Category Archives: SA Government

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Time to organise, not divide

After the shock cabinet reshuffle by President Zuma early Friday morning, South Africans of all walks of life expressed outrage, called for action and started to organise. The land swell of opposition, including the usual suspects, but also members of the ANC top 6, axed ministers, struggle stalwarts and growing numbers of grassroots ANC members, reached its zenith at the memorial of fallen struggle hero, Ahmed Kathrada with an emotional and stinging speech by his widow Barbara Hogan. Since then, cracks have started to show with competing calls for marches, a serious backlash against the #BlackMonday hashtag and a perceived lack of action against Helen Zille by the DA. What should be clear to everyone is that the removal of the President Zuma cannot be achieved without significant support from ANC members and MPs either inside or outside of Parliament. For the latter, co-operation between disillusioned ANC members and the opposition is key. Unilateral and ill-conceived actions are guaranteed to dilute any such attempt. Now is the time to organise, not divide for all parties determined to reclaim the country.

Over the course of the weekend, there was no (maybe well-intentioned) campaign that has done more to dilute opposition to the unilateral actions of the President than the #BlackMonday hashtag. On Twitter, vocal opponents to the reshuffle who were earlier calling for the resignation of the President started to express outrage at the campaign, asking pertinent questions like where was black Monday after the Marikana massacre, during the #FeesMustFall campaign, in opposition to recent racist events and of course in opposition to Apartheid. The tag was poorly chosen in my opinion and not enough was done to organise a united front (e.g. SAFTU and Zwelenzima Vavi are embarking on another #OccupyTreasury march this morning).

The DA press conference on the future of Western Cape Premier Helen Zille also served to dilute the opposition to the President with many calling on it to clean its own house before speaking out against the President. However, in my opinion, there was no way that the DA press conference could have had a more severe outcome for the Western Cape Premier. She is facing a disciplinary hearing and the DA leader, Mmusi Maimane clearly stressed that it was for bringing the party into disrepute and not a freedom of speech issue. It would serve the DA well to expedite this process so that its undiluted energy could be focused on the crisis in our country.

In my opinion, the DA is making a strategic error in calling for a march to Luthuli House on Friday. There is nothing that will be more effective in encouraging the ANC to close ranks than a partisan initiative like this. This move smacks of political opportunism rather than a genuine desire to deal with the current crisis. Instead, the DA should reach out to other opposition parties, organisations and disgruntled ANC members to organise a united series of actions, including marches. They and the EFF will after all need all the support they can get to have any chance of success with a vote of no confidence in Parliament.

And this is where the focus should lie, in my opinion. All actions taken in the coming days and weeks should be aimed at encouraging enough ANC MPs to vote their conscience if and when the vote of no confidence is tabled in Parliament. Already, Pravin Gordhan has become a focal point for opposition, calling on South Africans to organise and stating that he will be guided by his conscience and “do the right thing” when a vote of no confidence arrives. If more MPs are to follow their conscience, it is imperative not to give them a reason to close ranks, but instead to include them and all opposition parties and organisations in upcoming actions. It is time to organise, not divide.

Are you wearing black today? Do you support unilateral actions by the DA and other parties/organisations? Would you prefer a unified set of actions, including marches? Do you believe ANC MPs will break ranks? Do you think a vote of no confidence will succeed this time? I would love to hear your feedback.

In the mean time, keep your talking straight!

#BlackMonday #CabinetReshuffle #PravinGordhan

 

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man


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Investment boycott is perverse

Following the halting of lending to six state-owned enterprises (SOEs) by Futuregrowth, there has been increasing calls for an investment boycott or even a tax strike in SA. I believe such steps would be perverse, considering the fact that even during the worst days of Apartheid, no such steps were implemented by SA firms or taxpayers. An investment boycott or tax strike would be very damaging to the SA economy and risks fuelling the flames of division within our country even further.

The aim of an investment boycott or tax strike would be to force the government to take a number of steps supported by some opposition parties and some sections within big business. These steps would likely include the cessation of the actions against Pravin Gordhan, the halt of the nuclear project, increased oversight of SOEs, seriously addressing corruption and probably the resignation of President Jacob Zuma.

In my opinion, an investment boycott or tax strike would represent the nuclear option for SA, which would be very damaging to our economy and to our most vulnerable citizens. It could limit the government’s ability to deliver on its promises: including the National Development Plan; it could put pressure on infrastructural spend; and could even limit its ability to fund budget increases, which could put pressure on areas such as education, health, etc. In addition, it could damage the country’s reputation if it were to lead to a reduced ability by the country to finance its debt. If we are looking for a credit rating downgrade, an investment boycott or tax strike would go a long way to achieving it.

In addition to the damage that such actions could cause to our economy and reputation, it also is not guaranteed to succeed. Even overwhelming participation in such actions (which would be needed, but is unlikely, in my opinion), may lead to the opposite reaction from the ruling party than is desired. It is much more likely to unify the ANC and cause it to close ranks. If this were to occur, the pain experienced by our country would be extensive and long-term.

In addition to the economic and reputational damage that an investment boycott or tax strike could cause, it could also be very harmful to the social fabric and our desire for unity and equity. It would serve to flame the fires of the “white capital” narrative that is increasingly being bandied around in our country and is creating increasing divisiveness. And it would be correct to do so. The plain truth is that the same people and institutions who are calling for an investment boycott or a tax strike, were silent on these topics during Apartheid.

There is no doubt that international sanctions against the National Party played a meaningful role in leading to the demise of Apartheid. However, it was never supported by SA business or by SA opposition parties. Not even the Progressive Federal Party (PFP) who was the precursor to the DA supported these actions. No large SA corporates became involved in sanctions and none of them came even close to an investment boycott. This was despite significant human rights abuses and disenfranchisement perpetrated by the Nationalist government. There was also no real talk of a tax strike by South Africans.

We can see the lack of action by SA big business, opposition parties and white citizens in the 1980s and before as complicity. We can choose to believe that they were happy to live under Apartheid and for many, I am sure this is true. However, we must not under-estimate the impact that fear could have had on inaction. An investment boycott or tax strike by SA big business and white citizens would likely have led to a substantial crackdown by the NP government, which was too ghastly to contemplate by many. And here is the rub. We lived in a police state during the 1980s, under an almost constant state of emergency. We lived in a country that was not free, even for the beneficiaries of the system. That has changed.

Say what you will about recent actions by the ruling party, about corruption, about lack of accountability, about our President being seemingly untouchable, we still live in a free and democratic country. If you have any doubts about this, go and have a look at what newspapers write every single day about the government and the ANC, without fear or serious reprisal. Go and have a look at what people have to say on social media and how many of them are arrested for it. Gone are the days when you had to watch what you say, who you interact with, who you gather with, who you protest against. Gone are the late night knocks on your front door, the arrests, the detention without trial, the “suicides” of those in custody. If you are still not convinced, go and have a look at who governs Tshwane, Johannesburg and Nelson Mandela Bay metros. If we were not substantially free in this country, if we did not have a vibrant democracy, this would never ever have happened.

In addition, go and have a look at what ANC loyalists and previous leaders have to say about the SARS wars, about Nkandla, about the constitutional court ruling and about electoral losses. The vast majority of South Africans and leaders on both sides of the aisle can see what is going wrong with our country and are adamant to make it better. The majority of people are on the right side of history and we will see positive changes in the near term. I am confident and optimistic.

However, if you want to divide people, if you want the racism card to be played more often, if you want the “white capital” narrative to grow, if you want to devastate the economy, if you want to hurt the most vulnerable and if you want to damage the country’s reputation, then you must support an investment boycott or a tax strike. I seriously hope that this is not what you want.

I therefore call on opposition parties to speak out against these voices looking to damage our country. Refer back to your and your predecessors’ arguments against sanctions in the 1980s. I call on big business to distance themselves from these moves. Remember what side of the argument you were on during Apartheid and consider what this could do to the economy. I call on ordinary South Africans to be patient. We are moving in the right direction and forces for change are gathering momentum. Trust that the hard-won democratic process allows for your voice to be heard.

Are you a supporter of an investment boycott or tax strike and why? Are you not concerned about the negative impact this could have on the economy and ordinary South Africans? Would this risk the hard-won unity that is developing in SA? Would it not add fuel to the “white capital” narrative and racism allegations? Should you not have the same approach as when you were against sanctions in the 1980s? I would love to hear your feedback.

In the mean time, keep your talking straight!

#InvestmentBoycott #TaxStrike #Futuregrowth #SARSWars #Sanctions

 

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man

Photo by twicepix


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It is time for parties to shift left

It is easy to see the results from the last week’s local government elections in SA as purely a rebuke of the ruling ANC. In addition, we should see it as a cry for help from the poor and disenfranchised, a cry for better services, more opportunities and jobs. It is a cry for a better deal in SA. All political parties should take heed of this message. They should realise that none of them will achieve meaningful growth in their support without aggressively addressing the concerns of the poor in SA, both in messaging and delivery. It is time for those parties serious about continued growth to shift left.

The ANC was the biggest loser in the local government elections, seeing countrywide support declining from 62% in 2011 to 54%. It has lost outright control in four major Metros, namely Tshwane, Johannesburg, Nelson Mandela Bay and Ekurhuleni. In addition it will lose many other municipalities to the opposition or will have to govern through coalitions.

The ANC should embark on a period of self reflection to understand why voters in the large Metros did not come out to support it in these elections. Now is not the time for in-fighting. It is time for a leadership overhaul and aggressive focus on improved governance in the Metros and municipalities they retain as well as provinces and nationally. There is nothing like political competition to focus the mind and it is my hope that the increased threat of losing further support will invigorate the ANC to improve delivery. Because it retains the strongest power base in SA, national government and 8 out of 9 provinces, it is best positioned to improve the outcomes for the poor and most vulnerable in SA. It is likely that the ANC will increase its pro-poor focus utilising its significant power. We can only hope that it achieves this at least in part by improving efficiency.

