This resource is hosted by the Nelson Mandela Foundation, but was compiled and authored by Padraig O’Malley. It is the product of almost two decades of research and includes analyses, chronologies, historical documents, and interviews from the apartheid and post-apartheid eras.
30 Oct 1996: Clewlow, Warren
POM. Mr Clewlow, let me just run through a couple of things and then you comment. You have the rand which continues to fall, seemingly inexorably. Last night it was, I think, the lead story on the BBC World financial news and they were talking about it maybe sliding to R5.00 to a dollar. Foreign reserves have been decimated making it increasingly likely that the Reserve Bank will have to call on the IMF for a loan. Interest rates are high yet inflation is on the increase again, perhaps making it necessary for interest rates to go higher still not only to curb inflation but to pull in some foreign reserves. The flow of foreign investment is nowhere near the levels once projected. In fact to use the phrase "South Africa is no long the flavour of the month", after the slight economic boomlet in 1994/95 growth once again is slowing. Most forecasts put next year's growth at under 3% at best. Emigration of white skilled professionals has reached what would seem to be alarming peaks. What growth there has been has been jobless growth and yet the government continues to prattle on about, it's like 6% growth rate and this macro-economic plan that it's going to achieve all these wonderful goals. It seems like they are talking while Rome is burning and that already it is clear that the plan will not and cannot achieve the objectives it articulated in part because of many of the circumstances I have outlined to you. Comment.
WC. You put 54 questions down in one thing.
POM. I know you're good for it.
WC. All right. Clearly if you look at the slide in the value of the rand that is showing an outward no confidence in the administration of this new government, well the financial and economic administration. That's what the slide of the rand is telling everybody. It's telling us that they don't believe the government is doing a good job in that area and I would agree. They are slipping up in many of those areas. We have moved from the political transition period, that's all happened, and remember, I would like to remind you, all the predictions of doom and gloom that such a thing was impossible have turned out to be quite wrong. All the harm that was done to South Africa at that period of time which I think was very hard, that we were about to blow up and all that sort of thing, those people, they are the ones that should be penalised for causing problems which didn't really in fact happen. But now we're in a different ball game. We're now in the real world, the real world of economics and I don't think we've yet come to terms with that sort of thing. I think there are a lot of speculators using this era against us and if you're in the world financial businesses speculating against currencies is the name of the game. I'm afraid we're in this stage at the moment. We are the speculators' dream at this time.
POM. That's George Soros.
WC. If you ask a speculator what he doesn't like, he doesn't like someone with a stable currency. Nothing happens. He likes it going up and down and he hopes to get the right rhythm going. So I think there is a lot of that sort of pressure against South Africa but we shouldn't have it because we should be a stable country and a stable currency. When you get down to all those predictions of growth and that, those weren't the predictions of the South African business community, or certainly not in the Barlow group, we never for one moment, we didn't budget for growth rates of the ilk that you talked about. We've always thought that the growth is going to be much lower, slower and steady and in fact that's how we planned our group. We would have been acutely embarrassed if the predictions that had turned out turned out to be right because we would have missed the wave because we never thought it would happen and I'm pleased to say that at least we got that right. I'm sorry it wasn't the other story but at least the story that took place is the story that we in our group expected and so did a lot of other companies. So I wouldn't pay too much attention on those frothy expectations that took place.
. The issues of today, really, is to forget about the outside pressures and whatnot and really roll up our sleeves and get going with what we need to be doing internally, get going with the issues of today which is combating crime. That's number one. If success was to be seen there and I believe that there is success in combating crime that is taking place. I've seen statistics and I believe that there is a measure of success under our belts in that area already but nowhere near enough what it needs to be. But get that out of the way, we've got off the table the silly statements and predictions which were also fuelled by a press looking for stories that we were going to get a government with communist policies and all that. That hasn't happened. Look at the government's growth plan. That's not a communistic growth plan. That's a good capitalistic sound plan. The problem with that plan is it's not being implemented. It's been well written and whilst it creates criticism here, there and everywhere, the bottom line is that it's not the plan that's the problem, it's the lack of implementation. It's that sort of thing that we have to start scoring a few runs and if we just started putting some of those things into action we would already start seeing the tide turned.
. When it gets to business, you take a business like Barlows, at this moment we are very busy. Conditions are nothing like what we would like. It never is, but business is there, opportunities are there, our companies are busy, we're about to announce our results which I've already told the world at large will not be disappointing at all. And you might say, "Well, how come? Is your company, this company so exceptional that it can overcome all these issues?" And I don't believe so. I think what it is, it's a good example of a company, and there are many others like us, who read the signs correctly, take advantage of the issues of the day, roll up their sleeves and get going with the business that is there.
