CURRENTS: Editorials: Edition: July / September 2019

Bigger and bigger

Umbrella arrangements are on a one-way trajectory.

Their efficacy deserves ongoing scrutiny.

The consolidation of standalone funds into umbrella arrangements is proceeding apace. The last annual report of the old FSB, and first of the new FSCA, shows the number of active funds down to 1 647 by end-March 2018 from 1 758 the previous year.

But the sting is really in the contrast with five years ago when there were over 5 000 funds. Ideally, the FSCA would like the number consolidated much further to match its capacity for supervision; perhaps to 200 mega-funds although a recent count suggests that there are more than this number of umbrellas alone. Most of these are smaller and newer.

A pattern of the major sponsors of commercial umbrellas is emerging (see chart). However, these FSCA figures are about a year out of date. For instance, as mentioned at the Batseta conference, Sanlam is now approaching the R50bn mark. Also, according to the latest Sanlam benchmark survey, there are now only about 1 100 funds that can broadly be categorised as standalone (compared to some 13 000 in 2005), and roughly 350 of them are busy transferring primarily into umbrellas.

The chart nonetheless shows the huge gap between the upper and lower 10 sponsors, together accounting for 98% of the umbrellas. Old Mutual, having abandoned administration of standalones, leads the pack.

As consolidation progresses, there are at least three issues around umbrella funds that need to be properly clarified:

• What is meant by “independent” directors when they’re appointed by the sponsor;

• Whether management committees should be mandatory at participating employers in order that their workplace link to employees isn’t compromised;

How the economies of scale are comparatively reflected in cost advantages.

Marcus: different hats

Not so great

For the 2019 Sanlam benchmark survey, 100 principal officers were asked for their wish lists. Coming out tops were compulsory preservation and regulatory simplification. Sadly, believes Sanlam’s David Gluckman, neither is likely to happen.

He added: “If we want to make retirement great again over the next decade, we need to win the battle against the armies of compliance and risk managers that make providers and trustees too scared to do anything positive.”

When an actuary is not allowed to talk to a member about financial matters for fear of straying into advice, or when people claim that no one aside from a financial adviser is allowed to indicate to a member such basic information as to how tax benefits work, “then something has gone very wrong with our industry”.

Grey matter

The commissioner of the Financial Sector Conduct Authority was supposed to have been appointed by October last year. But it still hasn’t happened. The role is filled by Abel Sithole who variously signs FSCA documents as commissioner, acting commissioner and representative of the transitional management committee.

So that’s Peculiarity No 1. Peculiarity No 2 was raised by Gill Marcus who sits with Judge Mpati at the inquiry into the Public Investment Corporation.

She asked whether Abel Sithole, who is the “interim person” as FSCA commissioner, is the same

Abel Sithole who simultaneously serves as chief executive of the Government Employees Pension Fund (the PIC’s largest client).

Nomkumbulo Tshombe, head of the FSCA legal department, replied that the GEPF is not regulated by the FSCA whereas the FSCA regulates the PIC and the GEPF governing structure is its board of trustees: “Mr Sithole is the principal officer of the GEPF which is different from a chief executive in the traditional sense.”

Marcus: “It doesn’t necessarily resolve the conflict….Given the same personality, all I’m doing is pointing out that there is a grey area in relation to Mr Sithole.”

Now to await the Mpati recommendations and the actions to follow. Never a dull moment.

Bad play

Unless newspapers in Independent News & Media SA have miraculously turned to profit, with each day that passes the group’s exposure to the PIC must compound. So long as the group’s daily and weekend titles continue hit the streets, as they do without interruption, the PIC is between a rock and a hard place.

The PIC can cut its losses by folding the newspapers. On the other hand, closures will kill prospects to find potential buyers which – presuming they exist outside the PIC’s imagination – are taking inordinately long to come forward.

Such is the PIC state of paralysis that it does nothing at all. It doesn’t even answer questions on how INMSA’s debt is escalating. After the disclosure in parliament late last year that INMSA had not repaid to the PIC a loan of R253m due in August 2018, think in more hundreds of millions.

There’s clearly a price to be paid for media diversity, as much for INMSA as for the SABC. Less clear is who’ll pay it, as much for them as for other iconic titles whose futures are threatened.

