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 It is the product of almost two decades of research and includes analyses, chronologies, historical documents, and interviews from the apartheid and post-apartheid eras.
18 Apr 1995: Clewlow, Warren
POM. Let me start right away with the RDP. Since we've come back to the country we've heard nothing but RDP, RDP, RDP, yet when you question people about it, particularly Premiers in the provinces, you find they don't know a lot about it. You talk to heads of government departments in various provinces and they all have different interpretations of what it's all about. More importantly it looks like a blueprint for a vision rather than an agenda for the future and when you get to the question of who is going to fund all of this there is silence. How does business look at the RDP and see it being implemented in a way that makes sustainable economic growth feasible or possible in the long while?
WC. First of all as far as the funding is concerned there, there shouldn't be silence because there are already considerable sums available for the RDP already. It might not be nearly enough but nevertheless it's a large sum to get going, so anybody who says there are no funds is misinformed.
POM. It's like funds not to implement it on a short term basis or a year to year basis but it seems like a massive programme for the reconstruction of the whole country.
WC. I look at the RDP differently. It's an excellent thing because it's provided the country with a new slogan, shall we say, a new unifying slogan which at this time is not of a political nature but of an economic nature. It's a bit like, it's not quite, but it's on the same lines as what the Marshall Plan was which was implemented after the war in the Far East. Now the RDP, I view it as something of a Marshall Plan type of programme.
POM. The Marshall Plan in Western Europe was implemented with an extraordinary amount of expenditure and investment by the United States.
WC. That's why I said it's not the same. All I am saying is it has given South Africa, shall we say, a unifying economic slogan which everyone can rally round, a new rallying point, RDP. RDP is not definable but it's basically in the minds of people who will benefit from it, a programme to which they look forward with hope, it gives them hope. It doesn't give them a house, it doesn't give them an education, it just gives them hope. From a business point of view it's a sensible way of getting South Africa to start developing on the right ways, the right economic tracks because we're not going to have a future in this country unless we're economically successful, and when we are economically successful, and I believe we will be, then that's just the start because then we've got our neighbours to look after. It's the total area from Southern Africa down. The borders are the borders that were placed by history, by things of the past, events of the past. We're basically a region and it's as important for us in South Africa to have a successful region just as the Far East couldn't benefit if in the midst of it all was a great big country that had nothing, was deprived. Our problem here is not only getting South Africa going economically but also extending that beyond our borders. So this is a massive task, it's absolutely mind boggling, but it's not to be shot down, it's not to be looked at negatively and said, "Oh, it's too big, where's the money going to come from? How are we ever going to do it?" If one approaches it in that way we won't, so the answer is let's accept that there is a grand economic vision, accept it as pie in the sky as it might be to some people. But if we all look in that direction and then say, "Right, now how do we start implementing it?" It's like building a wall, like building a dam, we build it brick by brick by brick. [We don't build it in great big ...]
POM. I want to come back to the question that has haunted the present government from its inauguration date and that is expectations versus the capacity to deliver. Even though they warned three years ago about creating expectations that would exceed capability, that's not the way the electorate saw it, they saw it as, "We will have change tomorrow or the next day". Nothing has been done in a substantial way on any number of fronts and why should people believe in the RDP if it's like a phrase, they can't see a tangible result, have not seen a tangible result?
WC. Well first of all it's far too early to expect a tangible result, that's the first thing. Secondly, I think the electorate is an intelligent electorate. It might not be an educated electorate but I think it's got grassroots nous type of thing. And I don't believe that the people, their expectations are as high as have been written about, I don't believe so. I think people accept that prior the election one would expect parties vying for power to use promises. Don't all politicians do that? Whenever there is an election in the United States of America ...
POM. But they wouldn't know that because they never had the opportunity to vote before.
