Transformation riddle as Investec doubles up
Bank veteran sees ‘real transformation’ in much broader terms
● When Investec announced that it had appointed joint CEOs, one black and one white, it threw the focus onto bank transformation.
Business Leadership South Africa CEO Bonang Mohale criticised the step, but Investec says it often pairs people as part of a policy that has nothing to do with race.
The latest industry report by the Banking Association South Africa says “black people constitute a majority of all managers in the banking industry”. But before you break open the champagne, the report also states: “Most of the gains have occurred at the junior to middle management levels.”
When you visit one of Investec’s splendidly organised gatherings, you notice that at senior levels the bank is not representative of South Africa. In fact, it’s pretty white.
In a recent interview with Business Day, outgoing CEO Stephen Koseff, who will be retiring in October, said Investec put meritocracy before employment equity. Business Times asked him if the two should be at odds, because the assumption then is that white people will succeed in a meritocracy and black people will succeed in a universe defined by equity. It feels like a false binary.
Koseff responds that every year the bank takes in 400 graduates of whom between 60% and 75% are black. “Over time, they will migrate into key roles [in the bank]. We grow from within.”
But the number of black managers is low because “we find that talented black guys want to go into their own businesses”.
The financial sector charter, which set targets for black empowerment, has instigated a sea change. Direct black ownership of the sector is at 26.39% according to data from the banking association.
But studies show that these managers are not making it to senior and board level positions.
“Employment equity remains a critical area despite the many initiatives undertaken by various banks,” the association said in a report to parliament last year.
That may be changing with the appointment of people like Fani Titi as joint Investec CEO and Khumo Shuenyane as chairman of the bank. Over at Standard Bank, CEO Sim Tshabalala appointed former National Treasury director-general Lungisa Fuzile head of the bank’s South African operations. And at FirstRand, Roger Jardine will in April take over the chairman’s seat from founder Laurie Dippenaar.
But banking transformation is wider: it includes empowerment financing and the entire rubric of financial inclusion. The definition should be even broader, says Koseff.
He cites an example from Ethiopia, where Investec invested in a brewery. Even in that job-poor country, the brewery’s staff comprises only a few technicians in white coats because the plant is almost fully automated.
It is an African example of a company integrating into the fourth industrial revolution, the era of robotics, the internet and nanotechnology.
When Koseff asked the brewery owners if the government didn’t frown on the low number of employees, the CEO, in turn, frowned at him. It wasn’t a problem because the government was more interested in the downstream impact of the brewery — it will catalyse thousands of jobs along the value chain.
When Koseff announced the changes at Investec and got blowback from Mohale, who complained about the twinning of a black CEO with a white one, he in turn blew a gasket.
Investec’s work culture is flat and non-hierarchical. Koseff is called “Stephen” by pretty much everybody and the hard-driving but informal culture of the place is clear if you visit.
“We put people together,” says Koseff, pointing out that he and Bernard Kantor operated as twin executives.
Former finance minister Trevor Manuel insisted the bank maintain a strong presence in South Africa when Investec received the go-ahead for a dual listing in London. Koseff stayed while Kantor moved to the UK.
Titi and his co-CEO, Hendrik du Toit, will operate in exactly the same way, says Koseff. Titi, who has been chairman of the Investec board since 2004, will focus on banking and on managing “national responsiveness” while Du Toit will grow Investec’s global footprint and run its asset management business.
Koseff is riled when transformation is defined by a headcount of black and white. “You have to define what you mean by transformation,” he insists.
For him, true transformation lies in education and growth. He defines it as Investec’s programme to install solar panels to power water infrastructure in rural villages. For him, it is defined by a mathematics teaching programme the bank sponsors in secondary schools. Koseff says that of the 245 000 pupils who wrote maths in matric last year, only 6 700 obtained distinctions.
“You can only transform through growth,” says Koseff, who has long campaigned against radical economic transformation and for inclusive growth.
“It’s a different country if you compare [it] in December and the country today,” he says. “South Africa holds a special place in people’s hearts because of the way we’ve transitioned. We’ve gone back 10 years [but now] we’ve got a second chance,” he says, referring to President Cyril Ramaphosa.