We recently concluded a FirstRand-funded research project about the community trusts set up under South Africa’s renewable energy independent power producer procurement programme. The research investigates the extent to which the trusts are contributing to community development. Join us for the online report launch on 6 May at 3pm (CAT), where we unpack these findings in greater detail.

Click here to register for the launch.

Join us at a workshop where we discuss the recommendations of our research report on the community trusts set up under South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). These recommendations flow from the research findings, which we will outline in depth at our report launch on 6 May. At the workshop, we will discuss what needs to be done by participating stakeholders to unleash the potential of the trusts to contribute to the country’s “just transition”. Details on panelists will be posted soon.

Click here to register for the workshop.

Absa CEO’s office had been a kind of presidency for a decade and a half, not fully engaged in the bank’s details.

This column was first published in Business Day. 

In Absa’s short life it has had to remake itself more times than any company would want. Barely older than SA’s democracy and forged through combinations and compromises that echo the politics that played out around it, its search for a robust strategy seems never to be over. It is the youngest of our big banks but has arguably faced more overhauls than those multiples its age. The scars are evident and contributed to the surprise exit last week of its new CEO, Daniel Mminele.

To see how it got to this stage, we need to rewind. No sooner had Absa settled into its role as the SA subsidiary of Barclays, which swooped on it in 2005, than the British bank stunned with an exit in 2017.

Barclays robustly remade Absa in its image, tearing out the awkward culture that had preceded it, fostered under former Broederbonder Danie Cronje (first as CEO and then chair). Barclays chose Maria Ramos to be CEO in 2009 and gave her the task of completing that transformation. Within a year, five of the Absa executive committee had exited and Ramos had put in place replacements that were comfortable with the dual reporting lines to her and to bosses in each business unit in London.

But then the rug was pulled out. The board, with Barclays representatives left out of the room, began to forge a new strategy. The separation involved 266 distinct projects over three years, with Barclays picking up a R12.6bn bill for it. Planning for the future was done bottom-up, an alchemy of change management and strategy redesign. While Barclays had imposed strict rules and reporting lines, Absa now turned inward and reimagined an independent future.

In a sense, it was too successful.

Ramos chose to stay to deal with the Barclays fallout herself. It was a surprise to many that she would want to oversee the burning down and rebuilding of what had been her vision. It also made things tricky for succession as she would be handing over a 40,000-strong behemoth with a R1.5-trillion balance sheet and millions of customers, just getting over a divorce and in no mood for more change.

Oversight function

Ramos’s exit came suddenly in February 2019, but the transition to Mminele was slow. While the Absa board had identified him early, the intricacies of his departure from the Reserve Bank were complex, requiring a wait for his contract to end and six months of cooling off. Absa thus had a year with no permanent CEO, at exactly the time that the new structure was bedding down.

The post-Barclays era re-empowered local business unit leaders. Under Barclays, the SA CEO had become an oversight function sitting on the global Barclays executive committee (which itself was musical chairs under a series of Barclays CEOs), while the real business of banking happened bilaterally in business units. London was cut out of the picture, but the business unit structure was entrenched. The group CEO’s office did little to re-establish authority, compounded by the office being vacant.

The Absa Mminele found was a set of fiefdoms. The taking back of control had been baked in, and the CEO’s office had little of it. I wonder how different things might have been had Ramos left with Barclays and someone else had taken the job of rebuilding the bank for the future.

Mminele is a hands-on manager with an eye on the details. At the Bank and in his earlier commercial career he was well respected as a technocrat. He has a masterful insight into the financial system. In the slow handover of the CEO’s role to him, there was much discussion between him and the Absa board under chair Wendy Lucas-Bull about the remake he would find when joining. For a decade and a half, the CEO’s office had been a kind of presidency, not fully engaged in the details of the bank. But despite those engagements, Mminele arrived and found the job to be very different to that of a technocratic banker. It did not help that the Covid-19 crisis broke out shortly after, making it a job that had to be done largely by remote.

Internal candidate

The Absa board clearly did not want to part ways and made every attempt to talk Mminele around, to accept the limited role he could play at least in the short term while he built authority over the long run. Both sides have given up, and the board decided a payment and separation is the least expensive option. It does not reflect well on them.