Wake-up call

For so long has Regulation 28 required that pension funds “give appropriate consideration” to environmental, social and governance (ESG) factors in their investment decision-making that it’s become one of those things without consequence if not taken seriously. Okay, trustees could say, we’ve “considered” these factors so we’ve done our bit.

The guidance note issued by the Financial Sector Conduct Authority tries to put meat onto the bones of Reg 28. But it’s merely a guidance note, with no penalties for non-compliance, where “consideration” is upscaled to “encouragement” and “expectation”.

In the UK, by contrast, the pensions regulator will sanction trustees who don’t follow the ESG rules that came into force last year. Guy Opperman, speaking in parliament for the pensions ministry, described as “utterly wrong” the perception amongst many trustees that they needn’t worry about ESG: “They’d be breaching their statutory and potentially their fiduciary duties not only to current but to future members”.

The value of the guidance note is in the FSCA specifying what it encourages and expects of trustees, to focus their minds in the compilation of their regulatory investment policy statements (IPS) and on their oversight of outsourced service providers. For consultants, who know more about ESG than most trustees, and asset managers, for whom ESG promotion is a selling point, the guidance note must be a joy to behold. They’ll be loaded with fees-earning work.

Implementation of the guidance note’s principles relies on transparency and disclosure to the regulator and stakeholders who’d include fund members. The regulator must anticipate that more funds will promptly file their annual reports and stakeholders might hope that more funds actually create informative websites.

Information requirements are demanding.  As an example: “Where a fund holds assets that limit the application of ESG factors, sustainability criteria or the full application of an active ownership policy, the IPS should also state the reasons as to why this limitation is to the advantage of both the pension fund and its membership. Alternatively, the IPS should set out the remedial action (or) where no remedial action is taken, the fund should set out the reasons therefor.”

The stage is set for delicate debates, not least being the myriad conflicting factors over Eskom: fossil fuels versus climate change versus jobs for coal miners versus poor governance versus national energy supplies vs financial viability.

These are issues that government is battling to resolve. Maybe, just maybe, the clout of pension funds can help.

Internationally, according to the Global Sustainable Investment Alliance, assets invested sustainably have passed the $30tn mark based on a classification that encompasses funds (including pension funds) using ESG criteria. Today there’s a plethora of ESG indices.

Useful tool

It’s well worthwhile for trustees to invest the time – no money is required – for taking the e-learning course offered by the toolkit on the FSCA website. Whether as an introduction or refresher, be tempted to explore

It’s made delightful by the case-study games that complement the basics you thought you knew, from board governance to stakeholder relationships.

In fact, the toolkit shouldn’t be for trustees only. Members of pension funds, and consumers of financial products at large, will equally derive knowledge and pleasure from it.

Tax at Alex

Still there’s residue, after all these years, over the profits taken by Alexander Forbes from its controversial “bulking” operations. It was back in 2006 that Forbes had “bulked” the bank accounts of numerous pension funds in order to earn interest for itself from the banks.

These were considered “secret” profits that should rightfully have belonged to the affected funds. But then Forbes reflected them as its own profits and paid tax on them. However, once Forbes subsequently passed the “bulked” profits onto the funds, what’s to happen with the tax?

Because the profit belonged to the funds, Forbes shouldn’t have paid tax on it. And once the profit had been passed to the funds, it should have been only for the pre-tax amounts as the funds aren’t liable for tax.

The “bulking profits” were not in themselves assets of the funds. Rather, they’d accrued from an agreement reached between Forbes and the banks. As the base of the profit was pension funds, these profits should be distributed – where they haven’t already — to funds that are still active.

Within this shambles there’s another poser. It’s the destination of profits belonging to funds that are no longer active but, in future, will have assets in the form of these profits.

Dream city

In his SONA address, President Cyril Ramaphosa spoke of the new post-apartheid cities that he envisioned. He was accused by critics of fantasising.

The critics might be wrong. They should look back to the well-advanced plans announced by Paul Mashatile, as the then chair of the Gauteng ANC and in charge of the province’s human settlements, to launch a R1,8 trillion public-private partnership for precisely this purpose (TT Sept-Nov ’17).

Now that Mashatile is in the ANC’s top six, as its treasurer-general, he’s strategically positioned to give these extensive plans the oomph they need.

Mvunonala again

“One of SA’s biggest unions was used as a conduit to launder about R65m in pensions allegedly plundered from impoverished orphans of deceased mineworkers,” reported City Press in June.