The DA was the biggest winner in the local government elections. It is likely to take control of three major Metros in the form of Tshwane, Johannesburg and Nelson Mandela Bay, while it has the outside chance to form a ruling coalition in Ekurhuleni and being part of an EFF-led coalition in Rustenburg.

It would be easy enough for the DA to fall into the trap of gloating and self congratulation after these elections, but that would be a mistake. The people in many Metros and municipalities have given the DA an opportunity, but not a blank cheque. The party now faces a huge responsibility to deliver on its promises. If the party’s track record in other municipalities is anything to go by, it should take a very technocratic approach to ruling new regions, including attracting more skills, identifying inefficiencies and aiming for clean audits.

It is hoped that the DA will be able to achieve cost savings. They key is how it will apply these cost savings and how it will deal with the existing deployment of resources. It is my view that all savings achieved should be employed to enhance the conditions and prospects of the poor and disenfranchised. Poor service delivery should be addressed with the utmost urgency, followed by developmental spending in the poorest of areas. Local infrastructural spend should be encouraged, with a focus on creating employment.

However, I would go even further than utilising savings to rebalance the budget towards the poor. There is an important case to be made for reducing spending on affluent areas in lieu of poor areas: 1) it is morally the right thing to do, considering the inequalities of the past; 2) rising unemployment, stubborn inequality and low economic growth is creating a ticking time bomb for SA that cannot be ignored; 3) the development of poor areas and creating opportunities for the disadvantaged is important not just for stability, but to encourage long-term growth; and 4) the only way for the DA to defend and grow its support is to deliver to the constituency that (at the margin) put it in power.

If the DA does not shift left and illustrate a clear pro-poor focus, its gains during the recent elections could easily be reversed. The next election could see a much higher turn-out in poor areas with these votes going to the ANC or the EFF. To cement its gains, this constituency has to see the benefits of DA rule.

The EFF garnered less support in the recent elections than many analysts, including myself, expected. It received 8% of the national vote and did not obtain an outright majority in any municipality. However, it has created a very strong base from which to grow, it is in a position to determine who will rule in major Metros and it has the opportunity to be involved in the governing process, promoting its own policies.

The EFF is already a left-leaning party with a pro-poor focus. Its challenge now is to turn its policies into concrete delivery in the municipalities where it is part of the coalition. It has to choose its partners wisely and it has to be realistic in its demands. It has not garnered enough support to drive revolutionary changes in the way budgets are allocated, but it is in a strong position to ensure that a strong and sustained shift left starts occurring where it is involved.

In my opinion, the EFF can have a bigger impact in coalitions with the DA than with the ANC. In such coalitions, the EFF would be a clear and unambiguous voice for the poor and if successes are achieved, it may see its support growing over time. In coalitions with the ANC, it may face a number of problems: 1) the elimination of inefficiencies and delivery may not be as strong (if ANC track record is anything to go by); 2) it would not stand out as clearly as a pro-poor left-leaning voice of the poor as in a DA coalition; and 3) it faces more risk of being co-opted by the ANC and that some of its support is reabsorbed by the ANC.

SA is facing numerous challenges, including rampant unemployment, stubborn inequality, low economic growth, poor education outcomes and inefficiency (including corruption). The ANC, especially under its current leadership has not effectively addressed these concerns and it has lost support as a result. The uncertainty caused by lack of delivery has led to the rise of opposition parties, but it has occurred in a very negative political environment and a bruising election campaign. It is my hope that the era of coalition politics in SA will offer the opportunity for more constructive engagement between political parties. It is time to unite and address our challenges or face a populist uprising over time.

I continue to promote a New Deal in SA, with an aggressive focus on unemployment and education. Even if it leads to economic pain in the short-term, we should make a definitive decision to refocus our budget on these areas. We absolutely have to create an inclusive economy and improved education outcomes so that we can look back a decade from now at today being the turning point in the SA story.

In addition, I stand by my view that we need a Minister of Employment who has the necessary power and the ultimate responsibility for increasing employment. This minister must stand or fall based on progress here, this is where the buck should stop. In our current cabinet as well as in a DA shadow cabinet, the responsibility for dealing with unemployment is decentralised. This has not worked and is unlikely to work in the future. The role must be centralised, we need a champion and we need delivery.

 

How do you feel following the local government elections? Are you encouraged or disappointed? How do you feel about political competition and the rise of coalition politics? Do you believe that we should and will have an increased pro-poor agenda going forward? Do you think that our parties will shift left after the election? I would love to hear your feedback.

In the mean time, keep your talking straight!

#LGE2016 #NewDeal #MinisterOfEmployment #TshwaneCoalition #JHBCoalition

 

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man


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Health care costs are too high – let’s cut them

Health care costs in SA are high and growing ahead of inflation, whilst at the same time most South Africans still receive a substandard product. Why is this so and how can we address it? It is not that we spend too little; it is because we are not getting bang for our buck. We need more efficiency in state hospitals combined with an increased spend on preventative and primary care. Within the private sector, we need to look at current legislation, including prescribed minimum benefits (PMBs) and community rating combined with open enrolment. The problem of high health care costs can be solved if we work together and address the right issues.

In SA, health care expenditure (both public and private) amounts to c.8.8% of GDP (according to the World Bank), which is well above the global average of 6.9%. Even if we only consider public health care spend, at 4.3% of GDP, SA is above the global average of 4.1%. Despite this high health care spending, our infant mortality rate is still 33.6 per 1000 live births, which is higher than the global average of 24.2 and a multiple of the 5.8 of high income countries. Despite recent improvements, our life expectancy (62.9 years) remains meaningfully below the global average of 71.4 years. The outcomes we achieve in SA, especially for those dependent on public sector health care (where infant mortality is higher and life expectancy lower than for the overall population) are not reflective of the money that we spend. Why is that?

Public Health Care needs more primary care and increased efficiency

In the public sector, the main causes of high health care inflation and a substandard product are a shortage of preventative and primary care as well as inefficiencies within the system, in my opinion. By any measurement, the public health care system in SA is very hospital focused. According to the District Health Barometer of 2014/2015, public health spend per capital in SA was R2737 in 2014, of which only R742 was for primary health care (27%). From this data, I estimate that we spend c.57% of our public sector health budget on hospitals (central, provincial and district). This is well above most other countries in the world, both developed and emerging. Developed economies such as Greece (42%), Australia (40%) and Canada (30%) spend much less on hospitals and more on primary care (e.g. 38% for Australia). Emerging economies such as Niger and Ghana spend more than 50% on primary care and other countries such as Burundi, Cote d’Ivoire and Sierra Leone also spend more than SA as a proportion.

The problem with such a low spend on primary health care is that too many people land up in hospital who could have avoided this with the help of primary care. Part of this story is one of prevention, ensuring that conditions are diagnosed (HIV, TB, etc.) and treated, children are immunized and properly nourished, people are better educated on preventative care, including diet, safe sex, the dangers of smoking, exposure to carcinogens, etc. The other part of the story is one of high-cost treatment being sought when the availability of low-cost treatment could have dealt with the condition. Many people dependent on the public sector go to hospital emergency rooms for the treatment of conditions where primary care (if available) could have been sufficient. Such conditions could include colds and flu, gastro enteritis and minor injuries.

Over time, an increase in primary care spending in the public sector could substantially reduce the burden on hospitals and help to reduce health care inflation. A meaningful boost to primary care, could also reduce private sector health care spend if it offers a viable alternative to GP visits for medical aid members. In my opinion, the National Health Insurance (NHI) proposed for SA, should have a meaningful focus on primary health care.

The inefficiencies within the public health system in SA can and should be addressed through improved administration. Too often we hear about problems within government hospitals such as the unavailability of beds, nurses or medicine. Improved administration should be a priority of the National Department of Health, which could lead to savings and improved product. Where the necessary skills and systems are not readily available, the involvement of the private sector should not be ruled out. We have one of the best private health care industries in the world and there must be an opportunity for the skills, technology and systems to benefit the public sector as well.

Private Health Care needs more primary care and a relook at legislation

The private health sector in SA provides a good product to those that are covered, but at a great cost, which is growing well ahead of inflation. According to the Council for Medical Schemes (CMS) 2014/2015 Annual Report, medical aid contribution increases over the period from 2002 to 2014, exceeded CPI by 4% p.a. on average. The true escalation is higher than this because the CMS’s calculation does not take into account that there is downgrading between options, thereby sacrificing certain benefits, and the fact that medical schemes also reduce benefits over time within options to counter some of the cost pressure. This meant that in 2014, the average medical aid cost R1330 per average beneficiary per month, which could mean that for an average family of four, the cost could be over R5000 per month. Note that the “average medical aid” would not offer comprehensive benefits but it would include the so-called prescribed minimum benefits (PMBs).

The three main culprits for the high inflation and cost are lack of preventative and primary care; community rating combined with open enrolment; and PMBs. To effectively deal with the problem, we need to significantly increase our focus on healthier living, early detection and chronic disease management (through increased investment in clinics) rather than the expensive treatment of diseases in hospitals. At the same time, we need to reconsider medical schemes legislation, with a specific focus on PMBs, community rating and open enrolment.

Primary care offers a better solution

In the case of the private health industry, an even lower proportion of total contributions is spent on primary and preventative care than in the public sector. According to the CMS Annual Report Annexures, only 9.5% of contributions made in 2014 were towards medical savings accounts. This is extremely low (granted, the CMS figures do not reflect out of pocket spend by members) and likely driven by 1) the high cost of medical aid (many people opt for hospital plans only) and 2) the fact that the medical savings account contribution is capped at 25% by law. Imagine how much healthier people would be if more money in the private sector was spent on primary and preventative care and imagine how much lower health care costs would be if people were treated by nurses and GPs before being sent to expensive specialists and to hospitals. The phenomenon of supplier induced demand is more fuel on the cost fire. Few people would query their doctor on whether a certain pathology or radiology test is really necessary – especially if a third party (such as a medical scheme) pays for the test.