. The mining business in South Africa has got many contracts going, a lot of growth. Look at the amount of money that companies, big groups like Gencor, Anglo American are spending in mines. Now that's going into the community. If we just have to look at the number of road projects, dam projects, not being talked about but already either being implemented or about to be implemented, it's very high. Our order books in those sorts of areas are high. We are operating with stable forces, we're not in an era - there's a lot of talk of unionisation and all that but the unions that our group are working with are certainly doing their job, they're doing their jobs as a union should do. Obviously when you get to negotiations, when they get started extreme positions get put on the table but in reality I believe it's working quite well.
. If you put all this together, it's like building a wall brick by brick by brick. From my perspective this brick wall of South Africa's future growth and prosperity I think the foundations are there, they have been put down and now the bricks are being put on top of it. It's slow like one would expect but nevertheless you see the wall going up. Look out of your hotel window, you know Johannesburg, do you see slow progress? Sandton is full of cranes. There's a lot of talk of how slow the RDP is, sure it's been disappointingly slow but that doesn't mean to say it's nothing taking place. You can see it, you can take a drive round. If you got in your car and drove round the Reef area with the specific purpose of looking at progress in RDP you don't have to look at statistics, your eyes will tell you, you'll see it. The conclusion you will draw is what a pity it hasn't happened before. Your second conclusion is what a pity that it's not being done fast enough but what you won't be able to say is there's nothing being done. It is being done.
. And I think we've just got to tune into a mode of saying we've got a government that's very inexperienced on administration, you can see that, the pressures keep bursting here, there and everywhere and all that, so it's a government which for administration is very, very inexperienced and that's showing already and it's not going to change. Only time is going to improve that. But the basic things are there. The infrastructure in this country is here, the mines are here, the telecommunications are here, the airports work, we've got water systems, whatever, we've got a banking system, it's here. Now all that's got to happen is this total wheel of development has got to start slowly gathering momentum. At this stage it's not going fast enough but I don't see anything which is fundamentally going to derail it in the next five years. I'm still very confident that we will get where we have to go, maybe later than we should but we will get there.
POM. Just what I've observed from the last time I was here, I left in June and then came back in September, was that whites seemed more noticeably sceptical about the future, about the way things were going, that on the one hand you had almost like a contradiction that you pointed out. You had a smooth political transition, the institutions of state are in place and are working. The Constitutional Court proves that in terms of the way it dealt with the constitution, and yet whites appear to be feeling more threatened than ever before and it would appear that a lot of Mandela's efforts to assuage their fears have been in vain in the sense that deep down they believe that the country, it's only their perception at this point in time, that the country is in fact going the way of the rest of Africa. Why are whites' fears still so high, why are they so tentative about the future, why can't they talk the way you're talking, why do they want to get their money out, why can't the government lift exchange controls tomorrow morning? Is it because the capital would flow out because of people's lack of confidence in the future and this would send the wrong signal to anybody outside about putting capital in?
WC. Fears, you talk about fears, I am sure there are many people that have fears. I rather think that people have concerns. I personally don't have fears and neither do my family and neither do a lot of the people that I mix with. I'm not saying there aren't people that don't have them but believe you me I think this question of white fears is another exaggeration. There are certainly concerns. That's a different thing. And where do you get concerns? You get concerns because, people are concerned because they can't see the future as clearly as they would like to. That's when you get concerned. You get concerned when you get thrust into an unknown and at the moment we have been through the fear or concerns of how we were going to transform ourselves politically. I think those fears or concerns have gone away. Now the problem and the concern lies in how we're going to succeed economically. At this stage certainly the average man in the street doesn't see, I don't think there's anybody that really sees that path clearly. And anybody who thinks they do is wrong, but what do you do when you go along a road full of bumps and potholes? You drive carefully, you plan your journey more carefully and South Africa has got to plan its way through the bumps and potholes of its road economically very, very cleverly. That's what I think we're trying to do. Certainly as a company we're trying to do that.