The fund is identified as the SA Transport & Allied Workers Union. The matter dates back to unfolding scandal at Mvunonala which involved, amongst others, the Bophelo Beneficiary Fund (TT May-July ’18).

And still nobody’s been arrested. 

FINANCIAL REGULATION: Editorials: Edition: July / September 2019

A guardian of

the guardians

Oversight body, higher than the twins, proposed in Oz.

For consideration in SA too?

When a Twin Peaks regulatory regime was being considered for SA, much focus was on the appropriateness of the model in Australia. It was seen to work well.

Not so any longer. Appointed to investigate the Australian experience with Twin Peaks was a Royal Commission into misconduct in the banking, superannuation (pensions) and financial services industries, it has produced a forensic report with far-reaching recommendations for reform and restructure.

Many findings are unflattering, to put it mildly, of financial institutions and of their regulators. Best then for SA policymakers to take a close look. The commission has done work that resonates in countries, SA definitely included, which have significantly emulated Australia.

Both the interim and final reports of the commission, respectively tabled last year and this, are voluminous. Their detail is intense. The conclusions are thoroughly argued and several are radical.

Prominent amongst them is the motivation for a permanent oversight body that sits above the twin peaks – the Australian equivalents of SA’s prudential and market-conduct authorities – to monitor and publicly report on their performance. The body’s essential role would be to assess:

• The effectiveness of each regulator in discharging  its functions and meeting its statutory objectives;

The performance of the leaders and decision-makers within the regulator;

How the regulator exercises its statutory powers.

Hayne . . . deep digs

The task entrusted to each regulator by statute must be the foundation of any assessment. In most cases, the commission believes, assessment will not be capable of measurement or quantitative expression. For example, the number of proceedings filed or infringement notices issued will not say anything about the regulator’s enforcement culture unless the decisions behind those numbers are evaluated.

While the “broad contours” of the enquiry areas would be largely obvious – licensing, enforcement, consumer protection, regulatory cooperation and market supervision – an important consideration will be how effective the agencies are in enforcing the laws within their remit. This will determine whether more radical steps, such as creating a civil enforcement agency, should be considered.

“I consider that a new (oversight) body is required,” said commissioner Kenneth Hayne, a former judge in Australia’s highest court. “It should be established by legislation and be independent of government.”

The requirement would be unnecessary if the two regulators were operating as effectively as needed. Clearly, they aren’t.

With the Twin Peaks model having operated for many years, the report noted that both the Australian Securities & Investments Commission and the Australian Prudential Regulation Authority recognised that their approach to enforcement must change: “That change cannot be effected by the passing of legislation. It must come from within the agencies. But it is also important to strengthen the accountability of both…by both being accountable to a new oversight body.”

The central task of the commission was to inquire into whether any conduct of financial-services entities might have amounted to misconduct in falling below community standards and expectations. Innumerable instances of common practice are cited and condemned. The commission’s analysis produced four observations:

• In almost every case, the conduct in issue was driven not only by the relevant entity’s pursuit of profit but also by individuals’ pursuit of gain. Providing a service to customers was relegated to second place. Sales became all-important. Advisers became sellers and sellers became advisers. Rewards have been paid regardless of whether the persons rewarded should have done what they did;

Entities and individuals acted in the ways they did because they could. Entities set the terms on which they would deal. Customers often had little detailed knowledge or understanding of the transaction and next to no power to negotiate the terms. At most, a consumer could choose from an array of products. There was a marked imbalance of power and knowledge between those providing and those acquiring the product or service;

Consumers often deal through an intermediary. In many cases, the intermediary is paid by the provider and may act in the interests of the provider or only in the interests of the intermediary. The interests of client, intermediary and provider are not merely different but are opposed;

• Entities that break the law are too often not properly held to account. Misconduct will be deterred only if entities believe that misconduct will be detected, denounced and justly punished. It is not deterred by requiring those who are found to have done wrong to do no more than pay compensation and wrongdoing is not denounced by issuing a media release.

The misconduct identified in the report has caused large damage to individuals as well as the overall health and reputation of the financial services industry, the commission finds: “The industry is too important to the economy to allow what has happened in the past to continue or to happen again.”

