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Appoint 100 of SA’s best people to fix the country – Mark Barnes

Former Post Office CEO says shortcuts to economic privilege not founded on long-term investment gains have created a ‘sub-sect middle class’ arguably satisfied with the status quo. That’s the worst threat we might be under.

RYK VAN NIEKERK: Mark Barnes is the founder of the Purple Group which owns, among other things, the popular trading platform EasyEquities. He is an investment banker but, before he founded the Purple Group, he was an executive at several institutions, including Standard Bank, Brait and Capital Alliance. But for many South Africans, he is perhaps better known as the businessman who was appointed CEO of the Post Office in 2016 – and that was when the Post Office was in a desperate financial position. He was the CEO for three-and-a-half years and during this period the Post Office’s financial position improved significantly. However, he resigned in 2019 when the government rejected his offer to buy a stake in the institution.

Yesterday Barnes sent out a tweet saying President Cyril Ramaphosa must appoint the 100 best people to fix the country. He said the president should start with 10 people, and that it is the last chance for South Africa.

He joins me now.

Mark, thank you so much for joining us. What was the context of this tweet? Was it a tweet in anger, or have you been considering making this proposal for a while?

MARK BARNES: Well, I had just finished watching the news and, in fact, reading the papers on Sunday and I couldn’t find any good news whatsoever. Every element of our construct seems to be at risk, ranging from education to electricity, to water, to social order, to economic order – and you just get the sense that everything we look at more closely looks worse than we expect it to be. And so you go, ‘What is the root cause of this, because we have so many things in our favour in South Africa?’ We are gifted with natural resources, we have wonderful weather, we have all of those good things.

Now we have to go to the root cause, which is leadership. We have not yet managed to intersect political and economic power in South Africa, in the new South Africa, in the post-1994 South Africa. That is where the gap is. So we sit on opposite sides of a table with an inferiority complex about business on the one hand, and a superiority complex about business on the other, with levers of power that are not wishing to intersect with experience.

We must get over it, man, because what we really need is to hold hands and we need to get over our baggage and our continuing divides, including racism which continues, including poverty and inequality and all those things which we need to leave at the door. We need to sit down and face the realities of this beautiful country and fix them together.

So I thought, how do you do that? Let’s infiltrate the current ecosystem with expertise. There’s a famous saying in flying, which is ‘airmanship’. We need airmanship to deal with a crisis. The technology can all be there, the weather can be for or against you, but in a crisis the pilot has to have experience. So why don’t we acknowledge that experience and expertise, no matter from whence it comes, and do a three-year deal which says, ‘We’re going to transfer not shares but expertise’.

We’re going to sit around a table, listen to what the new South Africa wants, and give back what the old South Africa had learnt, and somehow find a combination because, in the real world, Ryk, when you walk around and you greet people and you go and watch rugby together or whatever it is that we do, we are friends already. We are over it. If you listen to our children, they speak similarly, some of them. Of course we haven’t addressed all of the issues but we who live here and who intend to live here forever want it to work, and we need to cross our divides now. It’s enough already of the polarisation between political power and economic urgency.

RYK VAN NIEKERK: Do you have a relationship with the president? Do you know him well?

MARK BARNES: No, I wouldn’t say that. There was a time I think when many of us had a relationship with him, and I would argue that that has faded – that would be the most polite way of describing it.

RYK VAN NIEKERK: There are many perceptions regarding the private sector and government. It seems almost as if there are two silos not working together as they should be. But do you think there are leaders within the private sector who would be willing to serve in senior government positions in the context of fixing South Africa?

MARK BARNES: It’s worse than silos, Ryk. We’re in opposition, practically. Whenever there’s a private-sector idea, it’s regarded with suspicion: ‘They’re trying to destroy Eskom so that they can privatise it,’ or they accuse me of destroying the Post Office in the interest of buying it. By the way, I only offered to buy it after I left; and that’s not why I left.

So we’ve got this division, we’ve got this suspicion. We need to look each other in the eye and go, let’s forget about our individual agendas.

If you want to fund a developmental country with transformation imperatives, inequality and all of those things, you have to have a thriving economy to support [closing] that backlog.

You have to have business that is functional and sustainable and paying tax so that that revenue to the state can be ploughed back into the economy where it’s required.

You cannot create tax without profit. You cannot create a sustainable- and follow a developmental mandate without a commercial substance to support it. And so who knows how to do commercial substance? Not politicians, not freedom fighters, [but] business people who’ve been doing it to understand the very clear equations of economic growth and profitability. We’ll get them in the team. Let’s not have a Springbok flyhalf who can’t kick a goal.

