Whitey Basson is sceptical about the prospects for South Africa’s economy.
“Maybe we should all go to sleep until 2023,” the retail doyen behind much of the success of clothing chain Pep and African supermarket juggernaut Shoprite tells the FM in an interview. Only then, he says, once the ANC’s December elective conference is done, will any real decisions be taken.
Basson, 76, reveals that he has offered his help to President Cyril Ramaphosa’s government to fix any department that needs it. “I don’t want to work,” he says, “but will try to sort out an area for them without pay — I don’t want money.”
It’s the CEO equivalent of Ramaphosa’s “Thuma Mina” (send me) slogan back in 2017, when as newly elected ANC president, he invoked Hugh Masekela’s song to tap into the vein of volunteerism to reverse the debilitating years of Jacob Zuma’s presidency.
And while Basson doesn’t need the money, you’d think he has plenty to offer an economy parched for sage management.
When Basson retired as CEO of Shoprite in 2016, he left a company ranked as the 86th-largest retailer in the world, with 130,000 people employed in 15 African countries. This is perhaps SA’s greatest retail success story: a struggling eight-store grocery chain in the Western Cape, bought for R900,000 in 1979, that had become a pan-African titan worth R114bn when he stepped down.
Basson says those in power still take his calls — even if that often takes a party trick. When he hears a personal assistant’s hesitation about putting him through, he quips that he and the boss share the same girlfriend and they need to talk. “It works like a charm and I get put through immediately.”
It’s trademark Whitey: always ready with a joke, often disguising a serious message in his humour. It’s why his Shoprite results presentations were such a hit.
He is still able to get hold of Ramaphosa, though.
“I’ve known him for a long time, but I don’t worry him with nonsense ... I just hope that he makes his second term,” he says. But, Basson warns, unless Ramaphosa has the full support of his cabinet, it’ll be difficult for him to implement meaningful economic policy.
You’d think Basson has the kind of strategic turnaround skills that the president might want to be using in service of the wider economy.
As former JSE CEO Nicky Newton-King tells the FM, veterans like Basson could play a vital role in revitalising industry.
“Business has lots of experience in clarifying strategy and driving execution, and a shared desire to see our country succeed,” she says. “Bringing in seasoned businesspeople who have no political ambitions would help accelerate so many of the critical programmes that need to be delivered if we want growth.”
Pairing these veterans with youngsters, Newton-King argues, would create a new cohort of South Africans with “strategic and execution muscle, and an understanding of how the state works”.
Nolitha Fakude, a director of the JSE, Discovery Bank and Business Leadership SA, says others have done it too. Take former Absa boss Daniel Mminele, who heads the presidential climate finance task team, and former Sanlam CEO Ian Kirk, who is on the board of the presidential state-owned enterprises council. Then there’s former Standard Bank CEO Jacko Maree, who is an investment envoy for Ramaphosa, and Gloria Serobe, who led the Solidarity Fund during Covid.
Not that these corporate leaders have all the answers. When asked what his master plan would be to fix the economy, Basson admits he doesn’t really have one.
“I do not know if anybody has such a plan. There’s a helluva lot of potential if we can channel all the funds, brains and expertise in the right direction, [but] I don’t know how to solve it, because the whole system is so infiltrated with party politics,” he says.
But what he is clear about is that the solution won’t come from committees, meetings and commissions. “It needs action by the people [Ramaphosa] trusts,” he says.
The magnitude of the task is immense.
After finance minister Enoch Godongwana’s medium-term budget policy statement two weeks ago, ratings agency Moody’s lauded the “better than expected revenue outcomes”, and “lower than expected debt levels”. But it warned that Eskom “will remain a drag on the South African economy”.
GDP growth is also too low to meaningfully dent SA’s 33.9% unemployment rate. In June, the International Monetary Fund said South Africa “needs to urgently remove obstacles to private investment and encourage competition to reignite economic growth”.
And, the institution pointed out, there is a “large gap between encouraging policy statements and reform implementation”.
It is this gap that keeps business awake at night.
Fixing the broken windows
For his part, Basson argues that you have to break up the economic recovery plan into bite-sized chunks — fix one project within one department, and expand from there.
“You can’t have a department that issues permits or whatever that doesn’t work, and the window frames aren’t painted, or the staff isn’t available,” he says.
Instead, officials should model themselves on departments that work in other countries — buy the software they use, implement their strategies here. And paint the offices.
Altering the course of a country is obviously more complex than fixing a listless retailer — even if Basson’s success in doing the latter is the stuff of legend.
In 1992, when he bought Checkers, it was losing R45m a year. He turned that to a profit within nine months. He did the same with the 319-store OK Bazaars, which he bought in 1997 for R1 but which was losing R20m a month. Both were folded into the Shoprite group.
One thing he did do, which Ramaphosa ought to emulate, is trim the perks.
Immediately after buying Checkers, he famously went to lunch in the company’s executive dining room, where white-gloved waiters served a three-course meal. To Basson, this was heresy for a retailer, so he scrapped it — and it was back to Tupperware lunches for the top brass.
