Money Matters
Issue 49

Oct 2023

Please ignore the previous newsletter. We note that there was a glitch with the links to the full articles. This has been corrected below.

Amidst the deluge of headlines, spanning from war-torn regions like Russia/Ukraine and Israel/Gaza to our own local political landscape, it can be hard for investors, especially us South Africans, not to lose sight of the bigger picture.

Take corruption as one such factor that increases our anxiety levels. Whilst we wallow in self pity, JP Landman reminds us that South Africa’s fight against corruption shares common ground with the world. Lessons from the US show that change is possible, even from systemic corruption. Whilst progress may be gradual, it is undeniably underway. To shed light on this ongoing narrative, we’ve featured his insightful article for context.

We have also included a Nic Andrews piece in which he discusses the significant changes of the last 20 years and how these changes will have a fundamental impact on the future.

Whilst it is noisy out there, our advice to our clients remains the same – stick to your investment strategy and do not allow yourself to be swayed by the oversupply of information and heart-stopping headlines.

Lawyers love to hear their clients say that they want to fight a case “as a matter of principle”, as this invariably means that it is no longer necessarily about whether or not the fight is winnable, but that their client believes it is morally indefensible not to try to uphold their point of view. A potentially negotiable and often complex argument is reduced to an absolute and a binary outcome – win or lose.

When dealing in absolutes, as is the case with the war in the Ukraine (where neither side has even posited a reasonable outcome as an off-ramp to the conflict) and now also more recently the horrific attacks in Israel and the resultant backlash in Gaza, resolution seems a dim reality.

Reflecting on the past two decades in the investment industry, and the significant changes that have occurred, can be extremely useful in helping us prepare for the future. I have spent time looking at the big events and shifts of the past few decades to attempt to look at what the industry may look like in the coming decades.

As a departure point, let’s consider some of the headlines from 2003.

Learning from others – In 2021, two researchers published a paper on corruption in the US between 1865 and 1941, a period infamous for its corruption. They distilled four lessons from that period.

Their first finding was that ‘it is possible to make a transition from a systemically corrupt political system to a system in which public corruption is aberrational.’ The paper specifically rejected the notion that an entrenched culture of corruption is virtually impossible to dislodge. South Africans can take comfort from that.
Secondly, the US transition away from systemic corruption was incremental, uneven, and slow. There was ‘no big bang’. Some you win, some you lose. Again, South Africans can relate to this as we consider the first state capture case folding (the Nulane case, which the National Prosecuting Authority (NPA) is now appealing) and the fumbling on TV of the prosecution at the Senzo Meyiwa trial. Such defeats are painful but are not the end of the story.