Political developments over the last several days have us riveted and this will be true of your clients too. In times of great uncertainty, it is completely natural to be anxious about one’s investments and ask whether there is not some action that should be taken to protect them, which makes the job of an adviser challenging if there is no clear direction. However, these are exactly the impulses that need to be resisted and composure maintained. It is also one of those times where the client really stands to benefit from your leadership.
Whilst it is by no means certain how this will all play out, the axing of Pravin Gordon and his deputy was widely expected and factored in. This reflects in bond market yields, which were trading at about 8.94% for the 10 year government market debt this morning, from 8.3% prior to the announcement. Contrast this to the December 2015 firing of Minister Nene when yields shot from 8.6% to 10.4%. Even the Rand, whilst sustaining heavy losses, is not trading materially weaker than the R13.10 – R13.32/USD levels we experienced in the first half of March and certainly better than much of the 12 months prior to February. This raises some interesting questions as to why markets haven’t reacted worse than they have. I believe it has everything to do with what I like to call “end-game optionality”. In other words, markets are backing the notion that Zuma’s moves materially increase the prospects of his being removed. The difference between where markets trade and where they would trade (if investors did not believe we could fix this) represents the embedded value of the end-game option.
Whilst these actions from the president – and his motives for doing it – were expected and understood, it does confirm beyond any reasonable doubt that the centre of executive power in South Africa has shifted from Luthuli House to elsewhere. The cabinet reshuffle was orchestrated somewhere and that “somewhere” was not in the higher echelons of ANC leadership or in any other party structure. That President Zuma has been “captured” and that he is being instructed from outside the government is now virtually impossible to counter. Circumstantial evidence has been overwhelming for many years now that the president sits at the centre of a vast web of patronage and corruption. However, his actions last week drew a line in the sand; he is prepared to throw an entire country under the bus to protect and serve his self-interest. This is a good thing. It is now almost impossible to align with or support the president without being directly implicated or seen to be.
This point leads to the second, which gives cause for hope – this may be the single most important event in post-Apartheid South Africa for unifying our people in opposition to the rise of the gangster-state. It gives us an opportunity for a restart. South Africa is as polarised as it’s been in the post-Apartheid era, with identity politics drowning out constructive discourse. For so many, it has felt like an inexorable slide towards the precipice. Part of the reason for this is that political players have fed on the legitimate woes and the dashed aspirations of our people, adding fuel to the fire for political advantage. In the face of a greater evil, there is an unrivalled opportunity to work towards eradicating Problem Number One and worry about 2019 afterwards. The Americans and Russians were ideological rivals, but defeating Hitler was a bigger priority. Mmusi Maimane, Julius Malema and the “uncaptured” ANC need to recognise this and mobilise – they squandered the last opportunity.
As South Africans, this is a difficult time. Many friends and family have left the country over the years out of fear that the house would come down on our heads. The fact that you are still here means something – it is a statement in its own right. Perhaps you have more faith in us as a nation, believe in our people and potential and what we can achieve if we can get rid of the rot, or perhaps it is that South Africa runs too deeply in your veins and you are not just going to meekly hand her over to a criminal gang. You wouldn’t be wrong on either account; we must never lose sight of what we can achieve under the right moral leadership and also never forget that we live in one of the greatest countries in the world. She is worth fighting for and apathy at a time like this is unforgivable. Set aside petty differences, identify yourself as South African and, regardless of race, culture or who you voted for, stand up as one, mobilise and be heard.
When the history of South Africa and this dark period is written, be able to explain to your children and grandchildren where you were and what part you played, no matter how small. When we have won, we can start to heal our nation.