WC. But they did vote and they knew what they were doing. In your country when you have an election the incumbent and the person who is trying to get the presidency, get into the White House, it's the same pattern, it's a series of promises and then after the election comes the balance sheet of working out how many promises have been met and how many haven't been met. At the moment in your country your President has a problem. What was promised, what was given as an expectation hasn't quite been met to the extent of which most of the electorate would accept it. Now in this country, sure, we have the same problem, but I don't think it's out of hand and I think from a tactical point of view one has noticed that once the election took place that was the end of an era. Now came the era of governing and much more pragmatic, much more common sense utterances have come about. Since the election expectations haven't been, I believe, fuelled to unnecessary heights. President Mandela in particular has been, I think, most careful not to run away with the expectancies. Other politicians who still use the masses as a power base tend to err more on to the building up the expectation factor rather than the pragmatic approach. But I don't think it's run away. But, sure, it's only a year, but I'm not criticising, I think quite a lot has been done in a year and much more than I really thought would take place.
POM. If I were to ask you on a scale of one to ten where one would be very unsatisfactory and ten very satisfactory, how would you rank the performance of the government after almost being one year in office?
WC. Seven. Six to seven.
POM. Where has it been best and where has it been weakest?
WC. I think it's been best in, the best part of the government has been the fact that it's enabled the whole country to point in the one direction. It might not necessarily mean that everyone has fallen into line with the new government's thinking completely, but I think President Mandela has done a great job in pointing the whole country in the same way. Where it's least effective, and that's also not surprising, but the least effective has been the day to day administration. It's been a complete change and the government has not, you can also argue in their favour and say time is too short, but I think the day to day administration hasn't quite worked out as efficiently as maybe I had thought it would be. It's still early days. I think the incidence of unrest has dropped and that's been a plus and the credibility of South Africa as a nation has been enhanced, that's been the greatest achievement.
POM. Just going back on two or three points. One, you have these elections coming up on 1st November, local government elections, and the rate of registration is extraordinarily low by any standard yet it is at this level that the RDP is supposed to be implemented. Now if you can't get local structures in place that are not only adequate but educated and sophisticated enough to implement something like the RDP, it would seem to me the country is going to face a real problem.
WC. Don't always look on the negative side. Sure, the registration has been low but I think it's also indicative that people are less concerned with politics as they were say two or three years ago. If you look at local elections anywhere else in the world, only the countries that I know statistics are in the United States and the UK.
POM. Their democracies have been in existence for like 200 years.
WC. Yes but frankly, let's be honest, local elections don't fire people up. It's not the biggest game in town. There are far too many other things that - South Africa as a nation is not, I think it's been hyped up as being obsessed with politics, we're not obsessed with politics. I don't think Mr Average Black Man is obsessed with politics. He's more obsessed in the upliftment of himself, his family, his job, the economics, which is a natural thing and it's happening in most countries, most accepted countries in the world. Having now been given the vote, having got through all the hurdles of the past to where we are at the present, now we're just settling down to a very normal country. And I don't think there's the great, this might be to the great disappointment of the politicians, but I think Mr Average South African is getting on with living as a South African.
POM. OK, let's just take the economy. Three years ago I interviewed Derek Keys when he was first appointed Minister for Finance and he said quite bluntly that the best this country could do between now and the year 2000 was to increase the level of employment by about 1%. I went back to him the following year and he was now out of office and asked him the same question, he gave the same answer that if we are honest with each other the best we can do is probably to see a 1% increase in employment. Let's put that to one side. On the other side we've had the GDP for the first time in eight or nine years has increased at a rate of 3.4% or 3.5% a year by some estimates, by 3% by other estimates. Some say it's a sustainable growth, others say that it's not, but the one thing that comes out of it is that whether it is going to be 3.5% divided by 2.7% by population increase or whatever, it's not going to create an awful lot of jobs. Now how does the country reconcile the fact that it can actually have economic growth but that there will be no increase in the number of jobs, in fact that the rate of joblessness may go up rather than down?
