Statistics and Lies

The Minister of Labour, Mildred Oliphant, has once again complained that companies are not adhering to the wishes of Government in the employment of Blacks and women in senior positions. She quoted a series of statistics, to prove that she really has no understanding of the situation, and that the expectations of businesspeople are being realized.

“According to Statistics SA’s 2016 third quarter figures, whites account for 9.5% of the economically active population (EAP) and black Africans 78%. The commission’s 2016-17 report says whites fill 68.5% of top management jobs, six times their EAP. Africans account for 14.4%. Males fill 78% of top management jobs. Whites account for 58.1% of senior managers compared to 22.1% of Africans. At the lower levels, Africans fare better, but still don’t match their EAP figures, accounting for 60.2% of skilled technical workers and 76.1% of semi-skilled workers.

“The continued high rate at which the white group appears to be afforded preferential treatment for recruitment, promotion and training opportunities at [top management] level is of concern. This trend renders it highly unlikely to achieve equitable representation at this level in the near future,” concluded the report [by the Commission for Employment Equity]. The situation is similar at senior management level.”

Frightening figures, when viewed from the point of view of the Government, figures which demonstrate the same lack of effectiveness as the Government under the ANC has shown in virtually every other sphere of the economy in which it has been active. However, when viewed rationally, the figures are both understandable and encouraging.

Let us look at some of the details, and really understand them.

Whites fill 68.5% of top management jobs, six times their EAP. Africans account for 14.4%, while Whites account for 9.5% of the economically active population (EAP) and Black Africans 78%.

Apart from the factually incorrect description of Blacks as ‘black Africans (which ignores the fact that numerous Whites are descended from families that have been in South Africa as long as most of the Black families), one must understand that a large proportion of the economically active Black population is engaged in work which has no potential to develop their education, knowledge and skills to the level where they can become effective top management. The statistics of that proportion are not presently available to the writer, but it is a safe bet to assume that, of the 78%, at least 50% are not qualified in any way and have little prospect of becoming qualified for a top management job, and another 20% of the remaining 38% are not yet old enough to have gained the experience required. Yes, top management requires many years of experience. If the Blacks who are educationally-qualified for the top management jobs had started their climb up the ladder in 1994 (assuming an adequate education), they would have gained 23 years of experience. How many of the top managers of large companies are aged less than 44 years? Again the statistics are not available, but the answer is certainly less than a handful. Why 44 years? Assume that an aspirant for top management completes Matric at 18, then a three-year degree, that person started work at age 21. Add the 23 years since 1994. He or she is now aged 44. Most of the Blacks who will become top managers of large companies are still working their way up the ladder, after gaining a good education and years of experience in many of the activities that are essential knowledge for the top job. In an interview on SABC this morning, the Minister of Social Security inadvertently confirmed this fact, when she stated that SASSA required at least five years to establish an in-house ability to pay social grants, after having worked on the problem since 2014 – a total of 8 years to do a project that a competent European or American company would certainly complete within 2 years (after all, CPS was able to develop the ability within less than a year!). She explained that the organization of SASSA, which was set up to do only the payment of social grants, consisted of low-level management. That statement is one of the few believable statements by the Minister, who has become known for obfuscation, circumlocution and even the use of Russian, in answering embarrassing questions. The simple fact, known to all of the companies burdened by the law requiring them to employ a certain ratio of ‘previously disadvantaged persons’. Is that there are simply far too few competent Black persons with the education, qualifications, skills and experience required to perform competently in a normal economy, never mind the minefield that the South African economy has become under ANC rule.