An extreme example of what aggressive primary care and preventative treatment can do to medical aid costs is that of the Impala Medical Plan. In 2014, the Impala Medical Plan cost R402 per average member per month, which is only 30% of the average for the whole industry. How is it possible that Impala can be so much cheaper? The answer lies in the fact that Impala focuses heavily on prevention and primary care. Impala’s members are almost always required to first see a primary health care nurse, before being able to see a GP and then moving on to a specialist. In other schemes, members often skip these steps and go straight to specialists or are sometimes admitted by doctors into hospitals because medical savings accounts have been exhausted.

There are a few other reasons why the Impala scheme is much cheaper, including 1) membership is compulsory (so the healthy helps to cross-subsidise the unhealthy), 2) the average age of an Impala member is lower at 29.1 years vs. 32.1 years on average for all schemes (health care for the old is more expensive), and 3) lower administration costs (3.1% of contributions vs. 8.0% for all schemes on average). However, despite these additional factors, the primary and preventative care model appears to play the greatest role.

In my opinion, there should be a serious drive to encourage the increased use of primary and preventative care by medical aids in SA. It may be useful to lift the 25% restriction on medical savings accounts and for medical aids to actively encourage members to use nurses and GPs before moving to the more expensive options. It may also be useful if the public sector’s primary care offering increases meaningfully, both in quantity and quality so that it can offer competition to the private sector. Imagine the savings if you only needed to purchase a hospital plan, whilst all your primary care needs are dealt with by public clinics. Over time, this should lead to much lower inflation of hospital plans as well. This should be a focus of the NHI, in my opinion.

An efficient NHI can help to deal with community rating and open enrolment

An important reason why open medical schemes are more expensive than restricted medical schemes is community rating, combined with open enrolment. Community rating means that everyone in a specific medical scheme is charged the same for a specific set of medical aid benefits, no matter what age or of what health or sickness profile they are. The fact of the matter is that older people will require medical attention (especially expensive medical attention) more often than young people. If a scheme therefore has a higher average age, it will need higher contributions per member than a scheme with a lower average age. Open enrolment means that you are not forced to join a scheme, you can voluntarily decide to join, but the medical scheme may not deny you membership. There are some counters to this anti-selection risk such as late joiner penalties but they are relatively ineffective. The problem here is that if it is your choice, you are more likely to join a scheme if you are older (and more likely to need medical attention), if you are more likely to need maternity care or if you have a pre-existing condition (that requires medical care). If everyone was forced to join regardless of health status or age, schemes would have a larger proportion of healthy members, a lower average age profile and as a result, lower contributions per member.

In my opinion, there are two workable solutions to deal with this conundrum. The first is to promote preventative and primary health care to the utmost through de- or re-regulation in the private sector (possibly even to the point of scrapping the current PMB regulation and compelling preventative and primary care as the minimum benefit package of medical schemes or health insurance) and for the public health care (NHI) to heavily re-focus on preventative and primary care. Everyone who is employed in SA will likely be required to make a contribution to the NHI and as a result, it will not be voluntary in nature. The second solution is to reduce the number of PMBs that schemes are forced to offer and to allow members to cover these benefits by buying top-up medical insurance.

Whereas the current regulatory regime regarding health insurance and medical schemes admittedly has many shortcomings (even admitted to officially or unofficially by the regulators) it has become clear that government (and in particular the National Department of Health) is so pre-occupied with rolling out NHI that any other regulation under its ambit is not getting priority or attention despite its negative unintended consequences and the uncertainty it creates amongst various role players especially in the private sector. This has become a major detractor for the meaningful reform that is alluded to above.

Prescribed Minimum Benefits (PMBs) raise the bar too high for ordinary people

The existence of PMBs have created two problems with health care costs, namely that it significantly raises the threshold cost of health care and that there is evidence of abuse of this structure. PMBs are a list of minimum benefits that every medical scheme in SA has to provide to its members, including an extensive list of 270 conditions as well as a large number of chronic conditions from epilepsy and glaucoma to schizophrenia and colitis. In an ideal world where everyone has the means to afford expensive medical aid, it makes sense to cover any possible contingency under the sun. However, many people are not able to afford medical aid that is made more expensive due to the extensive risks that need to be covered. The existence of PMBs creates an all or nothing conundrum for these people. Either they spend a large amount of money (which many cannot afford) and be extensively covered or they have to forego private medical aid altogether. In the case of so many people, the latter option has to be taken whilst for those that can afford medical aid, costs continue to escalate. It is a bit like being forced to take out comprehensive motor vehicle insurance that includes a rental car, roadside assistance and free weekly car wash when you only wanted to cover third party, fire and theft. If you cannot afford the full package, you are forced to go without any cover.

I will not go into a great deal of detail on the abuse of PMB as publicly available information is limited (I prefer to cite my sources) and I have not done the more in depth research myself yet. I hope to follow up on this issue. In brief though, there are commentators that feel that 1) because PMBs are mandatory within medical schemes, there are GPs, specialists and surgeons that reclassify uncovered conditions to fall within the ambit of the PMBs and 2) that PMB regulation obliges schemes to pay service providers of PMBs what they charge (they are not allowed to dictate lower rates), which leads to PMB costs are inflated (relative to non-PMB costs).

In the latest CMS Annual Report, it was disclosed that the average cost of PMBs increased by 13.4% from R500 per beneficiary per month (pbpm) in 2013 to R567pbpm in 2014. This implies that for a family of four, it would have cost R2268 per month to cover just PMBs. By 2016 this could have increased to more than R2700 per month (assuming 10% annual inflation).

This is clearly unaffordable for the vast majority of South Africans and could be construed to be unconstitutional in the light of it possibly contravening Section 27 of the SA Constitution which reads:

1. Everyone has the right to have access to-

    a. health care services, including reproductive health care;

    b. sufficient food and water; and

    c. social security, including, if they are unable to support themselves and their dependents, appropriate social assistance.

2. The state must take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of each of these rights.

3. No one may be refused emergency medical treatment.

Together, if we take the right steps, we can achieve lower costs

The issue of high health care costs is a pressing one and needs to be addressed appropriately. Instead of finger pointing, we need to find constructive solutions. It is in everyone’s interest that we reign in the costs and inflation associated with health care costs. Focusing on prevention is paramount in my opinion, but will require political will, changed regulations and co-operation from the private sector. Inefficiencies within the public sector must be addressed and the private sector should be called upon to become involved. The Department of Health should seriously look at current legislation (especially PMBs) and should not be scared to change what is not working. The introduction of the NHI should do more than broaden coverage for ordinary South Africans, it should also be very focused on primary and preventative care which can reduce overall health care costs in both the public and private sector. Together, we can achieve this.

Do you agree with my assessment on what drives health care costs up and how to counter this? Were you aware of the detrimental impact that PMBs have on costs? Do you see the benefit on spending much more on prevention and primary care? I would love to see your opinion.

In the mean time, keep your talking straight!

#HealthCare #NHI

Photo by wellness_photos


  • 2

When will we cross the Rubicon?

On the evening of 15 August 1985, PW Botha took the stage in Durban to open the National Party Natal Congress. Countrywide this was a much anticipated speech and for weeks there had been speculation that it could change the direction of SA. There was cautious optimism that the ANC could be unbanned, that Nelson Mandela could be released and that SA would cross its own Rubicon. In the end, Botha completely deviated from his original speech and delivered what became known as the Rubicon Speech, which was more of the same fear-mongering that South Africans had gotten used to.

In response to the speech, the rand collapsed by 35%, foreign exchange markets and the stockmarket was closed for a week to try and reschedule international debt and SA entered its darkest hour, which lasted until 1990. From shortly before the Rubicon Speech until 1990, SA existed under an almost constant State of Emergency and the country was engulfed in violence. It was only after the Rubicon Speech that international sanctions and disinvestment programmes started reaching critical mass, leading to huge outflows of foreign capital, a depreciating currency and weak economic growth.

By 1990 the Rubicon was finally crossed, but not by PW Botha. He missed his opportunity and it took almost 5 years of violence, death, disruption to education, economic strife and national polarisation before the Nationalists took the inevitable step.

On 31 March 2016, Jacob Zuma had a Rubicon moment of his own. Pressure against President Zuma had been building for years, starting even before his appointment when he was embroiled in legal battles. However, he managed to consolidate his position of power despite concerns surrounding the Guptas, Nkandla and strategic deployments. Everything changed, in my opinion, on 14 December 2015 when he backtracked on his appointment on David van Rooyen as Minister of Finance. From that moment on, the forces against the President gained momentum with Guptagate and the Constitutional Court judgement last week adding fuel to the fire. By the end of last week it had become clear to all but a few (including maybe himself) that the tide had turned convincingly against his presidency and that his sustained tenure had become untenable.

During his speech in reaction to the Constitutional Court judgement, the president had the opportunity to act in the interest of the ANC and the country and to fall on his sword. Instead of crossing the Rubicon, the President opted to leave the country in limbo and to delay the ultimate outcome. He has now forced the ANC to embark on a long and painful process that is likely to result in his ultimate removal, whether at the 2017 Elective Conference or at an earlier convened conference (the latter being more likely, in my opinion). We can only hope that unlike the decision by PW Botha in 1985 not to cross the Rubicon, that Zuma’s decision will result in less extreme and less prolonged damage to the ANC politically and to the country’s economy and societal fabric.

