FirstRand chair mystified by government

Jardine weighs in on NHI, prescribed assets, SOEs, growth …
Roger Jardine cites the national health insurance proposal as the latest evidence of government’s ‘desire for state-led solutions'. Image: Moneyweb

FirstRand chair Roger Jardine says “government’s apparent unwillingness to champion the private sector as a growth engine is mystifying”. Writing in the 2019 integrated report of the country’s largest banking group by market capitalisation, he insists that “there is no plausible plan for South Africa to prosper without the private sector playing a strong role in creating sustainable growth”.

Read: FirstRand keeps its head above water

It is “time for government to partner with the private sector to drive the developmental agenda”, he says.

“The private sector has the incentive, skills and resources to build businesses that employ people and build the wealth of the country. It cannot, however, do it on its own. It needs a government that creates policy certainty, is not distracted by trying to keep failing SOEs [state-owned enterprises] afloat and/or running sectors of the economy that can be done more efficiently by the private sector.”

Jardine is not one to mince his words.

FirstRand has always allowed its chairs to weigh in on matters of national interest, often with a blunt and honest assessment, in the annual report. Last year, then-new chair Jardine used his letter to comment on land reform, income inequality and “broken” SOEs. In 2017, former chair Laurie Dippenaar debunked the myths that local banks are ‘too big’ and anticompetitive, and that they ‘refuse’ to transform.

Jardine argues that South Africa’s skills and expertise are concentrated in the private sector: “It provides 79% of the country’s employment and contributes approximately 50% to the fiscal purse through corporate tax [around 19%] and personal income tax paid by its employees [some 31%].

“FirstRand Bank alone paid R8.5 billion in tax this year. Leveraging private sector balance sheets for infrastructure initiatives can work, as shown by the Renewable Energy Independent Power Producer Procurement programme, where R210 billion was mobilised from the private sector.”

He is however under no illusion that a partnership between government and the private sector on its own will be a panacea for growth.

He says a “deep reform in the public service must also be implemented”.

“The ability of any state to deliver on its agenda is directly determined by the strength of the public bureaucracy.”

The tendency of government to plan itself into paralysis is also criticised by the banking group’s chair.

“The list of reforms that are necessary has been debated for too long. It includes: policy certainty, increasing competition, reforming [SOEs], improving education, improving health care, stabilising the electricity supply, expanding road networks, allocating spectrum, developing the tourism industry, developing the agriculture sector, and the list goes on.

“We could also add incentives to lift exports and decrease imports, and provide title deeds to more South Africans. More than one plan to deliver on these reforms has been drawn up and debated, only to be replaced by yet another plan.”

He says the response to date “by government and policymakers is, to be frank, perplexing – particularly its current allocation of the country’s scarce resources”.

“Effective resource allocation matters profoundly to developing countries, especially when there is little to waste. It’s obvious that expenditure must be reined in, and each rand spent needs to generate either a social or an economic return (ideally both). Sadly, too much of government’s expenditure delivers neither and, if we continue on this road, it will bankrupt the country.”


Jardine cites the proposal for national health insurance (NHI) as just the latest evidence of government’s “desire for state-led solutions”.

He says he is “reasonably confident that it will be very hard to find a South African who does not agree on the desirability of universal access to health care”.

“It is, however, incomprehensible that government can propose new NHI legislation without a detailed grasp of its full financial impact on the country. This is particularly of great concern given the fragility of the country’s finances. Important elements of the new policy remain unknown and this creates risk to further investment in the sector.

“Moreover, the country’s public healthcare system is in disarray and the private healthcare industry can play a major role in achieving universal access. A meaningful dialogue between government and the private healthcare sector is required to agree on the mix of policy, regulation and incentives to provide all who live in South Africa access to necessary care without financial or other impediments.”

Prescribed assets

While the introduction of prescribed assets is “gaining increasing political currency”, Jardine makes a strong point about pension liabilities.

“We seldom talk about pension fund liabilities (particularly with the emergence of defined-contribution funds), but it’s the pension liabilities that are the real issue. The average net replacement ratio in SA pension funds stands at 17% – meaning a pensioner can expect to receive only 17% of their final monthly gross salary when they retire.

“On this basis alone it is reckless to contemplate prescribed assets (often with misaligned risk and return) when we are under-saved as a country.”

Read: Prescribed assets would upset the rationale for pension funds

Three ways to drive growth

Despite all these concerns, Jardine acknowledges President Cyril Ramaphosa’s “sustained public commitment to rooting out the corruption that has played its part in the country’s fiscal and economic decline”.

“However, an anti-corruption strategy is not a growth strategy. Notwithstanding the key interventions made to date, government needs to move swiftly with further and substantial reforms to accelerate growth.”

He offers three obvious examples that would yield meaningful results on the growth front:

  • “Implementing the Eskom restructure plan as proposed in the recent Economic Strategy Paper presented by National Treasury;
  • Increase competition in the telecommunication and transport sectors (including the ports) by breaking up public sector monopolies and allowing the private sector to provide services (also proposed in the National Treasury paper); and
  • Design and introduce policies that will incentivise a meaningful lift in domestic savings (so that we can fund infrastructure development).”

Read: Treasury has laid down the challenge

* Hilton Tarrant works at YFM. He can still be contacted at



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Sadly all the calls will fall on deaf ears – None as deaf as those who do not want to hear!!!!

Bank Business loans also fall on deaf ears. Didn’t mention that as a plausible plan.

The ANC is great at strategizing. Sadly they failed to complete the course. After that, you implement and execute timeously. Oops, before that you have to find the correct solution. That is lacking as well.

Another senior businessman that addresses half the problem – China and Singapore’s success was built on high economic growth and low population growth.

