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Strictly Business Interview with Dawie Roodt · Strictly Business

• 0:00
  You're listening to Strictly Business Podcast with Lindsay Williams.
• 0:05
  The last time I spoke to my next guest was in June 2023.
• 0:08
  I don't know what we spoke about and it's not really very important.
• 0:12
  What is important is that I don't know what he is now.
• 0:15
  I don't know what he does now.
• 0:16
  I don't know who he's affiliated with now.
• 0:18
  And I need to find out and I need to know his views on the world, which were always
• 0:23
  very forthright.
• 0:25
  With me, I'm pleased to say, is my old friend, Darby.
• 0:27
  Ruud, who's going to introduce himself by telling me exactly what he is.
• 0:31
  Who are you, Davi?
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  Meneer Willem, sir.
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  Wonderful talking to you.
• 0:35
  Thank you.
• 0:35
  Long time.
• 0:36
  Far too long.
• 0:37
  Well, you know, what has happened since?
• 0:39
  Well, I'm still at the fishing group.
• 0:41
  I'm still the chief economist.
• 0:42
  I think so.
• 0:43
  At least I just walked out of a meeting, so I still got a job there.
• 0:47
  Very good.
• 0:48
  What has happened is that I'm not that much involved in the day-to-day management
• 0:53
  of the company anymore,
• 0:55
  but I'm still the director.
• 0:57
  the board of Efficient.
• 0:58
  We had some corporate action the last two years or so ago, I think the last time you
• 1:04
  and I spoke.
• 1:06
  And so I'm still involved there, but a little bit less involved in the management
• 1:10
  of the company than previously.
• 1:12
  But I'm still talking to clients, I'm still talking to our financial advisors,
• 1:16
  and I'm still talking to wonderful people like you,
• 1:18
  and I'm still trying to figure out what's going on in the world of politics and
• 1:22
  what's going on in the world of economics.
• 1:24
  So I think pretty much the same, just a little bit more relaxed.
• 1:25
  Okay, good.
• 1:26
  I like the relaxed bit.
• 1:27
  The world of politics and world of markets and everything else in the corporate world
• 1:33
  is something that we will delve into now.
• 1:35
  When we spoke last week and reintroduced ourselves to each other,
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  you spoke to me about flying around the country in your own aeroplane,
• 1:41
  probably going to areas and places that are not exactly on the sort of speaker's
• 1:48
  map, are they?
• 1:50
  But you go out there and you impart your wisdom, Darby.
• 1:52
  Yeah, so part of my job is to do...
• 1:54
  Well, I do a lot of public speaking events,
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  and I need to go and talk to clients as well and do speaking at various venues and
• 2:04
  things like, for example, Farmers' Days typically.
• 2:07
  Yes.
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  And that is where my airplane comes in quite handy because you can drive over the
• 2:14
  pothole trying to drive
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  there, but it's dangerous because of the collapse of South Africa's infrastructure,
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  and of course, it takes a lot of time as well.
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  So quite often, it's easy simply to fly.
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  to these little faraway places.
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  But I get the opportunity, of course, to meet amazing people at these relatively
• 2:32
  small towns all over South Africa.
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  And for that, the plane comes in quite handy.
• 2:35
  So yeah, and I've been doing my pilot license the last, say, two years or so as
• 2:39
  well.
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  Nice little segue when you mentioned potholes in infrastructure, because we'll
• 2:43
  start with South Africa.
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  If you had gone away in June 2023 and come back now, and I'd phoned you up and said,
• 2:50
  right, let's talk about South Africa.
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  And you could say to me, well of course, it's fantastic what's happened since I've
• 2:55
  been away.
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  Everything's turned around.
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  Infrastructure is good.
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  The potholes are being fixed.
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  I don't think that's the case, Darby.
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  I'm afraid no, Lindsay.
• 3:03
  I'm afraid no.
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  But this is the trend the last couple of years.
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  In fact, the last, say, two decades or so, we simply continue on that trend.
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  And I think there are three areas of collapse in South Africa, and that
• 3:17
  continues.
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  There's one different perhaps, but let me just get to the three areas of collapse.
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  The one is the local authorities.
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  The local authorities all collapsed and everything that goes with that.