The situation on the ground is that a company’s prime requirement is to earn a profit for the shareholders. Once that is being done, the company has the freedom to comply with all the other nice-to-have objectives, such as Black Economic Empowerment. To do that, every top manager must perform at the peak level of performance expected from him or her. Where the profit flow is good, there is enough surplus cash to do the things that are required to meet the Government’s unrealistic expectation (that every Black is born with all the skills and experience to perform excellently – they are not, nor are Whites, Indians, Coloureds or Chinese), with a person being appointed to do a job that he or she is not qualified or experienced to do, supplementing his or her efforts with a skilled (probably White or Indian) who will filter out the gross mistakes deficiencies and add some on-the-job training in the process. That, of course, introduces managerial friction and inefficiency, and adds a considerable burden of cost, all of which weaken the market position of the company and detract from the attractiveness of the country as an investment destination. If you doubt this, ask why so many ‘proudly South African’ companies have largely withdrawn from the country (e.g. Anglo American, S A Breweries, Gencor) and others are doing whatever they can to minimize their exposure to South Africa. Ask why the economy is in a decline, where, previously, it was regarded as the ‘engine of Africa. Ask why the creditworthiness of the country has declined to the point where two of three Ratings Agencies have rated the country as ‘junk’. Ask why every Government-controlled business entity is in a state of collapse. Why cannot SAA make a profit, when the non-Government airlines do, why Eskom requires an ever-increasing tariff for the supply of the energy which, in the past, has been a major driver of economic growth, why the SABC requires additional funding every year, why SANRAL is rapidly approaching a fiscal cliff, even after a questionable accounting revaluations of its assets in order to maintain balance sheet solvency, could why PetroSA manage to deprive the country of its strategic fuel reserve? The root cause in every case is unqualified management. The compounding cause, corruption, is a direct result of the lack of moral honesty that is a prime element of a competent top manager, a quality that is built only by years of exposure to quality managers, absorbing their beliefs and morality.

“At the lower levels, Africans fare better, but still don’t match their EAP figures, accounting for 60.2% of skilled technical workers and 76.1% of semi-skilled workers,” the report continues. That again is no surprise. Although ‘Africans’ (correctly defined) occupy all but a tiny fraction of such positions, Blacks are severely disadvantaged in their capacity to occupy skilled or semi-skilled positions simply because the standard of education they receive is at an abysmally low level. The Department of Education systematically attempts to hide the real facts of this, by lowering the pass mark so that more ‘learners’ gain their piece of paper, but the truth is that an education at a level required to meet the minimum standards of most sophisticated employers is not available from the State schools. If there is any blame to be apportioned for this situation, it lies squarely at the feet of the ANC, which disrupted a proven skills-building system and introduced a system that had been proven elsewhere in the world to be defective. Once again, the ANC refuses to accept the advice of people who really know the truth, preferring to accept their ‘gut feel’ and the universally-disproven communist doctrine that they use as a master plan.

The figures issued, if correctly understood, are encouraging, in that they show that the Black citizens are working their way up the system, as any intelligent observer would expect. If we disabuse ourselves of the racist rhetoric spewed by the Government, it is clear that employers at all levels of the economy, would be delighted to find a qualified employee, whether at top management, skilled or semi-skilled, and would appoint such a person to an appropriate position. They would be pleased to provide the training, education and exposure that would maximize the value of such a person to the company. Every employer needs good people to sustain their growth into the future. Equally, every employer would be unconcerned that the best candidate for the job is Black or White, or any other race. Only the Government (and the few other Parties espousing similarly lunatic racial criteria, rather than promoting the economic growth that will create the situation where every person will have the job they want) would wish to push an unrealistic policy to the extent that the country’s already fragile economy will collapse.

The best thing that the ANC could do would be to expunge any reference to race from their lexicon, and that would be followed by getting out of the way of the hardworking people of all races who are working to make the country of Nelson Mandela succeed, for all its citizens.

Some advice for Ramaphosa

Cyril Ramaphosa, an undeclared contender for the position of President of the ANC and so, ultimately of South Africa (if the ANC can hold onto its voter base in the face of its abjectly poor management of the economy) made the first really strong (almost) statement of his political career last night, declaring to an assembly of presumably dyed-in-the-wool Black ANC supporters that the policy of radical economic transformation is ‘non-negotiable’.

This was not the brightest thing to do at this critical time in the country’s economic history. The new Minister of Finance is in New York, attempting to convince the world’s investors, already very leery of the economic policies of the ANC, which have placed the country on a continued economic slide towards the present junk status, will not change, that it will continue on its path of ‘fiscal conservatism’. The fact that this path, together with several other elements of the ANC policy, are the cause of the current junk status, appears to have escaped his attention, and the inflammatory electioneering speech of Ramaphosa will certainly go a long way to convincing the investing public that the ANC will continue to be blind to the failings of its policies.

