Asset Manager Survey Listed Investments – December 2022

Mark Davids, Head Investment Strategy and Distribution – MOTSWEDI

“I like your perm, but not on my window”.

Growing up in the township of Eldorado Park south of Johannesburg, I used minibus taxi’s throughout my university years and early working career. One of the most enduring and funny anecdotes was a sticker found on the inside of a minibus taxi window which read “I like your perm, but not on my window”. In the 1990’s a popular hair style was called the “perm”, which was a gel applied to ones hair to change the texture. One of the drawbacks of the gel when applied to hair was that it had a wet finish. Taxi drivers took pride in the appearance of their taxi’s and wanted their passengers to be aware of this. If people with permed hair sat and leaned against the taxi window, the wet finish would transfer to the taxi window. Hence the popular sticker on the inside of the taxi’s.

This anecdote speaks to the nuanced reality which people growing up in late and post-apartheid South Africa have lived experiences of and was the essence of culture in townships. Similarly, I am sure, many growing up in suburban South Africa at the time had similar cultural anecdotes aplenty. The big difference however is that anecdotes from the suburbs went on to be integrated into the fabric of most of the large incumbent fund management businesses and has become the cultural standard which most people growing up in townships had to adapt to in order to navigate and survive in post-apartheid corporate hierarchy.

“Culture eats Strategy for breakfast”.

This begs the question, is the corporate culture in many large fund managers conducive to encouraging black talent to express their authentic self. Does the tone of the chatter at the “water cooler”, set by the leaders of the organisations, resonate with why a “perm” was as popular a hair style choice as it was. The reality unfortunately is that the post-apartheid modern South African corporate architecture of many large fund managers does not allow for the true integration of this essence into its culture.

Many of the incumbent large fund managers are trying to solve for why black staff, particularly female staff, are not staying at their companies – most put it down to a larger pay cheque – which in some cases it is, but few are looking at their own corporate cultures as the source of the problem. Few are analysing their cultures throughout the company to be more open to understanding the essence of the “perm”.

8% to 16% – culture and growth

When speaking about the need for transformation in South Africa many in the upper middle class and beyond, point out exactly how the incumbent large fund managers have made strides in appointing black staff to key positions and how the Socially Responsible Investment (SRI) programmes have helped so many disadvantaged communities. Indeed, they have and may these programmes and appointments continue and thrive.

In my view however, there are two different issues at play here which need to be separated.

First, is the issue of diversity and inclusion in the workplace, which has seen some black individuals appointed to senior management levels and above, this is happening at many companies (Inc. black fund managers), is a good thing… and should continue for the benefit of all South Africans. Efforts in workplace diversity should continue and should be grounded in empathy.

Second, is the issue of black ownership and the growth and support of black-owned fund management businesses in a white-owned and dominated industry… Which has established networks. The upliftment and acceleration of black fund managers along with efforts to capacitate them to become more competitive should be the top priority of asset owners. However, this part of the transformation discussion seems to purposefully get lost in popular discord. This can be evidenced in the poor industry representation rate of organically grown black fund managers over the past 30 years (8% out of R7Trillion).

Asset owners responsibilities

When we are clear on the causes of stumbling blocks to growth and identify solutions to overcome them – innovation and new opportunities tend to present themselves. High on the agendas of asset owners should be the identification of methodologies and programmes to support medium and small black fund managers, which should be given the opportunity to grow into large corporates.

ENDS