Tuesday, May 3, 2016


This article first appeared in the Business Times section of The Sunday Times on 1 May 2016. 

‘THE South African labour market continues to be racialised and gendered, it remains hierarchical with blacks concentrated at the lower levels and the white group occupying decision-making positions.”

This was the conclusion of the Commission for Employment Equity’s 16th annual report on the state of transformation in the workforce.

It’s no surprise the statistics have once again revealed a lethargic pace of racial and gender transformation in the private sector, especially in top and senior management.

The ratio of whites in top management relative to blacks remains extremely high relative to their share of the economically active population — which is a measure of people between the ages 15 and 64, who are either employed or unemployed and who are seeking employment.

Whites represent only 9.9% of the total EAP of South Africa yet they constitute almost 70% of top management.

Africans were the biggest beneficiaries of the decrease in white top management, rising from 13.6% representation in 2014 to a paltry 14.3%.

It is worth noting that they form over 77% of the total EAP.

Further analysis shows that in the public sector, over 73% of top management are African, while the largely white-controlled private sector has only 10.8% of Africans in top management.

Chalk and cheese!

So the question arises: why has the pace of transformation been so slow in the private sector and what should be done to ensure its acceleration?

Ntsoaki Mamashela, director of employment equity at the Department of Labour, puts it down to excuses of “shortage of skills” and lack of “commitment to transformation”.

She points out that the Skills Development Act was promulgated in 1998 and for 18 years companies have had clear guidelines on developing the skills of their workforce.

If you are depressed by the poor ratio of Africans in top private sector management positions, you will be horrified by the report’s observations on skills development.

At top management level, the report says, the white group benefited the most from skills development opportunities.

“What the designated employers are reporting is that preferential treatment is given to the white group at the expense of the designated groups in terms of skills development,” it says.

So South African companies are training a higher proportion of their white employees over their black employees, yet they argue that a shortage of skills is the reason they don’t have black top managers.

I often hear business leaders and government officials say “transformation is a business imperative”.

The Commission for Employment Equity also says “transformation does make business sense. No business will survive in the long run unless it reinvents itself and constantly adapts to the ever-changing demands of an increasingly competitive global environment in which it operates.”

In this context, the term “transformation ” carries two connotations.

One refers to transforming the racial, gender and broader demographic profile of employees, suppliers and owners of a company.

The other is more of a global and universal connotation. This refers to transformation of a business model, culture or even the product or service offering of a company in order to remain competitive in a rapidly changing world. Think Über — a service that used mobile technology to transform the taxi industry.

Those who want to argue that transformation, in the South African context, makes business sense conveniently confuse the two connotations.

If that were true, how do we explain the lily-white top management teams that have led South African business since 1948 to date?

Even if one argues that apartheid protected the status quo until 1994, how then do you explain the past 22 years?

How is it that multibillion-dollar companies have not only flourished but more than doubled their value in the past 20 years, yet their best record, as a collective, over the two decades, shows the 10% white population controls almost 70% of all business decisions?

We all know about the meteoric rise of Capitec.

Fourteen years ago, the bank’s share price was R2.

Today it’s just under R600. I don’t recall the company ever crediting its amazing growth to transformation, notwithstanding the fact that its core customers are Africans.

It’s a farce. For most business leaders, transformation is not a business imperative and frankly, does not always make business sense.

For them, it is a government requirement that is at best an inconvenience and at worst a destroyer of value.

Case in point is the CEOs of mining companies. They argue their companies should only have to do one BEE transaction in their lives.

They say when the BEE shareholders eventually, and rightfully, exit to realise value, the company should be allowed to remain 100% white-owned into perpetuity.

To them it “makes no business sense” to require mining companies to always have meaningful black shareholder participation.

Let’s wake up and smell the coffee. Enough with the carrots — it’s time for the stick.

Take off the kid gloves and deal decisively with these transformation dodgers.

Or history will judge us as a bunch of cowards who dishonoured the blood of those who died for this freedom.


This article first appeared in the Business Times section of The Sunday Times on 24 April 2016.

