Speech to Media24 Academy graduates

2010-01-31 14:00

I have the honour of talking to a group of men and women who are to be greatly admired, for having struggled heroically, and achieved magnificently. These are this year’s grandaunts from Media24 Journalism Academy. I believe in the ideal of the life of struggle, so today’s celebration conjures up Albert Coma’s immortal essay on the myth of Sisyphus.

Camus reminds the reader that consequent to some levity attributable to Sisyphus, the Gods had condemned him to ceaselessly rolling a rock to the top of a mountain, whence the stone would fall back of its own weight.

It is during the pause at the top of the mountain, as he watches the thing bound down to the bottom, that Sisyphus is most inspiring, argues Camus. At each of those moments when he leaves the heights and gradually sinks towards the bottom, he is superior to his fate. He is stronger than his rock. He concludes that all will be well. He is happy with his fate, Camus argues.

Well, I imagine that Albert Camus would have a lot say about your struggle and high achievement. He would say you have pushed the rock up the academic hill. You have struggled, and you have strained as you have studied the material at the Media24 Journalism Academy. You have made a great effort to stretch your intellect with some theory and practice. You have sacrificed. You have achieved and you are here tonight to be acknowledged for your glorious triumph. Even as you receive your certificates, at that moment, you are like Camus’ Sisyphus, at your most admirable. For your rock inevitably rolls down the mountain again. You have to turn and trudge down the mountain and muster up your magnificent courage and fortitude to push the rock up again. As you struggle and arise, you face new challenges. From tonight you are no longer interns. You are journalists. There are new stories to investigate. There are details and data to analyze. There are great stories to write. You will be heroic for being true to the ideal of the life of struggle: dealing triumphantly with the inevitable conflicts and challenges that arise in economic and financial journalism.

Tough environment

Many of us are not too upset to see the back of 2009. Banks found it a difficult year, with rising bad debts, lower asset growth and stubbornly high costs all negatively impacting earnings. I am acutely aware that media houses also had a torrid time in 2009. Advertising revenue shrank dramatically. Staff layoffs were common-place. Added to this, financial journalism faced a number of challenges: pressure of speed due to a 24-hour news cycle; increasing complexity; the challenges of globalisation; and the sustainability of the business model with the changing dynamics created by websites, blogs and other forums.

Looking ahead to 2010

Even after the darkest nigh, the sun will rise. It is my earnest hope that the lower interest rates in 2010, the impact of the Soccer World Cup and a more robust global economy will all do their bit to make 2010 a much better year for all of us. The World Cup alone has some eye-watering statistics which have the effect of exciting one about this year:

• R55bn contribution to GDP.
• Equivalent of 415 000 annual jobs to be created.
• The number of foreign tourists expected to travel to SA estimated at 487 000. This includes 150 000 people from other parts of Africa.
• The amount to be spent by tourists is projected at R8.5bn.
• The expected tax income to government is R19bn.

The importance of journalism training

However, I think it’s important to note that despite the tough financial year in 2009, Media24 has continued to invest in its future through its investment in its young journalists. I know that when earnings are under pressure, businesses will look for ways to reduce costs. One of those would be to cut training programs. However, this is the last thing one should cut, as this is where your future lies. Media24 is a shining example in a barren landscape. Many of your competitors are either doing nothing or very little to build the base of future journalists. For this, I commend you. 

Role of good journalism

I see this investment as paramount, since there is a strong link between the quality of the free press in a country and its economic performance. Koïchiro Matsuura, Director-General of UNESCO (United Nations Educational, Scientific and Cultural Organization), believes that accurate and professional reporting is often the only recourse that society has to combat corruption. He concludes his compelling argument by saying that an “independent, free and pluralistic media have a crucial role to play in the good governance of democratic societies, by ensuring transparency and accountability, promoting participation and the rule of law, and contributing to the fight against poverty”.

India is a most interesting example: it has a newspaper industry which is extraordinary for its freedom and independence. In this regard, Nobel Prize winner Amartya Sen observed that: “India has not had a famine since independence, and given the nature of Indian politics and society, it is not likely that India can have a famine even in years of great food problems. The government cannot afford to fail to take prompt action when large-scale starvation threatens. Newspapers play an important part in this, in making the facts known and forcing the challenge to be faced.”

