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JEREMY MAGGS: Hello everybody, and welcome to FixSA here on Moneyweb. I’m Jeremy Maggs. Every fortnight we ask our guests how we can make things a little better in this country. How do we improve matters? How in the shortest space of time can we become a competitive and successful nation once again?
My special guest this week is Dr Miriam Altman, a South African economist. She’s a social activist and also a strategist. I’m not going to go into her full biography but, very briefly, she has served as an executive director at the Human Sciences Research Council – chief of strategy and regulatory affairs, if memory serves – and at Telkom and also as a commissioner on the National Planning Commission in the Office of the Presidency. You’ll know that’s the body tasked with guiding long-term planning for South Africa.
Dr Altman is also a professor of Fourth Industrial Revolution [4IR] practice in the School of Economics at the University of Johannesburg, and an adjunct professor at the University of Cape Town. And that’s enough CV as far as I’m concerned.
Miriam, such a pleasure to talk to you. A very warm welcome. I’m going to ask you to take your pick as we start this conversation. What’s the biggest problem in South Africa right now, in your opinion, which needs fixing?
MIRIAM ALTMAN: You might be surprised by what I say, but the absolutely most important thing for us is that we should be investing in human capability. That probably sounds like a tall order and maybe abstract, but it is I think the most important ingredient to success in any high-growth developing country, and it’s something that we underplay so significantly in South Africa. I think it’s the reason we don’t make progress.
JEREMY MAGGS: So when you’re talking about investing in that capability, are you talking about a bottom-up approach, where we further enhance the skills of people that are here, or do we need to start importing those skills that we lack?
MIRIAM ALTMAN: Well, no doubt one of the most important ways of growing, expanding and developing is to have easy movement of people between countries. There’s no doubt about that. So we should definitely be enabling that kind of skilled immigration that we often talk about. But we’ve got plenty of capability in the country also.
So let me go to the narrowest kind of example that I can give. The capability in state-owned enterprises [SOEs] – which I know you want to talk about a bit in this call, the quality of the boards and experience, the quality of executive management, their stability – is absolutely key to everything else functioning.
When I went to Telkom, you’re right, I was chief of strategy at Telkom for the turnaround. I was brought in by Sipho Maseko.
I was his first hire in the company, and knew him quite well. I went to Telkom knowing that it was failing. It was in a failing situation. I joined in 2013 with Sipho.
For me, what I’ve learned is that the most important thing in anything is not just being part of something, of exciting change; it’s the quality of the leadership.
And what had happened at Telkom was that in 2012, I don’t know why, but the board suddenly was appointed, and it was a very high-quality board. There was Santie Botha, and it was a very strong board. And then Sipho I knew from Vodacom as a very strong character and super-smart. For me, that was enough to tell me that there was a chance of succeeding, and that’s what happened – that we were really able to drive the change.
It doesn’t matter what the detail is, but you’ve got the characters who are eating, sleeping, dreaming, and have the capability to do it. We just don’t take that seriously enough at the other end of the spectrum, and I’ll stop there.
It’s simply this issue – can kids read? That’s the bigger ticket. The broader set of issues is if there’s one thing that, say, the next president needs to pin his presidency on, the way that General Park [Chung Hee] did in the 1950s in Korea, is that every child should be able to read for meaning by age 10, or by Grade 2.
That would be an absolute game-changer. You could rally the whole nation around it. Every single person can be involved in something like that.
JEREMY MAGGS: I want to circle back to SOEs Miriam, and I’m glad that you’ve raised that. I absolutely understand the notion of quality leadership. I want to push you on that in just a moment. But with so many SOEs there is the sense of despondency and inertia that prevails right across the value chain within an organisation. How do you start overcoming that to then turn this big ship around?
MIRIAM ALTMAN: It’s an interesting thing, that. First, you do need the quality of leadership. You need people who are in place for a long time, and you need to be able to drive performance.
Now, in some of the entities like Eskom and Transnet you’re starting to see change in the quality of management. The question is how performance is driven.
If you take the Telkom example, it was very strange when I joined, certainly.
You could see that one of the problems in the company, even though it wasn’t in a competitive market, was that people still had this idea like they were in a monopoly.