SA policymakers can take another good, hard look at Australia. It previously spared them the trouble of reinventing the wheel. ν


Probably yes, for a SA retirement-fund industry constantly on the receiving end of regulation upon regulation. In its interim report, the Australian commission began from the premise that breaches of existing law are not prevented by passing some new law.

Any new layer will add to cost and complexity, it warns. This should not be done unless there is a clearly defined advantage. Otherwise it serves only to distract attention from the simple ideas that must inform the conduct of financial-services entities.

These ideas are: obey the law; do not mislead or deceive; be fair; create products fit for purpose; deliver services with reasonable care and skill; when acting for another, act in the best interests of that other.

The simplicity of these ideas points firmly towards a need to simplify existing law rather than add new layers. The more complicated the law, the easier it is for compliance to be seen as asking ‘Can I do this?’ rather than ‘What is the right thing to do?’ “There is every reason to think that the (mis) conduct examined in this report has occurred when the only question asked is ‘Can I?’.”

Regulatory complexity – labyrinthine and overly detailed – may foster a box-ticking approach where entities focus on internal procedures intended to fulfil various complicated legal obligations. Not only is this at the expense of considering the circumstances in each matter on their merits, it finds, “but also at the expense of measuring what is proposed against these simple ideas”.

FINANCIAL SERVICES TRIBUNAL: Editorials: Edition: July / September 2019

Adjudicator in a quandary

Process to reconsider a determination is a mystery, even to the appeal body.

From an early decision, confusion rules over clarity.

Problems with legislation, previously unforeseen, lie in wait.

Feelings of sympathy might be extended to Vivian Cohen, the actuary appointed as valuator to the Amplats Group Provident Fund, who’d been ordered by the Pension Funds Adjudicator to pay the fund R40,5m plus interest as compensation for a loss that the fund had allegedly suffered (TT Nov ’18-Jan ’19). Having applied to the Financial Services Tribunal, for it to reconsider the Adjudicator’s determination, Cohen is left in suspense.

All the tribunal has done, and apparently could do, is refer the order for payment back to the Adjudicator for further consideration. At this stage the limited relief for Cohen, until there’s final settlement, is the tribunal’s finding that the loss to the fund “was less than that set out in an actuarial report on which the Adjudicator relied”.

The tribunal, chaired by retired judge Louis Harms sitting with Neo Dongwana and Ndumiso Nxumalo, made clear that its remarks referred to the office of the Adjudicator and not to a particular person in the office. This is just as well because of scathing observations about the office headed by Adjudicator Muvhango Lukhaimane. She’s left with bruises and little guidance on how they must be attended.

Almost as a sideline, the tribunal laid into the office for its presentation of the records that had been signed off by an unnamed senior assistant Adjudicator. Of the 2 228 pages, only about 10% were relevant to the application and all had been “dumped” at the tribunal to appear as a “shuffled pack of cards”.

So much for the past. For the future, the Adjudicator has bigger problems. First, there’s still a hole to be filled in the fund’s assets. Second, since the tribunal’s decision didn’t analyse the merits of the Adjudicator’s determination, what’s to be the correct process in reconsidering it?

The main object of the Adjudicator is to dispose of complaints lodged in terms of the PFA. Yet in the legislation the jurisdictional requirements for the disposal of complaints are “simply absent”.

The tribunal lacked the power to substitute the Adjudicator’s decision with its own, it found. Having looked at a plethora of case law and statutes – the Financial Sector Regulation Act, the Promotion of Administrative Justice Act and the Pension Funds Act – Harms seemed to throw up his hands: “How, in the light of this mix of provisions, the process may unfold hereafter is a mystery to us.”

It must therefore be a mystery to the Adjudicator too. Now in the hands of Lukhaimane is the unfolding of this mysterious process.

Appointed by the Amplats fund as its valuator in terms of the Pension Funds Act (PFA), Cohen had undertaken to conduct unit-price calculations on behalf of the fund (see box). It was alleged that a R40,5m loss to the fund had been caused by the breach of his duty to perform this function without negligence.

However, the tribunal stated, the failure to execute the mandate with the necessary diligence, skill and care – required of a reasonable professional – was not to be resolved by delict (civil claim to compensate for a loss). It had to be resolved by the principles of contract.

Cohen did not perform a duty under the PFA when committing the error, the tribunal continued: “The question arises whether the complaint of the fund against Mr Cohen fell within the jurisdiction of the Adjudicator, something which must be found within the four corners of the PFA.”