Who will be next? I expect that an internal candidate is more likely, though there will be pressure to appoint a black candidate. Absa has a strong layer of black leaders at the second tier, but the executive committee itself, particularly the most senior members, leans pale and male.

Complicating matters is that Lucas-Bull is set to step down next year. The board has been busy with a process of appointing her successor since January and an announcement should be made soon. It is surely a prerequisite to securing a new CEO who must, above all else, want to avoid overhauls.

Theobald is chair of consulting firm Intellidex


Following National Treasury publishing the draft amendments to Regulation 28 of the Pension Funds Act for public comment, Intellidex submitted its response welcoming elements of the proposed reforms as positive. This is an important step is countering the debate over prescribed assets. Regulation 28 offers an effective tool to shape investment discussions without compulsion and the shutting down of that debate will help sentiment. However, Intellidex believes that some of the proposed changes need clarification and some are likely to be negative from a public interest perspective. In particular there is a call for a clearer and more inclusive definition of infrastructure within the regulations.

Signup to download the full submission below.

The list of distractions from what matters seems never-ending.

This column was first published in Business Day.

Everything seems rather performative at the moment — performative crisis-mongering, performative protest, performative vaccination schemes, performative witness appearances at the Zondo commission, performative policymaking, performative leadership.

The real action is maybe dull. Who cares about water-use licences? (Except the company trying to open a factory on time and employ more people.) Who cares about radical shifts in the domestic business environment being proposed by the government with workers on boards, enhanced localisation and employment equity requirements? (Except the companies trying to recovery from the pandemic.)

People seem to have forgotten we are in an energy crisis just because there is a short pause in load-shedding despite the dire warnings of what will come as the economy recovers. Equally there is something of a wool-over-the-eyes moment on the risk mitigation round as the department of mineral resources & energy seeks to provide “context” to the procurement round and see off its evident flaws — it will not be solving the energy threat through 2022 given the challenges to reach financial close.

The list of distractions from what matters seems never-ending.

Regarding the supposed “constitutional crisis”, a former president trash-talking judges and not complying with the Constitutional Court’s judgments isn’t a constitutional crisis. It will only become one if the constitutional, rules-based system cannot strike back and hold the line by inflicting an appropriate punishment. We wait to see on that front if such a punishment is given, (which is likely) and if it can be executed (about which most question marks arise but that seems quite possible).

There is similarly overexcitement about small protests outside Luthuli House comprising a bussed-in, ragtag bunch. The focus on the (admittedly important) issue of stand-aside is far too much “he said, she said” than actually what should happen, what was agreed or what will happen.

Quacking duck

Regarding the vaccination “trial” that couldn’t get above an average 8,200 vaccinations a day over any seven-day period, it seemed to mismatch the government’s spin. The private sector will now, hopefully, be allowed to show how it is done on a larger, faster scale.

In high drama at the Zondo commission last week there was an attempt to mislabel a quacking duck in a web of spin and obfuscation.

The most damaging element may be the performative policy-making, such as the distraction of the Expropriation Bill and section 25 amendments from what might actually make a difference to the country’s average emerging farmer, as the insightful Wandile Sihlobo outlined in this publication last week.

Sticking to IRP-2019 (Integrated Resource Plan 2019) when it is already out of date for the future demands of the energy system in the face of the forthcoming Climate Bill, the need for transition financing, and even least cost and jobs-maximising outcomes are also performative — playing the key vested interests.

Spin about policymaking remains problematic. Headline targets and national rhetoric on infrastructure ignores that most infrastructure (in volume/value) should be done at provincial and municipal level and that hard, complex policy moves are required to enable that.

Unions like performative compacting as we saw with the “Eskom compact”, achieves nothing that the government through leadership couldn’t attain on its own.

Long-term threats

The problem has been that any true analysis of the threats to the constitution, policy, growth and to political stability has been lost for the noise layered on top — an overfocus on Twitter and the sucking in of too much media time to cover performance rather than underlying issues.

The big long-term threats are energy security, fiscal sustainability and unemployment, driving inequality. These are regularly booted to the back of the agenda.

