FRANS CRONJE: Changes Rob's mind? Can the GNU Actually Save South Africa's Economy?

You get in the way of this, what you're actually literally doing is you're getting in the way of the prospects of 20 million people finding the chance to earn the kind of income they need to look after their families.

This girl of Gogos is still a believer that there isn't a decent alternative to the ANC, and she still believes the ANC brought them dignity.

Well, firstly, that woman is absolutely correct. Ja, mare, se tu bosta. If you do this, you think it's a rugby match one day, A black man will marry your daughter and sit next to you in Parliament. ANC is under 50%, as we know, amongst black voters, amongst township voters, amongst rural voters, and amongst voters that earn less than R2,000 a month. Zuma ran a brilliant campaign. He said, but look how the ANC has treated me. They've abused me, they've abandoned me. And people said, yes, and me too. The growth rate is 4 or 5%. Unemployment's coming down to 10%, South Africa will be great. And getting foreign policy right, that's very important.

You're getting me slightly optimistic here, Frans. I'm not used to it.

Hello, Frans.

Good to see you again.

Rob, it is very good to see you too. Thank you so much for inviting me to come on.

No, it's a great pleasure. We haven't had a chat for a while. I'm really looking forward to this. Frans, what if I have a 29-year-old son who studied at university, whatever, business science or law, should he bother be living in South Africa? Is there much hope for a graduate, white, young, dynamic, intelligent, connected South African? Or should he just get to America, get to Austin and get into the world of tech?

One of the answers we give to that is to say, let's look at the strategic balance in the country or the cards that we've been dealt. And then we decide from there. We're also going to say hedge yourself, but let's look at the cards. First card is South Africa is behaving quite unusually for a post-colonial emerging market in Africa in that it's had two peaceful transitions in 30 years. Um, when countries change, the minority change, particularly, um, The post-colonial societies, they change violently, so they're shooting in the streets or peacefully. And we're in the latter category. And that sort of thing should never be assured. And people can get a bit down on the GNU and say it's not moving fast enough, but it's extraordinary in some respects that our political problem is the politicians are underwhelming and fight with each other in Parliament, not that we've got a far bigger problem. So that's, that's one. Second countervailing force or card we've been dealt is that, uh, the society is completely unradicalized. Uh, voters moved away from the ANC because their material circumstances had shifted. And really for the last 30 years, uh, quite at odds with a lot of, uh, thinking, voter behaviour is motivated by the material circumstances of people, not by, uh, propaganda, brainwashing, and ideology. And that's a hell of a strong one because if you're very radicalized, uh, sometimes, you know, we might work in a part of the Middle East or so. It's very difficult to tell an audience there there's an upside because you've got to break this deadlock of radicalization. So the democracy works in the main and public opinion is moderate and centrist and pragmatic. The third one that follows from that is that South Africans, at odds with what you're often told in the legacy media, are very open to reform. Only a third of ANC voters think that expropriation without compensation is a good idea. 8 out of 10 South Africans think that chanting 'kill the boer, kill the farmer' is an abomination and has absolutely no place in our society. The DA has a policy head who announced recently an amendment to, or proposed amendment to, the way in which the country does empowerment policy, at the heart of which is the idea that you downplay race and upplay material disadvantage. We polled ANC, I mean all South Africans, ANC voters, a subsample in that, you know, majority of ANC voters support that DA proposal. So I've told you that democracy essentially works. Decisions are driven by pragmatism and material circumstances. And South Africans on the whole are very, very open to the kinds of reforms the country needs to be a success. The next step in the process is fiscal policy, how the macro economy is managed. And if you're a liberation movement exiled in the former Soviet Union and East Germany, and you inherit a country and you get to a point where you're going to lose an election, all of which I'm describing to you, ANC of the last 30 years, what you do is you print money and you print a lot of it because you're trying to create inflation. Uh, because if you can, if you can create inflation, you can create desperate poverty and populism and you can override democratic safeguards. The ANC knew they were going to lose that election in 2024, and we know that because we told them and they believe us on the data. But they didn't do this. They in fact tried to put a cap on the, on the debt curve. In real terms, spending on civil service wages and even some elements of social protection were rolled back. And the reason for that, I think, is my view of it, but I have reason for the view is that while the ANC might not have been great in government in many respects of late, it's, um, there's enough decency in parts of that organization to say we won't burn the whole country to the ground just to try and save ourselves. We'll actually take the hit. We'll lose. And afterwards we'll, we'll do a deal. They could have done an EFF-MK deal. It was perfectly within their powers. No one was going to stop them. But they chose not to do that. And at intervals since, most recently in KZN, they had the opportunity to do the MK deal there. And, you know, that free will chose to stick with, with the DA. I'll give you one more, and that's the question of energy. This is one of the— when we talk about South Africa's potential upsides, people say to us, yeah, but you can't grow the economy fast enough because you don't have enough electricity. And that's false because we have enough defunct coal station standing in the veld to be refitted to in very short order and very cheaply, in fact, get us to a point where from an energy perspective, a growth rate of 4 or 5% is again within reach. And people find coal a bit controversial and that's fine. And you can worry about those things if you want to. But, you know, there's a hierarchy of needs here and we're a young democracy with a young GNU government. And I think the shrewd thing to do is everything in our power to give the economy the electricity it needs to grow quickly, to allow the improvement in living standards and material circumstances that will lock public confidence into the democracy. And, you know, if our— if the climate critics and so on are hostile on that, I mean, my answer to them has always been this is a moral imperative. 20 million people in South Africa that don't have a job, not going to get one if we don't have enough electricity. And if they don't get one, I don't know if this democracy is going to hold either forever. And so I'd say to that youngster, you know, these are the things you've got to weigh up. And that means it's not as easy an equation as some people make it to be, that it's straight downhill for South Africa. And that's not to say blind optimism and you, you know, everything will be fine. It's not that. It's actually the opposite of blind optimism. It's actually the strategic equation is really interesting, more so for the fact that a lot of people have left and will continue to leave. And I don't begrudge them that at all. They must live their lives and make the right decisions. Many people are very happy in Australia, Canada, wherever they've gone, UK, and that's wonderful. But if you go, the fact that so many people have gone means that from an entrepreneurial perspective, there's actually South Africa's got a skills shortage and a talent shortage. Maybe if you want a life where you'll work for a large bank and you'll work there forever or change jobs once or twice in your career, you'll earn your salary, you'll go home, you'll have a nice little house and two cars in the garage and no one you know will ever be murdered. And, uh, when you retire, you'll have a pension and you'll go on holiday for two weeks of the year to the beach. You know, that, That's, I mean, that's a great thing. You can have that. But in South Africa will be more of an adventure. But there's certainly for people that have an appetite for that, you only live once. People who have an appetite for that and have thought it through and decide, hell, they're going to make it happen here. You know, I understand that because, um, you know, here, here I am, uh, Spanish.