WC. First of all just bear one thing in mind, statistics in South Africa are not all that reliable. We're not as sophisticated at keeping the statistics as many other countries. For instance, I don't know and I don't think anybody knows, how many unemployed people there are in South Africa at the moment. Sure, there are more than there should be but how many? I don't know. And what is the definition of unemployed? Is it a question of has he got a formal job or is a street vendor selling tomatoes on a corner unemployed or what? It depends. I can tell you one thing, if you measure it from a year to now as far as labour forces in factories are concerned for the first time we are starting to employ more people than we did before because our economy has grown, our businesses are growing. And I don't think that's just a phenomenon of Barlows, I think that's going across the board. We definitely employ more people than we did a year ago. And the second thing is the number of people seeking employment is lower than it was a year ago, and that can be measured not by a statistic or something out of the Reserve Bank or something, you measure that with your eyes, the number of people that are waiting for jobs outside factories which we have. There are not nearly as many as there were a year ago. So we are certainly eating into the unemployment pool. Remember another thing, we still require as a country, agriculture is still one of our major industries in this country as employment of people and giving people a means of subsistence. And we haven't had good agricultural years in recent times. If we come back to that normal cycle I think that will further take people out of the so-called unemployment pool and put them back into a place where they can have some form of employment or certainly some form of providing for their families. But it's a long way before it's going to be very sophisticated.
POM. Let me take you up on just that latter point. There have been three studies conducted lately, one by the IMF, one by the Monitor Research Company here and a third by a company called the Manufacturers' Futures Research Organisation, which ranked different, the latter two, in different degrees of competitiveness and found that among industrialised or semi-industrialised countries South Africa ranked last in terms of competitiveness and the IMF which really had a very negative and gloomy report on where the longer term was going in South Africa all because of - one thing common to all three reports was labour costs, that labour costs are out of kilter with the capacity to produce. Is that true?
WC. I don't know. I know the reports that you refer to but I haven't read them. I'm just living here on a day to day basis. All I know is it's a fact that in most of our businesses we probably employ more people than we could, but most big employers, large employers, take a very, shall we say, a view towards the labour force that one works as hard as one can not to lose jobs. It's a policy in our Barlow group. We retrench people only as a last resort not as a first resort. So probably you would find that in many of our organisations across the board in South Africa we probably employ more people than our counterparts elsewhere would do. But that's part of living in South Africa. I, for instance, have a sugar farm, it's a family investment. Now we, on that farm I know, definitely employ far more people than we normally need. We support families there because the families are there and these people have nowhere else to go, so therefore one takes that sort of attitude. One is working towards giving people work not trying to basically say, "Gee if we're going to get a high score with one of these foreign surveys we had better pull up our socks and immediately start looking at our labour forces". We're not doing it.
POM. You're an honest, pragmatic businessman and when you see a report come out by the IMF which is regarded as being pretty neutral, it's no kind of ideological causes to hew, you found that the wage rate in South Africa per unit cost of production is way out of kilter with the rest of not just Africa but with other developing countries on the Pacific Rim or wherever and that unless this problem is dealt with you're going to have a real problem creating any employment for the future.
WC. Is your solution, fire your excess labour then?
POM. No I didn't say that, but you're a businessman, I would like to hear how the problem must be addressed. To me it would be, for example, to develop a culture in trade unions where they would think not in the interests of their own particular constituency but attempt to lead them in the direction of thinking of the country as a whole. Then you'd turn round and you'd find that a union kind of actually infects phials with blood contamination so that patients may get AIDS or tuberculosis or whatever. To me that's an extraordinary statement of the alienation of the working class. What's happening? What's happened to COSATU?
WC. I know that report. Is the report true? Has it been proven? That's the first point, but assume it is, then that's the work of a crank, that's not a union policy, that's the work of a group of people who if they are guilty of such crime should be sentenced to heavy prison sentences. That's almost akin to murder. But that's a fringe.
POM. My point would be that when you look at there at the labour force there is no kind of acceptance among their members, rank and file, of the RDP and the need for control of wage levels.
WC. No, no, no. First of all if you look at labour forces per se, 1995 versus 1993, they are far more settled than they were. That's the first thing. The second thing is they are far more akin to the problems, the issues, than they were four or five years ago. Four or five years ago remember the labour movement was almost a political movement in disguise because it was the only form that certain people, they were using the labour movement for political expression. Now that's gone, that's why we're finding, if you look at our labour union management today, those that were running the unions of four or five years ago, are now ministers or politicians. In other words they have left the labour union to do what they really wanted to do which was politics. Into the labour movement now are, shall we say, the purists now, people who are really there because they are running labour things and we are finding a much more pragmatic, a much more sensible approach. It's not right by any means but it's far better than it was and there's a far better understanding. I don't think we've got a - to sum up, if we want to make a generalisation, I think South African industry employs more people than its counterparts would do elsewhere and that's because mainly there's an understanding that people here want work and you don't retrench people for the sake of an IMF report.