One of the key success factors of the apartheid system was the meticulous manner in which Hendrik Verwoerd and his cronies ensured that black people, notwithstanding their demographic dominance, remained disenfranchised by virtue of how their living and working spaces were planned.

Townships date back to the late 1800s, when black people were forcibly removed from areas white settlers wanted for themselves.

But the colonists were clever enough not to "throw the baby out with the bath water". They didn't want to lose the benefits attached to easy access to cheap labour, so they built "locations" to place blacks at the periphery of their "whites-only" towns and cities.

They then ensured that the lack of development in these lokasies would keep blacks forever enslaved and dependent on the measly wages earned from working in kitchens and factories - wages designed to be inadequate for a decent living.

The democratic government inherited this huge spatial problem that entrenched and sustained the inequality between rich whites and poor blacks. A problem that many say will take at least a generation to reverse.

The dawn of democracy saw many black people moving into former "whites-only" suburbs and their children attending former Model C schools. These were the lucky ones. Most worked very hard, despite the odds set up by an oppressive system of government, to be able to afford the high house prices and municipal rates and school fees required to be a resident in the 'burbs.

However, the vast majority were left behind.

While the rise of the black middle class added some colour to boardrooms, schools and neighbourhoods that had been exclusively pale, it didn't move the needle on economic inclusivity.

It soon became clear that black people moving into whites-only communities was no way to emancipate South Africans at scale.

We have to do it the hard way.

We have to transform these townships into dignified living and working spaces - and perhaps one day the pride of a truly free society.

This is why I was so chuffed to hear both the Ekurhuleni mayor, Mondli Gungubele, and Tshwane's mayor, Kgosientso Ramokgopa, address the issue of building township economies.

Ekurhuleni has developed five new township economic hubs at a cost of R90-million a year; awarded projects worth R140-million to 20 emerging contractors and will soon take on 100 more, including another 100 construction supervisors, to carry out projects worth R500-million; and awarded R350-million worth of procurement opportunities to local companies owned by women, young people and people with disabilities, as part of the R2.9-billion ring-fenced Mintirho ya Vulavula community empowerment programme.

In Tshwane, the city's free Wi-Fi, branded "TshWi-Fi", has been a tremendous success. Access to data has a very positive impact on the economic prospects of a population. The citizens of Tshwane get fast speeds and 500MB of free Wi-Fi every day. There are now 776 TshWi-Fi zones in the city, according to research firm BMI-T.

Yes, ladies and gentlemen, free Wi-Fi elok'shini.

Just think of the socioeconomic dividends we will earn when our people can establish thriving businesses where they live.

One of my favourite ad campaigns is by Liberty, the owners of Sandton City. The financial services powerhouse founded by Donald Gordon likens its rise to that of its iconic development in Sandton.

"This is the richest square mile in Africa, and the powerhouse of its economy. But it didn't start that way," says the TV commercial.

I long for the day we can read the story of a black South African entrepreneur's rise and liken their journey to the rise of a township.


This article first appeared in the Business Times section of The Sunday Times on 17 April 2016.

The FNB/BER consumer confidence index for the first quarter of this year revealed that despite a slight improvement from the last quarter of 2015, South African consumers continue to have the lowest confidence in their own financial position and that of the economy since the global financial crisis and recession in 2008 and 2009.

This is not surprising given the decision this week by the IMF to cut our 2016 economic growth forecast for the second time in three months, all the way down to 0.6%.

In its latest World Economic Report, the fund gives "lower export prices, elevated policy uncertainty, and tighter monetary and fiscal policy" as key reasons.

Low commodity prices have been with us for a while now, and nothing suggests a recovery any time soon. Tighter monetary policy is also likely to be with us for at least another year as interest rates keep rising thanks to overheating inflation.

At least one South African bank expects the Reserve Bank to increase rates by 25 basis points during each of the three monetary policy committee meetings between now and January next year. That would take the prime rate to 11.25%.

Add to the mix inflation and an expected increase in the bread price, and it's no wonder consumers' confidence is at record lows.