I used to run war games in the company and so on, to get people to understand that this is actually a competitive environment. It’s a very, very interesting thing.
Now, the SOEs and then government departments also are not in a competitive market – and that becomes a huge problem.
So when Eskom, for example, sets up a transmission company, it’ll be something like what we had to do at Telkom, where we broke up our wholesale and retail businesses. I don’t know if that makes sense to your listeners.
They used to fuel each other and protect each other, and we said to each of them: ‘You [must] become profit centres and you have to be profitable on your own, however you achieve that. You’re not now protecting other parts of the business. The idea was to light a fire under people’s bums and open up the opportunity.
Now in Eskom, once there is more competitive procurement of generation of power, that will start to change. You’re not protecting Eskom anymore – that’s not what your goal is – then you’re going to see a very different kind of behaviour, I think.
They really need to get moving, which they are, with that transmission company.
Here comes the transmission IPP office
Then we need to start seeing, as [Electricity] Minister [Kgosientsho] Ramokgopa to his credit has been doing, is that transmission infrastructure has been a huge issue for many years.
And, as you know, in Bid Window 6 [of the Renewable Independent Power Producer Programme] – and if I need to explain anything I’m happy to do that – in renewables procurement they didn’t take on any of the wind projects, which was unbelievable. They said it was because there wasn’t any transmission infrastructure, something just beyond imagination.
So the point is that he’s pushing extremely hard on that now, because Eskom has been pushing on it for years, I’ve got to tell you. Now he’s pushing on that.
And then what he’s been doing is he’s been trying to look at innovation in public/private cooperation around transmission finance. He had an event last year that I was at. It was a closed event where he had Goldman Sachs and a variety of other financial institutions who were presenting ideas on how transmission infrastructure could be financed; he seems to be pushing that quite hard.
JEREMY MAGGS: Miriam, you’ve raised two interesting points. One is lighting the fire under the bum, which might just give me a headline for this conversation, and the second is how to keep people in place for a longer period of time.
Let’s start with the ‘fire’ quotient first. What do you mean by that? Is it no carrot and all stick, or what’s the strategic approach?
MIRIAM ALTMAN: When we went into Telkom this was a specific choice, and I’m giving this as an example.
There’s a tendency – not just in the public sector but in the private sector as well – that you go into a failing company and you think you’re smarter than everybody. You go in with a big heavy stick and you treat people like they’re stupid and don’t know anything. But actually they know everything.
So when a company’s failing – the discussion I had with Sipho when I joined – you have to assume that the problem is the top leadership, and not ‘everybody’.
If everybody’s failing and the whole company’s failing, it’s probably not the staff. It’s the incentives that were laid out for them, the KPIs [key performance indicators], the ability to drive behaviour, feedback loops, all that kind of thing. And that was very true at Telkom.
So we started with that assumption that you can’t fix a company that’s as sort of customer-facing as a company like Telkom is, and then think that you’re smarter than everybody – people who’ve been in the company for like 40 years – sometimes their fathers worked there, and their grandfathers worked for the Post Office. They really love the company and know it, but feel so angry that they’re not being enabled.
Now that is the story that I was sure was behind the scenes at Eskom, and that’s what’s coming through now in that Treasury report that was commissioned – I forget the name of it – that German company that did that report.
Read: Eskom needs practical help – report
They felt exactly the same thing. I just assumed that’s what it was. That’s what I assumed when I went to Telkom, and that was exactly what it was.
It was that there are lots of things you need to do that are outward [focused] to earn more revenue and [be] market orientated. But there’s a whole lot of stuff just around customer service and reliable connectivity that we’re now finding at the plant level at Eskom. You have to assume that it’s something like that.
JEREMY MAGGS: But you have to be firm and resolute to make sure that very strict KPAs [key performance areas] are designed and adhered to – and possibly that’s what you probably mean, I’m assuming, by ‘lighting the fire’.
MIRIAM ALTMAN: Well, okay, I’ll give you another example from Telkom, because I think it’s quite a good example because we moved fast. I don’t know if you remember, but I had in mind that I wanted people to be able to see the financials change by the mid-year results. I joined in June or July and our mid-year results were [due] in October, and I wanted it to be clear so people would start believing in the storyline that things were going to improve. That was part of the strategy.