So I think we need to say, okay, well you do this. Then we have to strike a deal which says there’s a handover period. This is kind of a build, operate transfer model which says, ‘Can you guys with all of your expertise come here and sit with us and let’s work this thing out together in the context of the new dynamics’. And when you leave in three years’ time, Mr Barnes, will you leave behind you a fully transformed management team that you’ve transferred competence with, and you’ve learned together and formulated a new construct for the new future world of South Africa? That has to be part of the deal.

We are not saying as business people that we want to take over. We are saying as business people that we want to stay here, we want to invite capital here, we want our children to stay here and our capital to stay here.

In order for that to remain an attractive proposition, we have to subscribe to the principles of business – which are well known.

RYK VAN NIEKERK: Why don’t you think government can attract top talent? While I’m listening to you it’s clear you don’t believe the skills are in government to fix this. I think that is probably a given, but why don’t you think government can attract the best talent?

MARK BARNES: Well, because we are all at fault, not just government that’s at fault. We think we know everything, and so we go there and dictate. Yes, I went to the Post Office to teach and I ended up learning. That’s the truth of it. I went there thinking I knew what to do and I ended up learning what had to be done. We’ll leave that there.

I think that we can exactly attract. I offered at one point in time to create what I called ‘a centre of excellence’ – pretty much like the corporate finance division I headed in the private sector – which would then farm out experts into the SOEs at junior sort of young, enthusiastic levels. We’d attract people from the merchant banks to come and work at the centre of excellence for government.

We still aren’t over it.

There’s a trust deficit, there is an absence of common cause. It’s all about who takes what from whom, rather than what we can create together.

So I think there’s an extraordinary willingness by business people in the private sector to be partners with government, but there isn’t an extraordinary tolerance for walking into a place and being told exactly what to do, regardless of your experience which might be counter to that advice. I’ll give you an example. If you are a cardiologist operating in a theatre doing a heart transplant, just because you own the hospital doesn’t mean you can go and tell that [cardiologist] what to do. They’re an expert, you’re a team, you’re a partnership. The operating support systems are all there and so on. Like getting into too many analogies.

We have to celebrate the differences among us and add them together to create this wonderful rainbow nation that we all stood in long queues to create – and we haven’t managed to do that. One of the reasons is because there’ve been shortcuts to economic privilege, which have not been founded on long-term investment gains and so on. And those have created what I might call a sub-sect middle class which arguably is satisfied with the status quo. That’s the worst threat we might be under.

So I actually think we need to go like ‘It’s not enough to have this group of people whose kids will go to private schools and who have the same hospitals and same security firms and so on protecting [them]. It’s not enough, regardless of whether that already cuts across racial divides. It’s not enough. What we need to do is start at the bottom and we need to understand how we can get a basic education at all levels, how we can get basic healthcare, how we can get all of those things which, for the vast proportion of the population, the cost per unit of consumption is even more than it is for the well off. The cost of an apple or a cigarette – or whatever you’d like – at the lowest sections of society is high. We have not dispersed the wealth and we certainly haven’t created it.

RYK VAN NIEKERK: I think it’s a logical solution to a complex problem to get the best people in the most important positions. And I think there’s not a single non-politician who [wouldn’t?] agree with you, but there were also some negative comments on social media that this proposal coming from the private sector indicates maybe a challenge towards transformation. How do you respond to that?

MARK BARNES: We can’t survive without transformation. It’s a matter of numbers and statistics, and it’s obvious that the demographic profile of leadership and economic power must reflect the demographic profile of the population. It is not sustainable for us not to transform and to participate and to have broad-based … and to create a middle class. A democracy by definition requires, to be sustainable, the bulk of the people to be in the middle class. We need a normal distribution of wealth, a normal distribution of all of these kind of things.

It is borderline suicidal to contemplate a society which doesn’t embrace the prospect of universal economic dignity.

I’m not saying that we can get it tomorrow. What I’m saying is that people are losing hope, and those who have the freedom of choice are choosing to go, [and taking] their capital with them. The people who don’t are stuck here. That’s not the answer. The answer is we have to have people believe that those who are looking after them or who are given the task of serving them – let me put it that way – are competent and are creating value.

Until such time as we all start believing that, the standards will continue to drop. If you start looking around you – the public sector, private sector, no one’s excluded – standards are dropping. If you drop a piece of paper, no one else is picking up their piece of paper, [so] why do you want to pick up yours? Is everyone still making their bed in the morning? Is everyone still respecting one another and parking in their own parking bays?

The standards are universally dropping in my experience, because we’ve started accepting less and less and less.

We’re dropping our standards. All of us are dropping our standards. I’m not saying there is a gold standard or colonial standard, I’m saying there is a South African standard below which we are starting to play.

