortunes/" target="_blank" rel="noopener">READ MORE: Lessons for South Africa&#8217;s Jacob Zuma in Robert Mugabe&#8217;s misfortunes</a>
<h2>Falling short</h2>
Just before the 1994 elections, ANC activist <a href="https://www.newstatesman.com/ns-interview-albie-sachs-lawyer-and-anti-apartheid-campaigner" target="_blank" rel="noopener">Albie Sachs</a> declared that the ANC had at best two terms in power to bring electricity and running water to the majority of South Africans and to address the inequality in educational, health and infrastructural services. Any longer, he said, and young South Africans would start to challenge its authority.
To give the party its due, what has been achieved is remarkable. It is easy to forget just how momentous the country’s problems were when the ANC took power in 1994. Given it started with one of the world’s largest gaps between the wealthy (at that time almost exclusively “white”) and the poor (almost exclusively of colour), post-apartheid South Africa has been tremendously successful in creating a stable and solid <a href="https://businesstech.co.za/news/government/178079/how-big-south-africas-black-middle-class-is-and-why-the-anc-are-concerned/" target="_blank" rel="noopener">black middle class</a>.
The party had to try and refashion the country on all levels – political, economic, social, cultural – and in some ways, it has made great strides. While it has its many critics, the Truth and Reconciliation Commission of the late 1990s helped the nation start to move on from one of the most intense protracted experiences of racial discrimination in recent history.
But some of the deep problems apartheid wrought are anything but solved: millions <a href="http://ewn.co.za/2017/08/22/more-than-half-of-south-africans-living-in-poverty-stats-sa" target="_blank" rel="noopener">still live in poverty</a>, and levels of violent crime (notably sexual violence) are <a href="https://africacheck.org/factsheets/south-africas-crime-statistics-201617/" target="_blank" rel="noopener">strikingly high</a>. All the while, many among the ANC’s elite (not least Zuma himself) have conspicuously accrued tremendous wealth, and their extravagance has become a significant problem for the party’s legitimacy. But instead of cleaning house or changing its ways, the ANC has over and over again chosen to fall back on its victory against apartheid and the memory of its most famous member, Nelson Mandela.
<a href="http://www.forbesafrica.com/focus/2016/12/01/zuma-thief-must-voetsek/" target="_blank" rel="noopener">READ MORE: &#8216;Zuma The Thief Must Voetsek&#8217;</a>
<h2>Behind the figleaf</h2>
In 2013, a month before Mandela passed away, the South African High Commission in London hosted the exhibition “We Love Mandela”, which included a <a href="https://www.enca.com/life/mandela-portrayed-jesus-last-supper" target="_blank" rel="noopener">painting</a> by South African artist Simon Dean entitled “The Last Supper”. It portrays Mandela as Jesus, surrounded by an astonishing cadre of “disciples” – from Desmond Tutu, Mohandas Gandhi, Martin Luther King, and the Ethiopian Emperor Haile Selassie.
This sort of Mandela-worship has been the party’s figleaf, and a useful device for silencing opposition, criticism, and calls for change. For far too long, it kept the party safe enough from electoral humiliation that Zuma remained secure in his office. But underneath it all, the political crisis that now confronts both the ANC and South Africa writ large has been brewing for years, and Zuma’s demise is long overdue.
To judge by the coverage outside South Africa, with the global public glued to every turn in this political drama, one might think Zuma’s demise had come from nowhere, and that it is guaranteed to change the country for good. But in reality, nothing new has come to light in some time. The latest investigation into his connections with corrupt interests began with <a href="https://mg.co.za/article/2013-05-07-the-beginners-guide-to-the-guptas" target="_blank" rel="noopener">exposés</a> by the South African Mail &amp; Guardian newspaper in 2013. Most of the assorted corruption charges against Zuma predate his presidency, as does the <a href="https://www.theguardian.com/world/2016/oct/10/khwezi-woman-accused-jacob-zuma-south-african-president-aids-activist-fezekile-ntsukela-kuzwayo" target="_blank" rel="noopener">controversial rape case against him</a> in 2005-6.
Zuma’s presumptive successor, Cyril Ramaphosa, <a href="https://theconversation.com/cyril-ramaphosa-prepares-to-confront-south-africas-bleak-future-89410" target="_blank" rel="noopener">is not exactly the embodiment of radical change</a>. But Ramaphosa will have the chance to finally seize the impetus for a true political transformation – to find a way of tackling poverty, violence and discrimination while reforming the ANC from top to bottom.
<img loading="lazy" decoding="async" src="https://counter.theconversation.com/content/91873/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" />Only if that happens will the end of Zuma really turn out to be the moment of transformation much of the world thinks it is guaranteed to be. &#8211; Written by <a href="https://theconversation.com/profiles/heike-schmidt-444690" target="_blank" rel="noopener">Heike Schmidt</a>, Associate Professor in Modern African History, <a href="http://theconversation.com/institutions/university-of-reading-902">University of Reading</a>
This article was originally published on <a href="http://theconversation.com" target="_blank" rel="noopener">The Conversation</a>.