This is why investigative reporting is so important in South Africa, as it is the most effective means of uncovering corruption and other misdemeanours, in business, in government and in society. This is vital in South Africa given that we rank so poorly on corruption. It is sobering to note that we ranked 55 out of 180 countries in Transparency International’s 2009 Corruption Perceptions Index. Sadly, our score deteriorated when compared to the previous year. This is a matter gravely to be regarded.

Remember your audience

It is trite that what you write gets widely read by government, domestic and foreign investors as well as the public. These people shape their perceptions of a particular company/industry based on what they read in the press. Consequently, I believe that you need to be totally sure that your story is accurate, your facts are right and that your opinions are balanced and not emotive. Remember that if foreign investors make decisions based on what the press writes, then South Africa’s cost of capital is impacted by your words. 

I believe that media houses need to focus on ensuring their journalists specialise in particular fields. It looks to me like the practice of having journalists who pursue particular 'beats' has faded. As a result, journalists are asked to cover sectors about which they sometimes have limited knowledge. The result can be uninformed coverage, or even worse, inaccurate reporting. Specialisation is what makes the difference between poor journalism and good journalism. My plea to Media24 is: please continue investing in future journalists, but then please also allow these journalists to specialise. This should be calculated to make sure that they thoroughly understand a particular sector. 

 

The increased complexity of financial markets

Banking, for example, can be quite a complex animal. For starters, the income statements of banks don’t look anything like the typical industrial company income statement (with sales and cost of sales) that we’ve all studied in textbooks. And then, of course, there’s the industry jargon that takes time to fully understand. Banks are intricately linked to the economy, but complex enough for their performance to differ widely from the general economy.

And to make matters worse, the landscape for banking has changed dramatically since I joined Standard Bank some 10 years ago. It continues to change rapidly post the financial crisis. Consider for a moment that when I started at Standard Bank, securitisation, sub-prime lending and Mortgage-Backed Securities (amongst others) had not mutated to the grotesque beasts that they became in the last couple of years. The regulatory environment is also in constant flux:

• In South Africa, we implemented the National Credit Act (NCA) in June 2007 – a detailed and ground-breaking piece of legislation. Interestingly, some of the proposed amendments to the UK banks act now look fairly similar to the core tenets of the NCA.
• SA banks implemented Basel II in January 2008 – an enormous exercise, but already, Basel III proposals recommending that banks hold more capital and more liquid assets (as well as a raft of other proposals) were released for comment in December 2009.
• Changes in South Africa’s Companies Act and Competition Act coming into effect shortly could have a fundamental impact on the way banks operate. 
• Taxes on banks are being changed regularly. Consider the 50% super-tax on bonuses in UK banks, and Obama’s proposed levy of 0.15% on US bank liabilities to regain the c$100bn loss made on TARP.
• The business of banking is changing. Again, consider Obama’s proposal to detach proprietary trading and investment in hedge funds and private equity companies from investment banks. This could change the competitive landscape dramatically.

This increased complexity, and massively changing environment, has made the work of journalists all the more difficult, which is why I am strongly in favour of journalists who specialise. I do not want to confuse an important point here: journalists don’t have to be economists or financial graduates to be good financial journalists. The journalist who won the award last year for the best coverage of the financial crisis (Gillian Tet of the Financial Times) is an anthropology graduate. But I think it is important for media houses to devote energy and resources to enabling their journalists to develop a deep knowledge about particular sectors and how they operate, hence building long-term relationships.

