Nicky Newton-King’s laudable laws of change
JSE’s outgoing head leaves the exchange a very different place
● In Cape Town, people with a beef march on parliament. In Johannesburg, they tend to march on the JSE — as the EFF did in October 2015 at the height of the #FeesMustFall rallies, and as protesters against gender-based violence did last month to demand action by JSE-listed companies.
It’s not immediately obvious why the JSE should be the target. It’s really just a trading platform, the regulator for companies that go to the equity and bond markets to raise capital, rather than the seat of capitalism.
But the fact that it has become a place for political protests of all sorts is, perhaps ironically, a product of Nicky Newton-King’s success in making the exchange one that took “stakeholder capitalism” seriously — persuading listed companies to do the same and enter the realm of politics during the toxic Zuma era when business didn’t have deep engagement with the government.
Newton-King left her office at the JSE for the last time last Friday after 23 years, eight of them as CEO. She believes strongly that leaders must know when to step aside to create space for a new energy. She will take a “gap year” in which she plans to do a cycle race in Sweden and to cycle the Camino de Santiago route in Spain.
Whatever she does next is likely to be somewhere at the intersection of business and politics — an area that has become her passion since what she calls the “transforming moment” of that 2015 EFF protest prompted the JSE to position itself at that intersection.
Paying tribute at a farewell lunch for “the women in Nicky’s life” last week, JSE chair Nonkululeko Nyembezi said it was NewtonKing’s “singular achievement” to position the JSE as a convening platform for engagement between business and the government.
In a celebratory all-women gathering that included chairs, directors and CEOs of several large companies, along with leaders in the professions, the government and media, Nyembezi spoke also of the culture of listening and respect that had been instilled at the JSE.
That Newton-King came out to listen to and address the thousands of EFF protesters in 2015, making sure the JSE dished out bottles of water, was not the controversial bit at the time, nor that EFF leader Julius Malema hailed her respectful reaction.
“The message I conveyed was, ‘Thanks for bringing your voice to Sandton, you raise important issues which business needs to discuss’, ” says Newton-King.
But her decision to distribute the EFF’s list of 17 demands for transformation of the economy to JSE-listed companies caused a fair bit of trouble, with several CEOs protesting that the JSE had no role to play in politics.
That was before Nenegate, and before the creation of the CEO Initiative and other forums during 2016 as protests against state capture mounted and business leaders increasingly realised they had to speak up.
Today the JSE is only one of a number of business formations playing a role in building a collaborative framework between business and the government in support of SA Inc, says Nyembezi.
But at the time the idea that companies should weigh in on sociopolitical issues was contested. “The board debated and came to the conclusion it was important work for the CEO to do,” she says.
Globally in recent months the question “what are companies for?”, as The Economist cover put it, has moved to centre stage. US corporate leaders have come out to emphasise the need for companies to serve society, not just shareholders. “They are latecomers to a story we in SA have been talking for a long time now,” says Newton-King.
The JSE itself is a great deal more transformed than it was eight years ago, particularly on gender, with a board and an executive that is almost 60% female (the new CEO is Leila Fourie) and more than 50% black.
It’s not been that successful as a role model: there still are only a handful of women serving as CEOs of JSE-listed companies. But the JSE is doing much to raise issues of gender violence and gender diversity, says Newton-King.
Its listings requirements already require companies to have gender (and racial) diversity policies in place at board level and to report on these to shareholders. It will soon add a general diversity policy requirement. It’s about the importance of listening to people who don’t necessarily think like you do, as Newton-King sees it.
The JSE she leaves is no longer the only exchange in town, and it has shrunk in terms of listed companies — from 428 in October 2008 to 357 in August, according to the latest Reserve Bank quarterly bulletin, which cites the global financial crisis as well as “idiosyncratic domestic influences such as persistent weak economic growth, low business confidence and onerous corporate governance requirements”.
Newton-King makes no apology for onerous requirements for companies in which public money is invested. She notes, however, that globally, the role of stock exchanges is under pressure because of the availability of cheap capital elsewhere that doesn’t require a listing, or the discipline that comes with public markets.
But it is a concern that exchanges may not be playing enough of a role in raising capital to fund the real economy and support growth. There is an opportunity for the JSE to see if it can find ways to provide funding for start-ups and she also wants it to look at whether there are better ways to make it cheaper for small retail investors to buy in.
That will be up to the new leadership. But it is in line with Newton-King’s firm belief that “our legal licence to operate depends on our social licence to operate — as business we have got to participate in creating the country we want to thrive in”.
Meanwhile the usually ebullient NewtonKing was surprised at how emotional she was and how grief-stricken the JSE’s 400strong staff.
“It’s hard to step back from a place you love and colleagues you adore. But if you stay too long you crowd out the possibility for people to have new ideas. You have to have the EQ to know when to leave.”
They are latecomers to a story we in SA have been talking for a long time now