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  The same goes for the state-owned enterprises.
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  There's a bit of an improvement, it seems to me, at ESCOM, one of the state-owned
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  enterprises,
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  and also a bit of an improvement in the management of Transnet as well.
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  But that is after they've basically been gutted.
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  In the meantime, the fiscal accounts deteriorated even further.
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  This is despite every year the Minister of Finance telling us that the fiscal
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  accounts, the debt levels will stabilize.
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  That hasn't happened yet.
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  It deteriorated even further.
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  So the fiscal accounts are really in bad shape at the moment.
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  And the only thing that I think really changed is that we hear more about
• 4:04
  corruption.
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  So it's corruption as always, just more of it, it seems.
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  But I also get the sense that the prosecuting authorities are getting a
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  little bit more serious and getting all those crooks.
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  in an overalls and intel,
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  but perhaps the corruption is simply becoming more weighted.
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  But that is a major issue that we have in South Africa.
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  And perhaps I can just make this comment.
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  What I've realized, Lindsay, is that if we want to fix South Africa, we must start by
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  getting rid of the ANC.
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  You cannot reform the ANC.
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  The ANC certainly is not going to reform itself.
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  And I've got many reasons why I say we have to get rid of the ANC, not only
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  because...
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  It is an incompetent and quite often corrupt organization, but it's simply
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  because the ideology is wrong, and from that,
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  the wrong policies and all of that.
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  So, yes, going back three years ago and seeing what South Africa was becoming
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  three years ago.
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  Basically, the trend simply continued.
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  Today, South Africa is pretty much the same, just a little bit worse off.
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  Okay, we'll talk about the ANC in a moment.
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  When it comes to corruption, I think one of the reasons that you think that there
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  is more corruption is because
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  people are not scared to report upon it.
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  There are now people that will say, goodness me, I've just seen that
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  corruption.
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  I'm going to be a whistleblower and I'm going to tell people.
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  And they tell people in the press and the press blasts it all over the front page of
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  their website or whatever it is.
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  And it's just like in the United States.
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  They talk about autism.
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  Autism has been around forever.
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  But now that it is reported upon more efficiently, then there's more autism.
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  That's why there's more corruption in South Africa, I think.
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  But I do agree that it's going on.
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  As for the ANC, Darby, that has to be got rid of by evolution rather than a
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  revolution.
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  You can't just sweep it under the carpet.
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  There would be a civil war, a mini-civil war anyway.
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  So it's got to evolve.
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  And if it evolves, it has to evolve by people being interested in politics and
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  getting rid of
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  the corruption and the rubbish and the snakes that have driven your country into
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  the ground over the decades.
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  And we're doing that.
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  If you can see what's been happening to the election results recently, and if you
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  see what the polls are telling us,
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  I think we are rid of the ANC.
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  It's a good thing.
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  I think South Africa is in for a difficult time politically because from now on...
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  there's not going to be one single dominant political party.
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  It will be coalitions.
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  And we've got coalitions all over the place.
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  In fact, on a national level, we have a coalition at the moment.
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  And the local authorities will have more coalitions.
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  And in many instances, the coalitions will be led not by the ANC, which is the case
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  in many instances,
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  and perhaps in most instances currently.
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  In many instances, the local authority, the coalitions, will be led by some of the
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  opposition political parties, especially the DA,
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  which is a good thing.
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  So no, I'm not calling for a revolution, certainly not, but certainly what is
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  happening in South Africa, and one institution that's still up and running,
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  doing very well,
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  is democracy.
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  So we're still a democratic country, and we're getting rid of the ANC.
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  We're doing what must happen, and that is getting rid of the ANC, and that is what
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  is indeed happening in South Africa.
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  Just something on the whistleblowers, the comment you made about the whistleblowers,
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  yes.
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  More people are starting to blow the whistle.
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  Unfortunately, many of them are getting killed.
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  literally they are getting killed and uh well i think we're making some progress
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  here and there where these criminal gangs
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  are being charged and the criminal gangs are being investigated and so on so there
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  are there is some progress there but being a whistleblower in south
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  africa is very very dangerous you can literally lose your job or your life yeah
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  well
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  when i first came to south africa they said lindsey africa is not for sissies
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  it's a very corny old phrase but It's not for you.