No mention here of low population growth, so the country remains a social disaster.

NHI was brought about by private sector greed. A 10min consultation with a specialist will set you anywhere between a R1500 and R5000 in SA. This is unacceptable. Government needs to recruit more foreign Drs from India, Eastern Europe and China to increase the number of specialists. But then again the HPCSA will use artificial barriers to keep them out in order to ensure that their members continue to charge high fees. But it is not sustainable.

By all means let government proceed with NHI. But it must stick to facilities within the public health sector. It must do what you say. it must do what it proposes. Which will work out so wonderfully that the private sector will be abandoned by everybody. That is what they must do. Punish the private sector that is so greedy and make it starve. Yes? You think that can happen? If so I suggest you also believe in Father Xmas. The only reason they want to force the private health sector into their harebrained scheme is because they are not able to do it on their own and they know it!

Good to see business leaders not mincing their words. The problem is that nobody should be mystified by the ANC’s actions. They are merely doing what they have been mandated to do by their members. Until their mandate changes and they are not dominated by the unions and communists, it will just be more of the same. On the bright side, it does look like some correct decisions are being made in certain areas but progress is glacial. We need urgent action now.

“He says the response to date “by government and policymakers is, to be frank, perplexing…”. It’s not perplexing, they are trying to play down the fact that they are pursuing a centralist communist regime.

I cannot help wondering just why we even HAVE a Communist Party. Do people not understand the lessons of history: that Communism so blunts initiative that it has proven to be an epic fail? As PROOF, Communism has ruined – and been kicked out of – over 50 countries. Google it if you don’t believe me. Seems to me there are only 3 reasons for someone to be a Communist” 1) They are absolutely ignorant of history 2) They know Communism is a failure, but love the positions and money they get from being in government 3) They are terminally deluded, to a demonic degree. There can be no other reason.

“The ability of any state to deliver on its agenda is directly determined by the strength of the public bureaucracy”. Now these are wise words and point to the biggest problem in South Africa and the reason we are heading for failed state status. Our public bureaucracy is, by and large, filled with incompetent, unqualified, corrupt employees, who do not see any reason to do the work they are paid to do. The intentions and plans of government mean nothing in this environment.

they will never see the reason to do their work that they are employed for properly, the attitude is: forget about the work /our tasks, we have a job.

Great article- portrays the dilemma perfectly….sadly the way forward is not so clear. The ANC’s record of taking working SOE and trashing them is clear for all to see. The State hospitals seem to be on their last legs and their answer is just to take over the private hospitals and do the same. It’s a no brainer…whilst the NHI is a great and admirable idea, the minority and other tax payers are just not able to fund it. Let it go.

There have been so many wise words published by expert economic and business people advising the government on the best way forward for the country. Unfortunately we seem to be in a precarious social situation which has all the signs of mass country wide protes breaking out . It wouldn’t take much to set this off,eg a downgrade , a big currency devaluation and steep higher prices or mass reduncies. Hence the government sits on its hands , waiting and hoping it can muddle through.

It is also necessary for government to change its approach to enterprise to enable and embrace it, rather than treating business as competition and threat.

Managing union influence is one key requirement for this.

“There is no plausible plan for South Africa to prosper without the private sector playing a strong role in creating sustainable growth”. Because politicians leech from the private sector, seeing it as their entitled right to drain as much capital as possible without actually killing the source. This is a delicate balance.

I’ve been bleating on in fora for a decade or more that politicians, be it the inept British MP’s or the local corrupt ANC, are there for the massaging of their own egos and addiction to power and control, not to benefit the population who voted them in. Refer characters like Dudu Myeni, Hlaudi Motsoeneng, Jacob Zuma et al.

Politicians are a specific breed of humanity attracted to the easy life of delegation and fawning adulation so expecting them to be creatively and intelligently involved in actual balance sheets, projections and mysterious things like production and performance is just asking too much.

Sigh …

Agree with you 100%. Politicians have outlived their usefulness worldwide. They replaced the royalties and nobilities of days gone by for something better. And it worked for a time. But that time is over. Power has gone to their heads and they are just as selfish, entitled and egoistic as the people they replaced. In this digital age, do we really need any politicians? In my opinion the majority of them add absolutely no value to a country, its economy and society. Time for a new order. Dump politicians and replace them with paid professionals / organisations who are fired if they do not meet their KPIs and objectives – simple. The constitution will be the guide for running the country. A council of independent, wise and proven to be honest men will adjudicate the efficacy of the constitution and from time to time consider if any amendments are required at any point. Voting or referendums can be carried out electronically. KISS.

Re the tariffs of medical doctors and specialists:

Our (excellently trained) medical doctors and specialists are actually paid WAY too little. Medical specialists in the USA earn on average 14 times more than our specialists. The training of our medical professionals are on a par with the best overseas curriculae.


The US is tough on specialists. An obstetrician basically works until August to cover professional indemnity insurance. Then till November to cover practice, staff, materials. Then one month profits for him/her.

We are heading same way with ambulance chaser law suits. I know of two obstetricians in western cape that stopped all baby work. Now do the other plumbing stuff but no pregnancies.

IMO we need a way that patients can choose:
Pay R8000 per hour for a specialist with unlimited insurance.
Pay R2000 per hour for a specialist with capped insurance.


Does this apply to all the specialities in the USA?

Yesterday my wife waited at Tshepong Hospital for 3 hours just to receive the file. Cardiology referred her to ICU for a Blood Gasses test. Nobody knew she was on her way. When these tests and Doctor visit was finished, she went to the pharmacy for meds. Waited from 13:30 to 17:00 to receive these. So total time spent from 07:00 to 17:00.
If NHI takes over, how mush time will then be needed?

End of comments.



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