Newsmaker
Economic threat needs unity as much as fight against virus, says Gloria Serobe
● In the dark days of the Zuma era Gloria Serobe said South Africans had “seen hell before and got themselves out”.
Now, says Serobe, co-founder of women’s investment group Wiphold (Women Investment Portfolio Holdings), and chair of the Solidarity Fund established by President Cyril Ramaphosa to help fight the coronavirus, “we’ll do it again”.
But people need to understand that the economic crisis the country is in also threatens them like the corona crisis, and must be addressed with the same unity of purpose and urgency.
“Where we are now we don’t have space for meandering conversations.
“There’s a ‘gemors’ [mess] out there. And when you’re in a state of gemors there’s no conversation about ideologies and things like that. There’s a hell of a lot of chaos.”
Meanwhile, the Solidarity Fund she leads and which received R2bn in its first 10 days — “individuals and corporates are stepping up” — will focus on procuring protective equipment for health workers — “they’re our first line. Without them we have a problem” — and test kits, and addressing the critical challenge of access to food security.
Through Wiphold, Serobe has worked extensively with rural communities and knows better than most how desperately vulnerable they are.
“When we talk about access to food security we have this lot in mind.
“Here you have children who used to get food at school. Now the schools are closed and there’s no food. And households never bargained for a long period of them being at home.
“Now they’re also unemployed at the same time. The mining houses are in trouble, so the breadwinner in village A is in trouble.”
Tourism has stopped, and the rural hotels, guesthouses and restaurants that rural communities depended on for jobs have closed.
“Very soon livestock owners are going to be fighting with their livestock for maize.”
It’s hard to exaggerate the added impact of SA’s recent downgrade to junk on all of this, she says. But she’s been in that hole and knows there is a way out of it.
“People don’t remember that the new government in 1994 took over a country that had junk status.”
She was the finance director of Transnet at the time. Transnet was the biggest weight on the government’s balance sheet, like Eskom, back then a top performer, is today.
“Transnet was the weakest link in the system and we had to fix it to relieve the government balance sheet.”
By the time she left in 2001, Transnet had moved from being 85% geared to 50% geared.
“When we did that the balance sheet of government changed. All sorts of things changed and after eight years, government was at an investment grading level.”
There are lessons from that experience for the government today, she says.
“Not everybody must be interested in politics. Some of us were such doers behind the scenes, doing the boring things, following the correct line.
“The nice thing about a credit rating is that it has a line. You just have to follow that line. You know exactly why you are in trouble.
“If you speak to the credit rating agency today, don’t tell them lies. Give them the plan. In six months’ time they’re going to see where you are.”
SA can dig itself out of the mess just like it did then, but there needs to be a radical change of mindset.
It can’t be an ideology thing, it can’t be a razzmatazz thing, it’s not a PR game Gloria Serobe
Chair of president’s Solidarity Fund
“There is a line of technocrats behind government that must just do what is required to get us out of where we are.
“It can’t be an ideology thing, it can’t be a razzmatazz thing, it’s not a PR game. It’s just about doing what you have to do. Focusing on fixing what is wrong.”
At Transnet they broke their backs to make it work again.
“But we had a clear line of instruction from government.”
They knew what they had to do, and by when.
“We worked closely with National Treasury. We would sit with them and go into things with them in detail. When you’re in this situation the details are critical. You can’t be waffling, you can’t be talking generics. You have to actually talk real facts.”
The management of state entities can’t have anything to do with politics, she says.
“They require management who are not interested in politics. They just do what they are asked to do, which is strengthen your balance sheet, strengthen your income statement, make it work.”
What they did then can be done again. Must be done again.
“A credit rating which puts you into junk status affects everyone. And when that happens, you have to do the right thing.”
But we didn’t before?
The difference between then and now is the bond mandate, she says.
“As long as all the credit rating agencies are not calling you junk, big institutional investors can still be here.
“But once all of them are calling you a junk status country it means they don’t have a mandate to invest in your bonds and they are forced to get out.
“A year ago they were not forced to get out. Now they are.”
Suddenly the stakes are higher for everyone than they’ve ever been.
It will be a massive game-changer, she believes.
“The urgency we have shown in the coronavirus crisis is the urgency we must show in addressing the things that have put this country in the economic stress we’re in.”
The response to the corona crisis has shown that when South Africans understand that the country is under threat, they will respond with everything they have.
“Once people understand that we’re in an economic crisis which also, like the corona crisis, threatens the country, they will respond in the same way and support the president to take us out of our economic crisis.
“If the economic crisis can be described in that way and be made simple enough for all South Africans to understand that we are in trouble, they will respond like lions.
“This is what I am learning from this virus.”