The CEO’s Message

The CEO's Message

Our country pushed the reset button at the beginning of this year. The President encouraged us all to look to a new dawn; to ask how we each might contribute to the future of this beautiful land. And yet, as we now know, tackling our socio-economic challenges is neither quick nor for the faint of heart.

If we needed a reality check: the Q1 2018 GDP numbers showed a 2.2% contraction. A shrinking economy puts all citizens under pressure as opportunities for business expansion and increased employment reduce. And at the same time, adapting to the Fourth Industrial Revolution will require competence in a range of new skills and an agile approach to the way we do things, as the pace of change continues to accelerate.

As we move forward, it is important that as a country, we focus on tackling head-on the pertinent challenges that we face and focus on what we do well. At a recent brainstorm in which I participated, we identified the following as immediate priorities for the renewal of our country: accelerating implementation capacity in the state by crowding in relevant skills (CFOs, COOs, and so on) from the private sector; implementing credible turnaround strategies for strategically important SOEs; dealing decisively with the need to downsize certain SOEs and the spin-off of others; building a national capability and narrative around key issues, such as why growth matters, what we do well and what we are doing to tackle our weak spots; making sure that those attending the upcoming Jobs Summit are properly mandated to propose solutions to best tackle identified constraints in the identified industries, and to offer commitments to a meaningful number of jobs once those constraints are addressed; ensuring that the upcoming Investment Summit successfully targets the right investors, and lands credible investment commitments; significantly progressing at least one major corruption case; and proactively addressing the issues of land and the independence of the SARB – both of which are seen by investors as signals of future policy direction.

Growth won’t just happen because we will it to happen – we have to work hard at it. So, as corporate SA, it is a time for reflection and for us to ensure that we shoulder our part of the responsibility of national renewal. And, at the JSE, we take our role in this regard very seriously.

There is no doubt that recent failures in some corporates have shaken the public’s trust in the fairness of the financial market ecosystem and heightened the expectation that regulators, like the JSE, must do something to hold some-one accountable.

This is completely understandable. As Prof Michael Katz observed in a recent article, regulators such as exchanges should not venture to express a view on the commercial benefits of an investment – and indeed none of our global peers do. But we are considering whether recent events would indicate a benefit in enhancing disclosures made by issuers or, indeed, whether additional guidance on the execution of ethical and governance responsibilities would be of assistance.

Another area we are discussing with the Financial Sector Conduct Authority is whether it would be possible to provide more regular guidance on the progress of investigations into possible market abuse – in doing so, hopefully giving observers comfort that possible abuses are indeed being investigated.

This is not the JSE’s role alone. There are many cogs that make up SA’s financial market ecosystem and it is crucial that these all work together, to create a robust governance ecosystem that is trusted by investors. How that system works together – from the JSE, to regulators, asset managers, pension fund trustees, company boards and subcommittees, analysts and auditors – is of utmost importance in ensuring that it meets world-class and emerging-market standards. A failure by all role players to take the hard actions necessary to build growth and confidence will risk the country once again facing the stark reality of a downgrade.

So, let me end with the reflection that we have what it takes as a people to make the potential and possibility in our country a reality. We should own the fact that our future is in our hands and commit to conducting ourselves in a manner that makes that future one in which we have achieved a growing, prosperous and inclusive SA.

Nicky Newton-King
Chief Executive Officer
Image: Haleema Rawoot