Kimi Makwetu Asserting that there is still no consequence for inaction in managing the country's purse - Mianzo Asset Management
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EDITION 415 JULY 2020 WWW.LEADERSHIPONLINE.CO.ZA
SA'S #1
AWARD
WINNING
BUSINESS
MAGAZINE
INTERVIEWS •• INSIGHTS
INTERVIEWS INSIGHTS •• INTELLIGENCE
INTELLIGENCE
Kimi Makwetu
Asserting that there is still no consequence
for inaction in managing the country’s purse ISBNISBN
7-02519-988-5
0251-9988
00370
00415
9 8 79 707
79 72750 215 91 99 89 88 890 7
0251 998807
TIME TO RAISE THE BAR
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Contributors
30 Contents EDITION 415 JULY 2020 WWW.LEADERSHIPONLINE.CO.ZA
SA'S #1
AWARD
WINNING
BUSINESS
EDITOR
EVANS MANYONGA
evans@capemedia.co.za
ASSISTANT TO EDITOR
DANICA TOBIN
Onkgopotse JJ Tabane
Onkgopotse JJ Tabane is a PhD candidate at Wits University. He holds a BA, BPROC and MA degrees from
MAGAZINE
CONSULTING EDITOR UNIN, UWC and NMMU. He is currently a news anchor on “YourVeiw” on Newzroom Afrika. He is the author of
ROBBIE STAMMERS Let’s Talk Frankly: Letters to influential South Africans on the state of the Nation. He is a member of the UWC
14 SUSTAINABILITY INTERVIEWS •• INSIGHTS
INTERVIEWS INSIGHTS •• INTELLIGENCE
INTELLIGENCE ART DIRECTOR Council; a Trustee of Lovelife and UWC Foundation and Chair of the UWC Media Society. He is a Director at FNP
TIME TO STOP SHOOTING BRENT MEDER Communications, Founder and Director of Oresego Communications, Pholosang BEE Resolutions Services
06
and Enviroworld Productions. Early in his career he was Head of Communications for the Department of
THE MESSENGER SUB EDITOR Environmental Affairs and Tourism, Chamber of Mines and South African Airways and Congress of the People.
WADIWA MOMULA
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NAVIGATING SOUTH AFRICA’S CAPE MEDIA Professor Owen Skae Wela Mlokoti
‘NEW NORMAL’ PROJECT MANAGER Skae has been an Associate Professor Mlokoti holds a Bachelor of Laws from the
MANDLA MANGENA and the Director of Rhodes Business University of Cape Town and a Master of
mandla.mangena@capemedia.co.za School since 2010, which has ‘leadership Laws from Duke University School of Law
24 MINING CAPE TOWN ADVERTISING TEAM - 021 681 7000 for sustainability’ as its essence. His areas in North Carolina. She has clerked at the
14
GIVING BACK TO PEOPLE AND PLANET CHARMAINE MEYER, JAMES STONE, VIWE NCAPAI of interest are business analysis, ethics, Constitutional Court for Justice Chris Jafta
Kimi Makwetu
Asserting that there is still no consequence
FRANCOIS GEORGE, DOMINIC JUMO, LES BOWNES
DEON HENDRICKS, LORNA MNGXUNYA
finance, governance and leadership and
strategic management. He is often called
and currently works in a corporate M&A
practice in Sandton, Johannesburg. This
upon to provide analysis and commentary month, she discusses cybercrime.
30 NO TOUCH ECONOMY for inaction in managing the country’s purse ISBNISBN
7-02519-988-5
0251-9988
JESSE THEBUS, MADELEINE JANSEN, NOMBULELO MAHLUNGULU
on governance matters.
00370
00415
DISTRIBUTION, CIRCULATION & SUBSCRIPTIONS
SUPPLY CHAIN AND 9 8 79 707
79 72750 215 91 99 89 88 890 7
0251 998807
EDWARD MACDONALD
OPERATIONS IN MINING edwardm@capemedia.co.za
Dr Onkgopotse JJ Tabane was in RSA: R343 (per annum)
CLIENT LIAISON OFFICER Luyanda Mafungo Chris Waldburger
34 YOU SAID IT conversation with the Auditor General, Mafungo was recently named the new Waldburger is a writer, teacher and political
LIZEL OLIVIER
Mr Kimi Makwetu, who asserts that ACCOUNTANT Client Relations Manager at Black Beard analyst. He has been writing for the South
Technology, rocketing her to the front of African media on sport, politics, culture and
there is still no consequence for inaction CHEVONNE ISMAIL
46 THE YOUTH IS THE FUTURE ACCOUNTS DEPARTMENT
the line of the group of the most influential
women in South African tech.
business since 2007. His work can be found
at chriswaldburger.com.
TODAY’S YOUTH, TOMORROW’S in managing the country’s purse BRIGITTE EBERBACH Luyanda has over 16 years of experience
DEBTORS DEPARTMENT ranging from acquisition marketing and
CUSTODIANS NADEEMA ABDULLAH client relationship management experience
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52 THE INDELIBLE IMAGE formation provided and opinions expressed in this publication
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are provided in good faith but do not necessarily represent
the opinions of this publication, the publisher or the editor. Tavonga Jacqueline Manyonga Carys Richards
54 THOUGHT LEADERS Neither this magazine, the publisher or the editor can be held Manyonga graduated from the University Carys is an experienced, HR leader with
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All lives are equal Editor’s Note
I have watched with keen interest as ‘The black lives matter,’ movement
has caught on across the globe like wildfire. Much has been said, after
all much is always said when it comes to the contentious issue of race
relations since the dawn of civilisation, or perhaps since someone decided
we all had different skin pigmentation and therefore it ought to mean
something.
What have I thought of it all? I have thought what I always think, that
we are all the same, regardless of race. However it is true that black lives
have suffered much prejudice and discrimination. As a black man myself I
have gone through various experiences of discrimination and hate. Some
experiences mild and some downright ridiculous.
Ultimately I learned that the black child must own their place in this
world. Education, entrepreneurship, bold focus and a strong thirst to
learn are the tools to take our place. Gone are the days we had to take up
weapons and use violence to explain different positions.
Today we are in a new world. A world that respects output and needs
matched regardless of race or creed, a world that respects knowledge
and skill as opposed to colour and creed, a world that respects progress
and direction as opposed to petty and idiotic agendas.