The distraction seems to have real-world effects though, especially in governance, driving risk aversion from the president particularly. A meaningful threat to ousting him in the short term would indeed need a lot of attention and focus. But does anyone seriously believe this will happen? Does anyone actually believe that imposing political capital and liberalising energy policy would lead to a lower probability that the president would win a second term at end-2022? Yet the focus on everything apart from what matters seems to reinforce this fear.

Leadership on an absolute basis — that all threats must be removed or placated — Cold War style, as opposed to looking at the balance of risks and probabilities — is the problem. Because for the risk averse there will always be another hazard — if you deal with step-aside now, what about branch and provincial meetings next year about a policy and elective conference? What about national elections in 2024 and a further elective conference in 2026? What about the fact the ANC always seems to realign itself during a leader’s second term?

Why is there never a debate about the fact that leadership and future chances for success could be strengthened through reform now — dealing with energy security, fiscal problems and unemployment? Would a liberalised energy system that created more jobs faster not lead to a higher chance of future electoral success? Would removing a minister here or there — such as at communications — that allowed reform not do the same?

All this affects companies at an individual and collective level. They have to do the fancy footwork in trying to sidestep these roadblocks that are put in place, to argue against the pieces of performative policymaking and to try redirecting the focus to evidence-based policy — after all so much of the performative action is evidence free. This is policy uncertainty in action and it has implications for sentiment and investments as well as job creation potential. There are enough ideas coming from business that need debate and attention.

Meanwhile unions’ views and stances on policy, not just their roles in performative politics, need interrogation. What is the future of a union in the Just Energy Transition? How do unions support workers through the fourth industrial revolution? Unions should be constructively challenged on these — not who they are supporting when, in what election.

The threat of the triple challenges that SA faces needs room for sensible discussion — whether it’s on the Just Energy Transition, monetary policy or necessity of a basic income grant, the funding of which should be challenged. These are the issues that will be the bigger movers of politics and electoral support in the long run.

For the rest, quacking ducks need to be labelled as such.

Attard Montalto is head of Capital Markets Research at Intellidex, an SA research-led consulting house.

With its existing leadership at both entities, combining the Department of Mineral and Energy Resources and Eskom would be a disaster. It would likely see the situation become untenable, says Peter Attard Montalto, head of capital markets research at Intellidex. Featured in Bloomberg.

Are social impact bonds the answer to better social welfare services? To answer this question, Business Day TV’s Alishia Seckam spoke to Intellidex social economy research manager Dr Zoheb Khan, who analysed the first two SIBs in the country. Khan points out that SIBs are still very young in SA. SIBs, essentially, are a payment-by-results financing model for social wealth services. Investors provide working capital upfront to NGOs. If the NGO is successful and meets outcome targets, defined in the SIB, then the outcome funder repays investors with amounts that are usually pre-determined. Watch the full interview on Business Day TV. 

Household savings as a percentage of GDP grew from 1.2% in 2019 to 2% in 2020. It is the strongest savings performance since 2004, notes Intellidex’s Nolwandle Mthombeni in her fin24 column.

The Impact Bond Innovation Fund was launched in 2018. The social impact bond (SIB) delivered high-quality home-based early learning services to preschool-aged children in low-income communities in the Western Cape, while delivering competitive returns to investors. The social and financial performance of the SIB is detailed in this report.


The Bonds4Jobs social impact bond (SIB) was launched in 2018. The performance target in the SIB was the placement of economically excluded young people into jobs, through the provision of innovative employment services. The successful SIB’s performance along social and financial dimensions is the subject of this report.

Press release

15 April 2021

Today, global finance and capital markets research house, Intellidex, has launched a pioneering report, Social Impact Bonds (SIBs) in South Africa. This ground-breaking report—funded by the Standard Bank Tutuwa Community Foundation—provides a detailed assessment of the country’s first two SIBs that focused on early learning as well as youth employability, and investigates the potential of using SIBs as vehicles to drive social change.

The first two SIBs in South Africa were launched in 2018: Bonds4Jobs and the Impact Bond Innovation Fund (IBIF). Both provided quality services to vulnerable youth and children. They demonstrate effective innovations in areas that have long suffered from poor quality service. This was driven in both cases by the pay-for-results structure, with outcomes measured and the working capital provided by investors.

Social economy research manager at Intellidex, Dr Zoheb Khan, who is the lead researcher on this project, says: “We are happy to be at the forefront of this exciting new area of research. We hope that the findings lead to further growth of impact investing in South Africa and to more effective social programming to tackle the country’s major developmental challenges.”