But does it? Not necessarily.

The tribunal held that the Adjudicator does not have any inherent jurisdiction. Although in respect of matters that fall within his (sic) jurisdiction, the Adjudicator has the power to make an order which any court of law may make. But this did not mean that the Adjudicator is a court of law.

Cohen . . . not yet off the hook

Harms . . . hard findings

The main object of the Adjudicator is to dispose of complaints lodged in terms of the PFA. Yet in the legislation the jurisdictional requirements for the disposal of complaints are “simply absent”.

Moreover, citing precedent, a “complaint” refers to prejudice suffered by a complainant as a result of the fund’s maladministration. Because Cohen was not administering the fund or performing any function prescribed in the PFA, or even the rules for an actuary, his role fell outside this definition.

Put differently, the Amplats fund’s complaint to the Adjudicator did not relate to the investment of funds or to the interpretation and application of the fund’s rules. Accordingly, said the tribunal, in the present instance the Adjudicator did not have jurisdiction to make a determination against Cohen. There was also a lack of due process.

Although the Adjudicator has a wide discretion in adopting a procedure considered appropriate, the procedure must be fair. In this matter the Adjudicator had decided the matter on paper “but was not able to have done so because the essential disputes fell beyond the capability of his expertise”.

The Adjudicator had also realised that “he did not have the expertise” to decide whether or not Cohen had been negligent. Not even a High Court would decide a damages claim on paper. It requires a full-blown trial hearing with legal representation.

Instead, without notice to any party, the Adjudicator had obtained the services of an ‘independent actuary’ for advice and opinion, and had based the determination on this advice. “To obtain evidence without due notice to the parties is irregular,” noted the tribunal.

And for fairness, Cohen’s side had to be heard. That it wasn’t heard by the Adjudicator made it unsurprising that, in his appeal to tribunal and without dispute, he was able to show incorrect assumptions in the conclusions of the ‘independent actuary’.

For example, in the calculation of loss, the actuarial report on which the Adjudicator relied had failed to take into account that part had been recovered by the fund. Another part had been caused by the fund’s failure to stop overpayments once the error had been detected.

Fundamentally emphasised by the tribunal was the “fatal flaws” in the proceedings before the Adjudicator. Because of them “we do not deem it our function to deal with the issue of liability any further”.

So back the matter goes to the Adjudicator. Best of luck to Lukhaimane.


The substance of the Amplats fund’s claim against Cohen was that he had erroneously used the same opening balances in the calculation of unit prices in a specific portfolio over four months to December 2012. The result was that the members’ fund credits were overstated, causing these members to be overpaid their benefits.

The error in the calculation had arisen because one cell in the particular spreadsheet was inadvertently hard-coded at the value on end-July 2012. It should correctly have referred back to the value from the previous month’s balance by means of a standard excel formula.

This value was then carried over from month to month until the error was discovered.

FINANCIAL SECTOR CODE: Editorials: Edition: July / September 2019

Compulsion on the way


In the name of transformation, it seems inevitable that

retirement funds will be whipped into line.

Please pause to consider whether it’s really necessary.

For an otherwise excellent Batseta winter conference, the start was frustrating. Its opening panel discussion, on transformation in the retirement-fund industry, was marked by a harangue about slowness and shoddiness in retirement funds’ compliance with the amended Financial Sector Code.

Horror of horrors that merely a handful of the top funds had reported to the Financial Sector Transformation Council on the FSC’s implementation. The message drawn by the panel – facilitated by a moralistic Andile Kumalo with a hardline Jan Mahlangu of Cosatu and an elegant Asief Mohamed of ABSIP amongst the participants — is that the funds are generally and unacceptably unenthusiastic about transformation.

A consequence of the poor report-back is almost certainly that the FSC, in keeping with Mahlangu’s argument, will soon become mandatory for retirement funds. In its first year of operation, for them the code was voluntary but subject to review thereafter (TT April-June).

Unrevealed is how mandatory compliance will be enforced. By fines on funds, and thus effectively on their members? By disbarment of trustees, and thus effectively exacerbating their scarcity? Unclear then is how mandatory compliance will make a difference.