RYK VAN NIEKERK: I think you can add the obedience of traffic rules to that, because a lot of people just don’t adhere to traffic rules because there is no consequence. I hate asking leading questions, but how far do you think South Africa is from rock bottom?

MARK BARNES: I don’t know how to define rock bottom because we’ve got a lot going for us that’ll hold us up. No matter how stormy it’ll get in Cape Town, it’ll still be one of the most beautiful cities in the world. But I would say this: the cost of reversing our spiral becomes increasingly prohibitive. It’s like anything that you allow to decay. We will get to a point when the measures of our failure will become primal – and we are already seeing that. We are already seeing violence, we are seeing behaviour that is typical of a complete loss of mutual respect and actually an instinctive need to grab things and to survive against all odds, so to speak.

And so we’re starting to see – if you read the news, if you look at the rape and the violence and the pillage and the behaviour that we are starting to see increasingly appear in front of us – that that is a manifestation of desperate people.

Not bad people, desperate people who are looking to find some strands of this dream that we all came together to agree to vote on and to manifest. And it’s absent.

And so now we get cross – and if you want someone to be really cross, let them be hungry as well.

We have people who literally are at the brink of starvation. When you start seeing that, when energy or electricity become the currency of survival, then people will behave entirely differently between themselves, as they will when those primary comforts are addressed; and we are that close to that happening, I sense.

RYK VAN NIEKERK: Yes, that is not a pretty picture.

MARK BARNES: I’m probably being a bit dramatic here, Ryk, because look around you. Things are still working. We drive to work and back. But I’m saying that it’ll cost a fraction of the effort and capital to fix it now than it will in three years’ time – a fraction!

RYK VAN NIEKERK: I want to take you back to your remark about leadership in South Africa, because I think many people were very excited that Cyril Ramaphosa took over the presidency and he was seen as ‘an honest leader who will turn things around’. But it seems like he’s very conspicuous by his absence at the moment. What role do you think that plays?

MARK BARNES: It’s a significant point. Yes. I don’t know what is in his mind or on his agenda, but I do know that we need strength and compass, filled with integrity and good purpose and all of those good things. I’m not beginning to question that. I never have.

But it’s now [a matter of] trying to stand up against whatever internal forces he needs to deal with, and lead the country, not the ANC, and make some very bold, if necessarily unpopular, decisions. Some of the best medicines I’ve had to take haven’t tasted good – but we need some medicine.

We need some hard decisions and we need to take risk in the name of doing what’s right and what’s universal….

I can tell you that in my experience over many, many years, if something is right everyone eventually gets it. And if something is wrong everybody eventually gets it, because we are informed, intelligent people, and we have had to learn to coexist through circumstances hard to find elsewhere in the world at the same scale. And so we’ve got through all of that. Well, now can we face the facts? Can we deal with the facts? Can we forget about popularity and start talking about purpose? Those are some of the things which we have to [do], to set aside politeness and popularity in favour of purpose and [pragmatism] and determination and things of that nature. And we have to start talking about partnership every single day of our lives.

RYK VAN NIEKERK: Do you think the private sector is doing enough or putting enough pressure on government? You’ve sent a tweet now, it is on social media. We’ve seen Business Leadership South Africa and Business Unity South Africa send a letter to the president stating listen, deregulate the electricity industry otherwise we will fail. But do you think there’s significant or enough pressure apart from sending letters and sending tweets?

Read: We cannot rely on Eskom any longer: Mavuso

MARK BARNES: No, I don’t think there’s enough pressure. I think the private sector or private capital needs to gather and arrive with a proposal that is funded – not ask permission when you say, ‘Listen, here’s our proposal for education or for hospitals or for whatever it might be, we are prepared to put this capital in’.

I was asked once whether municipalities could raise capital. I said no, but the projects that need to be done in municipalities can raise capital. I mean, Eskom was started without government funding it, because it was such a self-evidently fundable economic equation. We can get capital to do all of these things.

Now business wants to be well behaved. Business pays tax and lives here, and is subject to the laws of the land and the regulations and policies of commerce and trade and all of those good things. By the way, wealth is not represented by the CEOs of the businesses that you all know. Those are employees. It’s the shareholders and the real owners of wealth that need to engage with the authorities and the powers that be, and that’s where the deals need to be struck. All of us are well behaved.

By the way, if the president called me this afternoon and told me to do something, I’d do it, because he’s the president – and if I agreed with it, obviously. We need to confront the president, we need to get rid of all of these international advisors who’ve come here to make money out of giving us perpetual advice. And we need to sit among ourselves, look each other in the eye and speak the truth loudly – and we’ll get it. I’m convinced we’ll get it.