. The question of exchange control, well we can't take exchange control off because we haven't got the reserve to combat a real negative effect if it was to take place and you don't risk the economy, I wouldn't risk the economy at this stage in removing exchange control and give us a real negative time which will halt the little progress that's taking place. I think we've just got to be patient. Exchange control is here, so what? We've had it for 25 years or 35, I don't know how long we've had it for. So be it. It's not a new thing, we've got it, let's live with it but let's say to ourselves, one day, and hope that day is soon, we will be able to get rid of it. But when we get rid of it we will get rid of it at a time when the effects of removing it will not be adverse. You don't, if you're a rugby player and you've got a hamstring injury, you don't play rugby again until that hamstring is fixed. So I don't think we're in a position to do it. I think what we need to be more specific about is that we need to say, I think we're not being positive enough, and say how we are going to go about to get rid of it, what are the things we need to have in place before we get rid of it. We need to be clearer on that one. One of the things that worries me is that when you have a currency where you say is exchange control going to be lifted or not, you add another load of uncertainty on to it which is, again, a speculator's dream. If Chris Stals, Dr Stals was to say exchange control is going to be lifted on 1st January then every speculator in the world will be taking his view as to what's going to happen on 1st January. The gamblers will be here en masse gambling on the event. That's their business. We don't want to feel the negative effects of that so therefore we should have a much clearer policy as far as that is concerned. I believe we won't have exchange control by the turn of the century. I think, with hindsight, it's a pity we didn't think very seriously of getting rid of it two years ago. We could have done that, I think with hindsight it could have been done, but then if we all knew what was going to happen two years ago we'd be leading different lives.
. I wouldn't over-play this white fears. We're not a country of sissies here. I honestly don't know people who - I don't go with that one, I don't go along with that at all. But uncertainty is there because of too many unknown factors and that's coming up through bad administration and whatnot. Mandela is a great leader. He must be the number one leader as far as marketing man world-wide but what he doesn't do, I don't believe he's giving us enough, shall we say, leadership on what are the issues of uncertainty.
POM. On the uncertainty, a number of people have said to me that one of the reasons why foreign investors are so slow to come in is because of the image South Africa has in the wider world of being close to anarchy in terms of the crime situation and that high profile crimes add to this, that's one. Two, why does the government keep, in a way, setting itself up to say it is going to do things it then turns out it doesn't have the capacity to achieve, i.e. the RDP would be one, two, the macro-economic plan? It keeps setting expectations of a level rather than why aren't they saying what you're saying, this is going to be slow and plodding, we're not going to do 6%, we're going to be lucky to do 3% but if we do 3% within that we can achieve the following. That's two. The third thing is people have talked to me about, it goes to the Mandela question, that what will happen in a post-Mandela era there is still a question-mark about it. And then people say, well he's really turned over the day-to-day running of the country to Mbeki so we're already in the Mbeki era, so to speak, and that rather than talking about Mandela not addressing these uncertainties it should be Mbeki who should be addressing them.
WC. I'm not disagreeing with what you're saying, but getting back to what I said earlier on I think the inexperience of the government and the lack of understanding of real economic issues resulted in, two years ago, too much being said about the future which couldn't be delivered. I think with hindsight they must regret that too. When I read the newspapers and look at the statements I don't see government people making the same predictions of frothy growth prospects as they were doing. I think they have already learnt that lesson that you need to be more specific than just what they were. But when you talk about the government you're talking about politicians. I don't think our politicians are any different to the politicians throughout the world, that's why they're politicians and that's why we're business people. Business people I think have a reputation of being more down to earth and we're not appealing to the nation, I have to talk to my shareholders and they know what they've invested and they're more - a person who is a shareholder in our company here knows what he bought, knows what he thought he was going to get and it's my job to deliver in the real world, world-wide, and that's why I'm not a politician and I don't listen to much of what they say because the nature of the game is politics. So I think you're placing, you're quoting too much what the politicians say, but if you quoted what the business fraternity have been saying you wouldn't have been making those things because they never said that and with hindsight they were the ones that were right and the politicians were the ones that were wrong. What was your earlier question? You talked about?
WC. Yes sure. President Mandela is a man of 78. He is for a 78 year old man I think remarkably fit and very astute, but he's 78, and anyhow he said quite wisely that this is his last term, his one and only term of office then somebody else will take his place, just like someone's going to succeed all politicians. You've got to have a succession planned. It's easy to speculate what will one person do, what will the other one do. I think in the case of whoever succeeds the president certainly will never have the aura and the charisma, the Mandela factor is Mandela's, is his asset, not his sole asset but it's him and whoever takes his place won't have that Mandela asset, he will have to have his own and I believe our next leader, and it's probably going to be Mr Mbeki, but it doesn't matter who that leader is, he's going to have to be a deliverer and he's got a tough job because he's going to be the one who is going to have to take tougher economic decisions because we're going to need tough decisions to do what we have to do and he's going to be judged on his delivery whereas at this stage Mandela has this tremendous charisma, he has this wave of admiration that goes behind him and it's been that factor, it's the way in which he has set the example that's made the political transformation, I think, so successful with a lot of help from De Klerk who cooperated and they got that show well on the road. It's the economic show we now come to.