Which almost seems the opposite of what’s happening in the government, amid revelations in recent weeks that ministers enjoy free water and electricity, vehicles worth R800,000, and as many as 15 personal aides. Due to the outcry, Ramaphosa adjusted these perks last month.
At Shoprite, he also kept an eye out for how to slash costs. For example, after he was given a long receipt at one of the stores for buying a packet of cigarettes, he redesigned and shortened the receipts, saving the company millions on paper.
Basson says you need to start any turnaround by focusing first on the manageable changes. “I couldn’t turn Checkers around by repairing everything,” he says. “I did fresh things, new things. I made the stores smaller; I closed their head offices; I literally revitalised the businesses without having to cement cracks in the actual business itself.”
Minor steps, such as painting offices, might seem like a needless aesthetic intervention, but it accords with the “broken windows” approach: fix enough of the seemingly insignificant problems, and soon you’re on the way to fixing the whole.
There are plenty of places where you could start — including South Africa’s broken police service.
As detailed in last week’s FM, despite a surge in boots on the ground, and more money thrown at the police, the murder rate rocketed 20% between 2012 and 2020, while aggravated robberies soared 42.9%.
This, however, is largely a case of inept management, as was demonstrated clearly by last year’s July riots.
As Basson tells it: “Our biggest problem is we have a police force that can’t control the security of the country.”
But, he adds, were he without money to feed his family, with no job and no prospects, he’d also be tempted to steal. “I’d do everything in my power to look after them,” he says.
Mteto Nyati, former MTN SA CEO and now a nonexecutive on Eskom’s board, tells the FM a “broken windows” approach is a solid place to start.
“To me, the leadership matters,” he says. “Just making sure that in these institutions you have the right people leading them, they set the tone. It’s like a school which puts in the right principal — it changes everything.”
Still, it’s one thing to say it, but quite another to reverse “the effect of bad management” going back 14 years, says Basson.
“The problem is, we are just not a rich-enough country to repair the damage that has been caused to our total infrastructure,” he says. “I once said to one of the ministers in cabinet: ‘Forget about South Africans being impoverished, you’re going to go bankrupt through your municipalities, because nobody has added that sum up to what their debts are.’ You can see it now, with the lack of maintenance of roads and infrastructure.”
One solution is to professionalise the civil service. Rather than officials being hired — and kept — because of their loyalty to the ruling party, they ought to be hired based on their competence.
ENSafrica chair Michael Katz spoke of just such a change last month, telling the FM there is a need to create a “competent, independent civil service, which would help in the formulation of policies”. Such a civil service would be a first line of defence against corruption.
On this issue, Basson cites the example of Botswana’s first democratic leader, Seretse Khama. He retained the civil servants of the British administration for the first 10 years after the country’s liberation in 1966, easing the transition to a postcolonial economy.
Eskom’s handbrake on growth
Still, you can hardly blame Basson for being sceptical.
He says the country needs 5% growth to make a difference to unemployment. But the cold water on this aspiration is that even with the best will in the world (of which there is scant evidence in the ANC), Eskom can’t provide the power for that.
Two weeks ago, the utility released its latest power assessment, confirming it won’t be able to meet the country’s power needs between 2023 and 2027.
“The situation will worsen as the plant performance of Eskom’s fleet continue[s] to trend downwards, power stations shut down and demand grows,” the report said.
Even in a low-demand scenario with renewable energy factored in, South Africa simply can’t provide the power to justify investment. So the odds of hitting Basson’s 5% seem remote.
This is especially demoralising, given that commodity prices are sky-high, yet the country can’t woo mining investors as a result of the parlous power supply. And while there’s plenty of talk in government circles, there’s a dearth of action to remedy this.
Says Basson: “South Africa has had too many plans and ministers ... I would need to see improvements before, as a young guy, I’d invest.”
He does flag technology and tourism as potential winners — but they, too, are hobbled by failing public services and municipal incompetence. If this is not addressed, says Basson, “the young people will leave the country”.
Many of the other solutions he speaks of are, of course, obvious, including the need for a light touch on regulation and removing protectionist measures that allow for uncompetitive industries.
It’s a problem he’s seen elsewhere. “That’s why some countries in Africa don’t work — the duties are so high that it stifles prosperity, creating the breeding ground for crime,” he says.
But as much as these remedies have been cited before, it is the implementation of solutions that has been conspicuously lacking in South Africa.
Jabu Moleketi, a former deputy minister of finance and chair of cement company PPC, disagrees with Basson that South Africans ought to pull a Rip van Winkle and wait till after the ANC elective conference.
“As businesspeople, we can’t fold our arms and wait for politicians,” he says. “We must influence the situation — it’s not useful to wait.”
But, he adds, Basson’s sentiments about the need to change direction aren’t misplaced either.
Moleketi has a more savvy sense of the political dynamics than most, given that he still describes himself as a card-carrying ANC member, even if he holds no official party position.
In his view, business wants a consistent message from government leaders — not one tailored to the audience they happen to be addressing. And it doesn’t help when there is a lack of clarity over whether politicians are speaking on behalf of the government or the ANC.