I say black child remove your knee from your neck by educating yourself
formally, acquiring a skill or skills, delving in entrepreneurship, acquiring
knowledge on stocks, bonds, art and real estate among other areas of
interest. Push yourself, ignore the noise and focus on the relevant. When EVANS MANYONGA
Editor
all is said and done let’s see who will dare put their knee on your neck.
As you enjoy this edition of the publication let us reflect on what’s
relevant and fight for what is right. Life has never been black and white.
Therefore let us not try to force the world to be black and white. Do not
force to be where you are not needed. All lives matter and if anyone needs
reminding let them be reminded through sheer class and output. Enjoy
this edition of Leadership Magazine.
COVER STORY COVER STORY
Wrong hands in the coffers
Dr Onkgopotse JJ Tabane was in conversation with the Auditor
General, Mr Kimi Makwetu, who asserts that there is still no
consequence for inaction in managing the country’s purse
6 | www.leadershiponline.co.za www.leadershiponline.co.za | 7
COVER STORY COVER STORY
I t has been over seven years since
Kimi Makwetu was appointed to the
position of Auditor General. He prides
himself in having been able to navigate
a very difficult period in South Africa’s
given the limited nature of such resources. He
is a man who, despite his counsel being largely
ignored, given the repeated trends of misman-
agement, has not given up right to the end.
Under his watch, a new law has been piloted
possible to ensure that a new culture of account-
ability is established, to ensure that there is no
longer a persistence of what he termed ‘stag-
gering impurity’.
In a sense, the latest report is a sample of
At the heart of it all is a sense of entitlement
to public resources. Makwetu believes there is
no political will to tackle this crisis. Politicians
are quick to welcome and support his work, but
it’s their actions which are worrying, given the
political history, where corruption has through parliament, which will empower his what has been going on over the last decade. adverse reports that he has had to issue year
overshadowed the areas of financial in, year out.
management within government. Each time an audit report comes out, there
Makwetu has previously served as a deputy AG
“Those who say this is not is a contested narrative about whether these
indicators are corruption or merely misman-
and has had to navigate the troubled waters of corruption must then say what this is” agement. Makwetu has some choice words
managing the country’s financial management for those who are quick to say these horrible
— or lack thereof, for more than a decade. He indicators (see summary of report outcomes
speaks quite frankly about the state of collapse office to report truant officials to other organs Irregular expenditure trends have regressed, side bar) are not corruption: “So, what are these
of financial management and labels some of the of state for rapid investigation, and will also seeing municipalities wasting over R32-billion, indicators about?”
indicators as having largely regressed. empower him to recover stolen funds by as opposed to last year’s R28-billion. Other indi- ”Those who say this is not corruption must
In his most recent report, released earlier this issuing what is termed a ‘certificate of debt’ to cators are equally worrying and point to the then say what this is” says Makwetu. This
month, Makwetu notes, sadly, that the wrong accounting officers who are not able to explain collapse of financial management. Only 21 out is clearly an issue that frustrates the AG. He
hands are getting into the coffers, where public wasteful expenditure, in particular. He has of 219 municipalities received clean audits–and comes across as having lost faith in the ‘peer
funds are concerned. This is serious, especially no regrets that his office has tried everything the reasons are varied. review’ system amongst politicians in SALGA,
as he believes some of them are current
practitioners against whom some of his harsh
findings are against.
Incidentally, SALGA’s response to his latest
report hastened to say that the glass is half full,
not half empty, and that the focus must be on
‘centres of excellence’. Makwetu was dismissive
of this, stating that the problem is officials at
SALGA, who are employees of the same politi-
cians they are expected to critique.
The effectiveness of SALGA is therefore
highly questionable. Makwetu says that
SALGA should be at the forefront of the kind of
advocacy work that must result in best practice
in how municipalities are managed, instead of
downplaying a deep crisis that is evidenced by
his latest report.
Makwetu says that Treasury, as a custodian of
the public purse, can do better to reign munici- independently. His tenure existed in parallel now created by law, to hold politicians account-
palities in, but, sadly, this has not been his with the era of State Capture and this presented able for their use of the public purse, but he
experience. He cited the absence of a permanent its own set of challenges, where politicians is satisfied that his advocacy role as a chapter
Accountant General at the National Treasury as attempted–albeit in a subtle way, to influence 9 institution was well established during his
Makwetu ends his term this one of the signs that Treasury is not on top of the
deteriorating situation of our national finances.
audit outcomes. Makwetu is of the opinion that
they quickly got the message that he would not
tenure. Its major fruit is the amendment of
the Public Audit Act that has in many ways
November aware that he may not This observation may point us at the
current crisis. He identifies the hollowing out
amend audit findings.
Makwetu is proud that his office hires some
strengthened the hand of the AG office and
created a strong a culture of accountability.
be able to use the instruments, of SARS and NPA as key weaknesses. Only
recently, in view of the amended Public Audit
600 chartered accountants, all of whom receive
more exposure than they would have, had they
These are some of Makwetu’s more pointed
remarks on a range of important issues facing
now created by law, to hold Act, has the coordination with these critical
institutions started. In this regard, Makwetu
been in the better-paying private sector. This is
why one of his major disappointments during
the country:
politicians accountable for their is complementary of SCOPA forming an anti-
corruption task force, where these institutions
his tenure was when some of his staff were
threatened by rogue elements within munici-
On SALGA and the capacity
of Local Government
use of the public purse can better cooperate.
All the indications are that the institution
palities who sought to influence audit outcomes.
Makwetu ends his term this November, aware
SALGA is better placed to build capacity issues.
When it comes to dealing with difficult issues
of the AG was given the space to do its work that he may not be able to use the instruments, of accountability, some of the people around
8 | www.leadershiponline.co.za www.leadershiponline.co.za | 9
COVER STORY COVER STORY
the table are themselves guilty. There is no suf- is where there is payment for goods not to make sure we do not lose cases where such On corruption trends
ficient courage. The officials who run SALGA are PERFORMANCE SNAPSHOT received. a certificate is issued. There has been a series of interventions and
employees of the politicians who run SALGA. The amendment draws from the responsibili- An example of this is when the Ghana AG status review programmes. They present what
There are institutional limitations. The white OVERALL AUDIT OUTCOMES ties of the accounting officers. The accounting was taken to court over such a ‘certificate of can be used to help them address possible
paper on local government must be looked at OVERALL officers must demonstrate preventative controls. debt’. After issuing this certificate of debt, he findings, like internal preventative interventions
REGRESSION Outstanding audits
critically.