However, if you delve deeper you discover that not all consumers share this lack of confidence.

Apparently, "all consumers are equal, but some consumers are more equal than others", to borrow from George Orwell's dystopian novel Animal Farm.

The consumer confidence index notes that "most consumers still believe that South Africa's economic prospects will deteriorate further over the next year and that it is not a good time to buy durable goods, but a small majority is hopeful that their own household finances will improve".

This "small majority" oxymoron should remind the millions of South Africans who earn a "comfortable living" wage just how fortunate they are, and how much more thankful they ought to be.

The index concludes that "the resilience in the rating of financial positions is driven largely by higher-income households. In fact, over the last five years - a period characterised by generally low consumer confidence - high-income households have been the most confident.

"This has mainly been due to high-income households persistently reporting the highest levels of confidence in their personal financial prospects, even though their rating of South Africa's economic prospects has been low.

"By contrast, low-income households have recorded the lowest levels of overall confidence and the lowest levels of confidence with respect to the outlook for the economy and their own finances. This points to pervasive income inequality."

By the way, the index categorises high-income households as those earning more than R14,000 a month.

So how does that work? How is it that two groups of people in the same country, in the same economy, at the same time, reflect similar low confidence in macroeconomic prospects but are on opposite ends when it comes to their personal finances?

I think the answer lies in the fact that while they share the same geography, the two groups are not in the same economy. One group is in an economy of comfort and, at times, sheer abundance; the other is in an economy of constant scarcity.

In the extreme, tough economic times may mean less abundance for the rich, whereas for the poor they could spell disaster.

When interest rates are hiked, the rich restructure their balance sheets, settle expensive debt and avoid large credit purchases. This is why the "time to buy durable goods" sub-index of the consumer confidence index slumped to its lowest level since the 2008-2009 recession.

Interest rates have increased by an entire percentage point in the past four months, and this has clearly led to consumers waiting it out when it comes to big purchases, especially since most are funded by debt, whether unsecured or asset-based.

For the majority of low-income households, interest rate hikes don't lead to a downgrading of lifestyle or purchasing decisions, mainly because there is hardly any room to make such adjustments.

When your life is about survival and tough economic times hit, there is nothing for you to cut or spend less on. When all your earnings barely pay for the roof over your head, food in your stomach and the clothes on your and your children's backs, it doesn't really matter what some Lesetja Kganyago fellow has to say about something called a repo rate on a Thursday afternoon.

Your life essentially stays the same. Nothing changes.

In a way, that's why the Reserve Bank's mandate of trying to keep inflation in check is so important. I say "trying", because the target range of 3% to 6% is some distance from the 7% recorded in February.

High inflation hurts the poor much more than high interest rates do. Not because they don't have debt, but because they have no room to manoeuvre on a low income that is entirely spent on survival.

So the next time you feel like complaining about your lot in life, think about the millions of South Africans who can't even afford to have the conversation.


This article first appeared in the Business Times section of The Sunday Times on 10 April 2016.

This week, FNB announced its decision to close the bank accounts of Oakbay Investments, the JSE-listed company that holds the business interests of the Gupta family.

FNB declined to provide any reasons for the move, on the basis of "client confidentiality". Oakbay said it did not know why its accounts were being closed, and has demanded an explanation.

The move follows a similar decision by Absa, which late last year notified Oakbay that its accounts would be closed. The matter had remained under wraps until last week.

Another financial services company, Sasfin, which provides JSE sponsor and corporate advisory services to Oakbay, issued its notice to terminate services three weeks ago. It also declined to provide reasons for its decision.

Then there was KPMG, whose CEO sent an e-mail to staff about the firm's decision to resign Oakbay's audit.

Credit to Trevor Hoole for taking the time to explain the move.

"The recent media and political interest in the Gupta family, together with comments and questions from various stakeholders ... have required us to evaluate the continued provision of our services to this group ... " Hoole's e-mail reads. "We have decided that we should terminate our relationship with the group immediately."

Before making the decision, KPMG had apparently consulted regulators, clients, analysts and the firm's own risk department.