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  You can't be a sissy if you're a whistleblower or indeed a politician that
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  goes against certain other politicians,
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  because you always have to look over your shoulder.
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  It's a very difficult thing, Darby, and I thought that after more than 30 years of
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  democracy,
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  things might have gone at a slightly faster clip, as we say in English, or a
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  slightly faster pace.
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  But but it hasn't.
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  I don't think it's going fast enough, the change.
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  I thought that after 30 years, it would have been, we would have been.
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  A little farther up the ladder of prosperity, if you like.
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  I don't think that I'll be able to visit in my lifetime a truly prosperous South
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  Africa that's benefiting
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  from the rally in precious metals that we're seeing at the moment and certain
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  other commodities.
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  It's just not happening, Davi.
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  It's still going into other people's pockets.
• 8:37
  Yes, Lindsay, but you know, if you really talk about prosperity for a country and
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  what it really means, They're already in...
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  precious metals or really or something that that country has a lot of like oil
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  whatever the case maybe that is not the answer
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  to long-term prosperity for any country the real answer to long-term prosperity is
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  that you have to start where it really matters and that
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  is with proper skills development in your country and
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  we we do not have that we do not have skilled people that participate in a
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  modern economy because the quality of south africa's education
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  is quite often the worst in the world despite massive amounts of money that we
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  spend on that so no Thank you.
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  Countries really become prosperous not on gold or oil or platinum.
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  Countries really become prosperous on something else, and that is...
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  That's a value set and things like democracy and real freedom.
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  And of course, high world-class skills.
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  Those are the things that really are the only things that really assure long-term
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  prosperity for a country.
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  Short-term increase in some commodity prices usually only benefits a few
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  individuals.
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  And if you don't put all those other things in place, then the population at
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  large is not going to benefit from that.
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  So I'm afraid the other things are lacking in South Africa.
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  It's all good and well to have nice Gold price and gold, nice commodity prices,
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  and that certainly benefits a chunk of the South African population.
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  But that is not the real answer to long-term economic growth.
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  You need something else.
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  I think the point I'm trying to make with the precious metal rally is that let's say
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  that one day all the things that you want, i.e.
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  skills development and what I want, and that is jobs development because the jobs
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  data came out last week in horrendous numbers.
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  Again, every time I look at them, I think, what is this, South Africa or some proper
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  banana republic somewhere?
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  But unfortunately, it is South Africa.
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  I want there to be jobs and skills like you do,
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  but I want the platform to be there so that when a rally in precious metals
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  comes,
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  it's just the icing on the cake and it helps the fiskers and therefore it helps
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  the treasury, etc.
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  That's what I was trying to say, but I didn't say it properly.
• 10:39
  Yeah, yeah.
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  Well, just on your jobs comment, I'm not so sure I agree with the job creation idea
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  because that is what we're trying to do in South Africa.
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  We're trying to create jobs.
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  But politicians misunderstand the thing about jobs completely.
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  For example, we've got this program in South Africa to assist small-scale
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  farmers.
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  And I think that is not a very clever idea because agriculture today is not a
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  small-scale thing.
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  It's not a subsistence farmer story.
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  Agriculture today is a corporate business.
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  If you want to be involved in agriculture, you have to corporatize that business.
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  You have to have a board, and you're running on very small margins.
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  volume business, real successful agriculture like anything else.
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  And unfortunately, we're trying to create jobs in inverted commas by helping small
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  businesses and by
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  helping small farmers and subsistence farmers.
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  That's not the real answer.
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  You cannot.
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  There's absolutely no way that a subsistence farmer can ever compete with a
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  big commercial farmer.
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  And don't try to.
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  Don't try to so-called create jobs.
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  So I've got a problem with job creation because politicians understand Job
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  creation is keeping people busy.
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  That's not the answer.
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  In fact, I don't care if jobs are not created.
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  What is important to me is for the economy to grow.
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  And once the economy starts growing and you put all these other things in place,
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  then by magic, jobs will be created as well.
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  But keeping people busy, getting people to wave flags next to the road where there's
• 12:04
  some construction happening, for example,
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  that's not job creation.
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  That's just simply keeping people busy.
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  So forget about job creation and focus on economic growth.