RYK VAN NIEKERK: I remember remarks made by Bill Venter of Altron many years ago. I think it was in the late nineties where he said one day his phone rang and it was President Mandela, and he said, ‘Listen, I need a school built in a rural town in the Eastern Cape’. He couldn’t say no, because there was a lot of feeling of goodwill at that stage, especially in the private sector. Do you think that goodwill still exists? If the president phones the new CEO of Altron and says, ‘Listen, go build a school somewhere,’ do you think that will happen?

MARK BARNES: Yes. On balance I think it will. It’ll be a slightly longer conversation: ‘Well, I will do this, but I want that, and we need to change this’. There will be some conditionality attached. But I can tell you this for free – that if the president in his wisdom were to find the hundred people that he was prepared to intersect with and sit them all down in a room and say: ‘You have got to look after education. You five people go, come back with a solution. You go.’

And if there was an equality of reasoning and listening and a tolerance for differences of opinion that reverted ultimately to the factual foundations of what were proposed, then we would absolutely get there, and all of us would serve.

RYK VAN NIEKERK: We’ll have to leave it there. Thank you, Mark. That was Mark Barnes, the founder of the Purple Group.

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But Mark, you were there, we the citizens ’employed’ you at the Post Office, years ago a great, called Mayer Kahn was at the police.

We have a ANC problem.

Without getting the ANC out of the way you can employ 1000000 and still nothing will change unless ANC corruption and mismanagement stops.

Mr. Barnes, logically and ideally, you are absolutely correct BUT good luck in trying to oust the current 100 incumbents, who are desperately clinging onto their Range Rovers, Breitling watches and the likes, and have no value add whatsoever in any other field to be able to do so!!

These are wonderful ideas in theory. They will make positive contributions to any society that respects property rights. We cannot, however, expect a structurally collectivist culture to implement the fundamental ideas of the capitalist system. There are primary reasons why a country like Israel, which is a desert without any mineral, or agricultural wealth, has a GDP per Capita of $43 000, while SA, which is blessed with an abundance of mineral wealth and highly efficient farmers, has a GDP per capita of $5 000.

The creation of national prosperity starts with the thought processes and belief systems of voting citizens my friend. A nation that glorifies the slave complex will inevitably enslave itself to those who embrace individualism and accountability. This is a fundamental law of nature that explains why Africa depends on food aid and financial assistance from the West.

and the Israelis get to vote for a new government 6 times every 4 years ;). That is so unfair

Half the problem with state and SOE is not taking decision-making. The logic seems to be : if I make a wrong decision I might get fired, but nobody gets fired for making no decision…

No way government admits that cadres deployment and affirmative action failed – which they would have to do if they bring back expertise. What might work well is special purpose projects. So if 100 retired judges, prosecutors, lawyers and forensic people were brought in to go through the state capture findings and prepare fast-track dockets for prosecution. The team can be self-funding from the ill-gotten gains clawed back.

BEE policies are both racist and destructive. They need to end.
With R500m stolen from the SA taxpayer and outstanding loans in the trillions I think it’s safe to say that Radical Economic Transformation has achieved its objective….but still the theft continues. Lock up the perpetrators, get back the money and then perhaps we have a chance. I’m not holding my breath!

Haven’t I being saying this forever?

” … it’s clear you don’t believe the skills are in government to fix this.”Those skills were never in government .. there are very sophisticated theft skills though.

Yes … “And those have created what I might call a sub-sect middle class which arguably is satisfied with the status quo. That’s the worst threat we might be under.” It’s called the “I’m all right Jack” syndrome, even though I’m living in a Third World RDP house.

Unfortunately the failing with your excellent proposals is hubris and the horror of losing face in front of their coterie of hangers-on. Can you imagine Fikile or Bheki or Gwede admitting that they are useless and need to consult with, perish the thought, business on matters of policy. I’m not going to even mention race.

While 22 teens die from a still unknown death in a tavern and another 8 die at initiation schools? And a child falls into an open manhole and dies? A manhole that could easily have been covered by local residents with a wooden pallet and some breeze blocks?

Using your aircraft analogy, Richard Branson of Virgin Active would never have employed a single one of the SAA staff.

The power of poverty eventually affects all citizens direct or indirectly. I like the point of doing things ourselves from a position of knowledge instead of being bombarded by opinions from some international advisors…

SOLUTION: South African Business People: start excluding all government official participation in all megaprojects structures. Start embarking on bold business projects. Remember only entrepreneurs can build long-term meaningful solutions. The government’s official vision is five years or ten, not more than that period and this is the nature of governmental system.

End of comments.

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