My wife's a New Zealander, so we are, we go there every year or two to see the in-laws. And I think I could last 5 days in New Zealand without biting my arms off. It's so boring. I mean, it's just, it, you call South Africa an adventure. It is. My wife loves it here. Doesn't want to leave. I love it here. I don't want to ever leave. And I'd rather, you know, gnaw my arms off than live in New Zealand. It's too boring. It's too woke. It's, there's no adventure. I mean, it's just dreadful. And that applies to Canada and a whole lot of other countries. So I buy you on that front.

Just from a material perspective, South Africa's middle classes live in, I call it in great splendor. The, I mean, you, you've, you've, you've lived around the world and you've been extremely successful around the world. You, you, you know how, how the, the upper classes live in places like New York and the like. You saw it yourself, how South Africa's upper middle class lives on, on relative to the incomes that they earn. It's quite extraordinary to swap that for now getting on the tube in London every morning and in the, in the, in the, in the gray and little apartment in wherever, in Jerusalem or, or, or, you know, you, you, you, you. In, in, in living standard terms, you do, you do trade down.

I think, I, I think when, when you leave South Africa, we did actually a financial analysis. We looked at London, Dubai, Singapore, Johannesburg, Cape Town, and we did a mirror of costs. And it is 20%, the, it's a one-fifth, sorry, it's four-fifths cheaper to live in, in South Africa than it is in London. It's 20% the cost of living in London. There's one line item, security, that obviously doesn't exist in the London analysis, but it's 20% of the price to live here and 10 times the quality of life, but 10 times. So it's not even a, a, a decent, it's not even a fair analysis to say.

I was at a wedding in, in Cape Town over the weekend and, um, the, the girl getting married to a South African was German and, uh, German family and friends flew in some, you know, 2 days before. It's so interesting to talk to them because this was a very pretty high-end affair. And the— I jokingly called it the society wedding of the year, except that it couldn't be because Rob Herschel wasn't there. But, um, had you been there, it would certainly have qualified. And, you know, these Germans said to me, you know, they've been in the country for a day or 2 in the Cape. Is it the system? Extraordinary. They said, you, you, you know, they said it's a, it's, it's unbelievable how, how you live. So I think it's, it's, yeah, it's more than adventure. It's also, it's, it's a very great place to live.

Franz, can I tackle you on one thing? I'm working very closely with Eskom, and I would say that we have too much electricity now in the country. Eskom is Dan and Mteto, Dan Marakane and Mteto Nyati have done an excellent job in fixing the operational side. Now the balance sheet's a disaster. Electricity prices are too high, but Eskom actually has too much electricity, too much. This might blow your mind because we have no economic growth. So many private houses and small and medium-sized enterprises have brought in their own, mainly solar. And because the grid isn't working properly, you can't wheel electricity from the Northern Cape to elsewhere. I'll give you an example. Uppington consumes 20% of what Eskom produces in the Northern Cape, and the other 80% is unsold and cannot be wheeled or sold, can't be sold and can't be sent to parts of South Africa that need it. We have too much electricity and the duck curve. Every grid struggles with demand supply, you know, from let's say 5:30 in the morning till 9:30 in the morning, everyone's turning on their toasters, their light bulbs, you know, and getting themselves ready for the day. And then, you know, in the afternoon from 4 to let's say 8, 9 at night, the grid requires a lot of power, but in the middle of the day and particularly at night, it doesn't require nearly as much power. And the duck curve, because Eskom has been buying so much renewable power, the duck curve is at such a point that 30% of the power that Eskom buys or produces is not monetized. And this is not ANC municipalities that aren't paying. This is, they can't find anyone to buy the electricity. So in the last year, I'd say Eskom's The challenge has gone from, um, getting enough electricity into the grid to trying to optimize it for grid stability over the 24 hours. And it's a big issue. There's too much power. Now, how do you fix that? Well, you fix it by fixing transmission and obviously bringing in Bitcoin mining and AI HPC compute, which we are gonna do. Which massively increases the demand from Eskom, but also fixing the transmission network, which is going to take a long time. So we have more than enough power. We just don't have an economy that's growing. So let me just get to green shoots. Everyone is talking about—