It is clear to me from the ANC Secretary General’s speech on 31 March 2016 that the rallying behind the President is a temporary measure to promote unity in the ANC in the run-up to the municipal elections. At the same time, the ANC is likely to continue with its own internal processes, including the Gupta investigation and consultation with its branches, which may result in penal steps against the President. These processes are likely to be concluded only after the municipal elections, the results of which may add even further to pressure to remove him.

Opposition parties in SA are gaining substantial political capital from the scandals surrounding the President and this is likely to result in meaningful gains at the polls. The ANC is at risk of losing the major metros of Johannesburg, Nelson Mandela Bay Metropole and Tshwane. It is my opinion that such losses will remove any doubt within the ruling party that a realignment is required to avoid substantial losses in the 2019 general election. An early elective conference, resulting in the replacement of the President will provide the ANC with a two-year period to arrest the decline in its support and successfully defend its majority in the general election.

It is my opinion that the ANC’s room for manoeuvre will be severely restricted over coming months through opposition gains at the polls and opposition actions in Parliament, the courts and in the streets. I believe that we will cross the Rubicon later in 2016 or early-2017 at the latest. It is simply a matter of time.

What happens after the President is replaced will be key to the long-term success of the country. In my opinion, it is imperative that the new president leads the charge in SA for a New Deal, with buy-in from all the major political parties. We should make a definitive decision to refocus our budget to deal with the challenges of unemployment and education, even if this leads to economic pain in the short-term. In response to such a New Deal and the announcement of concrete steps to deliver it, opposition parties and ordinary South Africans should give government the support and the time to deliver by calling for a cessation to extra-Parliamentary actions. We need more South Africans in the workplace and fewer protesting on the streets and campuses. We absolutely have to create an inclusive economy and improved education outcomes so that we can look back a decade from now at today being the turning point in the SA story.

 

Do you think that President Zuma should resign or be removed from office? Do you believe that the ANC will lose meaningful support in the municipal elections? Do you expect that ANC internal processes will result in the President’s removal? Do you think President Zuma will survive in his position until the 2017 ANC Elective Conference? When do you think we will cross the Rubicon? I would love to hear your opinions.

In the mean time, keep your talking straight!

 

#Rubicon #ZumaRubicon #NewDeal

 

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man

Photo by GovernmentZA


  • 1

We need a New Deal in SA

South Africa is facing a national crisis of unprecedented proportions if we do not address unemployment, poverty and inequality with the utmost haste. Failure to do so could result in a populist uprising in this country, which could set us back by decades. Instead of political infighting, we need to stand together and offer the disenfranchised in our country a new deal. Unemployment and quality education must become our top priorities, even if this means we have to make sacrifices. Now is the time to act. We cannot afford to wait any longer.

In the 1990s when the ANC came to power in SA, two main deals were struck. The first was between the ANC alliance and the National Party (NP) to allow for the peaceful transition of power. The second was the less talked about deal between the ANC alliance and the private sector in SA. Although never explicitly laid out, this deal implied that that ANC would step away from some of its core Freedom Charter principles such as that “The People Shall Share in the Country’s Wealth” and “the Land Shall be shared Among Those Who Work it” and the private sector would be supportive of the ANC’s aims to transform the country from its old Apartheid state to one where there was a more equitable distribution of wealth and opportunities.

As a result, the ANC that took power in 1994 was market-friendly, did not call for the nationalisation of mines and banks or the wholesale redistribution of land. Its approach was one of fiscal responsibility that satisfied the private sector, rating agencies and foreign powers. At the same time, it embarked on a number of projects to transform society, including the transformation of the public sector, the roll-out of water and electricity supply, the building of houses, the broadening of education opportunities and the provision of social security grants. The ANC government achieved a great deal of success in these projects, which I highlighted in earlier research.

On the flipside, the private sector (especially big-business) supported the Government’s policies and were active participants in black economic empowerment and employment equity. Also here, meaningful success was achieved, especially over the course of the 2000s.

During the 1990s the supporters of the ANC as well as their partners in the tripartite alliance were willing to accept the deals that it made with the NP and big business because there was an implicit assumption that the new government would adopt such policies that would improve their plight over time. The problem facing the ANC 20 years later is that 1) it has only partly delivered on its implicit promises to it 1990s constituency; and 2) there is currently a large constituency (the millennials) who were not party to the original deal.

Although much has been delivered insofar as access to housing, utilities and education, the main laggard has been employment. The current unemployment rate based on the expanded definition is c.34% and is skewed towards the youth in the country. It is almost impossible to address the issues of poverty and inequality in our country in an economically sustainable way in an environment where unemployment is so rife. These issues can be addressed through redistribution, but the positive impact for the most vulnerable may be short-lived and cannot be achieved without wreaking havoc with the economy and the tax base. Increasingly the ANC constituency and its partners in the tripartite alliance are posing questions to the ruling party about the lack of delivery on the original deal. They are becoming impatient, they are increasingly looking for a new deal and are willing to look further than the ruling party for someone to deliver this deal to them.

The millenials are most impacted by the high unemployment and in addition, they suffer from poor education outcomes and the high cost of tertiary education. These young people were not party to the original deal and due to the lack of delivery on education and employment feel hard done by. They are increasingly demanding a deal of their own. The #fallist movements that are active on campuses all over our country are the tip of this spear. They are tired of being placated by the incumbents and are intent on agitating and supporting alternatives until they are heard. They will remain restless until they are satisfactorily included in a new deal.

Before the break-away of the EFF from the ruling party, the ANC Youth League could act as a lightning rod for the disillusioned youth and the ANC could placate them and their wider constituency using social grants and other Government programmes. This is not the case anymore. The EFF has become the first effective, undiluted voice in SA for the poor, young and unemployed. The EFF’s policies are clear and are borne from the areas of the Freedom Charter that the ANC stepped away from during the 1990s deals. Front and centre is the nationalisation of mines and banks; the redistribution of land; and free education. These policies are not watered down and they speak directly to the disenfranchised in our country. The EFF’s potential constituency is substantial, including the 34% unemployed, the poor, the youth and urban intellectuals.

Young, angry unemployed South Africans do not care about the state of the economy, the health of the tax base, the strength of the rand, the opinions of the private sector, sovereign credit ratings or how SA is viewed by foreign countries. They care about their own (often) miserable lives. Why would they not vote for a party that will take from the rich and give to the poor? Even if it damages the long-term prospects of the country, it will improve their plight in the short-term. This situation is made even more desperate by the fact that for many of the disenfranchised, there does not seem to be a viable alternative. The track record of the incumbents on employment, education outcomes and equality is poor in their opinions and they do not see light at the end of the tunnel. Without hope, why would they not be willing to embrace the alternative?

It is vital that the disillusioned block in SA is given a new deal to avoid them embracing political alternatives that could be damaging to the future of this country. The time has passed for promises. The time has passed for placating. The time has passed for short-term fixes. The New Deal in 1930s USA involved aggressive steps in job-creation and infrastructural build. It pulled the country out of the Great Depression and created the foundation for a decades-long economic boom and the creation of a vibrant middle class. We do not need to emulate what the USA did in the 1930s, but we should draw inspiration from this.

Unemployment should be the number one priority in SA, followed by education and we should be redirecting our efforts to solve these challenges quickly and effectively. It is unacceptable that we have several portfolios within our cabinet that are responsible for employment, none of which carry the ultimate responsibility or have the necessary power to aggressively change the direction we are moving in. Regardless of which political party is ruling our country, we need a Minister of Employment who is the most senior cabinet member (after the president), who has the power to set policy and redirect budgets and carries the ultimate responsibility for success or failure.

Even though we are in difficult economic times at the moment, we should make a definitive decision to refocus our budget to deal with the challenges of unemployment and education. Even if this leads to economic pain in the short-term, even if it leads to credit downgrades, even if it means we all have to tighten our belts, we cannot afford not to make this investment in the future. We absolutely have to create an inclusive economy and improved education outcomes so that we can look back a decade from now at today being the turning point in the SA story.

If we do not do this, if the business friendly ANC and DA do not join hands to lead us to this future, we are at risk of a populist uprising in SA. We are at risk that populist parties such as the EFF will force redistributive policies down our throats, whether it be at the ballot box or in the streets. Now is the time to give the disenfranchised in SA credible hope. If we expect them to be patient, they have to see a clear path to improved outcomes for them. More of the same will not cut it.

The 2016 municipal elections will offer the first opportunity in more than a decade for the ANC to actively involve opposition parties in the business of governance. There is likely to be no other option when they fail to win majorities in major municipalities. It is time for the ANC to change its direction, it is time to strengthen its leadership and with the buy-in of the DA (and maybe the EFF) to embark on a dramatic and aggressive new deal.

To the ANC I say, stop focusing so much on discrediting the DA and seeing the EFF as a naughty child. Realise that the EFF is a major risk (and rightly so) and that the DA can be an ally in improving governance. However, it remains up to you as the majority party and the party of liberation to refocus our attention on growing employment, creating an inclusive economy and improving education outcomes for all.

To the DA I say, by all means continue the fight against poor governance, but realise that it will become increasingly difficult for you to govern if the serious challenges facing SA are not addressed. Try and be less adversarial towards the ANC because you may have to work together and in the end, your policies are not that different.

To the EFF I say, continue pushing. You are increasingly the voice of the poor majority in SA. You have to ensure that the ruling party implements policies that will improve the plight of the disenfranchised and if they do not, you must defeat them at the ballot box. However, I ask you that if the ruling party is willing to put a new deal on the table, that you will be willing to focus your efforts on the ballot box and avoid being a disruptive influence in the extra-political sphere.

In conclusion, our challenges in SA are monumental and must be faced head-on. We need a new deal and we need co-operation amongst political parties to implement this. If such a deal is done, we will need patience from our citizens, whether it is because they have to tighten their belts or whether they have to wait longer for an improved outcome. And we need a supportive private sector. You have had a good run for the past 20 years, but where we are now is not sustainable. Be willing to sacrifice short-term profit in exchange for a higher price earnings multiple (PE). We need to lift the valuation of SA.