It has emerged that both Absa and Sasfin made their exit decisions soon after "9/12" - the events of December 9, when Zuma replaced finance minister Nhlanhla Nene with David van Rooyen.

When the markets plummeted and South Africa lost billions in those "four days in December", it was in part business, led by the banking industry, which successfully lobbied for Zuma to reconsider his decision, leading to the reappointment of Pravin Gordhan as finance minister.

Is it coincidence, then, that two of the country's biggest banks have decided to dissociate themselves from the Gupta family at this time? Oakbay sees the banks' moves as "part of a carefully orchestrated political campaign" the banks have allowed themselves to be dragged into.

My first issue with these events is consistency. I recall the two big investigations carried out by the Competition Commission a few years ago. One related to collusion in the construction industry to build the 2010 Soccer World Cup stadiums, and the other to a bread cartel.

The construction case exposed a well-orchestrated crime by South Africa's biggest construction companies. In summary, they sat in boardrooms and agreed how they would price their tenders to influence who won which contract.

This led to the fiscus paying much more than it should have for the stadiums.

The big construction companies took advantage of the situation and there was nothing we could do about it. Well, until Tembinkosi Bonakele and his team bust them.

To put it into perspective, Aveng, Murray & Roberts, WBHO, Stefanutti and Basil Read have paid a total of R1.5-billion in penalties for their role in the collusion.

This excludes any potential civil claims that may be instituted by the municipalities and the South African National Roads Agency.

So, basically, the construction industry stole from the South African government, was found guilty and paid fines for its crime.

If the "state capture" allegations and negative reputation of the Gupta family are the core reason for the banks and audit firms to ditch them, shouldn't the same or even worse have happened to the construction companies and bread cartels?

Did they not pose a "reputational risk" to their audit firms and banks?

My second issue is that no reasons were given. If Oakbay is correct that the notices from FNB and Absa provided none for the closure of their accounts, I am concerned. And if that is allowed or considered normal practice, I am alarmed.

If there is any suspicious activity on one's bank accounts, the law requires banks to report these for investigation, but to close an account and not provide any reasons to the client can't be right.

I do not want to believe that public opinion, "state capture" allegations and negative media reports about the major shareholder of a listed company are reasons to shut the bank accounts of that company and not even inform it of the reasons.

Irrespective of how we may feel at a particular time, we must be careful about taking permanent decisions based on temporary circumstances.

It is the prerogative of every business to decide who it chooses to have as its clients, just as Zuma has the prerogative to appoint who ever he wishes as minister of finance. But as we recently learnt, prerogative is a right or privilege exclusive to a particular individual. In the national interest, this right must always be carried out responsibly.

Just as the business community, especially banking, expected Zuma to change his mind after 9/12, which he did despite his prerogative, banks should provide clear reasons to their clients when they choose not to service them any longer.

What's good for the president is surely good for the CEO.


This article first appeared in the Business Times section of The Sunday Times on 3 April 2016

THIS week, the Department of Trade and Industry held a conference to discuss the illicit practice of “fronting” in broad-based BEE transactions.

“Fronting” refers to a deliberate circumvention of broad-based BEE whereby an entity claims BEE credentials by misrepresenting facts. In short, it is lying about one’s BEE credentials.

Its most common practice is having black people registered as shareholders and directors but with no beneficial ownership of their equity and no say in running the company.

In a typical broad-based BEE fronting deal, the economic benefits of the purported ownership or directorships would flow disproportionately to the black people, if at all, and the lion’s share would be pocketed by their white counterparts.

Over the years, we have seen many reports of cases in which domestic workers and gardeners discovered they were BEE partners of their unscrupulous white “masters ”. These have never been investigated and prosecuted. Well, until now.

Recent amendments to the Broad-Based BEE Act make “knowingly engaging in a fronting practice” a criminal offence, the penalty for which is a fine, or up to 10 years’ imprisonment, or both.

In addition, a person convicted of fronting will be disqualified from business with any organ of state for 10 years.