I want to say something about this because I don't agree with you. If you do the— you might have some regional anomalies and, and, um, and the like that, that's all there, but there's math behind this. I worked on an exercise where, um, we tracked the relationship between megawatts of electricity consumed and economic growth in South Africa over time, and then in leading emerging markets to try and estimate, um, how much electricity South Africa needs to produce if it wishes to sustain a rate of economic growth sufficient over 20 years to cut its unemployment rate from 30% to 10%. And the maths essentially— well, I haven't looked at the data this year yet, so it's a little bit off, but the maths essentially was peak hour of a peak day, South Africa is producing about 25,000 megawatts. That number needed to go to closer to 40,000 in order to enable the requisite level of growth. And, and that— so I do not go along completely at all, in fact, with the idea that we have sufficient electricity At this time for us to, and the question always is, it's sufficient for what? Sufficient, our benchmark is the growth to sustain the rate of job creation that knocks the unemployment rate down to 10% in a generation.

And it's at the right price and at the right time of day because the curve that you might actually see—

The time of day, I agree with you. The time of day is, and, and they, this is why I mean, it's another coal argument because, you know, you, you, you, you store the energy in the coal, the lump of coal itself. That's where it sits. You can burn it when you need it. If you move too fast towards solar and wind, you've got to store it in batteries. And at the scale we need to do that, the figures just become silly. You can't do that.

Batteries and batteries aren't there. They're not.

So I agree with lots of the assessment, but the broader assessment I think is on the quantum. Is that we need considerable investment in, in that and not so much in grid. It's very interesting. There's, there's quite a lot more than sufficient, in fact, grid capacity running from the north to the south of the country to do this. But there's insufficient running from the west to the east, from the zone of solar radiation into the cities, which is another argument why this coal thing needs to— is important. And again, just to, you know, these clips get out on their own. There's a moral imperative behind it. You get in the way of this, what you're actually literally doing is you're getting in the way of the prospect of 20 million people finding the chance to earn the kind of income they need to look after their families. And that's both politically incredibly stupid and morally it's, it's, it's, it's, it's abomination. Yeah.

That leads to a question of mine, and that's the deindustrialization of South Africa. Every week, You read in the news, there's another big manufacturing business with turbines, with smelters going bust, unable to compete, to be competitive. And I think it was you or David Root gave that fantastic statistic that an emerging market should be at 25%, uh, fixed investment as a percent. I think it was of GNP. Is that right? Whereas we're at 15% and every week you read that, you You know, ArcelorMittal is closing down its, uh, part of its steel operations in Newcastle, Saldanha, Thunderbell Park, and there was one other place. And then you read that TransAlloys, which is the only manganese smelter, is closing down in the Pumalang. Every week, another factory. We are, um, because of policy, which feeds into the destruction of Eskom and other state-owned enterprises, including Transnet. We're deindustrializing. We're going from, you know, backwards. I don't know if you read the Lee Kuan Yew book, From Third World to First World, one of the great books, one of the great books ever written. We're going from first world to third world.

There's interesting data trend lines on this that I can remember first seeing 20 years ago. And then if you look at South Africa's trend of deindustrialization, which is very apparent now, um, You can, you can see its early origins already in the late 1960s and so on. And then it really accelerates after '94 and manufacturing share of GDP, I think it's halved after '94, partly because fintech and so on starts to, starts to take off. And, and it creates this, this contradiction, which is sort of at the heart, I think, as much as anything of the ANC's, um, political problems in that the, the structure structure of South Africa's GDP, where, where value is created, looks like a pretty advanced Western-type economy, but the skills base of the economy looks like a kind of 1950s emerging industrial economy. And so you're not able to create employment for, um, a significant number of people who've been through our not very good school system. That becomes a political liability and Yeah, we've seen the consequences of ANC support numbers.

Let's go to gogos. My buddy Jabu's mum, Jabu's mum, the gogo, you know, is still a believer that there isn't a decent alternative to the ANC. And she still believes the ANC brought them dignity. And she knows things aren't quite right, but, you know, we're still stuck in that mindset. I mean, you do the polling numbers and you feel that things are moving in the right direction. Albeit slowly, and maybe if Prince Michelle is right, 2029, the ANC is below 20%. But, you know, can this economy and can this country and can our democracy survive ANC policies for another 4 years?