A plea

I have to avoid giving you advice – for who wants advice from bankers these days? But I may I be bold enough to make a plea:

“Be an advert for your country”. There is just far too much pessimism around SA at the moment. I know the old adage that good news doesn’t sell newspapers, especially in a country that ranks 129^th out of 182 countries in the United Nation’s Human Development Index behind Vanuatu, Tajikistan and Namibia – indeed; we do not even rank in the top ten African countries. But I’m imploring you to at least give this country a chance and then write about the country’s extraordinary achievements and its exciting future. For example, the World Economic Forum (WEF) released its 2009-10 World Competitiveness Report in mid-October. Although we remained in 45^th place overall (out of 133 countries), the report showed that South Africa’s financial system has jumped up the rankings from 24^th to 5^th. The only financial sectors that are ahead of us are Luxemburg, Switzerland, Canada and Sweden. Our sector outranks the UK (6^th) and the US (11^th). We did well on a number of other metrics (listed below) and this is something to be extremely proud of, but my sense is that this didn’t receive the air time it deserved. Other accolades for SA include:

• 2^nd in regulation of securities exchanges.
• 2^nd in strength of auditing and reporting standards.
• 3^rd in efficacy of corporate boards.
• 4^th in financing through local equity market.
• 5^th for the soundness of the banking sector (USA ranks 108^th !!!).
• 6^th in financial market sophistication.
• 9^th in protection of minority shareholders’ interests.
• 9^th for strength of investor protection.

 

Further, on 29 December 2009, the Financial Times voted Trevor Manuel as one of the top 50 people who helped to shape the last decade. I quote: “One of the emerging markets' most influential policymakers and, until this year, the world's longest serving finance minister. Kept inflation under control and maintained fiscal discipline. Mere rumours of his departure provoked a fall in the rand.” Whatever your ideological position, as a patriot, you must agree that that’s an enormous achievement. Consider the competition: Barack Obama, Al Gore, Warren Buffett, Alan Greenspan, Melinda Gates and JK Rowling. As far as I could see, no SA media company reported on this. My sense is that we need to be a little more aware of the good news, and celebrate it when it happens. I would have loved to hear this from one of our own writers.

Furthermore, I noted with irrepressible pride this morning, that the Financial Times listed 50 emerging market business leaders who have shaped the economic performance of their respective regions, in an article published online at 10h48. What is truly remarkable is that out of those 50, four are South African; namely Graham Mackay of SAB, Phuthuma Nhleko of MTN, Cyril Ramaphosa of Shanduka and Jacko Maree of The Standard Bank Group. The article is written in the context of the BRIC countries, who together constitute 15% of world GDP (South Africa constitutes 0.5%), and 42% of the world’s population (South Africa’s share of world population is 0.7%). So with those proportions of GDP and population as background, you will agree that our representation of four business leaders in that group of 50 men and women (or 8%), is such that we punch way above our weight. 

I’ll give one more example of something we as South Africans have to be proud of. Did you know that in 2009, South Africa raised two sovereign bonds: 1) US$1.5bn in May at a 375bps spread over US Treasuries, and 2) US$500m in August at a 240bps spread over US Treasuries? Did you know that Mexico has the same rating as South Africa (BBB+) and yet it also issued a US$1.5bn bond on 11 February 2009 at a 425bps spread, or that on 8 April 2009, South Korea (A rating) issued two bonds with spreads of 400bps and 438bps respectively? A month before our US$500m bond issue, Poland (with an A- rating) issued a US$1.5bn bond at a spread of 290bps, significantly higher than our 240bps spread. How about the fact that foreign net equity purchases on the JSE in 2009 were R75bn – a record level for a calendar year.

This shows that the international investing community believes in something that South Africans themselves seem to find hard to believe. Rating agencies continue to give this country a stable and fairly high BBB+ rating, despite our challenges.

Finally, let me say this to tonight’s celebrants: The magnificence of your courage and fortitude, in getting this far in your work and studies and the possibilities arising from committing to your professional duties, evoke the remarkable words of Theodore Rooseveldt, the 26^th President of the United States:

“It is not the critic who counts, not the man who points out how the strong man stumbles or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again because there is no effort without error and shortcomings, who knows the great devotion, who spends himself in a worthy cause, who at the best knows in the end the high achievement of triumph and who at worst, if he fails while daring greatly, knows his place shall never be with those timid and cold souls who knows neither victory or defeat.”

Tonight’s celebrants know victory!

Thank you and Good Night!

The Media24 Journalism Academy graduation took place on 26 January 2010.