Junk did not happen overnight. It was the result of a long series of bad decisions, one building on the other, since the ANC came to power on the back of a voter base which is either economically illiterate or blindly trusting in the qualities and moral integrity of one man. The country has been sliding down this increasingly-steep slippery slope for the last twenty-three years, and a continuation of the political lunacy is guaranteed to bring about a continuation of the economic train smash, until, finally, the Government will be forced to accede to the harsh demands of the IMF when it begs for rescue. There are only two ways to avoid this fate: either a less-corrupt leader will take control of the ANC and change the country’s economic direction, or another Party will do the same. The only question is whether the change will come before the IMF takes control, or after.

What Ramaphosa fails to recognize is that the country simply does not have sufficient well-experienced and qualified Black managers to rescue the country. Of all people, Ramaphosa should know that a skilled manager is not born: he or she is the result of a good educational foundation, with the addition of years of on-the-job training and a wide exposure to the advice of people who have seen it all before. South Africa could have been approaching that stage now, if only the ANC had not decided that a certificate that the bearer has been educated is less important than the content of that education. The educational system has demonstrated convincingly that it is not capable of producing the managers of the future that the country needs, and no number of examples of exceptional Black graduates will change that. There are exceptional Blacks, as there are exceptional Whites, Indians, Coloureds and Chinese, but that is not proof that the system produced them – they are exceptions. The country cannot grow on exceptions. It needs an educational system that consistently produces school and university graduates who are amongst the best in the world. South Africans are capable of that, as is shown by the Model C schools that Nkosazana Dlamini Zuma so disparages, but the general system does not harness that talent. That was proven convincingly this week, when the Law Society warned the University of the Witwatersrand that it will lose approval for its Ll B school unless it tightens its law educational standards. That comes only a few years after the Law Society reported that a significant proportion of new law graduates were incapable of using language efficiently. It is a frightening state of affairs when a formerly prestigious law school, which, over the decades, has consistently represented the pinnacle of university education in South Africa, and the graduates of which have, until the past two decades, been held in high regard by most of the world’s academia as well as big business, has to be warned that its education is sub-standard. Unfortunately, in the international Management Consultancy of which the author is part, a recent degree from a South African university is treated as an indicator of below-par capabilities. Once again, the ANC has shown its belief that tens of thousands of certificate bearers is of greater value to the country than a smaller number of graduates of excellent quality.

The quality of management of the State Owned Entities, such as Eskom, SAA, Sanral, Denel, SASSA and SABC, as well as of most ANC-controlled State Departments is an unmistakable testimony to the extremely poor standard of the Black management available in the country. The South African Police Services seems incapable of producing a Commissioner who is able to hold the top job for more than a year! Apart from the rampant corruption (another manifestation of poor management), it is clear that the policy of pushing an ANC cadre into the top job years before he has the skills, the integrity and the personal qualities to perform adequately is a virtual guarantee of failure, and no amount of Hlaudi-speak will be enough to convince the world that the financial woes of the organization are a figment of the Opposition’s fevered imagination. SABC requires another R3 billion, although the former CEO, now out of the job for only a few months claims it had a cash surplus of R800 million, and SAA requires another R4 billion only a month after the last R5 billion was injected to save it from bankruptcy – who has ever heard of a State-owned airline failing to publish its annual accounts for fifteen months after the statutorily-required date, in order to save it from insolvency! The incompetence and corruption (another manifestation of managerial incompetence) of Eskom has resulted in a massive slide in the industrial and mining output of the country, causing it to miss out on two world booms. The reliable, affordable supply of electricity is universally recognized as a promoter of economic activity, and Eskom has been singularly negative in its role in that regard, while the ANC and its leaders have benefitted enormously from the endemic corruption on the corporation.

The management talent is available in South Africa, amongst the thousands of sidelined White managers who would love to be in a position to help their Black counterparts, and tens of thousands of South Africans abroad would be delighted to return to add their skills and efforts to the drive. Believe it or not, Mr. Ramaphosa, Whites want the country to succeed as much as Blacks do! They all understand that the future of the country lies in the hands of all its citizens, and the amount of goodwill on the ground, amongst all races, is considerably greater than the ANC wants to believe. The average citizen wants the Rainbow Nation of Nelson Mandela to succeed, and he or she will do whatever it takes to make that happen, if only the Government will step aside and allow them to do that.