More significant than the rounds of clichés were what wasn’t said: no definition of transformation; no clarity on the desired end-game; no presentation of facts and figures; no analysis of progress to date; no suggestions for improvement; no mention of member outcomes; no larger institutions to air contra views.

This is a great pity for the opportunity lost. Fairly new in its gazetting, the FSC deserved better. The majority of funds, implicitly the industry itself, were pummelled by sweeping platitudes.

Meanwhile, in the background is the Department of Trade & Industry’s amendments to the generic B-BBEE codes of good practice which in turn could presage a movement in the FSC’s goalposts. Procurement remains the heaviest weighting on the overall B-BBEE scorecard. Now its weighting is to increase. There’s also a refocus on skills development to include higher education.

As the FSC stands for retirement funds, preferential procurement gets more points than black participation on funds’ boards (made rather complex when half of the trustees can be elected by members) and executive management (which presumes an availability of qualified principal officers).

Reporting requirements are detailed and onerous in a good and necessary cause. However, what’s aspirational shouldn’t be confused with what’s practical.

Funds can burnish their credentials, for example, by heftier allocations to black-owned asset managers. The idea is to encourage the younger and smaller, since most of the established and larger are usually at a minimum of Level 2.

For a little illustration on transformation’s present state of play, contrast the hubbub at the conference with performance from the larger asset managers who’d remain contenders in retirement funds’ procurement stakes. Compliance with the FSC’s seven pillars – enterprise and supplier development, empowerment financing and the like – falls substantially on them or the financial-sector groups of which they form part.

The illustration can be made by analogy. Of SA’s 20 largest unit trusts, 10 out of 44 (23%) of portfolio managers are black and six out of the 44 (14%) are women. More significant, there’s a promising pipeline (see chart on page 10).

Thabo Khojane, chief executive of Investec Asset Management and recently appointed chairman of ASISA, points out that trustees typically support both big and boutique asset managers: “They aren’t mutually exclusive. But a fund can get a low score if the manager lacks the critical mass to apply such B-BBEE elements as training. Perhaps the smaller managers should not be scored on the same basis as the larger, and instead be allowed to apply for exemption until they’ve reached a size when they can choose to opt in.”

He notes that IAM annually recruits for training five to 10 young black professionals that it doesn’t need: “We recognise that we’d eventually have to let some of them go and are happy for our competitors to benefit from the training we’ve provided.”

Khojane . . . industry perspective

Pillay . . . risk management

Msibi . . . clients first

Big isn’t bad, argues Coronation chief executive Anton Pillay. Given the seven pillars for FSC measurement, he believes it critical to ask who is actually doing what work: “Different clients have different requirements. The first step is to look after portfolios in terms of risk management.”

The point is similarly emphasised by Stanlib chief executive Derrick Msibi: “We impact more people by caring for clients’ assets than any other aspect of transformation. When there are millions of beneficiaries in retirement funds, collective investment schemes and insurance policies, financial wellness depends much more on looking after them than on changing the industry’s ownership structures.”

And all this at a time when retirement funds are under exceptional pressures from diminished investment returns and retrenchment-driven member withdrawals in a persistently low-growth economy.

Also, bound by fiduciary duties (merely as a reminder) and regulatory layers (which come at a cost), trustees’ heads must spin. For the FSC to become mandatory on retirement funds will make the job of the trustee no easier. 

FIRST WORD: Editorials: Edition: July / September 2019

To be great again

SA democracy gets a second chance. It’s not up to Cyril on his own. Key role for private sector.

In the wave of post-elections relief, that President Cyril Ramaphosa has emerged triumphant, the predominant question is whether he can “deliver” on promises made. It’s the wrong question. Instead, the private sector should be preoccupied with asking how it can assist delivery through the intellectual and financial strength at its command.

Retirement funds, for one, have huge capacity with their trillions of rand under management. For far too long they’ve been frustrated by the lack of such ‘bankable’ infrastructure projects as renewable energy and water supplies. Advance them and any argument for prescribed assets evaporates. The unleashing of job creation must accompany the confidence, previously absent, that people’s savings won’t be squandered.

Ramaphosa has a tight window of opportunity, to prevent a return of investor scepticism and quell a regroup of party hacks, for confidence in his administration to be stimulated and belief in a trajectory for economic growth to be entrenched. The one is reliant upon the other, and neither can be effected from within government alone.

