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Investec CEO in spat over how to grow SA

Nov 18 2014 14:50
Matthew le Cordeur

One Young World ambassador Simamkele Dlakavu took on Investec CEO Stephen Koseff over SA's economy.

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Cape Town – The debate about South Africa’s future happens in many forms, but a recent caucus meeting between some of the country’s brightest young minds turned to heated debate when an up-and-coming media practitioner took on one of South Africa’s top investment minds.

Investec CEO Stephen Koseff was sharing his knowledge with One Young World ambassadors on Saturday ahead of their summit in Dublin, when Simamkele Dlakavu changed the course of the day. “I shook my head,” she told Fin24 on Monday. “Stephen noticed and asked me to share my views, which I did.”

Dlakavu, who is a filmmaker, writer and producer, was at odds with Koseff over his ideological stance that South Africa could only be a better place for all through tried-and-tested policies of economic growth and not through the redistribution of wealth.

Her tweets about this went viral, stirring debate about Koseff’s viewpoints. "A white SA man - CEO of Investec - telling me to stop looking at the past and to move past 'our victim mentality'... After debating him, I gave up," she tweeted on Saturday. "He mentions that we are going to solve inequality through economic growth. Redistribution is 'hogwash'. We need labour flexibility."

Why SA needs growth economy

Koseff confirmed these views with Fin24 on Monday. “For South Africa to grow it needs a growth agenda, not a redistribution model,” he said. “When we have a redistribution model, we won’t create employment and everyone remains poor. When countries like India and China transformed the agenda, they started uplifting people.”

Koseff said he believes strongly in corporate social responsibility, social grants, Black Economic Empowerment and the focus on providing better education to the poor.

But what triggered Dlakavu’s social commentary were his views that South Africans should move past “our victim mentality” to progress. “I don’t believe what he says will work for the majority of the poor in the country,” she said.

“I believe she took that out of context,” said Koseff. “These are the people who will shape this country and they want to know what to do to make a difference. We must not forget the past, but we must move forward as a society and not let that past hold us back.

“We need business-friendly policies to capture Direct Foreign Investment and we need more private sector involvement in the development of infrastructure and the creation of jobs, because the government can’t run our economy: it needs support from the private sector.

“Africa must address the past, but as individuals you can’t let it hold you back,” he said. “A big way to address the past is through education. We need to improve our education system and back the right people into business.

“What is relevant to society is being open-market friendly that encourages foreign direct investment,” he said. “You can’t redistribute people out of poverty, you have to grow them.

“If you look at North Korea and South Korea, you can see it clearly,” he said, pointing out that the GDP for South Korea is $1.4trn and North Korea is $12bn; the GDP per capita of South Korea is $29 000 and North Korea is $500 and the Gini coefficient of both countries 31. “That’s what happens to a country when it’s inward looking.”

Economic theories debated

During the debate, Koseff referred Dlakavu to Why Growth Matters: How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries by Jagdish Bhagwati, Arvind Panagariya.

The book explains how India and China transformed itself after abandoning its policy of wealth redistribution and why growth matters.

In turn, Dlakavu referred Koseff to Kicking Away the Ladder: The “Real” History of Free Trade by Ha-Joon Chang, which references the previous book and argues that the western countries that are against redistribution now were actually built on this very platform.

“Stephen says we need to achieve growth,” said Dlakavu, who is currently filming a documentary about race relations in South Africa. “But we know South Africa is one of the most unequal societies in the world. What has their [free-trade economists] logic achieved?

“We have achieved growth, but it has not benefited the majority of the poor,” she told Fin24. “It has benefited the rich and a few black elite.
“We have various inequalities due to land and minerals and unequal distribution of basic services and education,” she said. “Although he [Koseff] worked hard to build Investec, and I admire that, we have to address systematic issues.

“He said we need labour flexibility, but who does it benefit? There are casual workers who don’t have medical aid and don’t have rights at Wits for example.

“We need to have honest conversations,” she said. “Since Madiba [late President Nelson Mandela] came with his promise of a Rainbow Nation, we have placed issues under the carpet, but now they raise their heads with violent racist outbreaks like we see with the EFF and it’s because we’re not talking about the issues.

“Apartheid happened,” said Dlakavu, who wrote her political science thesis on the “black patriotic bourgeois” that emerged after 1994. “There are things happening that are maintaining the system. The black working class needs to get educational opportunities to grow.”

Koseff agreed with this focus on education. Promaths, run in partnership with the Kutlwanong Centre for Maths, Science and Technology, is Investec’s leading academic programme that assists 3 500 learners in grades 10, 11 and 12.

“Of the 268 Promaths learners who wrote the matric Maths exam last year [2013], over 100 achieved distinctions,” an Investec statement says. “226 learners wrote Physical Science and 100 received distinctions.”

However, beyond education, the difference between these two figures represents two important schools of thought in South Africa.

Dlakavu’s school of thought, which is: “Trickledown economics does not work in the world and will continue not to work in this country,” she said.

And Koseff’s school of thought, which is: “We have to go down the right road, which is one of a growth economy. We don’t want to land up becoming like North Korea.”  

Luckily for South Africa, these are two people with the power to bring change. Koseff has invited Dlakavu to lunch to debate their ideas further.

“I look forward to talking to him more about these issues,” said Dlakavu.

* Fin24 encourages healthy debate and would like to ask readers to post constructive comments on the subject of the economy. We will close the comments section if comments spirals out of control.

investec  |  stephen koseff  |  economics  |  sa economy


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