 

Do you think our country in its current format is sustainable? Are we at risk of a populist uprising? Would you support a new deal if it will drive employment growth and a more inclusive economy? Would you be willing to sacrifice today if it means a much better future? I would love to hear your opinions.

In the mean time, keep your talking straight!

 

#Populism #Unemployment #NewDeal #MinisterOfEmployment

 

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man


  • 1

Why are unions against pension tax changes?

Over the past months, there has been a great deal of discussion on new pension tax laws and their impact on provident funds. So vehement were the objections from unions (especially Cosatu) that the implementation date has been changed from 1 March 2016 to 1 March 2018. Why are unions so against this act? Could it be that at least in part, it will make it more difficult for protracted strikes to occur, reducing the bargaining position of unions?

The new Tax Amendment Act and will have a particular impact on provident funds, allowing for their treatment to be more in line with pension funds. As a result, upon retirement, a member will only be allowed to take one third of their pension as a lump sum and will have to buy an annuity (a stream of income from retirement to ultimate death) with the rest; and upon resignation, an employee’s contributions to their fund will be subject to tax (where provident funds withdrawals were tax free before). The changes will not impact any historic contributions to provident funds and will only affect future contributions.

The clear motivation behind these changes is to create an environment where workers save more for retirement and are less of a burden on the state in their old age. This is a worldwide phenomenon and imperative. With people living longer and longer, governments want to ensure that their citizens are able to look after themselves.

The problem in SA is that we have high unemployment and that employees who lose their jobs are often not able to find new employment readily and tend to dip into their pension and provident savings to survive. Many retirees also tend to withdraw their entire benefits to look after their extended families, due to low employment levels. The net result of this is that these people, even though they spend many years being gainfully employed and contributing to pension and provident funds, do not have sufficient savings in their old age to survive. As a result, they become a burden on the state.

In most countries with developed pension systems, laws surrounding retirement and early withdrawal are very strict, with either no early access to pensions or a high pension tax. Workers are actively encouraged to preserve their pensions upon early withdrawal (to save them for retirement and not to use them for spending) and to annuitise (buy a monthly income stream from retirement date to ultimate death) upon retirement.

Unions (Cosatu) appear to be very concerned about preservation being actively encouraged in SA. In response to the new Tax Amendment Act, Cosatu claimed that the Act “had introduced the issue of preservation through the back door”. According to them, “preservation cannot and will not be implemented outside the Comprehensive Social Security & Retirement reform”. Why are Cosatu so against preservation?

The main argument presented by the federation is that we suffer from a “current environment of high and stubborn unemployment and poverty in our society without a clear social security system in place.”. They intimate that it is important that workers receive a “lump sum payment upon retrenchment, change of employment or retirement” to allow them to survive financially. However, they concede that “in the long-term the cash runs out, leaving the worker to lead the rest of their life in poverty.”.

Cosatu therefore appears to be very concerned about people who cease to be workers, join the ranks of the retired or unemployed and stop being members of their unions. Fair enough and very altruistic, but could there be another reason for their aversion to preservation that may not be so altruistic?

SA has been suffering from protracted strikes for many years and more often than not, unions are able to extract healthy benefit increases from employers. The longer the strikes last, the more concessions unions appear to be able to extract from employers. If striking workers were to become strike-weary early on in the process, there may be a distinct risk that fewer concessions would be obtained. In the current environment without preservation actively encouraged, striking workers can at least look forward to cashing in their pensions if their actions result in dismissals or retrenchments. This reduces the risk of continuing with a protracted strike. If workers were forced to preserve their pensions upon retrenchment or dismissal, they might be less inclined to continue with a protracted strike and may be more willing to settle early with employers.

Is it therefore possible that unions are against the introduction of preservation, at least in part, because it would weaken their bargaining position when it comes to industrial action? If this were the case, are unions acting in the best interest of their members? Although the cashing in of a pension helps a retrenched or dismissed worker to survive in the short-term, it leaves them vulnerable in the long term (as per Cosatu’s own admission). Would workers not be better off remaining employed, but settling for lower benefit increases?

In an environment where employment levels are higher, there is no doubt that preservation and annuitisation upon retirement are desirable as it would reduce the burden of the state to look after people in their old age. Our focus should therefore be to increase employment levels. The unions in SA have an important role to play in this regard. To increase employment across the board, it is important that labour relations in SA improve, settlements are reached early and protracted strikes are avoided. In addition, unions should come to the party to create a more conducive environment for employment to grow by demanding less stringent employment conditions and protection. Unions should support youth subsidies, internships, vocational training, special labour dispensations in selected industries/regions, etc. In the long-run unions can only benefit from increased employment levels in SA, even if it means having to compromise on workers’ rights in the short-term.

The current approach is not working and has not worked over the past 20 years. Unemployment in SA has become a national crisis and cannot be dealt with in the usual way. In a previous blog, I recommended the appointment of a Minister of Employment who will have ultimate responsibility for employment levels, will co-ordinate across different government departments, unions, private sector and NGOs and will have the power and tools to drive the process. As part of this, we need unions to stop simply protecting their own turf, but to think more broadly about what will ultimately be best for our country, including for their members.

 

What do you think of the new pension tax laws? Do you think we can implement it considering our low employment levels? Do you think unions are worried about their industrial action bargaining power? Do you think unions can do more to promote employment in SA? I would love to hear your feedback.

In the mean time, keep your talking straight!

 

#Preservation #Pension #Unions

 

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man


  • 0

Give us cheaper access to credit

Times are tough in SA and people need access to credit. The problem is that for the most vulnerable, interest rates and fees on microloans are very high, which leads to expensive instalments and high bad debt levels. Using a house as security can lead to much lower instalments, can save the borrower a great deal of money and can increase the comfort level of the lender. Many people own houses that are not properly registered, that do not have title deeds and therefore cannot be used as security. Many others do, but are underserviced by lenders. If we could increase the proportion of registered properties in SA (that can be used as security) and better service low-income home owners, it would increase the accessibility of credit at lower interest rates.

There are broadly two types of credit that people in SA have access to, namely secured credit (which includes bonds and vehicle finance) and unsecured credit (which includes microloans). The interest rate that institutions charge on unsecured credit is much higher than on secured credit, because defaults (bad loans) are typically higher (more people do not pay back unsecured loans than people who do not pay back their bonds) and in the case of an unsecured loan default, there is no property or goods to repossess, so the institutions do not recover any of the unpaid loan.

Interest rates on unsecured credit are currently above 27% per year for most unsecured lenders. Under the new Draft Regulations, which will likely come into play this year, the maximum allowable interest rate will be 26.5% (repo rate TIMES 1.7 PLUS 15%) for unsecured loans. For bonds (or home mortgages), the maximum interest rate under the Draft Regulations will be 18.75% (repo rate PLUS 12%), although most people are able to access much lower interest rates on their bonds (13% and below, which is less than half of what unsecured borrowers pay).

What this means is that the most vulnerable people in SA who are taking out loans are paying twice or more for the privilege than people who can offer security. The very high instalments that unsecured lenders have to pay, reduces the affordability of loans and increases default levels. You are more likely to run into financial difficulties if you have to pay twice as much back on your loan every month.

According to the National Credit Regulator (NCR), unsecured credit in SA as at September 2015 amounted to R162 billion (up 10% from the previous year). This was about 10% of the total consumer credit at that time. That is a lot of money owed by people. It also implies large repayments required. Based on the new Draft Regulations, this implies an annual interest bill of a staggering R43 billion. If these borrowers were able to provide security on their loans, in the form of a house, they could theoretically save a massive R21 billion in interest payments every year. Imagine the positive impact that this could have on their pockets and on the economy as a whole.

So why are so many people in SA unable to access secured credit? Is it because they do not own property? The answer is a definitive no. According to the NCR Consumer Credit Market Report for the Third Quarter of 2015, 75% of new mortgages (bond loans) that were issued were larger than R700000 in size and a massive 95% of mortgages were for sizes above R350000 and above. By number, only 25% of new mortgages granted in 2014 were for R350000 or less according to the Centre for Affordable Housing Finance in Africa 2015 Yearbook. Because almost no bank is offering 100% mortgages (you typically have to pay a large deposit), the R350000 mortgage mentioned above probably relates to a property worth R450000 or more.

According to the Centre for Affordable Housing Finance in Africa, only 3% of mortgages in number (during 2014) were granted to people earning less than R15000 per month, which is needed to finance a house valued at R370000. This means that the majority of people who own houses worth less than R370000 are not getting mortgages. The same report noted that over 40% of registered properties in SA are worth R300000 and below, which means that an even higher proportion of SA properties fall into the group above, those that are not receiving mortgages.

In addition to the 40% plus of registered home-owners who are not receiving mortgages there are a further 1.5 million (estimated) home owners who are not even registered as home owners. The Centre for Affordable Housing Finance in Africa estimates that “just over half of the 3 million subsidised houses delivered by the state since 1994 are formally registered in the deeds registry”. The rest of these houses are not registered. If we take both registered houses worth below R300000 and the unregistered houses, it implies that well over half of SA home owners have no access to mortgage finance.

What does this mean? It means that over half of South African home owners are not using their homes as security for the loans that they take out. It means that over half of South African home owners are paying interest rates that are twice as high as the interest rates they would have paid if they had been taking our mortgages, using their homes as security. It means that there is a huge untapped opportunity to provide South Africans with cheaper credit and potentially larger levels of credit.