Well, firstly, that woman is absolutely correct. It's the first statement to make. Um, although go with the well-known Javis one. If, yeah, absolutely correct. Because the changes that she saw through her life more than justify that view. I've done this so many times. I was once accused of being better at pro-ANC propaganda than Mac Maharaj when he was Jacob Zuma's spokesperson. So that's a high standard. And, um, in the first 20 years after '94, The number of people in employment in South Africa doubled. The number of people receiving social protection, welfare in one form or another, rose from 2.5 to approach 15 million, now way beyond that. The share of families without electricity fell from 48% to 94% to under 20% by 2008. The murder rate was cut in half between '94 and 2008. And I can go on. And I think this is a, a, a, I mean, I've, I've come across this view often. It's a sort of view that lurks around corners of elite society. And imagine that's why you put it to me, because you know what my answer to it was going to be. And there's the sense that everything the ANC did after it came to power was a complete disaster. You have to be completely mad or radicalized or ideological to continue supporting it. And that's a flawed assumption because for millions and millions of people, it wasn't just liberation and the dignity that came with that, but this huge improvement in the basic living standards of people that accompanied liberation. And that was very real and it was a very great success. I've made the argument. I'm sincere in the argument. But the ANC in that first, let's say, 15 years does better to raise the basic living standards of millions of people than almost any other post-colonial emerging market before it, including the sort of great examples of Lee Kuan Yew and the like. Whether that was sustainable is another question, but just on the living standards increases. So that support has held to an extent, but not fully. You know, in the fourth quarter of last year, we, we, we polled these things and I was just looking through the data again the other day and you always get these spreadsheets, literally thousands of rows and columns of data. And it takes quite a lot of time to actually see what's in there. And then I saw a remarkable thing that amongst ANC's under 50%, as we know, but it was also under 50% in the fourth quarter. Amongst black voters, amongst township voters, amongst rural voters, and amongst voters that earn less than R2,000 a month, the poorest voters. So its support amongst the upper middle classes and so on might have collapsed dramatically, and amongst younger people fallen very sharply relative to 30 years ago. But even amongst those constituencies, the one you described that did experience Even there, if let's say if only poor rural black people voted, ANC wouldn't be assured of sustaining its political majority in the country anymore. And there's a reason for that is that people are invested in their children's success and they live vicariously through that. And the aspirant middle class and the urban fringe, these kids that, that didn't go to good school, struggled to get jobs. The way they suffer is, of course, something that's reflected in the sentiment of their parents and their grandparents before them, and therefore feeds into the balance of support for the ANC. So, so I— you set that question up very well, and I always like giving that answer. So I think it's very important. It's also— I think it's important to say that about how successful the ANC was initially. Because if the view holds in our society that everything's been a disaster for 30 years, then the question of how to fix it becomes quite difficult. And then if that were true, we were a democracy and nothing improved, that it's worse than it was during apartheid, that argument. If that is all true, then yeah, why not roll the dice on some radical alternative? You know, you, some radical populist could appear here with us and say your democracy as South Africans had never worked, people got even more poor, you're worse than when the whites ran the place during apartheid. And then if he says, let's go for a revolution, what would you say?

Maybe.

But that's not true. And we actually have a very clear model of what it takes to be successful, because in that you said, you mentioned the investment rate earlier. What allowed all of that to happen was that the fixed investment rate, which was inherited by the ANC at about 15%, broke north of 20, peaked at 22, was on its way to 25, now fallen back to 15 again. And, uh, there is— we call it the foundational indicator. If I go to talk to a bank or something, they say, where's South Africa going and how will we know where it's going? I said, well, what's the fixed investment number? Tell you everything. If it goes north of 20%, approaching 25%, South Africa is an absolutely great and prosperous and democratic place to be. If it stays at 15%, it's a contested society. But, you know, 15% also is kind of a care and maintenance number. It doesn't actually mean it's much more investment, but that that's there keeps going. If it falls below 15%, things could get, um, volatile.

I mean, 15% is like 1% economic growth. It's like care and maintenance. No, nothing really happened.

Yeah. If you want to do that, you can definitely do that. You get 15% fixed investment. You've got an economic growth rate that bounces between 1% and 2%, depending on global factors and good fortune, whether you produce commodities and what the gold price is and all of that. If you want to grow at 4% or 5%, which is what you need to get the unemployment figure down, the fixed investment rate's got to be at 25% and higher.

So, Frans, let me ask you a question. Jabu's mom says, there's currently no alternative for her. She's not, she knows something's not quite right with the ANC. She just doesn't feel that there's a legitimate alternative. What is your polling telling you, particularly the recent polls about where these kinds of voters, when they leave the ANC, are they just going to not vote, sit in limbo, or is there an alternative, a legitimate one that's communicating the policies correctly?