The “domestic worker” cases are the obvious ones, and it’s easy to see the injustice and accept that those who engage in such practices should indeed be jailed and never be allowed to do business with the state, or any one else for that matter.

However, the truth is that fronting has been happening for many years, in a much more sophisticated manner and by much more sophisticated people than some scruffy, khaki-wearing “master ” hoodwinking his unsuspecting gardener.

In the late ’90s and early 2000s, every major South African company was under tremendous pressure to do a BEE deal. CEOs and chairmen had accepted there was no way to stop or even slow down the government’s transformation agenda. To prosper in the new South Africa, one had to introduce broad-based black shareholding.

But there was a problem. These companies were worth billions, and “selling” 26% to black people with no money, on commercial terms, appeared near impossible. The popular view was that markets and shareholders would hate it, because whichever way you looked at it, a BEE deal would be dilutionary.

So these billion-rand companies had to think of ways to tick the BEE box without giving away the crown jewels. They had to appease a Pretoria that was unwavering on economic transformation, but they also had to retain the support of Stellenbosch and Cape Town, the capital cities of South African asset managers.

A number of CEOs at the time would call BEE “giving away value to black people”. Of course, this was never said in public, with every major company CEO singing the praises of BEE and how it was the “right thing to do”. The truth is that many resented it and worked hard to devise ways to be seen to be doing the right thing without really doing it.

Enter the investment bankers, in those days the smartest guys in the room with their double-cuff shirts and Porsche 911s. Their job was to come up with structures that looked like bona fide BEE deals with minimal value leakage for white shareholders and, where there was a gap, an opportunity to profit from this BEE thing.

As you can imagine, most of the mergers and acquisitions at this time involved BEE deals, and lots of effort went into devising BEE schemes that could be sold to clients. Hundreds of millions of rands in fees were earned by lawyers and bankers for designing and implementing structures for the optimal BEE deal for their clients.

One of the popular schemes was the special purpose vehicle structure. It had two variations.

The first was to introduce black shareholders, through a special purpose vehicle, at the level of the mother company.

The white company’s shareholders would “lend” the black shareholders funds to acquire the shares. The black shareholders would cede their dividends to service the loan and interest and, at some point, the share price would have increased so much that a partial sale of the shares would settle the original loan plus interest.

The upside was that the BEE shareholders were the rightful owners of the equity at the mother company level on day one. Tick. The downside was that the equity was obviously encumbered, and the settlement of the debt depended on a consistently growing dividend income that outpaced the interest charge and, of course, also a flourishing share price.

As we now know, many such structures fell apart mainly because the shares didn’t perform as anticipated, dividends were not consistent and, as investment bankers say, the deals eventually went “under water”.

The second SPV variation involved setting up a new company. This was initially a shell that issued 26% shareholding to the BEE shareholders at no cost, with the balance of the shares owned by the white mother company .

The “newco ” would then be the official BEE company of the group. The original mother company, or crown jewel, would remain 100% white-owned and the BEE company, with its 26% black shareholding, would be the vehicle used for all government-related business.

One could recognise the products of these BEE deals by their names — often some mixture of the mother company’s name and some African verb, like “siyaya”, “siyakhula” or “ses’fikile”.

This was a great deal for the white company. It got to do a BEE deal and got a cool black name without giving away any share of the mother company.

The white company didn’t have to fund the BEE shareholders or wait for them to raise capital to conclude the deal. Best of all, the group had a new subsidiary, with politically correct credentials and an incentivised team dedicated to securing government business.

The white companies didn’t stop there. They would often charge the BEE company a management fee for back-office services — sales support, marketing support, office space and so on — and this would often be a percentage of the revenue generated by the BEE company,
which further undermined its margins from whatever government business it secured.

The white companies also recognised they had to sustain the facade that the BEE deal was a group-wide transaction. There had to be a link of sorts between the mother company, which remained lily-white-owned, and the BEE company.

To achieve this, the mother company would appoint to its board the key person in the BEE consortium, who was often a politician or struggle stalwart.

His job, other than ticking the box of being a black director, would be to report to the main board all the “business development and stakeholder management” tasks being carried out by the BEE company on behalf of the group — further entrenching the facade that a group-wide BEE deal had been concluded.