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  And then jobs by magic will follow from that as well.
• 12:14
  I knew you'd say that.
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  I knew you'd say the government often gets mixed up with what it's supposed to do.
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  It's not supposed to create jobs.
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  It's supposed to create the environment where jobs are created.
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  I remember you saying that to me years ago.
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  Do you remember that, Davi?
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  Of course I do.
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  I've been beating this drum all along.
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  And I've got some other issues as well.
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  Like, for example, this inequality problem in South Africa.
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  It is a so-called problem.
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  Like unemployment, poverty and inequality.
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  It's a so-called problem because you do have very wealthy people.
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  There are very high levels of inequality in South Africa, but I don't care about
• 12:47
  inequality.
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  As long as the poor are better off, then I'm happy.
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  I don't care.
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  In fact, the inequality in many successful places like the United States, the
• 12:57
  inequality levels are higher there than,
• 12:59
  for example, on the European continent.
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  But on a per capita basis, the Americans are much, much better off.
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  So I don't care about inequality in South Africa as long as the poor are getting
• 13:08
  better off.
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  And exactly the opposite is happening in South Africa.
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  We have the unemployment numbers.
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  numbers, but we also have exceptionally high levels of poverty.
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  And do you know, Lindsay, that we have rising levels of absolute poverty in South
• 13:21
  Africa?
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  And absolute poverty means that people are going to bed hungry.
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  In fact,
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  there's something like a thousand children that died in state hospitals the past
• 13:32
  year,
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  more than a thousand kids that died of hunger.
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  Children are dying of hunger in South Africa.
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  And those are the kind of things that we should be concerned about.
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  And if we can grow the economy and ease inequality, I don't care as long as the
• 13:46
  poor are better off.
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  So put the emphasis where it should be and the emphasis must be always on economic
• 13:53
  growth and everything good will flow from that.
• 13:55
  Well said.
• 13:57
  What about investing in South Africa?
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  That's a completely different thing to a thousand children dying in state hospitals
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  and the state of the country and you
• 14:05
  and your stance towards inequality and jobs, etc.
• 14:07
  Let's put that aside because you've described it very well.
• 14:09
  Let's talk about investing in South Africa.
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  Are you going out to those places and say, yes, there is still a viable model that
• 14:19
  allows you to invest in this country?
• 14:21
  And this is what I would recommend.
• 14:23
  Should I invest and can I invest in South Africa?
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  And the answer is without a doubt.
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  I mean, we all know about the potential in South Africa and what we can potentially
• 14:29
  become and all that.
• 14:31
  I'm not going to repeat that.
• 14:33
  But purely from a financial market point of view, here are a couple of sitters.
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  I mean, obvious.
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  Places where you can put money and make a lot of money out of.
• 14:39
  So, for example, if you look at the equity market in South Africa, the equity market,
• 14:43
  we've had a beautiful run the last couple of weeks on the equity market,
• 14:48
  but the equity market is still behind most of its peers.
• 14:51
  The equity market in South Africa is still quite cheap.
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  And remember, we have world-class companies listed on the JSE, and the JSE,
• 14:59
  if I'm not mistaken,
• 15:01
  relative to the size of the economy, is probably the biggest stock exchange in the
• 15:05
  world.
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  But the JSE, so about 60, more than 60% of the revenue of the JSE is actually earned
• 15:10
  abroad.
• 15:11
  So we've got international companies that are listed in South Africa, and the JSE is
• 15:15
  very, very cheap.
• 15:17
  I would certainly look at the JSE.
• 15:19
  The second market that is exceptionally cheap in South Africa is the bond market,
• 15:22
  the capital market.
• 15:24
  The bonds in South Africa, in real terms, as far as I know, is the highest in the
• 15:27
  world.
• 15:28
  I mean, you can get a real return of 6%, 7% in South Africa.
• 15:31
  Where on earth can you get this for a foreigner?
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  You can start off by buying the entrance into South Africa is very cheap because
• 15:40
  you buy cheap currency, the rent.
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  So that's very cheap.
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  Secondly, you're buying a very, very well regulated and a very liquid market.
• 15:47
  And thirdly, you're buying into these amazing yields.
• 15:50
  I mean, it's, as you say, a no-brainer.