And they did. We saved about R700/800 million on our opex, and it showed in the mid-year results.
That’s how fast the change happened. It happened through this process, if I can just summarise, of picking the big-ticket items, obviously, that could have a big impact.
Working out, mobilising the staff around them, making them the centre point, not the consultants, empowering them to do stuff, and shifting the performance incentives around that.
A lot of the KPIs were just not correctly set – actually they encouraged the wrong behaviour – and then shifting the financials, like the bonus structure, because people would be paid for staying and for breathing. We got rid of all that stuff, and we elevated group and individual performance incentives, which SOEs don’t tend to have.
A government struggles with that idea, which is unbelievable. So we had to motivate to introduce them. There was quite a big fight about it. But we introduced that.
And then in the change programme, I brought up engineers from the company to work in my office, people who were directly involved in the change process. I worked with our accountants to line up the finances directly to results, and that enabled me. I had a team in my office who could tell me when there were red flags, when something [was] going wrong and people weren’t telling me.
And then we would work with people. We wouldn’t treat them like crap and tell them they were stupid. We would say, ‘Look, you’re not going to get your bonus this year’. They were used to getting bonuses anyway for breathing. And Santie Botha was the other – and that’s why I was referring to her. She was the head of the Remco [remuneration committee]. I can tell you, she’s a bull at the [gate]. She’s tough, hey!
JEREMY MAGGS: Those of us who have met Santie Botha can certainly attest to that. Dr Altman, that’s the one side of it, it’s the empathy side.
But I’m also going to assume that your argument is predicated on continuity, and that brings me to the second part of that question about keeping people, key people, in the job for an extended period of time, because there is so much movement, and that movement leads to, I think, a word called discontinuity. And that’s a problem.
MIRIAM ALTMAN: Before we leave the last topic, I want to say very clearly it’s got to be carrots-and-sticks. There has to be a threat for non-performance and what happens; it has to be meaningful. And there should be an upside to good performance as well. People get a lot of pride from it. So it’s not just the money.
So both those things, and respect and drawing staff – who probably know more than you do – into the design of the change. That, before we move on.
Now, in terms of continuity, of course you have to hope that you’ve got someone who’s good.
At Telkom, people were paid ‘retention’ bonuses, which means that we paid them to stay. My view is if you want to go, go; we’re not paying you to stay. You can get an incredible bonus if you achieve targets.
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You’d be paid very handsomely. But the problem that arises – and I’ve had this experience, I’ve worked in a lot of public-sector major programmes and institutions – is that there’s like constant change of the goalposts, a constant change of the leadership so you can’t get a team in motion. People, even ordinary people or even people who maybe aren’t great at their job but are willing to do it, can at least get into motion and understand what the routines are.
The problem that’s arising right now across government is that the teams are breaking down, and even big companies are actually bureaucracies in fact.
The majority of people need to know what you want from them and you just have to regularise that.
And then they just know how to do their job. Most jobs aren’t like creative, but you need some regularity and you can’t keep changing the rules of the game and what’s expected. People can’t cope with that stuff and they get demoralised.
JEREMY MAGGS: Let’s talk about the new rules of the game. If we can, I want to pivot the conversation away from state-owned enterprises.
The work that you do in 4IR? You will obviously tell me that digital readiness is critical for South Africa’s future, but we’re way behind the curve from what I can discern. What immediate steps can we take to improve it?
MIRIAM ALTMAN: Well, again, it’s funny because there’s this incredible company called Arise that is investing in in financial institutions across Africa. I was giving a keynote address on this very thing – it’s a range of things.
Firstly, governments tend to not understand digital very well, and that’s partly because governments are bureaucratic and digital is ever-changing.
There are a number of things. I was raising this point about human capability. We need a population that is e-enabled, the way that a place like Vietnam is. I’m giving Vietnam as an example. China’s a very good example, but Vietnam may be a better example, or Malaysia, because they are lower-income countries, much lower than ours. Certainly Vietnam is.