IN AUDIT
46 Regressed There is an independent committee estab- was placed on 123 dates of leave! There is a with accounting officers. This does not wait for
There is a need to re-look at whether this is 33 Improved The audits of 28 municipalities were lished to scrutinise all issues of natural justice need for transparency. audit time but it has, however, not seen much
OUTCOMES not finalised by 31 January 2020
still relevant. We need to relook at the architec- traction. There is no rigour of consequences.
ture and ask hard questions. We have escalated to councils that there must
There is an opportunity to re-look at the pro- Clean audits Quality financial be a proper performance review. Where there
Cost of consultants to assist in
statements financial statement preparation
FINANCIAL HEALTH
fessionalisation of local government and what are no limits to discretion which is where there
REVENUE AND EXPENDITURE
can be done to reduce political interference.
Why don’t we look at centralising some of the
48% R1,26 billion * Municipal revenue was R324 billion: R226 billion (70%) own revenue, R55 billion (17%) equitable
will be flood gates of corruption.
As long as the benefits keep flowing and there
(2017-18: 52%)
functions such as payroll? This way corruption 59% (134) share and R43 billion (13%) other conditional grants is no deterrent, and no consequence, corruption
can be reduced. 18% (43) Financial statements submitted will persist.
8% Municipalities submitted for auditing included material Salaries and wages (including councillor remuneration) of R91,3 billion – 40% of revenue and 166% of equitable share We need to ask the question of how the
(2017-18: 7%) financial statements without misstatements in areas in which
On the overall challenges facing the material misstatements consultants did work citizenry can be more alert.
state of financial management Deficit Creditor-payment Average creditor- More than 10% of
The closeness of the Treasury to the situation * Consultant costs include R741 million for audits completed by 31 January 2020 (expenditure exceeded revenue) period > 30 days payment period debt irrecoverable Advocacy role of the AG office
leaves much to be desired. and R522 million relating to outstanding audits or audits subsequently finalised Example of what we are experiencing now in the
2018-19 34% (65) 2018-19 89% (173) 2018-19 180 DAYS 2018-19 93% (181)
There has been a high level of tolerance for 2017-18 32% (57) 2017-18 85% (152) 2017-18 146 DAYS 2017-18 90% (161) COVID-19 audit. We have reached out to various
No findings on No findings on Irregular expenditure
a low level of skills. This causes the issues we civil society organisations and there is a sense
performance reports compliance with
highlight in the audit and creates an opportunity VULNERABLE FINANCIAL POSITION of complementarily given social audits. Areas
legislation
for looting. The skills audit is only one solution, like local government will raise these issues
while removing weak CFOs at the disposal of 33% R32,06 billion**
2018-19 31% (72) 2017-18 30% (68) more than an annual audit report.
councils is another. (2017-18: 37%) Fruitless and wasteful expenditure of R1,47 billion incurred by those in vulnerable financial position
(2017-18: R24,38 billion)
Councils do not exercise sufficient oversight, On political will
such as quarterly oversight responsibilities. The **Irregular expenditure includes R21,46 billion Politicians are always found wanting. There
councils only really look at the financials when 48% (109) 9% (2017-18: R16,63 billion) for audits completed by
31 January 2020 and R10,60 billion is little by way of action when it comes to
Achievement reported (2017-18: 8%) ASSURANCE PROVIDERS
audit results are presented to them at the end not reliable
(2017-18: R7,75 billion) relating to outstanding addressing the issues of audit outcomes.
of the year. Where some oversight happens, the audits or audits subsequently finalised Senior management, Internal audit units National and Municipal public Politicians quickly get distracted. It has been
council committees are politically dominated. municipal managers and and audit committees provincial role players accounts committees difficult to get them to focus on our recommen-
There are some weaknesses around internal MATERIAL IRREGULARITIES mayors slightly regressed slightly regressed slightly regressed regressed
dations made in the reports.
audits. 6 material irregularities identified from 6 completed audits There is an abuse of discretion and this is
R24 499 866 likely financial loss (R2 421 897 known and R22 077 969 estimated) STATUS OF CONTROLS the loophole used for corruption. There is no
On the excessive use of consultants accountability rigour, therefore a municipality
Madibeng Municipality has got a total expendi- can pay for AMC Cookware and DSTV sub-
ture of R34-million for the payroll cost, indicting
Nature of material irregularities 19% 12% 27% 2% scriptions from the municipality bank account
Overall internal controls Basic financial and Human resource Information technology
a huge staff complement. regressed performance management management controls controls slightly without anyone realising it.
The total bill is more than R35-million, sug- controls regressed slightly regressed regressed
gesting that this is a cost incurred over a period, Is there a silver lining — Preventative
Payment for goods or Assets not safeguarded Unfair procurement leading
yet their state of financial management is far services not received resulting in theft/vandalism to overpricing
control is the answer
from desirable. INFRASTRUCTURE Civil servants are dictated to by the priorities of
They have instead had four consecutive dis- 33% (2) 50% (3) 17% (1) their caucus. This is how the recommendations
claimers and they have been getting a lousy R11 418 843 R11 849 379 R1 231 644 ROAD WATER SANITATION of the AG office fail to be implemented.
INFRASTRUCTURE INFRASTRUCTURE INFRASTRUCTURE
audit outcome despite these costs. A total of There is a need for councils to oversee the use
R1,2-billion is staggering given that there is 27% did not develop or approve 41% had no policy / an approved 41% had no policy / an of finance.The former AG conducted a roadshow
a big staff complement. What is the role of road maintenance plan policy on water maintenance approved policy on sanitation to all municipalities. While this was welcomed
maintenance
the councils? These are some of the glaring the act is allowing them to do is examine any there. The new law gives us a mandate to ‘stay 16% did not determine backlog in 36% did not establish standard by the politicians, not much was practically
weaknesses. incidents of fraudulent activities. with the bone’ and insist on answers about renewal and routine maintenance procedures for assessment of water 35% did not assess condition of implemented.
infrastructure sanitation infrastructure
The amendment has given them renewed suspicious transactions. Preventative control steps are not taken
Water losses above 30% at 36% of
On the amendment of the Public Audit Act authority. The situation presses Accounting If there is no credible evidence and expla- municipalities
seriously. We have developed booklets of pre-
This act does not replace levels of accountability Officers to explain suspicious transactions. In nation, the AG Office can insist on issuing ventative controls and one hopes that these can
of councils. What auditors have lamented is that the past, it was enough to simply report the a ‘certificate of debt’. This ensures that the Water losses not disclosed at 12% of be implemented to avoid loss of confidence and
municipalities
there is an expectation from the public. What matters as irregular expenditure and leave it findings are not ignored. An example of this loss of money.