Let's take that question very seriously, and I, the question's often dismissed as, as, well, obviously there's an alternative. And I'm not, I, it's always so treacherous to do this on these shows because somewhere there's a politician who's going to get cross with you, and that's not my intention at all. If that person votes for another party, let's say they vote for the DA, because that's really what the question was. Will you, as a, let's say that you were a DA leader and you were on the show with us, would you be able to look that person in the eye and tell them with complete sincerity and absolute conviction that they will no longer live in that shack in 5 years' time and they will have a job? And you couldn't really do that. And if you can't do that, then there is some merit to that person saying, I don't see an alternative. That doesn't mean it's because the DA has failed. In Cape Town, the DA does very well. It inherits this flux of flow out of the Eastern Cape, which is run in appallingly bad fashion. So that's not— I'm not saying that— I'm not having a go at anyone. I'm just saying I don't think that— I think that question needs to be thought about very carefully. Almost the best person on on these things at all, I find, is Gareth Van Onselaer, who runs Victory Research, that does so much of the polling that this little social research foundation group that I have a hand in conducts. And I probably slightly quote Gareth wrong, but Gareth says the single biggest thing you can have how to do well in politics, the, the ingredient, the Holy Grail, is the re— is to inculcate in the mind of the voter the realistic expectation that if you vote for me, your life will get better. If someone said to me, I'm not confident that that's the case. And I said, well, where do you live? And they said, well, I live on a shack on a sand dune outside Cape Town. And I don't have any, I don't have a job and my kids don't have jobs and And which party could I vote for that will change that in 5 years? I, I don't know what I'd, what I'd answer for them. I could answer them something in the longer term about the importance of democracy and the like, but that's not, that's not what's going to cut it. So I think the question is quite a serious question, actually. And, and that now on the going on with this, If you were to look in before the election in 2024 at reasons that people give to vote for the— there's a flip side to this, which, which might be more uplifting for the DA than what I've just said. And you said to people, why do you vote for the ANC? Why do you do that? They didn't give you any positive reasons. The reason they should give is because I have great confidence that they govern well and will make my life better. That's the answer you want. For ANC voters, the reasons were, well, we're scared of what will happen if it loses power. There could be chaos and anarchy and violence. The DA is racist, will bring back apartheid, 80%. Um, we'll lose our social grants and you might as well vote for the winner. I mean, if you're an ANC strategist, this is frightening that the only reasons people vote for you, or many do, is because they think that it might be worse if you weren't there. Then something important happens. There's the G&Us fall, and you know what happens. This begins to change, and people see the DA in the government, and you know, it was very accommodating of the ANC, certainly initially. Which I don't think that was entirely by design, but I think it was strategically quite wise, had it been. Because these ANC voters that expect these kind of sort of knuckle-dragging white supremacists to immediately set about dismantling the social welfare infrastructure of the country, what do they actually see? They see these guys who kind of look okay. Not particularly well behaved, not particularly amazing. The country's not transformed. These, it's very much like it was before the DA was in the government. And all those negative reasons get diluted because now the ANC is gone. There's not anarchy and violence or more than there was before. Your social grants are still paid every month. The DA says we'll continue to do that. The centre is held, anarchy hasn't been unleashed upon the world. They certainly don't look much like these evil people that the legacy media had warned you about day in and day out for 30 years. If you let them govern, they will immediately go back to apartheid. And so the ANC is in a more vulnerable position suddenly, in that it can less rely on the negative factors to sustain what support it still has.

What do your polls and insights tell you about MK and EFF?

At the end of last year, I think there were, I don't know, 5 or 6 and 10 or 12 or so. So they're kind of where they were before. And, um, but a word on that. MK voters did not, it appears, vote for MK's policies. They didn't read the manifesto. Aha, this aligns with my view. They voted for something else. And then Zuma, who's a very brilliant man, I've always thought, just from a professional perspective, held him in the highest regard as a strategist and opponent. Why he's always comes out on top is because people don't take him seriously and you should. Zuma ran a brilliant campaign and he said essentially, I— what was his campaign? He said, I was a hero of the struggle. And that's true. He was. And nostalgia was there. Do you remember when we were great and we fought? We fought apartheid and people remember that and And then the second thing Zuma said essentially in the campaign was, but I made mistakes, which is one way of putting it. And that's very good because that's like Bill Clinton saying, oh, you know, I'm just a man. What do you want me to do with that interim? And people think, well, he's human. He's just like us. He's flawed. And then Zuma said the kicker. He said, but look how the ANC's treated me. They've abused me. They've hounded me. They've abandoned me. And people say, yes, and me too. They've abandoned me too. They've forgotten about me. So when you try and understand why MK did as well as he did, you must understand this. It's very important. These are very frustrated people who feel abandoned. Not, not the next step. Not yet, at least. Mad radicalized extremists. On the EFF side, something very similar happens. That EFF voter as a kid went to a rubbish school. He's never going to get a job or earn an income in a stable way. That means it's very difficult for him to, to find a wife. And build a family around because the eligible, uh, uh, woman in the community will, will say, but you can't look after me. And, um, it sounds terribly old-fashioned, but it's a real thing. If you're a man and you can't build a family around you and care for them, you, you feel inadequate. And then the EFF develops this, um, the beret, and they give you the beret. And for the first time, You know what you have? You have a team.

Ownership.

Try. Yeah.

Yeah.

You belong to something that holds you in high regard. And that's, that's a very attractive thing. And that's, that's why the EFF does well. So it's similar to MK. And sometimes I might talk somewhere, the bank is the typical place and they might, maybe they're foreign bankers and they say you have these mad radical populists that can burn the country down. We couldn't possibly invest. And I say to them, if I brought some of these radical populists to your board meeting here in, you know, wherever it was, let's say 5 of them, and I lined them up here in their berets, and you said to them, hello, I'm such and such, we're an investment bank or venture capital fund, and this is what we do in our business, and would you agree if we offered you a bursary and sent you to university and you could come and work for us? In a second, every one of the 5 will be with you. So that goes to the point of the country not being fundamentally radicalised. And why it's the strategic equation on whether you stay in South Africa or not is much more difficult than commonly meets the eye.

So if people don't look at manifestos, If they don't understand them for a start, because if you've not been able to read for meaning or been even been educated, how do you understand, you know, the basis of a constitution and economy, private enterprise? You know, if people don't read manifestos, then the needle's gonna move very, very, very slowly cuz it's only based on perception of improving your material wealth, for your children, for your being, and the basic services. So I'll give you one example. You know, we think to ourselves, what can't people realize that destroying South African Airways and destroying Transnet has a massive negative effect on the economy? Well, the reality is most people haven't a clue about why an airplane flies or who flies in it, 'cause they're never gonna go near an airplane. And the same with Transnet. All of a sudden, their trucks and taxis taking up the slack. No big deal. Electricity, sewage, potholes, jobs, security. That's it, really. That's how they— so the needle is moving very slowly, but it is moving, I suppose you would say.