The majority of South Africa’s preschool children do not receive quality early learning services. This delays progress during formal schooling and entrenches long-term inequalities. Perhaps relatedly, South Africa’s unemployment rate registered a record level in the fourth quarter of 2020, partly accelerated by the Covid-19 pandemic. As such, innovative thinking is required to best support South Africa’s human capital. One of the undeniable realities in the path to socioeconomic recovery is that investment in education and efforts to boost job creation are paramount.

While the state and the private sector spend billions of rands on education every year, the country’s education and employment outcomes remain extremely poor. SIBs could change this. SIBs are a way of financing social welfare services that pay for results. For example, when set numbers of unemployed youths find jobs, or when a certain number of children have achieved improvements in early learning school readiness tests, investors are repaid their capital, plus interest. This means investors get both a social and financial return on their investment.

Zanele Twala, CEO of the Standard Bank Tutuwa Community Foundation says, “We are thrilled to be part of this pioneering journey—and as leaders in impact investing—we stand ready to strategically explore progressive financing mechanisms. Doing so will certainly ensure improved outcomes in the sectors where we invest.”

Please see full report here. 

The first two SIBs in SA were launched in 2018: Bonds4Jobs and the Impact Bond Innovation Fund (IBIF). Intellidex has  now produced a series of reports that analyse the two SIBs and the general features of SIBs. You can download the “Social Impact Bonds in South Africa” report below, which summarises the experience of the two South African SIBs and speculates about the future of these innovative financial instruments and their potential to spur wider social change.

Watch the launch recording below.


JSE Alsi Index has gained almost 80% since the plunge in March 2020, when lockdowns began worldwide.

This column was first published in Business Day. 

If you rushed your investments offshore at the start of the Covid-19 pandemic, the wounds will take some healing. Since the plunge in March 2020, when lockdowns began worldwide, the JSE all share index (Alsi) has gained almost 80%.

Of course, no-one could have predicted the bottom, but had you just done nothing and remained invested through the period, you’d be up about 18% over the past 13 months, with 13% of that delivered this year.

I point this out because it helps to blast out of the water the narrative that SA investors are best served by taking all their investments offshore. Had you done so, you would not only have missed out on the SA performance (the MSCI World index lagged the JSE by several percentage points) but been on the losing side of a 35% recovery in the value of the rand. It would have been a major underperformance.

It is sometimes hard to discern the motives of the “all offshore” brigade that often takes to social media to inflame a class of older (and therefore wealthier) South Africans who feel aggrieved by the performance of the government. Together, they fuel a narrative of permanently declining fortunes. Those feeding the fire often have financial interests in doing so — they are selling the offshore products that just happen to be the alternative.

Good financial advisers know that getting the best for clients often means most of the work is managing their emotions and prejudices. What is best for clients — a portfolio that matches client risk appetite and ability with maximal probable returns — is obvious. For South Africans who will one day rely on their savings to live, it is important to consider that expenses will be in rand.

Profit filler

There is a simple way to avoid exchange rate and inflation risk: invest in inflation-linked bonds to ensure that assets will not depreciate just when you need them. Of course, few should be taking so little risk. If you have a longer time horizon it makes sense to expose yourself to more volatility and diversifying offshore is certainly a good way to optimise your portfolio, especially if you have a long time to build savings out of rand-based earnings. But it will still be important to think about the foreign exchange risk you are taking on and ensure your portfolio limits that.

One has to keep reminding investors that the profitability (and therefore value) of SA companies is only partly linked to the performance of the government. Mining companies and many major industrial companies generate profits from hard-currency-denominated sales. When the rand plunges, it is an instant profit filler as costs are usually in local currency but revenue in hard currency. A counter such as Sasol, for instance, gets a bigger profit boost from rand depreciation than oil price appreciation.

The pandemic has also helped improve efficiencies as SA firms that took a risk-averse outlook cut costs fast. As many have lower cost bases now, the recovery can result in leveraged profits. That has meant strong earnings from some unexpected quarters, including SA’s much-maligned manufacturers who suddenly found themselves far more globally competitive thanks to the rand plunge.

