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JEREMY MAGGS: Never one to pull her punches, Magdalena Wierzycka, chief executive officer of Sygnia, has come out guns blazing, saying South Africa has crossed the line into a failed state. She has also suggested that more pressure be put on government to move next year’s general election forward to 2023.
MAGDA WIERZYCKA: Jeremy, I think that we are all acutely aware of the fact that we are not even talking about the economy flatlining, we are now talking about the economy going backwards. We are talking about the fact that we have no plans to deal with job creation in any possible way. We have nothing in terms of improving, and I’m just going big picture here, improving education and the quality of education in South Africa. We have, and it clearly doesn’t come as any surprise to anybody, we have no electricity and that is just going to get worse. We have no support from government for the private sector and when I talk about the private sector, I’m not talking about big business, I’m talking about SMEs, there’s absolutely nothing and we have a very poor government in charge.
So we are looking at things that…a couple of years ago, we were willing to almost accept passively, we were willing to accept the fact that we have a poor government in place, as opposed to, as we now know, a completely incompetent one.
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We were willing to accept, surprisingly, that there is no job creation. Actually, we now have a situation in government that is actually actively destroying jobs through incompetence. Never mind we have, and we were willing to accept, no support for businesses.
Now, again via the electricity crisis we actually have a government who are just sabotaging businesses. No longer not supporting, just sabotaging, and again we were willing to accept a kind of flatlining economy. We now have a situation where again, and I’m going to lay all of it at the door of the government, we have a government which is killing the economy. We were willing to accept that we had some deficiencies in terms of our ability to deal with terrorism, and money laundering, now we find out that we are actually the centre of money laundering and sabotage. Hence, we have again a situation where we are grey listed.
JEREMY MAGGS: Why do you think we’ve gone backwards so quickly?
MAGDA WIERZYCKA: Jeremy, I think the situation is not a new situation, it didn’t evolve since Cyril Ramaphosa came into power, this has been a slow spiralling downwards of the economy, of a lack of cohesive economic plans, lack of maintenance of infrastructure, lack of dealing with corruption. But there came a moment when (Jacob) Zuma left and we suddenly, out of nowhere, we had this hope that under the new government, which isn’t as new as we were hoping for, that under Cyril Ramaphosa this spiralling downwards will at least halt and that we will see new things happening. Simplistically, prosecution of criminals involved in state capture, just as a data point. Instead, what we have seen is continuous spiralling downwards and, of course, these things tend to increase in speed. So things that were happening slowly are now happening faster and faster.
Hence, I was asked the question recently of are we are failing state, are we a failed state. I think that debate is over, I think most people will accept that we are a failed state.
JEREMY MAGGS: As far as the president is concerned, is he simply a disappointing and a weak leader or is he held hostage by his party and forces that he simply cannot control?
MAGDA WIERZYCKA: That’s and interesting question because under Jacob Zuma, of course, we saw a president who could swing the cat by its tail, change Cabinet 20 times over and didn’t seem to be controlled by his party.
We now have a president who, the kind of words that I have heard bandied around, which I think are very appropriate, is we have a president who is non-strategic and indecisive.
So could he control the party, of course he could. Could he change the Cabinet, of course he could. He’s not doing any of that. So then you’ve got to look at the personality and say what is it that has made him the person that he is, incapable of governing this country.
JEREMY MAGGS: What happens if the current trajectory continues?
MAGDA WIERZYCKA: It’s almost too horrifying to think about and it’s too horrifying that right now, this morning, I was sitting with my executive team at Sygnia and we were planning for stage nine load shedding, collapse of the grid, the JSE coming to a complete halt. We were talking about the fact that we now have to buy batteries and inverters for all of our staff so that we can at least maintain our systems if they are stuck at home.
That we can maintain our systems because we cannot afford to shut it down as a financial services institution. So whatever data we have, we have to run administration batches. If this continues, it’s too horrifying to think, then I think you will have significant decline of the formal economy as we know it, we will have an even greater emigration of skilled people across the board out of South Africa. It’s really too terrifying, I don’t know, we go back to a subsistence economy.
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JEREMY MAGGS: When you engage with the investor community, in other words, your clients, what are they telling you?
MAGDA WIERZYCKA: It’s interesting, as you know, I spend some of my time in London and when I engage with the investment community in London, and this is quite a thing coming from the UK because the same could be said about the UK, but effectively the verbiage is that South Africa is uninvestable, no one is that interested, no one is going to spend any huge amount of money on investing in infrastructure on any level of fixed investment in South Africa. So that’s the international community. The South African investors, given the limitations on foreign exchange controls that we have in place, what can they say, you have literally around 40 sufficiently liquid shares on the JSE that you can invest in. So what can they say, other than listening to our economic and political sides when we give our clients feedback and asking the same questions you are asking, they are not in any different space.
JEREMY MAGGS: How should local businesses be planning?
MAGDA WIERZYCKA: The interesting thing about local business is that it has become, and that’s also a good indicator, it has become a lot more vocal. When Jacob Zuma was in power, I remember I was taking an activist stance, for want of a better word, and really it was just posing questions and criticism. I used to say that I expected the business community to be right alongside me but actually what happened is I looked left, I looked right, and I was the only person on stage.
Whereas this isn’t what’s happening now, I think everyone is suffering from the burden of load shedding, in particular, and that translates itself into absolutely everything from the ability to just run businesses, business continuity, staff employment, the ability to increase salaries, profitability of companies and as a consequence of what we’re seeing is business being a lot more vocal, a lot more critical of what’s happening in government.
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JEREMY MAGGS: What stops you from closing up shop and giving up?
MAGDA WIERZYCKA: I’ve got 300 people I employ; I’m hardly going to throw my staff to the wolves. I have over 100 000 individuals who have committed their savings to Sygnia, I am hardly going to close down shop and say to those investors, sorry guys, personally I can afford to emigrate, so you’re on your own. Besides that, Jeremy, I was in immigrant, and I have been a refugee and, frankly, I don’t want to be that again, I’ve been through that experience, I’ve seen my parents go through that experience. We arrived in South Africa, and we built our lives in South Africa, it will take a lot for me to give up that life that I have. I would rather become the unpopular voice, if you want to call it activism again, then call it activism. I would rather become that than pack up my bags and say that I’m giving up on South Africa.
JEREMY MAGGS: So finally, then where do you start repairing it if you can?
MAGDA WIERZYCKA: That’s a big question because you cannot repair it without government being willing to do so. Certainly, business has repeatedly offered to help and that doesn’t seem to be taken by government in any meaningful way into consideration. Frankly, what I would like to happen and it’s going to be quite a radical statement, I’ll probably get arrested, but I would like people to take to the streets and call for the national election to be brought forward to 2023. I do not see any reason why at this stage we have to wait until 2024 to have our voices heard, let’s do it in 2023, this is a democracy. We have every right to demand that.
JEREMY MAGGS: Magda Wierzycka is the chief executive officer of Sygnia.
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