Zuma’s time is up – but what does it mean for South Africa?

It was an eventful rainy Thursday afternoon. Workers left their desks to watch the action through their office windows. It was one of the many marches against state capture. On this day, civil society organizations were picketing outside the office of global consultancy McKinsey, right opposite the FORBES AFRICA headquarters in Sandton, South Africa.
McKinsey is one of the many companies, in the country, implicated in alleged corrupt dealings between state-owned power utility Eskom and consultancy firm Trillian. McKinsey and Trillian stood to earn more than $490 million from Eskom.
It has been a year of drama in corporate South Africa. As strange as it may sound, a lot of South Africa’s protests, like this, have one family as the common cause.
Weak-kneed politicians allegedly allowed members of the Indian-born Gupta family to wield undue influence. This influence has gone from meddling with the state’s top jobs to conniving with private and public companies to act in their favor.
Another company in hot water is Bell Pottinger, a British public-relations firm connected to the Guptas by a $130,000-a-month contract. It was stripped of its membership in the Public Relations and Communications Association (PRCA) in the UK, after it was found that the PR agency deliberately fanned racial tensions, with creations like &#8216;white monopoly capital&#8217;, in South Africa, in favor of Zuma, while it worked for the Gupta-owned Oakbay Capital.
“We took this decision because we were not satisfied by the explanations given. We have never passed down such a damning indictment,” says Nicholas Dunn-McAfee, Head of Public Affairs, Policy and Research at PRCA.
<a href="http://www.forbesafrica.com/billionaires/2017/12/08/south-african-billionaires-fortune-plunges-2-billion-day-amid-accounting-scandal/" target="_blank" rel="noopener">READ MORE: South African Billionaire&#8217;s Fortune Plunges More Than $2 Billion In A Day Amid Accounting Scandal</a>
It gets worse.
For years KPMG South Africa has said it stands for integrity. Instead, the tax, advisory and auditing firm now stands alleged of giving advice so that money can be taken to Dubai to avoid tax payments. They also turned a blind eye to several conflicts of interest while auditing 36 Gupta-linked companies and compiled the so-called South African Revenue Services (SARS) rogue spy unit report which was used as part of the smear campaign against former Finance Minister, Pravin Gordhan.
There are consequences.
For KPMG, for example, pressure has been piling. The firm withdrew all its findings in the ‘rogue unit’ report; senior executives, including CEO Trevor Hoole, resigned; and it has been dumped by major clients, among them, Sasfin Bank, Sygnia Asset Management, the energy investment company Hulisani, and the University of the Witwatersrand.
Like the protesters in Sandton, Magda Wierzycka, Chief Executive Officer at Sygnia Group, an asset management company, says all involved should be held accountable, stripped of their licenses, fined and even jailed.
“There are no excuses. They did what they did for money. They were not ignorant of what they were doing,” she says.
Opposition political parties, rights groups and private citizens are playing their part to make sure unethical companies are punished. The problem is corporate misgovernance affects the whole country.
<div id="attachment_34798" style="width: 310px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-34798" class=" wp-image-34798" src="https://www.forbesafrica.com/wp-content/uploads/2017/12/Alastair-Macduff-Chairman-and-Chief-Executive-Officer-of-the-Turnaround-Management-Association-Southern-Africa.-copy-200x300.jpg" alt="" width="300" height="451" />Alastair Macduff, the Chairman and Chief Executive Officer of the Turnaround Management Association Southern Africa. (Photo supplied)</div>
South Africa was downgraded to junk status and went into a recession. At the time of writing this article, $1 was equivalent to R14.16 at its worst, it went to about R17 to the dollar. It means business confidence is at an all-time low.
“Businesses are feeling the impact of low investor confidence, weakening exchange rates and high fiscal uncertainty,” says Alastair Macduff, Chairman and Chief Executive Officer of the Turnaround Management Association Southern Africa.
“Restoring investor, business and consumer confidence will require a concerted effort to address these pressing issues – and address them in the best interests of the country as a whole,” he says.
Wierzycka agrees.