What is the downside of using your home as security on a mortgage loan? We have discussed the upside of such an arrangement, but there is a downside. If you default on a mortgage loan, your home may be repossessed! The question is whether this is worth the risk? If your loan instalment is half of what it normally is (with your home as security), will it not be much more affordable and will you not be much less likely to default? If you know that your home is at risk, will you not be much more careful in the amount that you borrow and much more diligent in making sure you keep up your instalments?

So what can be done to tap into this huge opportunity of cheaper credit for the most vulnerable in our society? There are two things. Firstly, there must be an aggressive drive by Government to ensure that all properties are properly registered and that the owners have legitimate title deeds to their properties. Secondly, banks and other lenders must be encouraged and even subsidised (to some extent) to offer mortgages to the half of South African home owners who currently have no access.

There is no shortage of money in SA to fund the potential increase (or reclassification) of debt that these steps above would imply. According to the latest banking statistics from the SA Reserve Bank (SARB), the total rand-denominated deposits in the system amount to R3.1 trillion. In addition, according to the SARB Quarterly Bulletin, there was R264 billion of assets lying in money market unit trusts. It would take a fraction of the huge cash balances in the SA economy to provide mortgage funding to the 50% of South Africans that do not currently have access to it.

What is holding the lending industry back from offering these much-needed loans on better terms to the most vulnerable in our society? There are three main reasons, in my opinion. Firstly, lenders are extremely conscious of risk. They cannot and will not give a mortgage loan to someone who does not have a title deed. They are also wary of providing loans to groups that they consider more risky. To address this concern, there should be the push discussed above to ensure that all properties are properly registered; Government should provide some level of subsidy to encourage such loans and to mitigate risk (whether it be through tax relief, higher BEE scores, concessions on future BEE requirements, etc.); and lenders should price for these risks (i.e. offering average interest rates of say 18% vs. the 13% typically charged on existing mortgage book, but still well below the 26.5% on unsecured credit).

Secondly, credit providers are often wary of entering markets where they do not have sufficient data and systems (to price with comfort). To address this concern, it is important to start putting toes in the water. These markets can only be better understood and priced for over time. And the time is now. In addition, there are many unsecured credit providers that have large client databases and could conceivably use these data to better price alternative products (mortgages vs. unsecured debt). It would take a decision from shareholders and management, possibly driven by encouragement from the wider SA populace, including Government, to take the leap into this market segment.

Thirdly, credit providers make more money from unsecured lending than they do from mortgage lending. This may be a more difficult concern to address, but it is not impossible. As long as mortgage lending in the under-serviced market is properly priced for, there is no reason why it should not be profitable to lenders. It may not be as profitable as unsecured lending, but it may well be more profitable than current mortgage lending. In addition, it should be considered good for the economy and for long-term growth within the banking sector. It is therefore necessary to take a leap, which may involve a gradual transfer of products. Such a leap may affect the bottom line in the short-term, but over the long-term, it could be very positive for the country. It is important that shareholders and management consider the greater good and act in a socially responsible manner in this regard. I am hopeful.

I challenge Government and credit providers to sharpen their pencils, to be innovative, to think of the greater good, to be compassionate to the most vulnerable people in our society and to come up with solutions. Use your skills, your infrastructure and your commitment to our country to help unlock the huge potential sitting in underutilised property as a form of security. History will judge you.

 

Did you know that interest rates are so much higher for people that cannot offer security? Did you know that over half of South African home owners are not currently using their homes as security for loans? Do you think that this offers a meaningful opportunity? Do you think that credit providers and banks will grab this opportunity or will we just keep talking about it? I would love to hear your feedback.

In the mean time, keep your talking straight!

 

#UnsecuredCredit #Mortgages #Credit

 

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man


  • 2

We need a Minister of Employment

Unemployment is the most important issue facing SA at the moment. If we do not grow employment numbers aggressively and quickly, we face an increase in poverty and inequality that could result in a populist uprising. Past attempts at dealing with this issue have failed and we now need a new approach. We need a Minister of Employment who will stand or fall based on employment levels. This needs to be a very senior appointment, which has the mandate and power to co-ordinate efforts across all ministerial portfolios, unions, NGOs and the private sector.

For much of the past 15 years, more than one third of South Africans have been unemployed (using the expanded definition). The most recent expanded unemployment rate (October 2015) was 34.4% (whilst on the narrow definition, the rate was 25.5%). For the youth, the situation is much worse with almost half of people between 15 and 34 being unemployed on the expanded definition (and more than 60% of those between 15 and 24). We are sitting on an unemployment powder keg in SA.

Whilst numerous reasons can be put forward for our low employment numbers in SA, including low cash deployment and increasing automation by the private sector, inflexibility of labour, low economic growth and weak commodity prices, the main responsibility should lie with our government. Globally, governments stand or fall based on their ability to reduce unemployment levels. SA should be no different.

It is time that our Government identifies unemployment as the top priority for our country and throws all that it can at dealing with the problem. Despite having a large cabinet with 35 ministers, there is not one department (or minister) that has as its primary responsibility the increase of employment in SA. The Department of Labour comes the closest, but in its stated vision, “employment creation” is only mentioned after “investment” and “economic growth” as priorities. The Department of Labour and the Minister of Labour also do not appear to rank amongst the most senior portfolios and ministers in cabinet, with the departments such as Treasury, Basic Education, Health, International Relations, etc., attracting much more attention. It is difficult to see Minister Mildred Oliphant dictating to Minister Pravin Gordhan on appropriate tax rates for promoting job creation; demanding from Minister Malusi Gigaba that visa regulations need to be relaxed to boost tourism; or setting targets for Minister Angie Motshekga and Minister Blade Nzimande on the number of science and engineering graduates required to boost the SA economy.

What we need in this country is a new Ministry that has as its sole responsibility the creation of employment. We need a Minister of Employment. This needs to be a very senior appointment in the league of a Nhlanhla Nene or a Trevor Manuel. The Minister of Employment should be empowered to co-ordinate all the resources within the cabinet to address the issue of unemployment. As such, this minister should be the chair of an inter-ministerial committee, including Treasury, Labour, Education, Public Enterprises, Tourism, Trade and Industry and other relevant portfolios. This minister should report directly to the president and provide at least quarterly feedback to Parliament. This minister should stand or fall by trends in employment numbers.

The Minister of Employment should be involved at a high level with all areas in SA that are needed to promote employment growth. As the ultimate champion of employment, this minister must ensure that all areas are working in concert, that duplication is avoided and that all the required energy is focused on the problem of unemployment.

The Minister should have insight and influence over all legislation and regulations in SA to ensure that they are aligned (or at least not contrary) to increasing employment. With such a minister in place, we would not have experienced the own goal of stringent visa regulations impacting tourist numbers and hence tourism employment growth.

A task team should be formed with industry, Treasury, the DTI and other parties to identify specific job-creating industries to promote through regulations, tax incentives and protection, if needed. Similarly, a task team should be established with organised labour and the private sector, possibly using the Nedlac infrastructure, but chaired and driven by the Minister of Employment. This task team must ensure that the labour environment becomes more flexible (even if only in selected job-creating industries) to boost employment growth.

The Minister of Employment should involve organisations such as Brand SA, Proudly SA, SA Tourism, Homecoming Revolution and others in a co-ordinated campaign to promote SA as an investment destination and the consumption of SA-produced products over imported ones.

On the skills front, the Minister should co-ordinate a strategy to ensure that the country produces the right graduates, provides the right vocational training and imports the right skills to support the industries identified to be major job creators. To achieve this, the Departments of Basic and Higher Education need to be involved as well as the Department of Home Affairs and the private sector.

There are numerous other areas where the Minister of Employment could become involved, including trade deals with other countries, infrastructure development, agriculture, science and technology, public enterprises, etc.

The role of Minister of Employment will be very challenging and will require hard work and commitment. However, we need large plans to address large problems. This role will need support from a wide range of role players, regardless of political affiliation. There should be large-scale buy-in from all South Africans. It is difficult to see how the vast majority of South Africans would not benefit from growing employment. Solving this problem will go a long way to addressing other problems facing SA. I therefore call upon the ANC, opposition parties, the Government, private sector, NGOs and ordinary citizens to speak out and demand action on unemployment. I call for your support in appointing a Minister of Employment (together with the power and support that such a role requires) immediately. We cannot afford to wait any longer.

 

Do you agree that unemployment is the most serious challenge facing SA? Do you think more can be done with centralised planning and coordination? Would you support the appointment of a Minister of Employment? What suggestions do you have to improve my description of this new role? I would love to hear your feedback.

 

In the mean time, keep your talking straight!

 

#MinisterOfEmployment #Unemployment

 

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man


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New weapons in the fight against AIDS

We are winning the fight against AIDS in SA and the world. Antiretroviral (ARV) treatment in SA is free and being rolled out to more people every day, leading to dramatic increases in life expectancy. New treatments are being tested and viable vaccines may be around the corner. A key challenge remains the stigma surrounding the disease, with many people not knowing their status and not benefiting from treatment. Being HIV positive is not a death sentence. Get tested, get treated and live a long and productive life.

In the past decade the life expectancy of the average South African has increased from only 54 years to 62 years. The increase was more extreme for HIV positive individuals and likely in line with recent Canadian research showing a 16 year increase in life expectancy for HIV individuals to 65 years (over the period since 2000). HIV positive individuals who are on ARV treatment can expect to live almost as long as people who are HIV negative and longer than people who have Type 2 diabetes.

The main driver for the improvement in life expectancy in SA is the aggressive roll-out of ARV treatment. In 2004 almost no-one received ARV treatment and this has increased to 3.1 million people in 2014. Since January 2015, anyone with a CD4 count of less than 500 cells/μl can receive ARV for free (compared with 350 cells/μl previously). This means that even if you show no symptoms of the disease, you will be able to receive free medication that can 1) help you to remain symptom free and 2) help reduce your infectiousness, i.e. your ability to infect your sexual partner.