The real problem of the ANC and its hangers-on is that they believe that the size of the economic pie is fixed, and that the only way that the Blacks can get more is to ensure that the Whites get less. That may be true in the world of the ANC, as is demonstrated by the fact that the economic pie has been shrinking consistently since they have been in power. Numerous non-ANC initiatives to grow it have failed because the ANC policies have ensured that the preconditions for growth – good education, good experienced management, good control of corruption – have been removed, rather than being expanded. An attempt in the 1990s to bring about 350 000 sustainable jobs failed because the Premier of KwaZulu Natal demanded from the German sponsor of the project a bribe of 15% of the cost of the project, promising that payment would ensure the co-operation of the Premier and the MEC for Economic Development! The economic pie is, in fact, not fixed, as is demonstrated by the fact that several economies, around the world as well as around Africa, have been growing at a pace greater than 5% p.a., even in times of world economic slowdown (with the South African GDP growth rate now projected at under 1% in 2017/8, and likely to be less). Even a smaller share of a bigger pie will translate into a better standard of living for tens of millions of South Africans, Black and White, with a brighter future for the Blacks making their way up the educational and experience ladder. Black Empowerment will happen inevitably in a growing economy, but cannot in a declining economy. No amount of entrepreneurial training in school will substitute for the quality education that is required to allow the schoolchildren to become citizens of the world.

Mr. Ramaphosa, as an intelligent politician, it is necessary for you to recognize the facts of the situation. A continuation of the mantra of Radical Economic Transformation cannot achieve anything of value for your Black voter base. A continuation of putting down the Whites who managed the growth of South Africa from a small colony at the end of Africa to a country that was important to the world, in the face of abjectly poor political management over many decades, will only deprive the country of a significant base of skills, knowledge and entrepreneurial capability, to the cost of all.

Mr. Ramaphosa, you are the Deputy President of all South Africans, Black, White, Coloured, Indian, Chinese, not only of the ANC portion of the country. The continuation of the present Zuma-ANC lunacy will serve only to drive away an increasing number of the people who supported the delivery of a democracy in this country on the basis of the moral character of a great man, Nelson Mandela, as well as the capital that is so essential to economic growth.

Now you have the opportunity to stand up, to speak truth to your political boss and to your nation, and prove to them that you have what it takes to be the next President.

The ANC Theory of Economic Development

During a whitewashing session for the Minister of Social Development, a major question that has puzzled many was answered.

As an aside, during the session on SABC TV, Dlamini stated that ‘the Constitutional Court Judges are people; they also read newspapers and watch television, so they gain incorrect understandings of what has happened regarding the payment of social grants.” That extreme insult to the Judges of the Constitutional Court, who each have more intelligence than the entire Cabinet of the President, and more integrity in their fingernails than the entire leadership of the ANC, was accepted unquestioningly by the sycophantic Peter Ndoro, who enthusiastically nodded his agreement of every word uttered by the criminally-convicted and Constitutionally-sanctioned Minister.

To return to the new understanding.

One of the speakers, justifying the policy of wealth redistribution, explained that poor people don’t have much to spend. By redistributing the wealth of wealthy people, who would otherwise simply spend it on the imported goods they favour, the poor people are given the means to spend on goods they need, so creating economic activity.

That remarkable explanation ignores a number of important things. The first is that wealthy people use their wealth, at least a considerable portion of it, to create the economic activity the country needs, the mines, factories and other businesses, as well as providing the finance needed for research and development, of goods and ideas, that would otherwise have to be sourced from abroad. Without that wealth, there would be no jobs, and so no way for the poor to earn the income to spend on ‘what they need’. Experience worldwide (yes, my own experience – I have earned a living for many years by generating new businesses for ex-employees of my management consultancy clients, who were displaced as a result of making the client’s businesses more efficient. Every one of those new businesses remained in businesses for at least three years, and many of them have become management consultancy clients.) has shown me that the average investment required for the creating of new jobs is around US$250 000, in addition to the requirement that the employees in those new jobs need a good education (an important disqualifier for most South Africans, as a result of the ANC-inspired sausage-factory education system producing an education standard ranking 183 of 185 countries) and years of relevant on-the-job experience, under the tutelage of an experienced manager (also precluded under the BEE system, which views skin colour as a suitable replacement for experience, resulting in a downgrading of the capability of South African businesses). This must not be seen as a criticism of Black South Africans. In my experience, a black South African has the personal qualities and mental capabilities to be the equal of a White South African, or of the citizens of any other country. What they lack is a decent education and suitable experience. This would be assisted by them having enjoyed exposure to a culture that values reading and understanding, questioning and critical discussion – as the President has often demonstrated, a background as a herd boy provides a very poor foundation for understanding how the world works. That background can be supplemented by reading and discussion, and by relevant (not political brainwashing) education that opens the world to the mind, and the mind to the world.

