Looking at who is in charge, has the transformation experiment failed?
On Tuesday, the country will be celebrating 27 years of freedom from apartheid colonialism — ironically, 27 years is the same period that Nelson Mandela spent behind bars in pursuit of our freedom. Yet the economic transformation project, which was initiated as a direct consequence of the negotiated political settlement, appears to have been set back a few years, especially in the financial services industry in the recent past.
Last Tuesday, the board of Absa, one of SA’s major commercial banks, announced that it was parting ways with its first-ever black African chief executive, former central banker Daniel Mminele. Official reason: “It has become clear to the parties that there is non-alignment on matters of strategy and culture transformation.”
However, word on the market is that the real reason was a clash with white executives. Faced with the threat of a walkout by these white executives, the board opted to sacrifice Mminele.
That Mminele — who has been replaced in the interim by a white man, Jason Quinn — came to Absa a year after Maria Ramos’s departure suggests the bank actually had no credible succession plan in place.
Earlier this year, Basani Maluleke — the only black African woman to have run a commercial bank — inexplicably walked out of her job as chief executive of African Bank. A week ago, the board of African Bank appointed Kennedy Bhungane as chief executive.
A few years ago, FirstRand replaced Sizwe Nxasana with a white man upon his retirement. After a bruising clash with his board at Old Mutual, Peter Moyo was easily replaced by a white man.
As matters stand today, only one black African, Sim Tshabalala, is running one of the five major banks. Saks Ntombela, the chief executive of Hollard, cuts a lonely figure in the major insurance companies.
These developments raise a disturbing question: has the transformation project failed in the financial services industry?
Before proceeding, it is significant that we agree on what constitutes transformation. At its most basic level, transformation is achieved when the leadership and general workforce of an organisation are reflective of the demographic realities of our country. Put differently, in a country with a troubled race relations past like ours, where a majority of citizens are black Africans, it goes without saying that the workforce and leadership structures should be black African.
But transformation is about more than achieving gender and racial balance in an organisation. It is also about the mindset and attitude of role players — whether they be black Africans, whites or Indians.
When done right, transformation should be regarded as a continuous exercise rather than just a one-off event. And yes, there is a role for progressive white men and women in a transformed organisation. Absolutely!
Appointing one black African chief executive and then replacing that black African with a white male points to a cynical exercise of transformation. This is as bad as appointing an incompetent but pliable black African in the name of transformation.
Similarly, it is not progressive thinking to only have a diversified board presiding over an executive that is dominated by white men and women. Incidentally, that seems to be the case in most major banks and insurance companies. It is sinister, too, to appoint only black foreign nationals to leadership positions and equate that to transformation in SA.
Twenty-seven years into freedom, it should shock us all to have only one black African in charge of a major bank, and one among the major insurance companies. More concerning is that the Absa statement gave no assurance that transformation will be a key requirement in the recruitment of a new chief executive.
What needs to be done?
In a few days, the Absa-Mminele debacle will be a footnote, and Mminele will forever have to explain himself and what really happened at Absa. This shouldn’t be allowed to happen.
Instead, this should be a turning point. The financial services industry should be mobilised to redouble its efforts to tackle transformation.
At the very least, the Absa board needs to make an explicit commitment to recruiting a black African to the job.
All advocates of transformation need to do a deep and honest introspection. The presidency, the South African Reserve Bank, the National Treasury, the ruling party, the opposition parties, the leadership of the Association of Black Securities and Investment Professionals, the Black Management Forum, the Banking Association of SA, the Black Business Council, labour and civil society should concern themselves with this central question: what went wrong with transformation in the financial services industry?
What actions and inactions have enabled the status quo to persist? Why is it so easy for companies to replace black Africans with white people, sometimes mediocre hires?
A few years ago, black professionals in the financial services industry approached the ruling party with their concerns about harrowing experiences they had had in the industry. To be clear, all banks routinely report on their transformation projects. But these reports are about numbers. There is nothing in them about efforts to build an inclusive organisational culture and transformation.
What we require now is an independent, qualitative inquiry into the experiences of black Africans working in the sector. Any further interventions — legislative or regulatory — ought to be informed by the outcome of this inquiry, and should be fact-based.
Transformation is not an optional extra; transformation is a business and economic imperative. It should form a core part of an organisation’s corporate strategy, and should be led at board level.
As we celebrate 27 years of freedom, rather than being angry about the purging of Mminele at Absa, we need to reflect on why the leadership of the financial services sector remains white and male, with Tshabalala and Ntombela as the only black Africans at the helm of major institutions.