It is therefore vital that you find out your status as soon as possible. AIDS has become like cholesterol, diabetes and TB. The best thing you can do is to know whether you are affected and to get treatment. The sooner you start, the less likely you are to get sick and the less likely you that you make other people sick.

One of the main reasons why people avoid getting tested for HIV (in addition to lack of knowledge) is the stigma that is associated with the disease. People are worried about what their friends and family will think and they are worried about being treated differently. However, with 3.1 million people on treatment (and rising), we all know HIV positive individuals, even if they are not public about it. It would help a great deal to counter the stigma if people on ARV treatment speak out and encourage their friends and family to get tested. They need to share the good news that being HIV positive is not a death sentence, that treatment is free and that you can live a normal life while being treated.

In addition to ARV treatment being rolled out aggressively, there are also positive developments on the pharmaceutical front that offers hope. In the past, ARV treatment was quite onerous and patients had to take three pills per day and if they did not stick to their treatment regime, the pills would lose their effectiveness and patients would get sick. Today, an increasing proportion of ARV treatment is in the form of a single pill, taken once a day. This makes it much easier to maintain a treatment regime, similar to taking cholesterol medication.

Last week, results from a clinical trial on an 8-weekly ARV injection were published. They show that patients receiving this injection experienced even more viral suppression (95%) than patients taking oral medication daily. Imagine not having to worry about taking your ARVs and just having to go in for an injection every 2 months. This should have a very positive impact on adherence and results. At the moment, it looks like the injection will hit the market in 2020, but hopefully this can be achieved sooner. The Department of Health has been very proactive in keeping track with developments so chances are good that they will provide the injection once it hits the market.

Many AIDS vaccines have been developed and tested since the disease started in the 1980s, but none have proven successful enough to be rolled out in the market. However, last month a new human vaccine trial was announced, which shows promise. The “full-length single chain” vaccine has been extensively and successfully tested on monkeys and will now be tested on human subjects. In addition, two promising vaccines are being tested in SA. The first is based on a study in Thailand and will involve 5000 subjects next year. The second study will involve 3900 people in America, South America and sub-Saharan Africa. Results are expected in 2020 and 2018 respectively.

There have been many failed attempts at vaccines and we should not place all our hope in such vaccine research. However, because of the success of ARV treatment, we have time on our side. As long as HIV positive individuals get tested and treated, we can slow the spread of the disease and increase the longevity and quality of life of patients. The key is to know your status.

What can you do to help in the fight against AIDS? Step 1 is to find out your status and to seek treatment if you are HIV positive. Step 2 is to speak out if your are HIV positive. Encourage your friends and family to be tested. Explain to them the benefits of treatment. Comfort them if they test positive. Step 3 is to practice safe sex as this is still the most effective way of slowing the spread of the disease. Step 4 is to support people that are HIV positive. Do not discriminate against them, do not make them feel ashamed and do not shun them. Help to reduce the stigma associated with HIV/AIDS. Together, we can beat this disease and turn it into a chronic condition like high cholesterol or Type 2 diabetes. Please do your part.

 

Do you believe that HIV/AIDS is a chronic condition? Did you know that you can live a long and productive life if you receive ARV treatment? Do you know your status? Will you stop discriminating against HIV positive people? I would love to hear your feedback.

In the mean time, keep your talking straight!

 

#NoStigma #AIDS #HIV #KnowYourStatus

 

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man

Photo by Trygve.u


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You’re biased, but maybe not on purpose

Unless you are an overt bigot (racist, sexist, etc.), you would probably deny that you are biased. You probably think you are fair when it comes to decisions like electing your school governing body, choosing who to appoint in a job, picking someone for a promotion, choosing who to do business with, etc. The bad news is that you are probably not – you more than likely suffer from familiarity bias. The good news is that once you are aware of it, you can do something about it.

Be honest with yourself, who are the people that you freely associate with? Are most of them like you? Do you speak the same language, did you go to the same school, do you go to the same church/mosque/synagogue, do you support the same sports teams, do you look the same? Although there will be exceptions, in most cases people associate with people who are similar to them. Is this a bad thing? Not necessarily – freedom of association is enshrined in most modern democratic and legal systems, including the US Bill of Rights and the SA Constitution. However, what happens if your preferences insofar as who you associate with start impacting the decisions you make outside your family and circle of friends? This can lead to familiarity bias – making decisions and choices in favour of what is familiar to you rather than what is deserved, logical or right.

Familiar bias is a particular problem when it comes situations where certain groups are in power (whether it be political, in business or in societies) and outside groups find it difficult to progress as a result of it. Notable examples are glass ceilings that women have and continue to face in the workplace, lack of representation in company management, exclusivity of sports clubs, onerous rules by body corporates and favouritism when it comes to government tenders and appointments.

To illustrate, please put yourself in the following position. You are the manager of a group of employees at a large firm. They are a mixed bunch, coming from different backgrounds. At work, you maintain a professional relationship and you even socialise on occasion (e.g. year-end lunch). However, you get along better with some of your colleagues, maybe you visit each other’s houses, maybe you play sport together, maybe you see them at church, maybe your children go to the same schools. You just like certain of you colleagues more than others, they think like you, you trust them more, you feel more comfortable with them. You now have to promote someone in your team and there are a number of candidates, some in your circle of friends and some not. If there are no rules guiding the promotion process, if there is no-one looking over your shoulder, who are you going to promote if you are faced with candidates who have similar qualifications and talents? Will it be the candidate that you like more and feel more comfortable with or will it be another candidate? The honest answer, more often than not would be the former. That is familiarity bias.

The problem with a situation like this is that it is very difficult for people who fall outside the familiar group to move into positions of responsibility, unless there are processes in place to encourage this. Women, regardless of background can attest to this. It is only in the past 50 years that women have really started come into their own in the workplace in most developed countries. It was a long and arduous process to break into the “boys club” and in many cases, this is still an ongoing battle.

In SA, our problem is more unique. We come from a history of institutionalised discrimination. Prior to the 1990s, limits were placed on who could be employed, who you could do business with and even who you could associate with. White South Africans were institutionally favoured over other population groups and by the time the situation changed, they were in a position of huge advantage. When majority rule commenced in SA, the government was faced with the choice of aggressively redistributing wealth through nationalisation, land repossession and penal taxation or using a more gradual market-friendly approach. Although it had a mandate to proceed with the former (with the Freedom Charter clearly stating that “The national wealth of our country, the heritage of South Africans, shall be restored to the people”), it chose the latter approach.

This gradual approach used various mechanisms, including employment practices within the public sector, government appointments, government tenders, black economic empowerment (BEE) and affirmative action (AA). There can be arguments made for the success achieved to date with these programmes and there can be arguments made that in certain cases, the wheel may have turned too far. Either way, we still have a very unequal society in SA, with most of the wealth and economic power in the hands of the previously advantaged and most of the political power in the hands of the previously disadvantaged.

An important element of transformation in SA that has been largely ignored by the policies that have been pursued is that of familiarity bias. People are more likely to embrace transformation and address issues within their control if they believe in the process and do not feel pressurised into it. It is important to change people’s minds. It is important that people look inward, address their own familiarity biases and actively try to keep them in check. People should be encouraged to be fair in the decisions that they make and not be driven by familiarity bias or adverse reactions to policies.

That may be easier said than done. On the one hand, there are many previously advantaged people that believe the process has gone too far and as a result, it has become very difficult for people from such a background to gain employment and promotions in both the public and private sector. On the other hand, there are many people in Government that believe they have the right and mandate to employ cadres in senior positions, even if better candidates are available and delivery suffers.

These views on both sides of the coin results in familiarity bias continuing unchecked. In the private sector, companies continue to do business with people they know, like and trust. Promotions (especially at senior levels) still accrue proportionally more to white males than any other grouping. In the public sector, senior appointments and promotions of individuals who do not have struggle credentials or party affiliation are less likely to happen than for those that do. Black kids are still often made to feel uncomfortable if they are outnumbered at school and vice versa. Non-white families often find it difficult to be accepted into previously white neighbourhoods.

Most of us know what it feels like to be on the receiving end of bias. Who has not experienced bias because of the way they look? Maybe it is the colour of your skin, maybe it is your body shape, maybe it is the way you dress. People experience bias because of the way they speak, often because they are communicating in a language that is not their first. People are looked down upon because of their background, where they live, their religion, which school they went to, which sports team they support and so many other factors. If you look inside yourself, even if you are amongst the most privileged in our country, you can identify times when you were at the receiving end. Instead of simply returning the favour or transferring our biases to others, maybe we should take a moment and think about it. Think about how you would like to be treated and treat others in that way.

It is important that we do not simply leave the process of transformation to government, but that we do our part to encourage it in our spheres of life. The next time you face a choice that involves people that are different from you, take a moment to reflect before you make your decision. The next time xenophobic violence flares up in your area, put yourself in the shoes of the foreigners that are being targeted and think again about your choice. The next time you are faced with someone of another race in your school or neighbourhood, think about their dreams and aspirations before you make your choice. The next time you are electing someone to leadership, whether it be at your school, club or other community organisation, consider your familiarity biases before proceeding. The next time you employ or promote someone, be open to what may be the uncomfortable choice, taking into account the inequality that remains in our society. The next time you choose a sports team, take into account those players that are struggling to break in for other reasons than talent. The next time you do a business deal, be open to role-players other than the usual suspects. Do this because you love this country and you want to make it a better place for you, your children and your grandchildren to thrive in for generations to come. Do it, because it is the right thing to do.

 

Can you admit that you suffer from familiarity bias? Are you purposefully biased or are you sometimes unaware of your actions? Is this an us or them scenario for you? Will you check yourself the next time you face a choice? Do you think your choice will be different? I would love to hear your feedback.

In the mean time, keep your talking straight!