10 | www.leadershiponline.co.za www.leadershiponline.co.za | 11
COVER STORY COVER STORY
He admits that the Peers’ View
On Parastatals advantage of the competitive landscape and end
Often distracted by the presence of big brother. up writing their own salaries.
This makes the governance issues fall by the
wayside. SAA is a good example. When we took Editorial Epilogue politicians are not
over its audit, we were alarmed at the lack of
rigour despite the involvement of the private
Kimi Makwetu leaves the office satisfied that
he has done all that was necessary to fulfill the
focused enough in
sector auditors. There was no proper due dili-
gence in appointing boards. We need to raise
constitutional mandate that he was entrusted
with. The reality is that the state of our finances
implementing his
the bar in this regard to get this area right. The
appointment of boards has just been a failure.
has only worsened, despite his numerous
reports and findings. He admits that the politi-
recommendations
There is an absence of a strong performance cians are not focused enough in implementing
culture. The civil servants in parastatals take his recommendations. Therefore, it became necessary to amend the law to empower his
office to do more than just recommend and wait
OVERALL AUDIT OUTCOMES Overall regression for the next year. He will not be there to see the
in audit outcomes
fruit of his toil, but institutions are supposed to
outlive their occupants.
Our institutions need to make sure that the
TOTAL Chapter 9 institutions must not be made to feel
2016-17 33 114 72 6 32 0 257 helpless. Makwetu realised that he could do
more than simply feel defeated by politicians
ignoring his recommendations—his legacy will
be felt when those who have gotten away with
2017-18 18 105 87 12 31 4 257
impunity face a real threat of prison for looting
the resources that the public have entrusted
Next 20 91 83 2 33 28
them with. His tenure was in no way perfect—
2018-19 4 257 with state capture happening under his watch,
Menu but here is a civil servant that on all accounts The Competition Commissioner The Deputy Minister of Finance
has done his bit for our future generations. — Thembinkosi Bonakele — Dr David Masondo
Prev
Makwetu represents a continuum of excel- The National Treasury has continued to further
EXPENDITURE lency we have come to expect from the office its relationship with the Auditor General and his
146 BUDGET Summary Profile of the Auditor General. South Africa has office throughout Mr Makwetu’s tenure, as can
Thembekile Kimi Makwetu was born in Cape public audit effectiveness second to none, be demonstrated at all levels within the National
Town and completed a Social Sciences degree at and the faith in this Chapter 9 institution was Treasury and the Ministry.
2018-19 3% 51% 23% < 1% 5% 18% the University of Cape Town in 1989. He received demonstrated with enhancement of its powers The Former Statistician From early warning discussions with National
R419 BILLION
a BCompt Honours degree from the University of in 2019 to give it power to take remedial General — Dr Pali Lehotla Treasury leadership (including the Ministry)
Natal (distance learning) in 1997 and is a quali- action and to recover, where possible, public The law for an ombudsman and that of the prior to the release of his general report on audit
fied chartered accountant. He started his career funds from responsible officials. Auditor General are related intrinsically. This outcomes, to debriefing sessions thereafter to
with Standard Bank and later worked at Nampak. Makwetu has been the calm but powerful is because they deal with payments and con- discuss mechanisms to improve financial man-
MOVEMENT from 2017-18 He completed his articles at Deloitte where he voice against maladministration and corrup- sequence management, the absence of which agement within the public sector and to share
33 Improved 46 Regressed progressed to senior management before joining tion that became so rampant from all spheres has spewed malaise with impunity on society. good practices identified locally.
MOVEMENT from 2016-17 Liberty and Metropolitan Life in Cape Town. He of government during his tenure. He became a But then what is the role of the executive and Constant communication between the
31 Improved 76 Regressed moved to Gauteng in 2003 where he worked at beacon of hope amidst declining faith in public administration if they have to be managed by National Treasury and the AGSA during audits
Liberty Life. Makwetu returned to Deloitte as institutions, a model servant of the people who the Auditor General and the ombudsman? has assisted in the identification of key areas
a director in the firm’s forensic unit before his pursued his mandate with diligence. He is firm It is the same question that we should ask that require additional focus, either by the audit
20 of the 24 outstanding audits reported in 2017-18 were completed by the date of this report; the 4 still outstanding appointment as Deputy Auditor General at the and fair. He leaves behind a worthy legacy. May of why the judiciary should be drawn into teams, management of an institution, and/or
were Masilonyana (FS), Maluti-A-Phofung (FS), Phokwane (NC) and Renosterberg (NC) Auditor General of South Africa (AGSA). his service inspire his successors to continue managing party politics and parliament? The oversight structures.A true measure of the rela-
On 1 December 2013, the Former President of with excellent record and may his profession- Auditor General is literally transformed into tionship between the National Treasury and the
CLEAN AUDIT MOVEMENTS
the Republic of South Africa, Mr Jacob Zuma, alism be emulated by public servants across the being the lead investigator, the prosecutor, and Auditor General is the collaboration and sharing
12 Remained clean 8 New clean audits 6 Regressed officially appointed Makwetu as the new length and breath of our country. the jury. of plans and strategies to monitor and report on
Auditor General of South Africa for a period of It does not escape me, too, that, as a black Conflating this responsibility will collapse the impact of the National State of Disaster and
seven years. ▲ chartered accountant, Makwetu is an inspiration whatever governance remains. Yet I can under- the COVID-19 pandemic.
Unqualified Unqualified Qualified Adverse Disclaimed Outstanding
with no findings with findings with findings with findings with findings audits to a whole generation of young people who can stand the Auditor General’s frustration with Both offices have been in regular contact to
Dr Onkgopotse JJ Tabane now believe that, despite their background, they manning leadership and management, and he share plans and initiatives, and to ensure that
2018-19 Source. Office of the Auditor General can too be at the commanding heights of their has no option but to take over if South Africa is the right level of attention is dedicated to key
2018-19 (2020) profession. For this, we thank him. to be saved in the short term from itself. risk areas.