For us who live through it, it might feel sometimes that it moves slowly. I mean, as I sit here, Johannesburg CBD, I'm in office in Johannesburg, blessedly not in the CBD. Because it hasn't had electricity, I believe, for a week. What is extraordinary? I Googled earlier today cities that don't have— major cities who don't have electricity for more than a week. Havana, Johannesburg, bird with a feather. However, so for us to look through it, it's that. But you know, in another sense, and then actually in a more kind of strategic sense, the The country's changing at lightning speed. You know, when, when I started what I do, ANC had 70% of the vote. You know, even in 2019, when, when the DA had that difficult election, they went backwards for the first time and they had that horrible falling out with, with Mmusi Maimane and that, that iconic photograph of, of, of Helen Zille standing in the, in the office. I think she was in this red dress looking like, yeah. And I think News24 writes this very silly article that it's the death of the DA or something. And 5 years later, they were in the cabinet, many portfolios, including important ones. The great example I like to cite is, I just remember it, I think, but you'd remember it because you're a little bit older, is August of 1985. When Pierre Botha addresses the National Party in Durban in what will become famous as the Rubicon Speech. And the context there is the growth rate is averaging zero and very volatile, and there are wars in the frontline states, and white conscripts are being sent into townships to confront young black activists, and the Cold War is on the go. People listening to this might have to Google what that was. And Botha says that night, if you translate it, the strongest line was, I will not lead white South Africa down the path of abdication and suicide. You know, you couldn't put it more firmly than that. And if you had said to someone afterwards, for all that he said, I reckon that within a decade, the last leader of the National Party, his party, will be the tourism minister in an ANC cabinet that's taken the growth rate back to 5%. You would have thought, not only is this person, not only is this completely wrong, but this person is completely mad. But it is what happened. And the thing is, it's not just the South African thing. It's that the pace of change when, when Obama stood in the mall in Washington, made the speech, yes, we can. If you'd seen that in front of a million people and you turned to your friend and said, uh, oh, you know, what a, quite a thing this, but I reckon Donald Trump's the next guy who's going to stand in that spot. Mad. How could it possibly be that this could occur? So I think the, the, the world in fact changes very, very quickly. And I think South Africa is changing. I, I sometimes think South Africa is changing so fast that it's a problem because we cannot keep up with the pace of change. And, and let's use the example of the DA again. And I don't— I mean this in a good way. It. There is a dearth of very high caliber people. Let's say, let's make it practical. We've got a local government election coming, Robin, within a year in every major center of the country. The DA and the ANC are neck and neck, every kind of urban, you know, Witbank and Potchefstroom, the like, and let alone Johannesburg and Pretoria. Let's say that the DA won strong pluralities or majorities in all of those. Does it have the people to run them? This is an example of how fast the country is changing. There could be an argument that could be raised to say it might be a big problem if you— let's say the DA won 20 major urban centres outright. They could have a problem because they'd be running them the next morning. And if they didn't do that really well, people would start to say, but you're as hopeless as the ANC that we turfed out to put you into power, let alone the current situation of the very hard time that John Steenhuisen is having as Agriculture Minister, which has astonishingly turned into a situation where he has alienated the rural farming base of the country, the heart of the DA constituency. So, so I think the, the pace of change is not only in actual fact really fast, but it might be so fast that it's a problem.

But you're talking political change and I agree with you. There's green shoots everywhere. When people talk about the green shoots in the economy, I mean, you know, corporates are still sitting on circa 2 trillion rand. They're not investing. Foreign direct investments dried up. Um, you know, economy's not growing and it, as a businessman, it's very hard to make any investment decisions right now. And the ANC seems to be doubling down. They've kept EWC as the sword of Damocles. BEE is going to be extended, not pulled back. Uh, the unions are intransigent. You know, as a businessman, it's, it's not moving at all. And the green shoots that people say. You know, the rand strengthening. Well, that's dollar weakness, not rand strength. The bond market and the equity markets at their, at their best in a long time. Um, but that's mainly driven by commodity prices. You know, it's nothing to do with ANC policy. So does the, you know, is, does economy naturally follow well behind the political development, positive political developments?

I'll push back gently against some of that because there's a lot of truth to it. The truth is the rate of growth is forecast at 1.5%. Our emerging market peers are doing 4, 4.5%. So yeah, you're right. Well, correct. However, when the DA suggested there's a better way to do BEE, what occurred was a series of things. The first is that the ANC spokesperson said, never. However, we are prepared to talk about it. And Mr. Ramaphosa said, no, but Parliament is the right place to raise this. Now that, before I get to the next point, that was amazing. I can remember that Thabo Mbeki correctly, from a point of strategy, refused to debate Tony Leon because he said that if he did so, people might think that the DA's ideas had any merit or relevance at all. Now you get a DA policy chief, most capable chap, admittedly. But saying we will amend or must amend the foundational policy of the country and the ANC, and the ANC spokesperson and the president in practice say, yeah, maybe we should talk about that privately. The ANC people who say, of course we must do it because this is killing us, because it's a tax on investment. And then one step further, the— I think it was the trade minister announced last year there would be a review of the policy announced in Parliament. Why are you reviewing a policy that is great? So the turn is, is, is present on, and that's the most important turn to watch because BEE empowerment is South Africa's most important policy because it's the policy that must address the past. It hasn't done so as well as it should at all. And all policy, social and economic policy, essentially flows from the principles behind PE policy, and he says it's willing to talk about it. It's very likely the 1980s again, as the, as people are prepared to talk about things that were once holy cow.