They made an objective choice very early, 10 or 15 years ago, that everybody should be connected, and everybody should have a kind of digital awareness, and everybody should have access to affordable broadband. And everybody [has] – and it really shows. it’s very affordable, very accessible.
When you go to Vietnam – I was there before Covid and I arrived at around 10 o’clock at night. I walked into a store. As soon as I got to my hotel, I had broadband on my phone straight away. It cost almost nothing, even for a foreigner. I was already off and away. China’s like that as well.
JEREMY MAGGS: So why can’t we get it right?
MIRIAM ALTMAN: Well, we can. We act like this is such a highfalutin thing. I’ve been part of this whole broadband discussion. I designed a national broadband plan. That was one of the first things I did when I joined Telkom. Everybody said, oh, this is a great plan, but it just never moved.
So government keeps messing around with this stuff, and then it relies on its own institutions – which it really shouldn’t because they don’t have the same capability. We’ve got an incredibly capable private sector. Since I joined Telkom, if not before, a hundred flowers have bloomed. It’s a highly competitive environment. There are loads and loads of startups and loads of innovation in the area.
I left Telkom in 2016 and I was talking to the budget office at Treasury.
Government can be a key driver of these things, but they should treat it as an operating expense. They treat it like a capital expense.
But the reality is, if you are a big corporate and you came to Telkom or Vodacom or whatever, and you said, we need to be hooked up, we don’t charge you for the capital expense, we charge you for the service, and then we amortise the capital within that charge, mostly.
And so what we said was, why don’t you just take it out of the capital budget because unfortunately – I’m going to get shot for this – the department’s not going to be able to cope with broadband rollout, quite frankly. It’s just going too slow. It’s not going to happen. And it’s not something you can wait for.
As you might know, being in communications yourself, communications is everything for people.
People care more about being connected than they almost care about food. Surveys will tell you that. It’s an obvious point. Markets depend on it; people depend on it for everything.
It’s the most fundamental thing. And people are getting cut out of communication if they’re not online. It is an incredible enabler, especially when you have an urban configuration like we do, or spatial configuration, where people are very far from opportunity. So it could be a game changer.
That’s what I was talking to Arise about. We were talking about small business stimulation across Africa. There’s no doubt that digital connection people think is such a highfalutin thing, but it is a fantastic African solution that deals with the fact that people are all across Africa. People are very much at a distance, they have very poor market information – there are small addressable markets for that reason – and digital connection is everything now in solving these issues. We treat it like a luxury and we have to change our mindset around that.
Now, one of the things around that is human capability. It means that we could right now have at least 80% of the population online, but maybe 33% is currently [able to] access the internet. Now, that’s a very common problem but it’s much deeper across Africa than it is in the rest of the world. If you were in Asia, that figure would be about 60% who have access to the internet.
Also, our populations tend to engage with social media, and aren’t deep users. They’re not what’s called ‘meaningful users’.
If I can give you an example of what the problem is, I mentor a lot of young people. I’m very involved in youth leadership work. With that I have some young people that I mentor. I’m just going to refer to one guy who is from an informal settlement. He made his way to be a graduate at UCT in maths and statistics. That’s the kind of person we’re talking about. He might shoot me for talking about him, but he is an extraordinary [person]. Think about it – coming from an informal settlement in Gauteng and finishing a maths and stats degree at UCT.
JEREMY MAGGS: That is an astonishing accomplishment.
MIRIAM ALTMAN: It really is. I often have to remind him that it is really astonishing. And it says a lot about a character like that. He had a lot of friends who were in maths and engineering, and I took them over to Tshimologong [Digital Innovation Precinct] at Wits when Barry [Dwolatzky] was still alive. It’s a software engineering hub. I wanted them to open their minds because they were thinking about going to university. They were all from disadvantaged backgrounds and all on an engineering or science track.
Now they would say: ‘How is robotics relevant in Africa?’ They don’t know anything about big data. It’s unbelievable. They are from Ekurhuleni, which is very central. They’re not from a rural area.
They all have smartphones, of course, they’re all on an engineering track, but they don’t know what big data is. So they’re not connected into a very abstract idea.