• 15:53
  And that's part of the reason why we've seen quite a nice return on the bonds
• 15:59
  recently and also in the equity market as well.
• 16:01
  Now, just imagine, Lindsay, just imagine if we can get the right government in
• 16:04
  place.
• 16:04
  with the right macroeconomic policies and saying the right sort of things.
• 16:08
  We can see a run of 20% or 30% on the JSE.
• 16:11
  We can see the bond market rallying by 200 or 300 basis points.
• 16:15
  Just imagine what that is going to do to the economy.
• 16:18
  Of course, it will have a financial impact straight away, but it will spill over into
• 16:24
  the real economy as well.
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  And everybody will benefit from that by just getting the right government in place
• 16:30
  with the right macroeconomic policies.
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  The financial markets are waiting.
• 16:34
  in South Africa, they are waiting for the right policies to be put in place.
• 16:36
  And then you're going to see some amazing returns and, of course, the benefit to the
• 16:41
  economy as well.
• 16:43
  Yeah, waiting, waiting, waiting.
• 16:43
  Just imagine if those are the words that you've used in the last couple of minutes,
• 16:47
  Darby.
• 16:48
  I've heard them so many times before.
• 16:49
  But yes, there is always hope.
• 16:52
  Darby, I know you're in the bush felt somewhere and you've got to go and speak
• 16:56
  to some people soon.
• 16:58
  So I just want to come up with my final question, which is going to cause a
• 17:02
  problem between us.
• 17:04
  We're going to argue Donald Trump, please.
• 17:04
  Donald Trump's presidency, Donald Trump's administration, your views, if you would.
• 17:11
  You know, Lindsay, I've listened to this guy a lot.
• 17:15
  I listen to Donald Trump and I think to myself sometimes listening to him that
• 17:20
  this guy is absolutely brilliant.
• 17:22
  He says the most amazing things.
• 17:23
  And then sometimes I listen to this guy and I cannot believe my ears.
• 17:31
  So So, Lindsey, Donald Trump is one of those guys, you can't, I mean,
• 17:37
  you cannot put him in any pigeonhole somewhere.
• 17:39
  He's just all over the place.
• 17:41
  And I think he's causing immense harm at many levels.
• 17:47
  But Donald Trump has broken a lot of things as well.
• 17:50
  And he's broken a lot of bad things and he's broken a lot of good things as well.
• 17:54
  So the world's never, ever going to be the same again after Donald Trump.
• 17:57
  And there are many examples of things that he has broken.
• 18:00
  for the good and for the bad sometimes.
• 18:02
  But yeah, I mean, what a wild ride it has been with Donald Trump up to now.
• 18:08
  And I think the world is never, ever going to be the same again.
• 18:12
  So there are a few things that I think he should be credited for.
• 18:15
  And there are many things that I think he should be blamed for, things that went
• 18:20
  wrong.
• 18:21
  I think the tariffs, for example, he's known for his tariffs.
• 18:23
  That is just wrong.
• 18:24
  That is just wrong.
• 18:27
  At the same time, you have to say that the American government is making a lot of
• 18:31
  money out of these tariffs.
• 18:33
  And you must also say that the inflationary pressures because of these
• 18:38
  tariffs that the economists were warning about,
• 18:40
  that hasn't materialized yet.
• 18:42
  So maybe Donald Trump, I don't believe in the tariffs, but maybe there's a little
• 18:49
  bit more to say about tariffs than what I thought initially.
• 18:51
  That's one example of something that Donald Trump changed, the way that we're
• 18:55
  trading internationally, and of course many other things as well.
• 18:57
  So Donald Trump, like him or not, Donald Trump changed the world.
• 18:59
  Yes, I think you're absolutely right when you say he changed the world and will
• 19:04
  continue to change the world.
• 19:06
  We'll maybe expand upon him sometime in the future.
• 19:07
  Darby, thank you very much for making the time to chat to me.
• 19:10
  That was Darby Root, the chief economist at The Efficient Group and the flying
• 19:14
  speaker.
• 19:16
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• 19:21
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• 19:23
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• 19:26
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• 19:31
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• 19:37
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• 19:39
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• 19:44
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• 19:46
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• 19:46
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