But it's one thing saying you're going to talk about it. The next is doing anything about it. Look at Zondo Commission.

To say you'll talk about it is, I would say, the most important thing. You've conceded the principle. I had the great privilege of, as a young analyst, having the tutelage of a great man called John Cain Berman. John used to say that, and he was right, that apartheid ended, I think it was 1969 or 1970. And if you asked him why, he said because in that year, John Foster, agreed that the Springboks could play an All Black team that had a Māori in it. John recalled that Jaap Marais, later of the Herstuchter Nationalapartheid, to give you a sense of the flavour of the thing, said to Foster, if you do this, you think it's a rugby match. One day, a Black man will marry your daughter and sit next to you in Parliament. And Marais was correct, and unfortunately so. Because when you concede, when very ideological governments concede the principle, history shows that under pressure they will concede everything else all the way to the point of reform. Now, that's not assured, just as it wasn't assured here in the 1980s. But if you, if you read the balance of things, forces in society, this is a marker. Of once you've conceded the principle, all that's left is the technical argument about how to do it. Now, we might take— China's building 49 ports around Africa in 20 countries, so it's real, but except in South Africa. And that's not because we are anti-Chinese. It's because it's very hard to get anything done with the South Africans. As I often think the Chinese, if we could get the embassy staff in the Chinese embassy staff in Pretoria together with their American counterparts literally down the road and have Chatham House rules, they would find that a lot in common, a lot in common with each other. Wow, that's very funny. We're getting things done. So, no, you're right. But I do think, I think the sometimes saying something and like this BE thing is, is, is actually almost more important than whatever action later. And I would say in this instance will inevitably flow from it. It's only a question of time now. Might be a long time. It's a question of time. The principle has been conceded.

And just let's talk briefly, and we're going to wrap up pretty soon, on international. I loved, um, I loved Ivo Werther's challenge to you of what he agreed with on the international front and what he didn't. And I cut out the, uh, what he agreed with, uh, orange man good. And what he agreed with was actually 80% of what you'd said. But where do we stand internationally? I mean, we should be unaligned, non-aligned. We shouldn't be trying to be in bed with the Venezuelas and Cubas and Irans and Russias and Chinas. I mean, is that going to bite the ANC? Or is that just irrelevant, a deflection?

Iran will, the rest won't. What South Africa's foreign policy should be is this: we, our greatest asset as a country, I'll make the argument, is, um, naval base at Simon's Town. It's one of three points that anchors control of the Indo-Pacific, and it is the backdoor to the Atlantic of, um, importance. Not quite the extent of, but not far off Greenland and Panama. We should trade that as an asset. And, uh, we should send a serious person to America with a mandate and a plan in his pocket. And the plan should say, first, minerals, you need those. This is what we propose. Second, energy, we need that. This is what we propose, and that will go to infrastructure and the like. And the plan would say, we, we, we understand that you don't place social obligations on South African firms investing in the US. We're not going to place those obligations on you either. Uh, you can do equity equivalents or special industrial zones or whatever you want to do. And we'll say, we, we've heard you that you're worried about the national security concerns. So to put you at ease. On the back end of this plan, we propose a transatlantic pact. Argentina, Washington, London, South Africa will have some sort of zone and we'll meet there and talk about security. And you'll get the deal done in Washington within a month, I assure you. I'm informed on this. It's utterly false, utterly false to say that the Americans are sabotaging a deal. They don't want to do anything with us. I mean, it's what, what Trump is not a deal maker. He didn't strike a deal with Rodriguez in Venezuela.

Uh, he's missed a deal.

You know, this isn't regime change. This is just, we want to do a deal. The last guy didn't hear him. So they captured him from his little flight and put the deputy in. Hardly an ideological, uh, whatever, uh, uh, fellow traveler of the MAGA movement. Rodriguez. Good Lord. No. And they'll do the same in Cuba and And whatever else. So they'll do that here. And then we repeat the exercise. We go to Beijing and we say, this is what we want to do. And that will work. And the reason it will work is it fits with how Chinese and American security strategists see the world. The Americans want a zone of hegemonic American influence in the Western Hemisphere. That's what they're pursuing. There's a good reason to do that. And China wants a hegemonic zone of Chinese influence sort of around Australia, frankly. But, but that it's the best way to put it on a map. Taiwan is a, is a bit of yesterday's story. This new story and the region around that and in the regions in between both sides. Accept that the thought of projecting power to control the regions in between, it's beyond their abilities and they'll settle for parity. So the countries in those regions in between can pursue a policy of parity. So, hey, we want to do a trade and investment pact with China. You know, will you send us more of your amazing cars? Which we, if you haven't followed, we've been tariffing Chinese cars to protect American and European cars, even while being a big sort of stand-up promoter of BRICS efforts to break the economic hegemony of the West, which is a nice story of the confusion at the heart of South African foreign policy. And we'll get away with that. And that's what we should do. And we should extract the greatest trade and investment concessions from each. And let's say we can, as a consequence, get get from the American side the fixed investment number up by 2 or 3 points, and from the Chinese side, we get it up from 2 or 3 points, and we release inside our economy this cash pile you mentioned. It's another 2 or 3 points. Let's be optimistic and say together those are 10. 10 plus 15 is 25. We're at the fixed investment rate we need. The growth rate is 4 or 5%. Unemployment's coming down to 10%. South Africa will be great. And getting foreign policy right is therefore very important. Because without doing that, both East and West, we're not going to draw the fixed investment we need to lock in the stability of this young unity government.