The Minister repeated the same public relations line that is taken by so many others who do not wish to expose their failings, saying that there are many accountants and lawyers who cannot find work, without going to the obvious next step of asking why. They cannot find work because their qualifications are inferior – a degreed South African of any colour who seeks work in the UK, the US or Europe is now not really sought after, unless their work experience demonstrates clearly that their work ethic puts them on a higher plane of capability, in contrast to those with a pre-ANC education, who could take virtually any relevant position in those countries without effort. Don’t forget that the Law Society published a report some years ago that the average Ll B graduate now is incapable of using language effectively! A client who employed a newly-graduated M Sc in chemistry (White) found that he had no knowledge or understanding of some basic chemical reactions! A university lecturer in engineering resigned because the instruction that he ensured that a certain proportion of Black students passed his course, in order to fulfill quota requirements, was not acceptable to him. He commented “Imagine using a bridge designed by a civil engineer who was required to achieve a 40% pass in mathematics!”

South Africans are capable and willing; they need a government that understands some of the basic rules of economics, and that demands that they perform to the highest standards. They need teachers who know their subjects and are willing to put in the effort and the time to ensure that their pupils achieve what they are capable of doing. And, most of all, they need to understand that by working to a belief that all people are equal and that they must all be entitled to share in what they don’t produce is a certain recipe for mediocrity.

Believing your own Advertising

The Minister of Basic Education spent a lot of time and effort in promoting what her Department has done in the past year, leading any seasoned ANC watcher to understand that the real meat of her presentation still to come, the percentage of learners to pass the Matric examination, was almost certain to be worse than the worst of their expectations.  The excuses, that the number of ‘learners’ writing the examination was greater than it has ever been, and the fevered efforts to ‘save’ those who failed in a single grade for the third time, were no more than window-dressing to draw attention away from the appallingly bad results her Department has achieved, results that will scar many youngsters for the rest of their lives, and do much to damage what little of the South African economy that remains in operation after two decades of ANC bungling.  The stark fact is that the Department of Basic Education, despite having a huge budget at its disposal, has managed to allow, or possibly force, almost 30% of people who have given up as much as a quarter of their lives in an attempt to gain an education that will enable them to become useful, productive members of society.  The significantly better results obtained in the Western Cape, 84,7% passing against a national average of 70,7%, proves that the young people of the nation are capable of producing significantly better than is now being achieved.  The only difference between that Province and the rest of the country that means anything is that it is under the competent management of the DA, rather than the cadre-dominated incompetence of the rest of the country.  When the national average of the private schools is brought into the picture, at better than 90% passing, the true state of the inability of the ANC to provide the country with anything approaching an acceptable level of education is highlighted.  One can only wonder when the ANC voters, all of whom are adversely affected by this incompetence, will start to understand that loyalty to the myth that the ANC has built about itself is destructive, almost to the point of being suicidal.

Of course, all of this ignores the fact that the Matric examination passed by these ‘learners’ is at a much lower level than they could expect in most of the world.  What used to be accepted at face value by the Western world as an indicator of a degree of competence is now treated with suspicion.  Even the Bachelor degrees (those gained after study at a University for at least several years, not the Matric certificate now promoted by the Minister as a Bachelor degree) are treated with suspicion abroad, to the extent that they carry very little credibility in an employment situation.  And with good reason.  The Law Society, not many years ago, reported that Ll B graduates were no longer able to use language effectively!  The ‘increased’ pass rate boasted of by the Minister in years past has been bought at the cost of imposing a lower standard in the examinations.  This has hit South African business hard, and probably accounts for the fact that so many of those with new degrees are not employed – they are probably not capable of doing the work that a Matriculant would easily handle in the years before the ANC stamped its personality on the education system.  The ANC has worked hard to compensate for this inadequacy by imposing the BBEEE regulations, to ensure that a proportion of the ‘previously disadvantaged’ are given employment, no matter how limited their capability is to do a decent job.