Emerging markets

Indeed, SA’s trade balance has been an astounding strength, recording the best figures since records began. It was partly due to weaker domestic demand on the back of the pandemic and lockdowns that caused a 12% fall in imports in 2020 compared with 2019. But despite lockdowns interfering with production volumes, the value of exports actually grew 10%. The figures boomed in May last year after the rand plunge, but overall the year ended up with a trade surplus of R183bn. And this year has started strongly with a cumulative trade surplus by end-February of R27bn, despite import volumes having recovered.

Compare that with other emerging markets such as Turkey, Brazil and Russia where company performance is more domestically exposed and political fortunes are even more tumultuous. You can see why many foreign investors are favouring SA.

None of this suggests that things couldn’t have been better if the government supported the environment with effective services and policies. The more than 5,000 mining licence applications backed up at the department of mineral resources & energy are a huge missed opportunity. That, and policy uncertainty, is partly why, despite strong commodity prices, miners are not expanding capacity, just earning bigger margins on existing capacity.

The current level of the commodity price cycle could have spurred masses of new investment had the policy environment been conducive. Similarly, capacity constraints at ports, roads and rail have held back greater exports of commodities, agricultural and manufactured goods. We must work harder to take advantage of such opportunities as a country.

So next time the “anywhere but SA” bandwagon comes charging past, see it for what it is: a creaking wreck filled with those who make a living selling the negative story.

Theobald is chair at Intellidex. 


We do not see Ace Magashule standing aside voluntarily. We expect foresee him see out the full 30 days and then be suspended to get the maximum victim status, said says Intellidex’s Peter Attard Montalto in a note to clients. Featured in Business Day. 

This column was first published in Business Day. 

There has been a lot of focus of late on recapacitating the state. It’s a simple model — if public sector employees are the coal on which the machine is running, better to have the highest quality possible (unlike the stuff going into Eskom power plants). There is certainly a need to refocus talent, hire and retain it, while  improving training for incumbents. Yet the “state lacks capacity” response to diagnosing SA’s problems it far more complex.

First, there is the risk aversion built up by many decent public servants during the Zuma years, where the informal mycelium network of making things work below the surface in the government — the subtle linkages and relationships between spheres of government — were destroyed as the drawbridge was pulled up. This is the grit that gums up the machine from operating properly.

Then there is the lack of leadership or decisive vision that is often endemic and must sap the most public spirited. This is especially important where there are many areas of the government or even individual departments, creating thiefdoms and siloisation. Infrastructure and its associated functions are probably the worst area for this.

But what about the machine in which all these people are working? This is, as a pure issue in and of itself, far too often overlooked. The people are only (maybe even less than) half the issue if the design of the institution is wrong.

The punch-drunk hangover of state capture has left SA too often risk averse to challenging and changing institutions, especially independent ones that sit apart from the government yet are still “the state”. Two voices trying to push this conversation, however, have been Miriam Altman (who has done so much to push the envelope of the National Planning Commission’s activity and impact on this and other topics), and Operation Vulindlela.

The “Tito paper”, which emerged almost two years ago, proposed a relook at regulators, including a new transport regulator. This has morphed into the Avengers-like reform outfit that is Operation Vulindlela. A central question there is what the state can achieve through institutions and how. If Operation Vulindlela (and the president) are to have a long-term legacy, it will be through building sustainable well-functioning institutions.

There is the opportunity to create new institutions — especially in water with a water investment authority and a water regulator in the next few years. In transport too a regulator is already being set with legislation arriving in parliament.

But what lessons can be learnt from existing institutions to apply to these new ones? There is the good, the bad and the ugly.

The good is probably the Competition Commission. With its own clear enabling legalisation it has — in a relatively short space of time (even if you disagree with some of their stances or investigation outcomes) — become an effective and robust machine. A key factor is its multiple levels of internal checks and balances ensuring self-correction and internal self-sufficiency that safeguard independence.

This contrasts strongly with the bad: the Independent Communications Authority of SA (Icasa). The current spectrum auction derailment in the courts is the result of mistakes made more than six years ago in a threadbare institution that doesn’t have the internal processes to self-correct or drive at speed towards an end goal. This is why — bar some major creative thinking — we are likely to be stuck within a completed spectrum auction for some time to come.