“In a funny way, what has happened to KPMG and McKinsey is actually very positive… Positive in terms of waking corporate South Africa to what is happening and to the fact that they can no longer sit on the fence and stay silent,” she says.
According to Wierzycka, South Africa’s corporate sector is suffering from a moral crisis.
“The dilemma is, do you change providers based on the fact of they are implicated in state capture even when it’s inconvenient to do so?”
<div id="attachment_34795" style="width: 510px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-34795" class=" wp-image-34795" src="https://www.forbesafrica.com/wp-content/uploads/2017/12/Mckinsey-strike-501-300x200.jpg" alt="" width="500" height="333" />People protests against corruption outside the McKinsey office in Sandton, Johannesburg. (Photo by Motlabana Monnakgotla)</div>
Wierzycka has lived it. She offered Bianca Goodson, former Trillian CEO turned whistle-blower, a job. This after Goodson’s new employer, Sage, accepted her resignation after she told them she was blowing the whistle on her previous employer. Goodson provided documented evidence that the Gupta-linked firm swindled hundreds of millions from state-owned enterprises Transnet and Eskom. Wierzycka called Goodson, and all whistle-blowers, heroes.
“When I heard what Sage did, I was actually breathless. The true heroes of the story of South Africa are the belittled whistle-blowers… Bianca took tremendous risks in disclosing the information she disclosed on Trillian, McKinsey, Eskom and a number of others. It seemed a completely natural thing to reach out to her, if anything else, to reassure her that she is not alone in this fight. When I did, I met a lady who is incredibly competent. So let’s be clear, I gave her a job, not because she is a Trillian whistle-blower but because I encountered a woman of tremendous bravery with a strong moral compass and qualifications that are arms long,” says Wierzycka.
<div id="attachment_34797" style="width: 311px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-34797" class=" wp-image-34797" src="https://www.forbesafrica.com/wp-content/uploads/2017/12/Magda-Wierzycka-Chief-Executive-Officer-at-Sygnia-Group-200x300.jpg" alt="" width="301" height="452" />Magda Wierzycka, Chief Executive Officer at Sygnia Group. (Photo supplied)</div>
Goodson has a five-year-old daughter and, according to Wierzycka, she was petrified.
“My biggest concern was her personal safety. If she had died in a random hijacking, no one would think because no one knew her name. So, what I thought was that the most important thing that needed to happen was to get her name out there in the headlines.”
Wierzycka’s good fight doesn’t end there.
Earlier this year, Sygnia started a new money market unit trust and the firm said it will donate 100% of the management fees, earned on the fund, to non-political organizations fighting corruption. Sygnia also fired KPMG when news on state capture allegations broke.
“At the end of the day, I think it’s up to each company to make a choice. In the instance of KPMG, their board of directors make up their own minds as to whether what they’re seeing is what they expect to be seeing from their service provider and how serious they view what the company has done. In the instance of McKinsey, do you honestly want to do business with a company that has robbed South African taxpayers while we have a tiny taxpayer base supporting such vast percentages of the South African population which is living in inequality… Are you happy, morally, to do business with a business like that? That’s a question each board of directors has to ask,” says Wierzycka.
Another problem with some corporate companies is that they use denial as a first response when they are embroiled in a crisis. It creates a bigger mess.
KPMG South Africa, as an example, hired Nhlamu Dlomu, previously Head for People and Change, to clean up the mess as their new CEO. She couldn’t answer many questions posed to her, probably because she wasn’t prepared to be the CEO of one of the four top audit companies in the country that was facing its greatest crisis.
Women CEOs in times of corporate crisis may be a global trend.
A PwC report found that 38% of female CEOs are forced out of the office; compared to 27% of male CEOs. Another study, by Utah State University researchers, found boards are more likely to promote women and minorities to top leadership roles when an organization is in crisis.
“To me, that was a typical response of an international company that thinks  putting a fairly attractive female in front of clients is going to solve the problem… I think that the reason they are losing the battle in the court of public opinion is because they’re arrogant,” says Wierzycka.