12 | www.leadershiponline.co.za www.leadershiponline.co.za | 13
SUSTAINABILITY SUSTAINABILITY
Time to stop
shooting the
messenger
Sustainability is key
Q uite a few messages have
been going around during the
pandemic about ‘Don’t Shoot
The Messenger,’ so I decided to focus
on this as it applies to all spheres of
From theories about attempts by certain
countries to take over the world by causing the
virus in order to change the economic order
to theories about laboratories deliberately
releasing the virus and then coming up with the
politicians to create the idea that Covid-19 is
a war to be beaten, which justifies a police
state and freedoms being taken away from the
citizens. Hence, any delaying of the return to
normal by the President is cast in this ‘warmon-
life and leadership. It’s something I vaccine to cure it so that they can make packets gering’ shadow.
have been telling young graduates for for the associated pharmaceutical companies The messenger-shooting scenario is well
over 20 years during my lectures on and investors. explained in an article in the American military
leadership and finance-related subjects. There is no end to the conspiracies as they and security studies journal JFQ 2018 by First
are driven by the fact that human beings don’t Lieutenant Michael P. Ferguson titled Don’t
I caution them that if they are going into the
world of finance they are going to have to
develop a thick skin and high degree of resil- One of the theories, and I don’t
ience. They need to accept that one day they
are going to be the messenger of bad news, as hold this view, is that it suits some
news by its nature is never only good. And they
need to accept that the messenger is often shot politicians to create the idea that
or blamed as people don’t want to receive or
acknowledge bad news. Covid-19 is a war to be beaten, which
The origin of shooting the messenger goes
back to ancient times when kings and armies
justifies a police state and freedoms
used messengers to communicate with each
other. Very often, when messengers delivered
being taken away from the citizens
bad news, they suffered the consequences,
often with their lives. In about 440BC Sophocles like uncertainty. This extends to our country and Shoot the Messenger—Demoshthenes, Churchill,
referenced this in his play Antigone with the President, who, by virtue of his position, is the and the Consensus Delusion, repeats itself in
line: No man delights in the bearer of bad news. national messenger for the pandemic. We don’t contexts—Ferguson is the American Aide de
The tendency to blame the messenger has per- like it that we don’t know what the future holds, Camp to the Deputy Chief of Staff, Operations
sisted as a psychological reality to today. Share so when the President shares a message that and Intelligence, Allied Joint Force Command–
bad news and people might not kill you, but they lockdown is only moving from Level 4 to Level Brunssum, Netherlands.
will tend to blame you or like you less or avoid 3, or from Level 3 to 2 only in certain areas, the He illustrates the strong parallels between
you. Especially when the stakes are high, and temptation to turn on him with guns blazing is Churchill and Demosthenes (4th Century
the perfect example is the Covid-19 pandemic, it quite profound. BC Greek statesman in ancient Athens) and
becomes even more challenging, with so many At the same time it unleashes a new round what is happening today: Sadly, the stories of
conspiracy theories flying about, shared on of conspiracy theories. One of the theories, Demosthenes and Churchill are the bookends
social media or tweets or spoken about. and I don’t hold this view, is that it suits some to a long and ignoble history of marginalizing
14 | www.leadershiponline.co.za www.leadershiponline.co.za | 15
SUSTAINABILITY SUSTAINABILITY
the bearer of bad news, or shooting the mes-
senger, that endures into the 21st century. These
“blind spots” usually appear in the wake of pro-
tracted or debilitating wars, or during periods
of economic instability when offensive military
action–or the maintenance of a robust defense–
are less palatable to populations beleaguered by
war and economic depression.
He makes that point that in both cases when
Churchill and Demosthenes raised concerns
about decisions taken to disarm, which they
felt were more populist than strategic (people
were tired of war), they were both accused of
being warmongers. In truth, both were vocal
about war being horrific but concerned about
premature and uncoordinated disarmament for
the safety of their nations. In Churchill’s case,
his concern about disarmament was during the
period between World War I and World War II
as he felt that disarmament was only desirable
if it strengthened prospects for peace. Their
concerns were spot on but as the messengers
they were shot down.
The issue at a business level is further
discussed by sociologists Vanessa Bowden
and Terry Leahy ( both of the University of
Newcastle, Australia) in an article titled: Don’t
shoot the messenger: How business leaders get
their bearings on a matter of science, published
in 2016 in the Journal of Sociology end. People stopped trusting the message of With Covid-19, business and labour are widely as coming from a section of society towards
Their article discusses how top scientists and science and they stopped trusting the message working together to call for the economy to which they have a long-standing animosity—
environmentalists warning about the effects of politicians. Anyone presenting uncertain open. those with high cultural capital and less
of climate change are shot down, just as the or bad news about the pandemic or regarding To further explore this idea, Bowden and economic capital than their own.
scientists and doctors warning about the effects the economy, joined the escalating number of Leahy make use of Pierre Bourdieu’s (1989) If we look at how American physician and
of Covid-19 and what can happen if lockdown targets for shooting the messenger. theorization of class as a matrix, with class immunologist Dr Anthony Fauci has come
is lifted too quickly and the pandemic is not The late German sociologist Ulrich Beck, positions based on different forms of ‘capital’. under attack in the US for offering the facts
astutely controlled, are shot down. In both quoted by Bowden and Leahy, theorises that a On the one hand there is economic capital, from a medical and scientific perspective, we
cases they are shot down by certain politi- global scale risk like climate change, creates an based in material possessions. On the other, see how this lobby plays itself out. Fauci is the
cians, economists and business people. Why? opposition between global capital, governments there is cultural capital, competence in the messenger who is shot down even by President
Because they are either more concerned about and civic movements: Global risks empower skills legitimated by the educational apparatus Trump who appointed him, because Trump is
their own election or they don’t care or because states and civic movements … on the other hand, (mainly intellectuals, including scientists and focused on being re-elected and he is therefore
lockdown is destroying livelihoods and they they disempower globalized capital because the medical specialists, and all those in the humani- siding with business and labour about getting
maintain the lives saved during lockdown will consequences of investment decisions give rise ties and arts). back to work. That Fauci has served as the
pale in comparison to the economic devastation to global risks, destabilize markets and awaken These differences are the basis for social director of the National Institute of Allergy and
of keeping closed. the power of the sleeping consumer giant. antagonism where business owners and indus- Infectious Diseases since 1984 does not come
While the latter is obviously a massive issue, Global-scale risks, he adds, break down tra- trialists (the rich) share an affinity with the into the picture. Why? Because it is his duty to
instead of weighing up caution and conse- ditional class allegiances. In the case of climate working class, albeit at very different levels of warn people about the danger of rushing back
Climate change and Covid-19 has given quence, the response is to shoot the messenger.