The ugly is the National Energy Regulator of SA (Nersa). The entity probably has the lowest level of respect of its stakeholders of any industry regulatory, with companies trying to navigate its lack of clarity to generate power. What is it even for? It is unclear it has any vision for the future of the energy or electricity space and simply rubber-stamps ministerial decisions for new power procurement. The recent public hearings into a section 34 determination to procure nuclear energy were an embarrassing set of questions from Nersa to presenters that showed inherent bias and old thinking — and I say that as someone who is instinctively not anti-nuclear.

To remain independent, institutions need methods of self-correction that drive a clear sense of purpose of their role, and in particular of what their industry is doing and where it is going in a rapidly changing world. The Competition Commission has that, Icasa has the latter and not the former, and Nersa doesn’t seem to have either.

The Independent Power Producers Office (IPPO) is another example of an interesting, young, institution that gained status and respect through the sheer force of personality of its founding head — Karen Breytenbach — to push it, stealth-like, from a Treasury idea, through a department of mineral resources & energy office to an independent institution.

After Breytenbach’s abrupt departure the institution looked increasingly wobbly, but now under new head Bernard Magoro, who comes with his own credibility from his work at Eskom, so the IPPO can reaffirm its credibility. (Though this is not to say it won’t be tested — especially trying to procure coal power in December.)

The ultimate examples of institutions with credibility have come from speaking truth to power. Most famously was Thuli Madonsela as public protector, but her departure showed how quickly an institution can crumble and lose credibility with the wrong person leading it. A different situation has happened with the auditor-general, where Tsakani Maluleke is strengthening an already strong institution.

Personalities are important. Phindile Baleni’s appointment as director-general in the presidency has aroused interest, as she is seen as someone who can make the government work. The presidency as an institution has seemed somewhat listless for some time as a broader institution (rather than just a few good people here and there).

If Baleni is to succeed at the presidency, culture will be key. The best institutions — such as the Reserve Bank and the National Treasury, which have a strong and deep culture that is identifiable from their most senior to most junior employee yet exists independent of each individual — are greater than the sum of their parts. The two institutions in their two towers seem to have a lasting hold; a legacy that is passed on down through transitions and could even survive state capture and a weekend special.

The government needs to think more about institutions. They are hard to correct when they go wrong — as can be seen from the logistical maze to get rid of the public protector let alone the politics of it, or the problems trying to correct for mistakes Icasa has made. Maybe the process for reinvention — a large red button that (say under judicial and parliamentary oversight) can blow up an existing independent institution and start it over — is worth thinking about.

Institutions are hard to build, there is probably a certain degree of luck (the right people in the right place at the right time), but there is a recipe. This involves leadership and personalities, sheer force of will, internal self-correcting design structures that reinforce their independence and a clear sense of what they have to do and where their policy area or industry is going.

Operation Vulindlela seems to get this, but does the rest of the government?

Attard Montalto is head of Capital Markets Research at Intellidex, an SA research-led consulting house.

Intellidex is a research-led consulting house focused on capital markets and financial services. We provide investment research, political economy analysis, financial services market analysis, social economy research including impact investing, and strategy research.

Most of our work is commissioned by major financial services companies, global multilaterals and investors, and when required our research leads to highly influential publications. We believe in having an impact in our markets by providing the insights necessary to make capital markets and financial systems work better for society. Our research has ranged from the impact of charitable foundations to advising on investment strategies of global hedge funds.

We are looking for a business development manager to lead our sales through existing and new client relationships. The role is part sales and client relationship management, and part helping develop new services along with the leadership team. The right candidate must be comfortable presenting and engaging with senior executives in South African companies, NGOs, government agencies and other entities.

Requirements include:

Performance will be judged by new clients and revenue you attract to the business, tracking and monitoring customer relationship management systems, client retention and workflow management. The role also has some administration requirements, particularly in managing roadshows for potential clients and other forms of marketing.

We offer a small company environment in which you will have considerable latitude to shape your role. We will construct a compensation package with suitable incentives linked to performance for the right candidate. We believe in developing our talent and ensuring significant career development opportunities.

Our standards are high. You will be working with MBAs, CFA charterholders and PhDs on our team to ensure that Intellidex delivers high levels of client satisfaction and responds dynamically to new business opportunities.

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