. When it comes to competitiveness the proof of the pudding is what are we exporting? And when it comes to our basic minerals and that we are exporting and we're competitive. Why are we competitive? Because we must be, no-one is doing it, they are not buying a lump of coal from South Africa because it's made in South Africa and someone is saying, "Gee whiz, let's buy this coal because they've got a labour problem", it's on a price basis. So I personally don't think South Africa is that uncompetitive and, secondly, if a degree of uncompetitiveness is because of a structural problem, pure numbers, and there isn't a solution, there isn't a social safety net for those people so people in business are aware of it, people in the labour unions are much more aware of it now than they were four or five years ago, so it's pointing in the right direction.
POM. OK, to come back to, I suppose, my continually basic question over the years. When you look at the numbers, and that's all I can do as an outsider, one can only see in the medium to longer term that the rate of growth of the population, or the entrants to the labour force, will exceed the capacity of the economy to create jobs so that you have in fact, even with economic growth, increasing unemployment rather than decreasing unemployment. Therefore you have the mass of the people out there who voted ANC or whatever with expectation of a job coming down the line, and the job isn't going to come down the line. It's not going to be there.
WC. That would be a problem if your facts are right. Maybe there's another scenario, that the economy will grow fast enough to accommodate that surplus labour. And certainly in recent times I think inroads have been made in getting unemployment down from a very high level, which nobody knows, to still a very high level which still nobody knows. But basically it's better than it was a year ago, measured by one's eyes, not by statistics.
POM. But you're a businessman, you look at reports and you make the evaluation according to people you hire to develop econometric models or whatever and you look at them and say, "Make decisions", or you don't?
WC. I do, I certainly do, and I'm very happy with the way ...
POM. But you say it's just figures I've looked with the eyes and ...
WC. I don't run my business on what the latest foreign report on the economy might be. I run it on what I know is happening, what's happening on our factory floors, what our people are thinking, etc., etc. Watching productivity increase, productivity has gone up, that's why our figures are better, our productivity is better. Where does that come from? It comes from Mr Average Man working in your factory. I have a great faith in Mr Average South African Worker. I'm not one who looks at them from foreign eyes and writes about it.
POM. In a way you are making a political statement which for the CEO of one of the most successful companies in South Africa sounds terrific. The fact of the matter is by no matter what measure of the growth of productivity you take, this year, last year, the year before, the rate of growth in wages exceeds ...
WC. No it doesn't, it doesn't.
POM. Everyone else is wrong?
WC. I don't know who you're quoting. All I am interested in is what is happening in my factories. Our wage increases in the last two years, our productivity has been higher, our gains in productivity are higher than wages, and wage increases have been generous. The productivity factor has been better. And I don't think I'm different, I don't think I'm out of step. I think our minds are more efficient. I think South African business is much more efficient than it was two or three years ago. We're not bedevilled by sanctions, we're not bedevilled by political unrest which has spilled into the workplace. I think of the difficulties that our black workers had three or four years ago when there was all the trouble in the townships, there were disruptions, politicians were calling for people not to go to work, boycotts, all that sort of thing. That's not behind us but the incidence of that has dropped considerably and as a result the person is just able to get to work better. The number of days lost through extraneous issues has dropped considerably.
. Look at the assassination of Mr Hani which you mentioned earlier on, that cost us I don't know how many days of work. Officially four or five but unofficially even longer. Township problems when you had clashes, you can't work a factory with three quarters of your labour force present and one quarter not there because it's all over the place. Now all that has gone very much better so our productivity has gone up. Now if all the other people are telling you their productivity has gone down, well I think you're talking to the wrong people because if you look at some of the big companies, the Breweries, the Amex, all their results are better, productivity is better. That's it.
POM. Will you let me skew around for a moment to, again, the RDP. The budget allocation for it this year is about 2.5 billion rand.
WC. It's a lot.