<a href="http://www.forbesafrica.com/focus/2017/04/01/give-us-water-not-statues/" target="_blank" rel="noopener">READ MORE: Give Us Water Not Statues</a>
Before firing KPMG, Wierzycka says she advised the audit firm to withdraw the entire ‘rogue unit’ report and they refused.
“I said, ‘let’s talk about the money then, because we know that this is blood money, whether it’s stolen from taxpayers or the farming community in the Eastern Cape. R63 million ($4.43 million) will go a long way towards fighting corruption. So donate all this money to organizations which are fighting corruption in South African courts. At least try to redeem yourself in the eyes of the South African public.’ I was told no…,” recalls Wierzycka.
KPMG only withdrew sections of the report, under questioning in parliament, admitting that it was wrong about the SARS report and that their conclusions and recommendations were incorrect.
Clearly, it will take more than marches in Sandton to bring about change.
<div id="attachment_34801" style="width: 360px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-34801" class=" wp-image-34801" src="https://www.forbesafrica.com/wp-content/uploads/2017/12/Sylvester-Chauke-Founder-DNA-Brand-Architects-300x277.jpg" alt="" width="350" height="323" />Sylvester Chauke, Founder DNA Brand Architects (Photo supplied)</div>
<h1>How To Weather A Corporate Storm</h1>
Sylvester Chauke loves to communicate. We meet him in his well-decorated office in Fourways, Johannesburg. As we enter, we are welcomed by multiple awards on the walls behind and in front of his desk. It is like we have entered a trophy factory.
“I don’t know how many awards I have. Not all of them are here but this is all inspiration and it is kudos to the hard work we do,” he says.
This is a world away from where it all started.
At 12 years old he went for a TV commercial audition. He loved it. Since then, he knew he wanted to work in the media industry.
There was research and soul searching. It ushered in a marketing and advertising communications degree, from the University of Johannesburg, and an internship. He never looked back.
Five years ago, he founded DNA Brand Architects; a marketing and brand consultancy company that advises people on how to avoid or deal with corporate crisis. He employs 34 people and counts Vodacom, Edgars, Bonang Matheba, Steers and Wimpy among his clients.
“It is all about taking all these fields of communication, whether it’s broadcasting, advertising, and brand communication, into one space,” says the 36-year-old.
According to Chauke, it is very obvious that there is a corporate communication crisis in South Africa. He says in most businesses, communication is just seen as PR. They send press releases and hope for the best. They don’t plan for a crisis.
“Most businesses don’t think that they have to think and plan for it, they just become overly confident, to some extent quite arrogant, to think that they are such great brands that can sort of overcome anything. We are seeing it right now with the likes of Bell Pottinger, KPMG and McKinsey. It is indicative of that communication is a ‘by the way’ thing,” says Chauke.
It is dangerous. When companies say the wrong thing, they risk losing their clients, or worse, the company. According to Chauke, planning for a crisis isn’t rocket science.
“Most of the time you can anticipate issues. For example, when your financial results come out and they are not good, you should plan what you are going to be saying to the stakeholders about the performance. It is the same if you are going to be retrenching 2,000 people, you need to be prepared.”
Chauke says every business needs a crisis management plan, reviewed annually, for crises they can’t anticipate.
“The biggest challenge that we have is people think because you are a CEO, and you speak to a crowd of 1,000 in a conference, you can handle media. That is so not true. You need an experienced spokesperson to handle that.”
He says Africans should inspire the world.
“I think that if the way that we do business is given a chance and doesn’t get distracted by all the corruption, scandals and corporate blunders, the way we do business would inspire others because we push regardless,” he says.
Maybe this is just the kind of inspiration corporate South Africa needs.

Tag: Gupta

FORBES AFRICA SOCIAL MEDIA

Could Tito Mboweni Be The Turning Point?

Zuma’s time is up – but what does it mean for South Africa?

Anger At The Corporate Slippery Slope