POM. Just talking about the politicians for a moment, the constitution provides for a democratic multi-party system of government. One, do you think that South Africa has a democratic multi-party system of government, or perhaps you should define what you think that is first and, two, whether South Africa has it or whether it is in fact a de facto democratic one-party state?
WC. I don't think it's a one-party state. As the thing is unravelling the direction that we're going in constitutionally-wise is looking very favourable for a good democratic constitution and a future democratic state. I don't think we've got a one-party state. We've got one strong party but time will tell whether that party remains, in any political history the stronger a party is the harder it is for that party to remain intact and we all know that the ANC was a party, it's common goal was to get into power and in doing so it incorporated a wide variety of groupings and people. It wouldn't surprise me, and I don't think it would be to South Africa's detriment in fact, if as the years rolled by it splits into more defined units. That's what democracy is all about. You could almost say we were run by a coalition of political agendas as a start and that got the show very much on the road. I would guess in five to seven years time we will still have coalition, it will be a coalition of groupings that once used to be under the one umbrella of what you call ANC. I see it splitting into two or three different groupings but nevertheless cooperating in the form of government.
POM. Could you envisage, one, you think political realignment will happen in the sense of that the ANC, I've heard it so many times I hate to use the phrase, is a broad church or a big cathedral? Do you think that the tensions between what the SACP would stand for or still aspires to as against what the pragmatists or whatever the people who are supporting the macro-economic programme are, are just becoming increasingly diverse and that at some point a left/right, left/centre, whatever you want to call it, split is inevitable or that a number of splits are inevitable and that you might see one of those groupings link up with the reformed National Party, whatever that is, to form a new government? Or do you think, again, adjacent to that, that De Klerk's vision of a new National Party that somehow can attract a large number of African votes is in fact a fantasy, that that's simply not going to happen as long as the NP is run by whites, particularly in light of the revelations that are coming out of the Truth Commission and the courts regarding the actions of the past?
WC. Politics is not my game but any political party, and the same very much applies here, cannot stand still. As the years roll by the party is going to have to remould itself, whatever party it might be it has to remould itself into the changing times which to me would mean that the ANC of 1996 will not be the ANC of the year 2006. If it is it's missed the boat, it hasn't kept up with events. So all political parties will change and it's inevitable I think that different groupings will come up. But to me I don't think politics are going to play such a huge role. Mr Average South African is not going to be terribly impressed with whether grouping A mixes with grouping B and throws out grouping C, the real test is going to be how are we going to progress economically. And I think as the years go by the party that has the best economic policies and shows it can deliver will be the winner. The days of ideology are gone, it's had it's day, we're past that. People would be so bored with that anyhow, they don't want ideology, they want jobs, they want economic progress. And as for the NP, it's the same thing. It's moving, what De Klerk has realised is that the NP of the early nineties is not going to be a force if it doesn't change in the year that goes ahead so he's trying to broaden the base. Now whether he's successful or not I don't know but if he isn't going to broaden his base he's not going to be successful so at least they realise that point. But again it gets back to economics.
POM. Just again on the development of what I would call a multi-party democracy, many people have suggested and I think the constitution provides in some way that there shall be 'proportionate and equitable' (which sounds a bit contradictory) funding or help for political parties. Would you, or do you think business would be in favour of the government providing some financial help to smaller political parties for them to grow or should the test of a party again be the market place? If it can raise the money to survive then it survives, if it can't then it doesn't deserve to. And, two, on the question of contributions to political parties, should there be laws (i) requiring disclosure of where political parties receive their funds from and (ii) should there be limits on what individuals or corporations can give and (iii) should there be a prohibition on foreign governments in particular, or foreign individuals, but more particularly foreign governments contributing towards political parties in South Africa?