You're getting me slightly optimistic here, Frans. I'm not used to it. Final question. How do you get rid of corruption? Because there seems to, it seems to be endemic. Do you do a truth and reconciliation committee and say, you know, fakile, get rid of it or keep what you still have? Or how do we deal with it?

You won't get rid of it because it's endemic and not just to South Africa, but around the world. I mean, the arms dealings of Western democracies are extremely corrupt often. The arms dealings here that are read as corrupt on the South African side, but equally corrupt on the European side, I assure you. So the corruption is is baked into the, into the equation to, to a certain extent, but it is not in and of itself a sufficient reason to explain the low rate of growth. There's a low rate of growth arose in part, corruption is damaging. I'm not saying we entertain it or so, fight it, but the low rate of growth arises in the main from counterproductive policies. And you can be a fairly corrupt society and also relatively high growth society at the same time. It'd be nice to say we'll clean it up, and there's a lot more we can do than what we do. And I thought the former, now outgoing Director of Public Prosecutions, it's been extraordinarily talented to get through an entire term without sending one senior person to prison. I mean, that must have taken some doing. What I'm trying to say is, is that corruption will be present. Does not negate the prospect of a much higher rate of growth. Okay. Whilst much more can be done to fight corruption, but it's not, it's not, uh, the people seem to make the mistake. I think it's like the mistake on electricity. We don't have the electricity, so we can't grow. We haven't fought the corruption, so we can't grow. I don't think either follows. We actually do have the electricity, certainly the potential, and we can actually grow much faster just through, um, instilling confidence through or pragmatic policy.

And Franz, what do you, how do you think we're doing at the Truth Report? Give us a critique. We've been going for 8 months.

Look, I think these, these things are incredibly important in media. We got a small one going on our side as well. And, uh, I've been amazed at the extent to which it's possible to develop a highly effective media offering with a relatively, uh, small crew of top-flight people and employing a lot of tech. And I think if you look at the viewership of some of these, these channels, you know, they, they'll do 20, 30, 40, 50, 100,000 views. Um, you, you chaps, Mike Scham, the, the real kind of doyen of this in a sense, Alec, Alec Hogg is such a wonderful thing on Biz News and, and many of the others. And I think in that they offer an antidote to the— let's call it the traditional media. I think they're incredibly important to the thriving of a realm of ideas and therefore the broader democratic order. And I, I, they, they must— each one must occupy its spot in the spectrum. That's very important. And they'll do that in different ways. and they have different approaches, but it's, uh, and then it's a global thing, you know. I mean, look how well Barry Weiss has done with the Free Press. We really like the Free Press in America. They've been— and then, then on the harder right side, you, you've, you've had, uh, um, the Daily Wire guys and what they've pioneered, uh, and how successful and influential they've been. I think it's the most wonderful You don't need an astronomical budget and 100 staff to be highly effective in media. I think these things are gonna grow faster and stronger and they're gonna proliferate further. And I think that in time, if ideas, you know, it's all the battle of ideas to change a society for the better. And I think in time, if South Africa comes right, properly right, 10% unemployment. Now, what does that mean? 10% unemployment? I think in the diagnosis of what happened, the rise of the smaller alternative media will have a very important chapter there in shaping the ideas that helped it all happen. So, yeah.

So, Franz, last question. Tell me the books. That you're reading at the moment and give our viewers one book that you'd highly recommend they read.

One that's worth reading now is, um, there were two with the same title. The title is The Conscience of a Conservative. The first one was written by Barry Goldwater. Barry Goldwater ran against Lyndon Johnson in what turned out to be the largest, uh, Johnson won, I think the largest Electoral College vote defeat in American history. But Goldwater left on the battlefield, as it were, the ideas to talk about battle of ideas that set up Reagan and the wonderful successes of the Reagan and Thatcher era that followed thereafter. And 30 or 40 years after that, former Senator of Arizona, Jeff Flake, who was a critic of Trump on the Republican side, wrote a book. Called The Conscience of Conservatives. Intentionally, Goldwater's book is the Bible of what led to Reagan. And Flake wrote one about America and the Trump era. To an extent, it cost him his seat in Congress. And read both of those and read them with a view to South Africa because Goldwater's book was written, I'm led to understand, by the father of a chap called, uh, Bazel, who is the—

yeah, you ambassador, our new ambassador, ambassador in Victoria.

And if you want to understand, and Bazel's father had actually met at, uh, at Yale. They'd been at— he'd been at Yale and he met at Yale a chap called William F. Buckley. And talking about media companies, Buckley sets up National Review in America. Which was very important in carrying Reagan to power. And I think the bookends of Goldwater's first book and what that led to, and then Flake's second, with Bosal sandwiched in the middle at a time of the South Africa-US conflict between the Trump crew and this, and Bosal himself being in Pretoria. I think go read both of those, and I think you'll have a good sense of the man, and you'll have a good sense of the people who occupy the White House. So some sense of the people. They, they, they, I, I think they perverted some of Goldwater's initial, what I regard as very sound ideas. But, um, that's my recommendation.

Franz, that's fantastic. What a great chat. I really appreciate it and, uh, looking forward to seeing you soon. Call me when you come to Cape Town next.

Absolutely. Thanks, Rob. Cheers.

Cheers, buddy. Thank you very much.