He would earn board fees, the status of being on a listed company board, in return for protecting the group’s interests with the government and regulators.

We never called this a front; we called it a partnership.

As I mentioned, in a typical broad-based BEE fronting deal, economic benefits attached to the purported ownership or directorships would disproportionately flow to black people, if at all, and the lion’s share would be pocketed by their white counterparts.

The reality is that the mother company never transformed. Instead, it pocketed most of the economic value created by the toil of the black shareholders in the BEE company.

So how was this not fronting?


This article first appeared in the Business Times section of The Sunday Times on 27 March 2016  

ON February 18, the South African accounting profession was shocked to learn that the much-anticipated results of the South African Institute of Chartered Accountants’ assessment of professional competence exam were no longer to be released the following day, as scheduled. 

The reason for this delay was the discovery of a “leak” of a confidential work paper from an audit of a client in the same industry as the case study the exam was based on. 

In the APC exam, candidates are furnished with a case study, without the question, five days before the exam. They are encouraged to discuss it in study groups that include trainees from various accounting firms. I am told that this time the case study involved a healthcare company.

Apparently, two trainees at PwC’s Port Elizabeth and East London offices distributed a client work paper to colleagues during preparations for the exam. The information quickly spread to all other firms, including small and medium-sized firms.

Keep in mind that at this preparatory stage, nobody knows what will actually be required in the exam.

Most of the work is about getting to know as much as possible about the case study industry, to be best prepared to answer whatever question comes up in the exam.

I am not sure how much of an advantage, if any at all, an audit work paper would have been to the candidates.

However, the real issue in this entire debacle is ethics and confidentiality, the cornerstones of the audit profession.

For PwC, its trainees have shared confidential client information with the outside world. There is no question that this is unacceptable and ought to be a dismissible offence.

I am told that the firm has dismissed at least 11 employees as a result. However, others have received a slap on the wrist in the form of written warnings and continue to work for the firm.

Apparently, the firm has decided to distinguish between trainees who knew they were disseminating confidential information and those whom it has deemed “would not have known” they were sharing confidential client information when they forwarded the work paper to their friends.

The further complication here is that, according to the Association for the Advancement of Black Accountants of Southern Africa, this decision seems to have prejudiced black candidates more than white candidates among those who were guilty of leaking the working paper.

PwC must be consistent in how it applies sanctions to the guilty parties.

Surely the principle should be based on whether one shared confidential client information with unauthorised parties.

As a matter of course, chartered accountants are required to refrain from “disclosing outside the firm confidential information acquired as a result of professional and business relationships without proper and specific authority or unless there is a legal or professional right or duty to disclose”.

Therefore, if found guilty, all these trainees must pay the price. Claiming to “not have known” cannot be a defence.

For Saica, the potential issue would be that candidates received information that was not in the public domain, in contravention of the APC regulations.

The obvious problem with this is about information you as a candidate already know.

During my articles, I was on the McCarthy Group audit for three years.

If the case study during my board exam had been about the car retail industry, I couldn’t possibly have undone the information I knew and I could quite easily have told my study group of my insights without necessarily e-mailing a confidential work paper. My study group and I would naturally have had an advantage over candidates who had not had the experience and exposure I would have had in that industry.

I suspect Saica accepts this risk, and its issue in this instance would be about the dissemination of this “non-public” information among the candidates, not what candidates knew as a result of their experience.

Apparently, as many as 300 candidates of the 2 709 could have had access to this work paper before sitting for the exam.

I am told Saica has requested candidates to submit sworn affidavits voluntarily, in which they should admit to any involvement in passing on the confidential information. It’s interesting to note that the request is not for those who had access to the information but, instead, those who passed it on.

It seems the emphasis is on the unethical behaviour of sharing confidential information as opposed to the potential benefit those who saw the work paper may have had in the exam.