#FamiliarityBias #NoToRacism

 

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man


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Idols, Springboks and Transformation

South Africa has proven to be a very interesting experiment in transformation over the past 21 years. Transformation has been an integral part of our workplaces over that period and has also found its way into popular culture from the composition of the Springbok rugby team to the winners of SA Idols. In some areas, we have been successful, in others not and in other areas, there may be an argument made that we have gone too far.

Transformation has been the outstanding feature of our changing world over recent centuries. 200 years ago, democracy was a rarity in the world and where practiced, it was often limited to white male land owners. Over the next 100 years, the situation slowly started to change in the Western world and by a century ago, many countries had universal suffrage for adult males. Women’s suffrage movements extended representation to all adults in the First World between 1881 (Isle of Man) and 1944 (France), although in countries like Cyprus (1960), Monaco (1962) and Switzerland (1971), it took much longer. Universal suffrage (independent of race, religion or ethnicity) took longer to spread, but the end of colonialism started the ball rolling after the Second World War. Japan took the step in 1946, followed by India (1950), Greece (1952), the USA in all states (1965), numerous South American, numerous Asian and numerous African countries in the following years. South Africa came in at the back-end, achieving universal suffrage as recently as 1994.

Transformation in the workplace and civil society took much longer to achieve (and is still a work in progress), often requiring changes in legislation to be delivered. Even today, gender equality remains an important talking point in modern democracies like the USA, with the gender pay gap in 2013, still being 18%. Affirmative Action (AA) remains a feature of admission policies to US universities, in Norway at least 40% of board members of listed companies must be women, in India a certain number of seats in government institutions are reserved for people from lower castes, in Germany there are programmes that state that if men and women have equal qualifications, women have to be preferred for the job, in Malaysia, the majority Malay population are favoured through a system called “Ketuanan Melayu” and in Israel a class-based AA policy was introduced for certain universities.

Many people question the appropriateness of AA policies that promote transformation, opting rather for an approach based totally on merit. Some of the arguments made against such policies may be sound, like “government departments become less efficient by excluding people with experience”, “my sports team is weakened by a quota system”, “such policies discriminate against me”, or “I cannot find a job because of AA, despite being qualified”. Other arguments speak to underlying bias or even bigotry, like “why don’t they just work harder”, “if their marks are not high enough, they should not be accepted into university”, “women earn less because they get pregnant and exit the workforce”, or “women are less ambitious than men and therefore not CEO material”.

In my opinion, both sets of arguments are problematic. Globally, we come from a history of bias and bigotry and this is even more extreme in SA. Throughout human history people have been persecuted for their faith, held down because of their social status, kept out of learning institutions, jobs and clubs because of their gender, denied the vote because of their race and discriminated against because of their sexual orientation, race, religion, social standing, disabilities, language and so many more characteristics. The fact that the world is moving towards reduced bias and bigotry does not just make it a better place to live for all, it also allows us to better tap into the talents that people have to offer and allow us to focus on making the world a better place to live (economically, socially, environmentally) instead of wasting time on bickering.

The merit argument is valid and something we should strive towards, but is problematic in an environment where there is not equality of opportunity, where we come from a history of institutionalised discrimination or where bigotry remains rife. By demanding merit only selections into universities, the working world or sports teams in a world of unequal opportunities, we are discriminating against a large proportion of people and excluding talent that could be developed over time.

The merit argument is also often held up by people and institutions that do not truly embrace the concept. It is undeniable that the vast majority of people have affection for people that are similar to them. They are more likely to have friends who speak the same language, who went to the same schools as them, who go to the same place of worship than them. Most men have many more male friends than females and vice versa. Most people will have more friends of the same race, background and social standing. People tend to like other people who are similar to them more than people who are not.

This brings us to my next point. When accepting someone into a school or university, when appointing someone into a job, when choosing who to promote to a senior position, when electing leadership of a club or political party, there is almost always a subjective element to the decision. If left unchecked, most people are likely to choose the person they like more if both candidates have the same qualifications, even if they are not consciously aware of it. People will choose the person they feel more comfortable with ahead of the person they feel less comfortable with.

In the work environment, which is often a boys club, men who get along, socialise together and understand each other are more likely to promote another man to a senior position, if left unchecked. If the majority of parents are English in a dual medium school, they are more likely to elect an English parent to the governing body. The coach of a rugby team (e.g. the Springboks) may be more likely to select players that conform to his understanding of what a good rugby player should look like, e.g. tall and strong and this may exclude many players of colour. Voters on reality singing competitions (e.g. SA Idols) may be more likely to vote for singers that speak like them and look like them. The outcome of such familiarity biases is usually to act as a significant handbrake on transformation. It is therefore necessary, especially in a country with a history of inequality such as SA, to put in place laws and regulations to focus the minds of those in positions of power to avoid familiarity biases and to actively encourage transformation.

On balance, the private sector in SA has done well on the transformation front, although there is more to be done. According to the Commission for Employment Equity (CEE) annual reports of 1999 and 2014, developments have been positive. In 2014, 70% of top management positions were held by whites (down from 87% in 1999), whilst the proportion held by males reduced from 87% to 79% over the same period. Whites held 81% of senior management positions in 1999, which reduced to 59% in 2014 (with the male proportion falling from 80% to 68%). In 1999, 44% of professional qualifications were held by non-whites, increasing to 58% in 2014 (the female increase was more modest to 43% in 2014).

All sectors relating to government have achieved the greatest transformation over the past 20 years. According to the 2014 CEE annual report, more than 75% of national, provincial, local government and state-owned company top and senior management positions were held by non-whites in 2014.

When it comes to popular culture, the results have been more mixed for example SA Idols vs. the Springbok rugby team. SA Idols is an interesting test case for transformation in SA, because it involves the viewing public voting for the winners, albeit not based on universal suffrage (as access to DSTV, the internet, mobile phones and airtime is not universal). It is interesting to note that during the 10 seasons of idols, there have been 5 white winners and 6 non-white winners (joint winners in season 5). It was only in season 8 that a black winner emerged in the guise of Khaya Mthethwa and since then, all winners have been black. In my opinion, the changes in winners of Idols has been the result of a combination of engineering by producers, changes in access to voting and changes in voting patterns. It appears highly likely that the Idols producers and judges made a concerted effort to kick-start the transformation process by increasing the proportion of non-white contestants that found themselves on the ballot. In addition, it is also true that non-white viewership and voters increased over time as more people gained access to DSTV and cell phone costs reduced. However, it is my hope that voting patterns are also starting to change with especially young South Africans focusing less on race when casting their ballots. It will be interesting to see the voting patterns in the current season.

The Springbok rugby team is a sensitive issue at the moment, especially with the World Cup coming up soon. Avid Springbok supporters want the best team possible to be chosen based on merit and they want to see the Springboks win. However, reports of bias as far as team selection goes have left a bad taste in the mouth over recent months. Many commentators feel that not enough has been done under Heyneke Meyer’s tenure to give opportunities to non-white players. An interesting article in September 2014 points to the fact that of the 30 new Springbok caps under Meyer’s tenure (at that time), only 20% (6) were to non-white players, vs. 39% under the tenure of Peter de Villiers and 44% under the tenure of Jake White. Since that article, Meyer has capped a further 6 players of which only one, Nizaam Carr, was non-white. I by no means claim to be a rugby fundi, but in a country where the majority of rugby players are non-white (e.g. c.70% of registered Western Province Clubs cater to non-white players, whilst the rest are mixed) to see such a small proportion of non-white players receive an opportunity at a Springbok level points to either, lack of talent, lack of transformation or familiarity bias. I really hope that post the World Cup, more will be done to achieve the necessary transformation of Springbok rugby to avoid it being pressured to change.

An unintended consequence of a lack of transformation, whether it is in the private sector, government departments, popular culture or sports teams, is that sometimes the scales can tip too far in the opposite direction. Examples are window dressing on SA company boards, fronting when it comes to black economic empowerment (BEE) contracts, overly aggressive quota systems in SA sports teams and qualified individuals being overlooked for positions or promotions, often leading to emigration. There have been many examples of institutions where the balance of power has shifted, like government departments, where appointments are made based on race and party affiliation regardless of qualification. Cadre deployment is not a unique feature of SA and is present in all countries, including developed country democracies. When there is a change in political leadership, the broom often sweeps away not just political appointees, but very often qualified technocrats as well. However, in most developed democracies, there is depth of technocrat management in all political parties, whereas in SA there is arguably not as much depth in the cadres available to the ruling party for appointment.

I hope that we can continue the transformation process in SA, but at the same time I hope that we can do it without it having to be a zero sum game and that we can avoid tipping the scales too far. To avoid the zero sum game scenario, it is vital that we address the education issues in SA and ensure that standards are much higher, that we grow the economy and employment levels and that we avoid not using valuable skills because of their skin colour (or party affiliation), whether it be in the private or public sector. To avoid tipping the scales too far, it is important that the previously advantaged recognise the inequalities in our country, especially of opportunity. We must be open to the transformation process and we should avoid familiarity bias as well as overt and veiled racism. We should do more to give opportunities to previously disadvantaged individuals, especially if they come from difficult situations. We should be empathetic and understanding of backgrounds. At the same time, we should do more to promote improved education, whether it be in our schools or our companies. And we should do what we can to grow our economy and employ more people.

 

Do you believe in the importance of transformation in SA? Do you think we have made progress? When do you think affirmative action should be abolished, now, 10 years from now? Do you see the transformation in our popular culture, looking at programmes like SA Idols? Do you think more should have been and should be done to transform the Springbok team? Do you think we can win the World Cup? I would love to hear your feedback.

In the mean time, keep your talking straight!

#SpeakingOutSA #NoToRacism

 

Marius Strydom is the CEO of MLAX Consulting

https://www.facebook.com/straighttalkingstrydom

https://twitter.com/Marius_Man


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