Under the Zuma regime, government and the private sector were in an abusive relationship of waste and worse. The advent of Ramaphosa, steeped in the legacy of Nelson Mandela, is marked by a love affair that anticipates proper consummation of food security – are presaged in the proposed Expropriation Bill (TT April-June).

Through-and-through a Mandela man

They’re a far cry for the expectations of populists, impervious to consequences, who’ll continue to test him in the run-up to next year’s meeting of the ANC’s general council. Such noise – as with interference in the independence of the Reserve Bank and non-interference in the structures of Eskom – are being prepared for short shrift.

Policy change requires attitudinal change. Here too the ground is prepared.

The commissions of inquiry into state capture and corruption, as well as the SA Revenue Service, have been accompanied by new appointments respectively to head the National Prosecuting Authority (with a specialist anti-corruption division established) as well as SARS. More than sufficient evidence has seemingly been produced for arrests quickly to follow.

The quicker the better for a change in attitude that overrides the constraints of party factionalism. From what’s been revealed to date, the genie is out of the bottle. From what’s been set up at the NPA and SARS, prosecutorial decisions aren’t for Ramaphosa to take.

Public perceptions are fundamental. Merely a handful of high-profile arrests, for a start, will demonstrate the seriousness of intent to attack societal cancers. The world needs to see, and the locals need to learn, that in SA the era of tolerance for stealing is over. Rhetorical pleas for a turnaround in morality are abetted by a big stick.

Actions by the NPA will necessarily find their way into the public domain, but this is not necessarily so with SARS. Bound by taxpayer confidentiality, its work is usually below the radar. However, tax evasion – such

Needed now is less a new dawn than a reinvigoration of the old, from the early days of democracy, when the towering influence of Mandela inspired the nation with a sense of morality and purpose, of service and vision, of overcoming racial polarisation and galvanising potential for achievement.

All were waylaid in the back-biting and self-seeking that followed. All can be restored, and must be, by a return to the values of Mandela. Ramaphosa is the only hope, not least to draw back into the public sector the calibre of talent which it then attracted; put differently, to uplift the competence while simultaneously to root out the Zuma minions and stymie their capacity for ambush.

Unless he succeeds, SA fails. The choice is binary, as much for government as its citizens, and not to be offered again anytime soon.

Rating agency Moody’s is spot-on with its warning that policy changes must be executed for the disaster of a sovereign-debt downgrade to be averted. But policy changes cannot happen on unilateral action. At the ANC’s end-2017 national conference, just in case Ramaphosa won the election, booby traps were set for him.

To date he has handled them with aplomb. Take land expropriation without compensation. His frequently-repeated assurances – adherence to the Constitution, prevention of land grabs, promotion as non-declaration of income illegally accrued — invites court appearances and criminal penalties. As in the manner that Al Capone was nailed, there’s a potent weapon for SARS to use in the public interest.

The clean-out of corruption by the state, prioritised by Ramaphosa, is a prerequisite for the build-up of confidence. At the same time comes the imperative for private-sector support. How?

Companies still cash-rich are itching for the confidence to deploy resources, with multiplier effects for economic expansion, on the back of business-friendly policy signals. More than this, formal mechanisms are in place.

Prime amongst them is the Financial Sector Code. It commits the supposed institutional moneybags — banks, insurers, asset managers and the rest — to social expenditures on a vast scale. Whereas previously the sector’s contributions might have been viewed as a compliance obligation, to temper government, it can be morphed by fresh circumstances into a platform enthusiastically to partner with government.

Grounded in B-BBEE considerations, the code’s application goes beyond them by escalating the number of participants in the mainstream economy: for instance, through improved access to financial services; acceleration of skills development, and leg-ups for smaller businesses. These give meaning to the “inclusion” objective of a “transformed” landscape.

It’s further underpinned by provisions for the financial education of retirement funds’ members and trustees. They embrace not only routines essential for governance but extends, by an awareness of rights, to the building of a stakeholder democracy.

Resistance to Ramaphosa will come from cadres who’re understandably averse to the prospects of refunding ill-gotten gains, paying tax and going to jail. In the bigger scheme of things, they’re blots methodically to be blotted out.

His battle is less against them than against time, specifically time to get the economy moving. It’s doable, given infusions of positivity, the beleaguered Eskom and a troubled world outlook notwithstanding.

Allan Greenblo,

Editorial Director.