‘What’s the cloud?’ It’s so abstract, but so central to life now. These are guys who are math-orientated, science-orientated, and on their way to university from disadvantaged backgrounds, but don’t know what big data is.
So what I found was that psychologically one of the ways I was mentoring him was that I would get him once a month or so to write a little report about this company or that company, or different applications that he might find interesting, because he had to fast-track his understanding from basically having no concept of what big data is. Do you know what I mean by that?
JEREMY MAGGS: I do.
MIRIAM ALTMAN: He needs to internalise what it means so that he can get into that world and start accessing those opportunities for work. He’s learning coding, he’s doing computer science, he’s doing all these things – but he doesn’t get it. He does now.
JEREMY MAGGS: That’s a very good example, and a very useful metaphor if that approach would be replicated exponentially.
And I’m also glad, Miriam, by the way that you referenced Professor Barry Dwolatzky, a personal friend of mine as well, and he made such a contribution towards fixing South Africa as well.
Miriam, this has been a very quick 20 minutes, and I’ve got about two or three minutes left on the discussion and I need to squeeze in two more questions. Again, I’m going to pivot in a different direction now.
I mentioned in my introduction that you’re also known as a social activist. As someone in that space, what role do you see for social activism – or increased social activism – in pushing for change, in pushing for the fix?
MIRIAM ALTMAN: I think if there’s anything that has to happen, that’s what needs to happen.
If we want to see accountability in public delivery, and start seeing the dial move, we have to be – rebuilding is the thing – the social justice movement and civic action. Business has to get stronger, which it is. That is starting to happen.
I’m involved in the water space at the very moment. I’m working with the DG of Water and Sanitation, Sean Phillips, another great leader. And the minister also – real servant-leadership qualities.
What I’ve learned in that process – I’m meant to bring stakeholders around to try to look at Gauteng water security – is there’s some phenomenal activism going on in Johannesburg.
Like around the Johannesburg Crisis Alliance, and some fantastic people who are coming around and putting together well thought-out demands and getting residents organised around critical things like electricity shortages, and the very deep issues that are happening around water, in a very sophisticated way.
I’ve been just so heartened to see this stuff emerging. As you know, after 1994 a lot of these organisations fell down because a lot of that money went into the state. And now I’m finding that those organisations are rebuilding.
Then equally what I’m involved in right now – this isn’t work, this is what I’m involved in personally – is youth leadership, as I was saying. I started an initiative around 2016 and we piloted in 2019. I work with an organisation called ‘enke: Make Your Mark’. It’s a youth leadership organisation. The idea is to build from a high school level. So we work with Grade 8s to Grade 11s.
We work with elected leadership in the high schools, and they have to lead the education change. So they become the change agents in education improvement in their schools. And through that they build civic leadership capabilities.
JEREMY MAGGS: Miriam, I’m going to ask you one final question. We’ve covered skills development, we’ve looked at the importance of the digital realm, we’ve spoken about activism. Pull all of it together for me in conclusion and let me ask you this one very simple question. Do you believe that in the short term South Africa can be fixed?
MIRIAM ALTMAN: What a minefield question! It’s not how I would’ve asked it. South Africa can’t be fixed in the short term. This is a long-haul story.
But what the Telkom story should tell you is Telkom turned around. Nobody believed that Telkom could be turned around. And we turned it around, whatever its issues may be today. But we had had a good 10-year run of a turnaround, which is a good turnaround. It moved very, very quickly, within months. And the key to that was that commitment to capability leadership performance.
That element of things is the most important. It’s more important than exactly what you do. It’s that people believe the change can happen. They are roped into it, they’re energised by it, and you’ve got strong leadership keeping that stream of activity consistent.
The Telkom change should be a very good example of how quickly things could improve. It won’t be fixed, but the whole point is to get onto a path of continuous improvement and continuous learning, which creates the hope and a dynamism and a psychological boost.
JEREMY MAGGS: Dr Miriam Altman, I think after this conversation, to quote you from an earlier part of this dialogue, you have lit a fire, I hope, certainly under my bum and that of lots of other people as well.
So thank you very, very much for joining me on the FixSA podcast right here on Moneyweb. It’s been a real pleasure, and goodbye to you.