It may be something of an understatement to say that South Africa has endured a torrid few years. The Zuma presidency and the scandals that have come with it have not just hurt our national pride, but have severely dented our international reputation.
Yet, even in the darkest moments, we were always able to hold onto some positives: a brave and independent judiciary; Thuli Madonsela; a free and fearless press; the occasional sporting hero; Makhosi Khoza; and a private sector that had produced some incredible entrepreneurs and world-class companies.
As a country, our mark on the international business world has far exceeded the size or influence of our national economy. Companies like SAB Miller and Naspers, with very South African roots, became global giants.
And over the last few years, so did Steinhoff. Through years of aggressive acquisitions it emerged as the second largest homeware retailer in Europe, behind only the mighty IKEA.
This rise earned it global attention. In June this year Steinhoff chairman Christo Wiese was named on the Forbes Global Game Changers list for 2017. At the end of last year, Steinhoff was one of Bloomberg’s 50 shares to watch in 2017.
Its success was certainly good reason to feel positive about what South Africa and South Africans can produce. It was an international flag bearer that showed what this small economy on the southern tip of Africa was capable of.
So when CEO Markus Jooste resigned on Wednesday morning following an announcement that the company could not release audited results, it’s not unreasonable for South Africans to take this a bit personally.
It’s not just that large numbers of South African investors will have been exposed to the crash in Steinhoff’s share price. It appears that we have been badly let down by a company and a man that represented us on the global stage.
While it’s too early to say for certain that Jooste’s actions are an admission that the company’s financials were manipulated, they certainly create that impression. The allegations have been around for years, and vehemently denied until now, so it’s difficult to see what other reason there would be for him to step down.
It’s an embarrassment that South Africa simply doesn’t need. When our government appears to be losing control of its finances, our state-owned enterprises are a mess of corruption and woeful governance, and our political leadership is, at best, uninspiring, we need success stories elsewhere to shore up our confidence in the country’s future.
Steinhoff appeared to be that. Under the leadership of a bold South African dealmaker, it had conquered a challenging European market and had recently made its first moves towards doing the same in the USA.
This was meant to be a company and a story that we could be proud of, but it may be turning out to be exactly the opposite. And when the world is already viewing South Africa with suspicion, we hardly need to confirm their fears about how we do business here with a major corporate accounting scandal.
The greatest problem facing this country right now is the terribly subdued state of business confidence. Companies don’t want to invest in South Africa because of the uncertainties in the political and economic environment.
Until recently, we could at least argue that corporate governance in our private sector was strong and our auditing standards were the best in the world. KPMG had already damaged the latter argument, unfortunately the former is now under serious threat as well.