STUART THEOBALD: How refreshing to have a business story and stop talking politics

The wonderful thing about the BHP bid for Anglo American is that the business pages have had something to publish other than politics.

It is a deal that represents a profound choice by both BHP and Anglo that will materially affect the performance of both companies, and therefore the returns to shareholders. How refreshing to have such choices, with material outcomes one way or another, within the control of shareholders.

Consider how the contrast from the news that has come to dominate. When we talk of mining companies’ performance, almost every comment must reference load-shedding and the logistics crisis, as well as policy uncertainty, diplomatic faux pas with key trading partners and crumbling local service delivery.

Company performance, in other words, has been about politics. For shareholders trying to sense opportunity, the key questions are whether politics can enable a way to stable electricity and what can be done to turn around Transnet’s performance.


Right now, investors are focused on Wednesday’s election and what it might mean for a future government and the likelihood it will implement policy that will improve the performance of the economy.

Business journalism in SA had almost become redundant. There is little point analysing managements’ strategies, the capabilities of leadership teams, the demand outlook and costs, when by far the biggest determinants of performance are in the hands of politicians. How nice, in the case of Anglo and BHP, for this not to be the case.

In other market economies things are quite different. Flip through the pages of the Wall Street Journal and Financial Times and you’ll find loads of news on companies’ investment decisions, what their consumers are doing, and new technologies being pioneered that promise to disrupt the status quo.

Of course, politics is there — both the US and Britain have elections coming up and the results could be material to business. But this is a background fact while companies get on with trying to deliver improved returns and journalists interrogate their performance.

It says something about what has happened to the business environment in SA that it feels so unusual to have genuine corporate news in which the stakes are high and up to shareholders. Anglo’s board is clearly thinking through BHP’s latest offer.

There is lots of detail to ponder, such as the implications of unbundling large assets in SA and whether shareholders really want them. Should the board decide the deal is worthy then it will have to put it to shareholders, who can vote on it. About a third of Anglo’s shareholders are in SA, so their view will be material if not decisive.

Of course, politics still matters. I think BHP’s approach failed to anticipate that its requirement that Kumba Iron Ore and Anglo American Platinum be stripped out of the group before it buys it, would be widely interpreted as a vote of no confidence in SA. It also failed to anticipate the matters, because politics matters so much here.

Strategic rationale

Whatever BHP’s strategic rationale, the power of politics to drive SA companies’ performance means its assets are harder to manage, because the politics also has to be managed. The deal must also contend with the Competition Commission, whose assessment of public interest concerns inflames fears of political influence. All these factors are important, but for once they are less important than the decisions of shareholders.

I am not sure South Africans appreciate just how unusual it is for a free-market economy, that this is unusual. Companies should be able to function in a predictable and conducive environment. Of course, political and regulatory risk will be forever present, but managing these risks should be within the power of boards and management teams and the magnitude of their impact on performance wieldy.

I think this says a lot about our country and the low-growth trap it has been stuck in since 2009 and the embers of the global financial crisis. Business has not been able to get on with the job of doing business. It has instead had to contend with an inordinate amount of political noise and public-sector dysfunction. Shareholders have been disempowered in the process. Business has become about politics.

If we are to reach our growth potential as a country, this must change. The role of government must be to create an environment in which businesses are empowered to perform.

The market should work to ensure businesses can access the services they need — governments are usually a pretty poor provider of services such as ports and electricity generation. Rule setting is important, but delivering basic economic services, which the private sector could compete to provide itself, is not.

The government must set the rules of the game to give business the widest set of opportunities, but let the market choose the winners. Shareholders must drive management teams to maximise value.

Perhaps then these pages can resume normal service. Businesses can get on with the job of growing the economy and we can stop talking about the politics.