With Covid-19 the scenario takes a new twist
change, certain sectors of business and labour
work together to resist progressive green
economic capital or material possessions. They
are in the opposite camp to those with cultural
to work, and business and labour do not like
his message.
the world an opportunity to reboot and where in South Africa, for example, everyone
praised the President for being proactive about
policies to address climate change because,
for example, it means moving away from the
capital who are not as focused on material pos-
sessions and place a high value on knowledge
Bourdieu says the only way to solve mega-
hazards such as climate change, and we can
reassess how we engage with each other early lockdown and everyone was behind him
until it continued way beyond the initial 21
days. Then mistrust started growing alongside
coal industry (a threat to business owners’
profits in this industry) and the associated
jobs (a threat to labour as they haven’t been
and aesthetics.
Based on this, business and labour, write
Bowden and Leahy perceive the warnings of sci-
now add health pandemics to the list, is to take
a cosmopolitan approach to risk where civil
society, business, labour and science are willing
the uncertainty about when lockdown would reskilled for renewable energy or green jobs). entists and the instructions of environmentalists to proactively break down their traditional
16 | www.leadershiponline.co.za www.leadershiponline.co.za | 17SUSTAINABILITY SUSTAINABILITY
history of mistrust and come together to find
common ground. It won’t be the ideal solution
same questions for many years, but when will
we change?
a system based upon the extensive and inten-
sive ‘digitization’ of each self. Such a system of
scale, and likely opposition on grounds of
curbing the ‘freedom to drive’ and thethreats American physician and immunologist
for any sector but it will be good enough to
attract wider audience consensus and start
Back in 2008 in an article titled Climate
Change, Travel And Complex Futures, the late
tracking and tracing involves step changes in
the character of life. In order that much of the
to the ‘freedom of the individual’ resulting from
its panoptic character. Dr Anthony Fauci has come under attack
bridging opposing positions.
Climate change and Covid-19 has given the
sociologist John Urry examined various soci-
ologies of the future, which, with alarming
population can continue to move around, a new
Faustian bargain to be struck fast. This involves
This will require exceptional political
leadership worldwide to ensure thatpolitical in the US for offering the facts from a
world an opportunity to reboot and reassess how
we engage with each other, how to have clean
air, how to improve our economies for the better-
prescience, apply to the Covid-19 global
pandemic. I’m taking the liberty of quoting a
few paragraphs from his conclusion:
a digital Orwell-ization of self and society, with
more or less no movement without digital
tracing and tracking.
rights are significantly protected if the scenario
of the digital panopticon is developed.
So far there is no sign whatsoever that
medical and scientific perspective
ment of all, how to achieve better healthcare for So my argument is that two possible sociolo- This may tame the car system (and other states recognize the sheer economic, social
all, how to live together more consciously and gies of the future are: regional warlordism and energy systems) if many developments take and political complexities of implementing a
stop population-wide scourges such as gender the digital panopticon. Regional warlordism place simultaneously, including the tracking and sociology of the future that would dramatically
based violence. involves a barbarism of unregulated climate tracing of each person’s carbon allowance which slow down the rate of carbon emissions without
No matter how we try to shut ourselves off, change, increased flooding and extreme weather should come to function as the public measure huge reductions in certain kinds of personal
we cannot change the fact that we are all con- events, the elimination of many existing ‘civi- of worth andstatus. So life goes on and indeed freedom.
nected—the Covid-19 and climate pandemic are lizing’ practices of economic and social life, and extensive co-presence through travel wouldbe Urry passed away in 2016, so he didn’t live
the messengers of this. And there are plenty of the dramatic collapse of long range mobility still achievable for many, but only because each to experience the Covid-19 pandemic or what
other messengers that something is very wrong and related developments of the past decades. individual self is trackedand traced enabling the the complex future holds and what personal
in the world. Who could have predicted that oil A digital panopticon is an all seeing ‘big individualized car-system to tip into a nexus, freedom means. Do we barricade every country
would go into negative value? brother’ digital system where people are organicvehicle system. and adopt a stance of every country and con-
Has this been enough of a wake up to change observed 24/7, which, Urry suggests, is But moving to the digital panopticon model tinent for themselves or do we accept digital
our behaviour or will we just revert to the old inevitable: of a nexus vehicle system is beset with systems that allow us to travel but that require
normal with potentially devastating conse- The future of human life seems to depend enormous difficulties, especially cost, the the t tracking of all our movements through
quences down the line? We’ve been asking these upon moving across a tipping point towards problems of implementing on a worldwide technology inserted into our smartphones.
Through contact tracing it would raise the alert
if we come into contact with someone with the
virus but is this a step too far in curtailing
freedom of movement? In the same breadth,
do we keep locked down or open up and build
herd immunity?
These are very complex issues, but however
we choose to move forward, business, science
and civil society need to find ways to meet each
and stop shooting each other’s messengers.
Business is saying you have to trust us enough
when we say we will make sure our people are
safe. Science is saying you need to trust that we
are conveying findings to try and keep people
healthy, we are not trying to destroy livelihoods
and freedom.
Covid-19 has given us the opportunity to
decide what freedom means but to reach any
cosmopolitan resolutions is going to require
considerable leadership to weigh up so many
different viewpoints and find the most effec-
tive way forward—a way where the social
consequences are balanced with economic and
ecological sustainability; where people can step
With Covid-19, business and labour into life again, feeling free but committed to
mutual safety and to a future where cultural,
are widely working together to environmental and economic capital are on the
same side. ▲
call for the economy to open Professor Owen Skae,
Director of Rhodes Business School
18 | www.leadershiponline.co.za www.leadershiponline.co.za | 19ECONOMY ECONOMY
Economic
austerity
Navigating South Africa’s ‘New Normal’
T he Covid-19 pandemic followed by
the ‘hard lockdown has blown a huge
hole in South Africa’s economy’!