POM. You've got this good irony, to me it's a good irony, of Ronnie Kasrils, Deputy Minister for Defence, looking for 1.5 billion rand in order to buy four Corvettes which nobody can justify on any scale. One, do you find that there is a certain irony in the fact that a man who is such a professed communist would be looking for this huge expenditure on what seems to the average person would be, your Mr Average Person, as just expendable?
WC. Have we bought those Corvettes? I don't think we've bought them.
POM. Not yet.
WC. Well we haven't bought them. Maybe we're not going to buy them. I don't think Mr Kasrils, I've never met him, but I don't think in my wildest dreams he was very much of a communist. I think he was a capitalist or he certainly was a different person using communism as his political base. Now that's past him he's become much more practical. That would be my reading of it.
POM. I.e. he's an opportunist?
WC. I don't know. He's a politician so all politicians have got to take all the opportunities that come their way. That's the way I read politicians.
POM. OK, then let me pick up some other numbers.
WC. Let me ask you again or tell you something, or ask a question. RDP, you talk about RDP, how many houses have we built in this last year?
WC. 728? Nonsense. We must have built many, I don't know the number but over 100,000, because what is your definition of a house? If a man is sitting on the street with only an umbrella over his head and he goes and buys a sack of cement and lays a slab and gets a box or gets some packing cases or whatever and he builds himself a little tin hut, it's a house in his eyes. Very modest and very inadequate in our eyes, but it's a house. What we might have built, if you say 728, we might have built 720 houses with brick walls and windows and toilets and that sort of thing. I wish we had built many, many more, but we have in fact built many houses. It depends what you call a definition of a house. And if all I had yesterday was an umbrella over my head and tomorrow I'm moving into my house which consists of a slab of concrete and some corrugated iron which I've either bought or picked up or done something and wood and I put a roof over my head and instead of a window I've got sacking, I've at least got a house. Now that's what's happening. It's not desirable, but that is moving on a large scale. First of all I don't believe that we will get out of that problem for many years. What will happen is that person who is living in that place, I hope, in one year's time won't be because he will have gone up the scale and got something better, but believe you me the moment he moves up to something better someone will move into what he had before. Now all our statistics are showing that the amount of informal housing, shelter call it, is growing and that you don't have to get a statistic for it, you can see with your own eyes. Go to a squatter camp and draw a line where it was and go and look and see where it's moved to. You say you live in Cyrildene, have a look at Alexandra and see how that's grown, see how that's grown. And you don't even have to go to Alexandra, you can look at the freeway and look down on it. It's growing all the time.
POM. So, just looking to the future, and thank you for the time as always, you seem very positive about the economic prospects of the country. If I were here as not Padraig O'Malley, whatever, or as Mr O'Malley asking you why should I invest my money in this country rather than other places around the world, what case could you make for me to do so here rather than other places.
WC. Invest in the people. Just look at the determination of the people and take a view, are these people determined enough to pull themselves up from where they are and do you think that in five years time they would have all gone one or two rungs up the ladder or will they just slip one or two rungs down the ladder? If it's the latter don't invest, but if you think they are going to raise themselves, bearing in mind the ladder is not going to get higher because of population there will be more people filling the bottom rungs, but if you think these guys are going to move up the ladder as long as the ladder might be and as low down as they might have started, if you think they are going to go up, invest. If you think they are going to fall off, don't. I belong to the group that believes they will go up. I'm not starry eyed about the whole thing, I just think that the signs are much more positive than they have been before and because of that determination of the people, and there is that determination to believe in the RDP and say, "Right that's something for upliftment", because of that I would invest and I believe they will. And I'm not just talking, I'm doing it. I've not invested overseas, I'm doing it here.
POM. Is the capital inflow still exceeded by capital outflow?
WC. No. Inflow is finer than the outflow at the moment.
POM. Figures I looked at three months ago ...
WC. I think you are getting figures from funny sources. Phone the Standard Bank, they will tell you.
POM. Well, the very last question would be, the way you talk, you talk very optimistically which you didn't quite three or four years ago.
WC. No, I'm on record as saying, you asked me whether President de Klerk was genuine in his policy of really getting negotiations going, and I was one of the few people who said he would be because he had said so and I believed him, and I still believe him. I still believe him and he's still got a very important role to play in this country and he's playing it quietly.
POM. OK. Thank you.