“We need people like Whitey Basson to clearly articulate not just the anxieties of business, but what it is that business would like to see happening,” he says. “We must move away from business just reacting to policy, but business coming up in advance with appropriate economic models [that] deal with the needs and aspirations of all.”
Of course, he adds, it’s not just South Africa battling higher political risk — globally, rising interest rates have tipped the scales in favour of an international recession.
“Political leadership risk has been raised a few notches. [We need] leadership imbued with understanding, courage and depth to deal with this,” he says.
A nose for a scam
What burnishes Basson’s credentials is that he knows a fast one when he sees it.
He was one of the few not to be taken in by the charm of now-disgraced Steinhoff CEO Markus Jooste — unlike his good friend Christo Wiese, who sank R59bn into the furniture retailer in 2014. Wiese, in fact, owes Basson plenty for ensuring he didn’t lose more.
The story is that in 2016, Wiese proposed a merger between Shoprite and Steinhoff. As the chair of both, and the largest shareholder, Wiese saw this as a neat way to create a single African retail giant.
But Basson wasn’t buying it. Not only did he not see the rationale for the deal; he also didn’t trust Jooste. It led to an awkward conversation with Wiese, with Basson saying he wouldn’t agree to insert his staff into a merged “Steinrite”.
“I would have never invested in that style of company,” Basson says today. “[Jooste] bought a lot of nonsensical companies that had no chance of making a proper return on investment, for which he probably overpaid. He was charming ... he took these blokes on trips for rugby. I wasn’t involved, we’ve never been friends, but I know a lot of the guys who went, and I only know one who paid for his own trip.”
Some of his friends were given hunting gear worth thousands of rands by Steinhoff. “If [Jooste] paid for that, it’s fine. But if the company paid for it ... I don’t know how the board approved it,” he says.
Back in 2016, Basson’s protestations gave Wiese pause, so he waited until after Basson retired from Shoprite at the end of the year, before setting about his plans to merge the companies. That delay proved fortuitous.
Basson’s instinctive dislike for Steinhoff’s “Bentley Brigade” and Jooste was prescient. A year after he resisted Wiese’s merger overtures, revelations of a R106bn fraud at Steinhoff saw the shares crater 86%. Wiese, like all Steinhoff shareholders, lost a bucketload.
Had Basson not resisted Wiese’s merger attempt, the union would have taken place before Steinhoff’s collapse — harming thousands of Shoprite investors too.
In 2018, in the wake of Steinhoff’s implosion, Wiese spoke of how he dodged this bullet.
“In some ways, I’m quite lucky to have lost only R59bn,” he said. "If [Steinhoff’s fraud had emerged] just one year later, I would have lost everything.”
Jooste, he said, had been “dead keen to do this”, and the deal was “90% done”, when the fraud emerged, and talks abruptly ended.
Despite all this, Basson and Wiese remain good friends — as you’d expect, considering both went to Stellenbosch University and their careers overlapped at Pep and Shoprite.
Basson clearly still has a good nose for retail. He still visits Shoprite stores and sends notes to his former team when he sees something he reckons should be flagged.
So how does he think his successor, Pieter Engelbrecht, has done?
“He is a professional, and so far has done very well with his market share gains — he obviously would not be as lucky as me to have a big market to take on,” says Basson.
While Shoprite has, like all retailers, had a rough time during Covid, its share price has come roaring back. On Monday, the stock rose 7.8% (it is up 37% over the past year), as it noted that sales growth in its South African supermarkets had grown 19.9% in the three months to October.
But, as if to underscore how hard it is to do business in South Africa, it revealed it had spent R100m extra on diesel per month during that time to keep the lights on during load-shedding.
Basson is full of compliments for Shoprite’s rivals too. Pick n Pay CEO Pieter Boone and Woolworths’ Roy Bagattini are “smart guys” who’re doing well. Pick n Pay founder Raymond Ackerman is “one of the best retailers in the world”, and he says Massmart is doing well with Builders Warehouse, but argues that “if they haven’t closed Game yet, they should”.
Interestingly, he hasn’t yet met Shoprite’s new chair, Wendy Lucas-Bull. “She’s been there for 2½ years and she’s not phoned me. She is probably still too busy,” he says.
Today, Basson spends much of his time holidaying with his family, mentoring younger people, looking after his two wine farms and game lodges, golfing and serving on the odd trust.
He does seem to miss the work, but says he was gatvol of meetings and red tape. “It’s really a stumbling block for any economy and especially for smaller people, because I can still go and see the minister or the president, but the ordinary guy has to go through all that,” he says.
The business travel was also relentless: he’d often fly back from an overseas trip and be greeted by his wife holding a suitcase with fresh clothes so he could change and head out again. “I’ve outgrown that cycle of my life and don’t have the energy,” he says.
Not that he doesn’t still have his vices. “My one son has never smoked, never drunk a glass of wine — I always say I made up for him on all of those accounts,” he says.
And hopefully, one of these days, he’ll get that call from Ramaphosa to help get the country’s economy back on track.
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