After the Bell: Cyril Ramaphosa — lost at sea and losing the support of business

My sense is that business — if there is indeed such an entity — was overjoyed by the promise of Cyril Ramaphosa securing the presidency in 2018. But I get the sense now that he is losing the support of business with dramatic speed.

There is, of course, no scientific way to measure this, but there have been an astounding number of results presentations recently in which the CEOs slipped out of their normal, studiously apolitical mode to express their frustrations.

On Monday, chicken producer Astral Foods laid it down pretty thick. In its outlook statement, the company said the outlook was really bleak. I mean really, really, really bleak. And not just because of the interminable and intensifying blackouts. You get the feeling now is the time to take out your tin hat.

SA is likely to experience political instability, further policy uncertainty, deteriorating infrastructure, municipal service delivery failure and, of course, power cuts, the statement said. SA could expect more social unrest, increasing hunger and more poverty. The government was “asleep at the wheel” and was “placing a massive cost burden on businesses and the consumer alike”. Right.

Of course, the complaining voice of an omniscient narrator also explained the terrible year the company experienced, with profits down by 89% and its key poultry division swinging into a loss of R283-million, after making a R466-million profit last year. It was somewhat saved by its feed division.

Hendrik du Toit, the CEO of SA’s largest listed asset manager, and a stalwart supporter of ANC governments in the past, said in a Moneyweb interview following Ninety One’s results announcement last week: “I just cry for the country.” But even he couldn’t resist some barbs. He lamented a lack of urgency in solving problems, including the throbbing load shedding headache.

Pick n Pay chair Gareth Ackerman spoke along the same lines during the retailer’s results announcements a week or two ago, slamming the government for its “inaction” in the face of SA’s structural economic problems, warning of an “existential threat” to the food industry, as well as social unrest stemming from food shortages.

And so it has been at many other results presentations. News service Bloomberg was also uncharacteristically harsh: a story about Ramaphosa and the business sector was headlined: “Ramaphosa Abandoned by Key Support Base Over South Africa Policy Missteps.”

The story included a sobering statistic: foreign investors have sold a net $10.5-billion of South African government bonds this year, adding to $15.9-billion of net sales last year. Non-residents held just 26% of government bonds at the end of April, down from a high of 43% in March 2018, the month after Ramaphosa came to office, the story said, quoting National Treasury data.

For his own part, Ramaphosa continues to put a positive spin on things; he seems completely and disturbingly unphased. The same Bloomberg story quoted him as saying in an interview: “There is continuing confidence and trust between government, business, and labour. We are always consulting each other and we all know that the challenges this country faces cannot be solved by each acting alone.” Really?

It’s impossible not to notice that Ramaphosa’s contrivance of pouring honey into people’s ears is wearing thin. What a contrast to 2018, when business was falling over itself to support Ramaphosa, partly just out of relief that the curse of his predecessor had been vanquished and partly because I think it really believed that partnership was possible.

Part of the problem is the huge cultural difference between business and politics: decisiveness is forged into businesspeople with a blowtorch, and often decisiveness in politics can be very dangerous. Yet, even by the standards of the extreme vacillation of career politicians, Ramaphosa is proving particularly dithery. Sometimes you can’t take both sides of the issue, sometimes you have to make a call.

In my mind, there is a question about whether this is the result of Ramaphosa’s tactical character, or whether it’s a consequence of being in charge of an organisation that is just lost at sea. The easy answer is that it’s a bit of both.

For all the businesspeople out there pulling their hair out; to me, there is one consolation in all the dark news. The previous conventional wisdom was that the ANC was poorly led. That was, of course, partly true. But in fact, the truth has always been that the ANC’s policies are generally just wrong, and even when they are right, they are poorly implemented. The ANC, with its ageing leaders, remains a throwback to a time when socialism was considered a realistic economic policy and social strategy. 

But overtaxing, overspending and just generally being kinda nutty (hello Ukraine) will eventually catch up with you. It just does. And here is the good news: the realisation that this is the case is normally a precursor to those policies being changed. Hopefully. Please. DM