WC. I think to start with we're still finding our feet in a lot of areas so I think the government should make some funds available at least in this period of time for the smaller parties to develop. I don't think they should be astronomical sums but I think there should be some fund to enable a good small party with good ideas to be able to develop. Now for the rest of it those parties, or whatever parties, have to go to the market place. Now whether companies or the business community support political parties that's for that business house to decide whether it should or shouldn't. What I think should happen is there should be full disclosure, so there shouldn't be limits but there should be full disclosure, so if company X decides in its wisdom that it needs to support a party, a policy or whatever, that's it's business and so be it, it should be disclosed that's all. No limits, just full disclosure.
. I think you will find that the business community in South Africa is not going to be terribly involved in supporting political parties. I think at the first election the ground rules were slightly different. Most business houses, Barlows included, we took a view that it was very important that this transition, that this first election, that the people understood what it was all about and therefore, certainly the Barlow group, contributed not so much to parties but to political awareness campaigns, helping people, contributing to videos that were being produced for telling people how to vote, what they were voting for, what the issues are, what it was all about. After all, remember, it was a hell of a complicated election compounded by the fact that the Inkatha Party was in and out and in and out and eventually in on a slip of paper at the bottom. But that era's gone now. That was helping the awareness of the situation. From now onwards a company would have to make up its mind as to whether it decided it was a good thing to support the party because that was the one that in their opinion would be best for the economic, presumably, the economic side of the country, just like it's done in the UK. Major companies make contributions to various political parties but they are fully disclosed. But I don't think that the business sector is going to be much of a source of contribution to political parties in the future. I don't think that's going to be a well that parties are going to be able to drink from. I think most political parties will revert, if they haven't, will say politics is not our game and we're getting on running your business and if you as a politician want to be elected you find your sources from other means. After all if you take a company like Barlows it's my shareholders that I'm (accountable to), and who are my shareholders? They are everybody, so why should I decide, what right have I got to decide for my shareholders' money whose party I'm going to support?
POM. How about foreign contributions?
WC. If Mr X's party can persuade someone in Scandinavia or Ireland or America to make a contribution to his election campaign so be it. Disclose it.
POM. Would the same apply to governments?
WC. Yes, if a government wanted to, how can you stop a government giving money? I can't stop Mr Clinton's government giving money to a political party if he so wishes. But it must be disclosed, that's the big thing, it should be disclosed.
POM. Looking at the first 2½ years, and I've asked you this question before and it's like one of my barometer questions, at the performance of the government since it came into office until now on a scale of one to ten, one being poor and ten being excellent, where would you rate it's performance at this point in time? Two, it bothers me that the government doesn't seem to learn what you posit as a basic lesson, don't keep coming out with plans when you don't have the capacity to implement them because all you do is you reinforce the perception of your own incompetence and it's a perception of your growing incompetence that can have an impact on how business people make decisions. Is that correct? And third, in 1999, just as a betting man, do you think the ANC, given that the political configurations are not going to change between now and then at least, whether the ANC will do better than it did in 1994 or slightly worse or do the masses of the people really have any alternative?
WC. On your first question how has the government done, the government of national unity which was the first government, on the question of getting the show on the road from the political point of view, getting the transformation, I give them 8½ out of ten for getting that done and three out of ten for economic progress and as I'm looking ahead at the moment that three is going to be hard to get better if they don't get cracking. When it gets to 1999 I'm not a politician and I haven't the slightest idea really except I think one thing will take place by 1999, it will be harder to get people to vote than it was before. I think the apathy level will come in with people being less inclined and less politically concerned but more economically concerned. So I think whatever party is successful in that era I think the percentage poll will be lower, following world-wide trends, politicians are not the flavour of the day.
POM. It seems the more stable a democracy becomes the fewer people vote.
WC. Really the people are not voting anyhow.
POM. In the United States they would be lucky if they get 50% of the registered voters or eligible voters turn out in a presidential election. My last question would be, you say unless the government gets cracking; what should the government be doing that it is not doing?
WC. Just taking the economic plan that's been put on the table, warts and all, what it should be doing is concentrating more on getting that thing going. They don't have to decide what to do, it's to start implementing.
POM. Any final words for 1996?
WC. We've got plenty of problems, we always have had them, we've still got them. The ones we had five years ago, many of them no longer exist and new ones have come up in their place and if we go four years ahead many of the issues we have today will be resolved and there will be new ones ahead of us there. So we're not going to live in an issue-free or problem-free country for a hell of a long time. I think all we need to do is, are we making inroads in solving the problems we've got and I think on balance yes we will. But having solved them let's don't be so stupid to think are not going to crop up.
POM. OK. Thank you ever so much.