From our already fragile position due
to years of political wrangling, state
capture, corruption, ESKOM load shedding
and now Covid-19 lockdown, the South
African economy has spiralled into a
dire situation, placing the country’s
future growth prospects at risk. For the
layperson, it’s critically important to
understand the unfolding reality and the
best way to prepare for this uncertainty
is not to panic, but to gain awareness
which can better inform decision-
making. Harvard academic, Ronald
Heifetz, suggests that one should confront
reality, ‘facing reality means facing up
to mistakes and failures.’ It’s only when
we understand our failings that we can
start to make constructive plans.
There is no doubt that rising unemployment and
non-trading businesses during the lockdown
have dealt the South African government’s
financial performance a severe blow. According
to Mr Edward Kieswetter, the tax shortfall since
lockdown in April 2020 has already exceeded
R13bn. This does not include the loss of tax
revenues from the excise tax of approx R1.5bn
20 | www.leadershiponline.co.za www.leadershiponline.co.za | 21ECONOMY ECONOMY
successive failures of ANC economic policies to reduced income through salary cuts and So what can the average salaried employees pay dividends later. Afterall, each person is in
across all public sector institutions. To mitigate various cost reductions. These extraordinary do to mitigate the Covid-19 financial fall-out? charge of his or her own destiny.
the impact of the failing economy, the South times have led to a re-think to how business is Fixing the economic challenges that constrain As we bear the brunt of Covid-19 and
African government has responded with a conducted and as ‘necessity is the mother of South Africa’s economic growth is not solely the lockdown, we should take comfort in the fact
R500bn financial stimulus package–the biggest invention’, there will be the distinct possibility government’s responsibility, but the responsi- that humans are incredibly innovative, resilient
in South Africa’s history! This is over and above that many businesses will not need as many bility of all South Africans. and adaptable.
the Solidarity Fund that has already attracted employees as they did before. This elevates For many indebted citizens, this will mean This is how we survived pandemics in the
over R3bn from concerned individuals. economic austerity to a whole new raft of developing innovative ways to manage financial past such as the Spanish Flu in 1918, two
Although the stimulus package is laudable citizens who previously felt secure in their jobs. liabilities, restructure debt and change wasteful World Wars and the recent financial meltdown
and might bring short term relief, what should Despite the pain that economic austerity will consumption habits. These should also include in 2008. We will only thrive if we learn from
be of greater concern is the sustainability of undoubtedly bring, it does not have to be all strong fiscal discipline (spending less than our mistakes. Let us heed of the words of Alvin
the South African economy into the future. The ‘doom and gloom’. Covid-19 has shaken us from earned), using the excess to reduce debt or Toffler, who in Future Shock (1970) wrote, ‘The
country is trapped in a vicious dilemma – the our stupor and resulted in increased solidarity investing to create long term capital formation illiterate of the 21st Century will not be those
economic model of the developmental state and social empathy. Hence we’ve seen decisive if one is employed. who cannot read, or write, but those who cannot
has failed dismally, resulting in a bloated wage decision-making by the government, as well as One should also take heart of the fact that learn, unlearn and relearn’. ▲
bill and a rising number of grant beneficiaries, unprecedented collaboration between the public many successful entrepreneurial ventures were
whilst depending increasingly on the private and private health sectors. At community levels, built during times of hardship. Therefore now Article written by Rudi Kimmie (PhD), Chief
sector to create growth and employment. But there have also been outpourings of altruism is also the time to think entrepreneurially—use Executive Officer of TSIBA Business School and
for the private sector to invest and create jobs and philanthropy where aid and humanitarian skills and contacts to earn a living or explore Viren Garach, CFP, CA (SA), Chief Executive
it requires radical structural reforms to the organisations are pouring millions of rands into diverse income streams. Self-imposed and Officer of PWM Advisors. They write in their
economy, and policy certainty—some of which do feeding schemes and social relief efforts. planned economic austerity will eventually personal capacities.
not serve the political and socio-economic aims
of the ANC led government, or its stakeholders.
Managing the Covid-19 drama is all about
inclusive decisive decision-making, collabo-
ration that transcends political ideology and
bold, timeous implementation. The government
provides the “theatre” within which all of us
act, but the actors’ don’t have the confidence
to create anything new and the ‘audience’ is
growing restless. Business confidence and
consumer confidence levels which were already
low prior to Covid-19, can only be boosted by a
radical implementation of structural reforms –
now! —even 6 months from now might be too
late.
Important to note too is that economic battles
are not won with a stimulus package, which is a
short term intervention. Meaningful economic
Global equity markets including the JSE, have growth results from sound policies, an investor
friendly environment, competent skills, a pro-
lost significant value and in one fell swoop ductive workforce and innovative practices.
To this end, South Africans need to grasp the
golden opportunities presented by Covid-19 and
fix what is ‘broken’ in our institutions. Top of the
from lack of tobacco and alcohol sales. Since all been placed at risk. Pension funds have shed list is to reign in irregular spending and corrup-
non-essential businesses are in lockdown, thou-
sands of workers might be retrenched as major
billions and those whose retirement is imminent
may have to lock in lower income for the rest of
tion, and employ officials based on competence
rather than racial classification.
Fixing the economic challenges that constrain
retailers file for business rescue. The result of
the fiscal damage is that the debt to GDP ratio
their lives, or delay retirement. Adding to these
woes is the flipside; the massive cut in interest
The reality for most South Africans is that
financial austerity will not be a ‘new normal’. South Africa’s economic growth is not
will increase to dangerous levels.
Adding to the financial woes, global equity
rates, which will also provide lower incomes for
those pensioners relying on interest income.
Economic austerity was already prevalent
where a large segment of society has been expe- solely the government’s responsibility, but
markets including the JSE, have lost signifi-
cant value and in one fell swoop, the financial
At a social level, Covid-19 once again high-
lighted the deep inequalities in the country
riencing this for many years. What is different
this time round, however, is that since Covid-19 the responsibility of all South Africans
security of many elderly South Africans have as a result of the apartheid legacy and from even the employed will be facing austerity due
22 | www.leadershiponline.co.za www.leadershiponline.co.za | 23MINING MINING
Mining’s benefits
not always visible
Giving back to people and planet
O ften in the news for the wrong
reasons, the mining sector
generally faces a chilly reception
in the court of public opinion. Its
historical environmental legacy, for
instance, has won it few friends—and
has led many communities to actively
oppose any prospect of mining activity.