I am further informed that some firms have instructed their trainees not to respond to this request. It appears there is little co-operation between Saica and the firms in this investigation. I suspect the two may have different interests, with the institute wanting to preserve its credibility and that of the APC exam, and the firms maybe interested in protecting the perceived integrity of their trainees and retaining their clients.

Of course, the downside of this strategy is that Saica expects trainees to tell on themselves. I don’t see that happening. It’s just not human nature — not even for accountants, especially those who have been sharing confidential information among themselves.

It follows, therefore, that trainees who are found to have conducted this contravention would be subject to disciplinary proceedings. It is, however, important that both PwC and Saica follow due and fair process in the investigation and that the ultimate decision on a sanction be based on an independent assessment of the circumstances of each candidate.

Anything short of this will surely escalate the racial tension, with the firm being accused of being tougher on black candidates than white ones.

More important, this matter has to be fairly resolved to maintain the ethical reputation of the profession.


This article first appeared in the Business Times section of The Sunday Times on 20 March 2016 

LESETJA Kganyago’s announcement that the Reserve Bank’s monetary policy committee had decided to increase the repo rate by a further 25 basis points appears to have been overshadowed, perhaps rightfully so, by Deputy Minister of Finance Mcebisi Jonas’s bombshell that he resisted attempts to be “Guptarised”.

The deputy minister’s statement carried extensive economic context, including that “the current economic climate presents many risks for [the] country, which requires responsible leadership to avoid a full-blown crisis”.

He called on South Africans to “unite on the key issues relating to managing the macroeconomic risks” and said that “the extent to which we are able to navigate the current macroeconomic challenges, restore investor confidence and rapidly stimulate growth will depend on heightened levels of political leadership”.

In the context of the big reveal, it appears that the deputy minister was suggesting that the threat of state capture poses a macroeconomic risk to our country.

This risk becomes pervasive when no answers are provided to the constant rumours, innuendo and now firm allegations around one family’s personal relationship with the president.

It’s worth noting that the deputy minister’s press statement was issued by the National Treasury and not in his personal capacity.

Back in Pretoria, the Reserve Bank’s monetary policy committee was engrossed in its scheduled three-day meeting, and one would expect its six members to have had little time to pay attention to the latest instalment of Guptagate.

Before them was the unenviable task of deciding on monetary policy in a difficult economic context.

Inflation is still overheating, with the Reserve Bank expecting it to peak at 7.3% in the fourth quarter and end the year on an average 6.6%.

This is well above the 3% - 6% mandate range. However, the committee’s decision was not straightforward this time around.

The rand has staged a mini-comeback since the committee’s last meeting with a 4.5% recovery against the dollar.

The electricity tariff increase awarded to Eskom came in at 9.4% for 2016-17 as opposed to the 16.6% initially requested.

Even on the inflation front, things improved slightly, especially in relation to its long-term forecast.

At the committee’s last meeting, inflation was expected to peak at 7.8% by the fourth quarter. That number is now 7.3%.

Yes, it is still well outside the target range, but this slight improvement has led to a “within range” forecast of 5.5% in the fourth quarter of next year, giving us some much-needed light at the end of the tunnel.

All of the factors above led to three committee members favouring the 25 basis point increase we eventually got, with the other three members preferring no change.

“Ultimately the committee decided on an increase,” it said in a statement.

I am told Kganyago would have been called on to make a casting vote on the matter, given the deadlock.

So, in one week, two very big and very tough decisions were made by two leaders in the economic cluster of South Africa.

One is second-in-command at the Treasury. The other is the governor of the independent Reserve Bank.

The last time South Africans saw the two together was at the budget speech 2016-17 press briefing.

They were seated next to each other alongside Minister of Finance Pravin Gordhan and an empty seat, presumably meant for SARS commissioner Tom Moyane. The irony in all this would make for a riveting bestseller.

In any case, Guptagate will continue for months. More victims of attempted Guptarisation are likely to emerge, and perhaps those who were successfully Guptarised will come out, too.

As for you and me, the reality is that we are now paying a prime rate of 10.5% for our mortgages.

Inflation continues to undermine the purchasing power of our hard-earned income.

Perhaps we, too, could do with a ministerial post