The incompetence of the ANC to manage the economy of a once-sophisticated country has been demonstrated repeatedly, in the Eskom debacle, which has set back South African development by years, in the inability (unwillingness?) of the Police to stem the rising tide of crime that has threatened to drown the country, in the inability and demonstrated lack of desire of Parliament to hold the State President to the standards of conduct required by the Constitution, absolving him of any liability in the expenditure of R245 000 000 of State funds on his private home (remember the fatuous statement by Zuma that he was not aware that so much money was being spent on his private property?), in the lack of service by the Post Office (the Bryanston Post Office was closed three months ago, without any notification to renters of Post Office boxes, apart from a single notice in the window, put up a few days ago, saying that the persons expecting post could collect it at the new location, which was expected to ‘open soon’, and giving telephone numbers, neither of which are answered), in the Department of Trade and Industry’s inability, after many months warning, to respond to the American Government’s demand for the dropping of an import duty on chicken, failing which South Africa will be excluded from the benefits of AGOA (the deadline given by President Obama was 30 December 2015, but, of course, we saw fit not to respond in time – the ANC Government appears to be totally incapable of acting on time, even preemptively!), with the probable result that many agricultural and other exports to the USA will become subject to import duties in that country, at a time when South Africa needs every dollar of export sales it can achieve, in the Department of Homeland Affairs’ disastrous insistence on a new visa regime, requiring every applicant for a visa to attend personally at the Consulate (there are two in the entire area of China!), resulting in a loss of foreign tourism to the country at a critical time for the economy, in the arrogant and undemocratic, if not unconstitutional behavior of President Zuma in replacing an internationally-acceptable Minister of Finance with an unknown backbencher (unknown except for his disastrous tenure as Mayor, ending in his house being burnt down by desperate citizens – perhaps not a bad example of how to deal with his boss!), and then backtracking a few days later by reappointing Pravin Gordhan, who was himself sacked a couple of years earlier, presumably for failing to rubber-stamp Zuma’s corruption.  The examples are legion.  It is hard to think of one Government Department that has not committed some act of flagrant stupidity or incompetence, and if one adds corruption on a large scale to the list of qualities not desired in a Government Department or body, the only place to look for a righteous man is in the Western Cape.

Listening to the lengthy explanation of the Minister of Basic Education about the excuses for her Department’s failures, excuses claimed as achievements, one was struck by the fact that she dwelt so extensively on the care and attention given to the ‘progressed learners’, those who were simply advanced to the next grade up after failing for two successive years.  She was proud to state that some 6 000 of those ‘progressed learners’ had passed Matric in 2015, and she promised increased care and attention to them.  It is hard to understand how 6 000 children (probably young adults by then, who have spent at least 15 years clogging up the educational system) can merit so much attention when the remaining three-quarters of a million matriculants, representing the apex of a pyramid of at least ten million(!) struggling pupils in the school system, are struggling under the grossly ineffective educational system!  Surely the place to start any corrective action is where the bulk of the problems lie? 

That seems to be typical of the ANC policies – find a group that commands a lot of publicity at grass-roots level, and lavish money on it.  The publicity, hopefully, will last long enough to carry the Government over to the next crisis, such as the Marikana shootings, which have now resulted in the construction of R110 million of houses.  Fortunately, the more outspoken of those subject to this sort of publicity-directed action are starting to speak out, questioning the basis on which those few chosen to receive such largesse at the expense of the cash-strapped State have been selected.  The answer is probably that they offer Zuma and his cohorts the best photo opportunities!  One would be forgiven for believing that the criteria for action by the ANC cover first the question of which projects can most easily be skimmed for corrupt purposes, then which will be the best to secure the ANC an election victory (as confirmed by the Deputy State President, Cyril Ramaphosa, when he stated that the most important thing for the ANC is to secure an election victory!)  Any other consideration, such as the good of the country, or the creation of an economic structure in which job-creating investors will feel at home, are of secondary importance.

These chickens will come home to roost, and the signs are increasingly strong that the roosting will take place much sooner than the ANC would wish.  Until then, the flight of Capital, the loss of brainpower and experience, the deterrence of investment, the loss of foreign markets, will all continue, at an increasing pace.