Times have changed, however. More than ever
before, the mining sector today complies with
many—and more stringent—laws governing
environmental and social sustainability. Beyond
such compliance, however, mining companies
are giving back to people and the environment
in ways that the public seldom sees. As inde-
pendent consultants who spend considerable
time in the mining sector, we see—and indeed
are engaged in— a number of examples where
mining companies are driving good sustaina-
bility practice towards creating positive impacts
for the environment, the economy, society and
governments.
This innovation improves not just the indus-
try’s direct environmental and social impact, but
extends as far as promoting better governance
in many countries while generating skills and
revenue that feed the broader economy. Through
its global associations like the International
24 | www.leadershiponline.co.za www.leadershiponline.co.za | 25MINING MINING
Council of Mining and Metals (ICMM), the sector
is constantly raising the bar for responsible
is showing a great deal of commitment and
ingenuity—by evolving policies, strategies and
have a significant impact on gross domestic
product if astutely pursued. Local imperatives Mines are frequently required to
practices. projects that enhance its positive impact on its
local communities and society in general. There
like transformation can also be promoted using
innovative procurement strategies—which meet legislated targets that promote
Economic development
Mines themselves clearly have a finite reserve
has been much progress in the way that mines
leverage their supply chains, for example, to
could affect items ranging from services like
conference hosting and environmental support local economic development
and life-span, but mining as a whole remains an nurture local enterprises. The resilience and services. Several mines are also successfully
important ‘pioneer industry’ from which other—
more sustainable—sectors can start and grow. In
the past, the way that mining contributed to such
growth was largely spontaneous, and generally
The resilience and sustainability of the
not planned with much circumspection.
Today, the context is more demanding.
local providers of goods and services
Mines are frequently required to meet leg-
islated targets that promote local economic
has been recognised as a key aspect
development. While mining’s contribution to of a mine’s contribution through its
South Africa’s overall gross domestic product
(GDP) has fallen steadily in recent decades, the supplier development mandate
industry still contributes significantly to the
economies of mining regions. Its secondary
and tertiary economic benefits also ripple deep sustainability of the local providers of goods and procuring mining essentials through enter-
into the informal economies in these areas; and services has been recognised as a key aspect prise development initiatives that include joint
by strengthening spending and skills in the of a mine’s contribution through its supplier venture arrangements.
upstream and downstream informal economies, development mandate. One of the challenges in leveraging supply
mining boosts the ‘economic engine room’ of One of the signs of progress in this field is chains for broader economic development is
the country. the evolution of international good practice in where a country’s capacity to produce is low.
What is often not considered by observers reporting on mining local procurement, one of This may be due to a lack of local entrepre-
is that the legislated requirements to promote the relevant instruments is the Mining Local neurial and technical skills, related experience
local economies are seldom straightforward— Procurement Reporting Mechanism developed and financial resources. Development is also
either in their execution or their impact. It takes by Engineers Without Borders. hindered where government macro-economic
dedication, skills and resources to act effectively The economic benefits of mining clearly policy and lack of a reliable power supply dis-
on many aspects of compliance if the intended extend beyond the royalties paid to central courage investment in supporting industries.
outcome is to be ensured. government and salaries to employees. By These conditions demand a more proactive
proactively developing the local supply role from mines to develop selected local sup-
Enhancing local procurement chain, mines can give back more to their host pliers —and this is being achieved with some Where a mine’s development can initiate the be generated will benefit not only the mine, lessons learned, though, is likely to be valuable
Prompted by policy and legal requirements countries and local communities through the success already through structured enterprise building of roads, rail, powerlines and even a but businesses and communities. to many other sectors and professions.
for growing local content, the mining industry services and products they procure. This can and supplier development programmes. port, the knock-on benefits for other sectors Key among the focus areas today is building
It generally requires closer partnerships are vast. This is especially vital where govern- Socio-economic resilience community resilience—an issue now more
between mines, large contractors, suppliers ment’s ability to fund or initiate these projects Mining’s economic contribution has in the past important with the impact of climate change.
and—where possible—supportive agencies from is limited. As has been witnessed in certain often been on its own terms; today, there greater Linked to a mine’s social development obliga-
government or the non-governmental sector. The southern African countries, the expansion of demands for other stakeholders’ interests to be tions and its enterprise development efforts,
potential benefits here are significant, as mines upstream and downstream activities can lead more systematically addressed. More intense this calls for closer collaboration between mine
are complex operations which act as dynamos to mining becoming less dominant while other and meaningful engagement with a wider group and community from an early stage. The aim
for economic opportunity. Mining companies sectors gradually contribute more to building of stakeholders—including local communities is to create an economic and social structure
have for many years been innovating their and supporting that infrastructure. —has for the past couple of decades been a tha—through active economic diversification
practices to leverage these opportunities for Embracing the concept of shared value, growing focus. In a field fraught with potential strategies and plans—could better survive the
local entrepreneurs. They are also responding there has been renewed interest in public- challenges, many mines are making important eventual closure of the mine’s operation and the
to government priorities to boost representation private partnerships as a means to promote strides in developing—in collaboration with loss of its direct local benefits.
Embracing the concept of shared from women and the youth in these initiatives. these developmental efforts—and these are
likely to increase in a post-Covid world. In
partners—strategies that work.
As in all new endeavours, success cannot be Environmental care
value, there has been renewed Infrastructure development
Wherever in the world mining takes place,
an example of joint infrastructure develop-
ment in the Democratic Republic of Congo,
guaranteed at the first attempt. Rather, the evo-
lution of mining is a difficult process that takes
Historically, the environmental damage caused
by mining has frequently been significant.
interest in public-private partnerships it is still a significant driver of infrastructure
investment. In the developing world context,
however, such investment is doubly important.
for instance, a mining company is partnering
with the state power producer to refurbish and
expand several power stations. The energy to
time, expertise and plenty of determination. The
ongoing work that the mining sector puts into
developing social engagement strategies and
Managing the environmental impact of mining
has been a central concern for governments and
civil society organisations over the past couple
26 | www.leadershiponline.co.za www.leadershiponline.co.za | 27You can also read
