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Speech by Raymond Ackerman, Cape Times Breakfast

25 November 2008 Mr Chairman, Distinguished Guests, Ladies and Gentlemen, Like many of my contemporaries in the business world, I am frequently asked how I remain so bullish in the face of the many challenges that confront South Africa. Particularly, there is often a hint of incredulity that Pick n Pay should continue to invest so confidently in a commercial environment that is threatened by very worrying levels of crime and violence, political uncertainty and deteriorating services.

Unlike many of those who find little good to say about the state of our nation, I am, regrettably, old enough to remember graphically the sheer awfulness of South Africa in the seventies, eighties and early nineties. I recall the dawn raids on African families whose presence in urban areas was deemed to be illegal, the wickedness of the pass laws, the forced removals under the Group Areas Act and the economically suicidal application of race-based job reservation. And when I remember those things, I have no hesitation in saying that the South Africa of today is a far, far better place than it was before 1994. We live in a country that is governed not by the unchallengeable dictates of cabinet ministers or security chiefs, but by the entrenched principles of a progressive constitution which binds Parliament and citizen alike to a judicable bill of rights, a free press and an independent judiciary.

That is the kind of society towards which I strove for most of my adult life and in the expectation of which so much of my business career was directed. Along with many of my peers in the commercial world, I recognised many years ago that apartheid was not only inequitable and cruel, but an insurmountable obstacle to economic growth and national prosperity. It impacted negatively on the quality of life of our employees, crippled productivity, closed foreign markets and created an environment of community conflict in which corporate progress and planning was made all but impossible. And now that it has gone, we are ethically obliged to bring to the building of a new nation precisely those energies and critical patriotism that we so successfully invoked to nudge society, government and opposition to change.

The euphoria of the dawning of democracy was intoxicating and the birth of the rainbow nation seductive. But the exhilaration that accompanied the miracle our national liberation perhaps blinded us to the harsh realities of the transition that was to come. Few of us paused to reflect on the daunting task of reconstruction that awaited a country that had been torn apart and brutalised by decades of apartheid, deprivation, ethnic prejudice and a command economy.

It is only when one reflects on where we were in the darkest days of the last century, and on the poverty, lack of opportunity and political and economic paralysis that characterised our society, that we are able to appreciate the overwhelming magnitude of the difficulties that have faced us in building a new society from the tragedies of the old and recreating ourselves as a normally-functioning and thriving economy.

We can learn much from the experience of the United States’ Reconstruction after the Civil War. Like our own post-apartheid transformation, it was an era of unprecedented political conflict and of far-reaching changes in the nature of American government. It saw the passage of constitutional amendments that for the first time enshrined in American law the principle that the rights of citizens could not be denied because of race. But it was not until the mid-twentieth century that America was able to come to terms with the political and social agenda of the Reconstruction and make a second attempt to erase the economic inequalities that originated in slavery and were reinforced by decades of segregation.

And then, earlier this month – in an extraordinary encounter with the Rubicon – millions of white Christians in the United States voted for a man with one Kenyan parent, that parent having been raised as a Muslim. We can’t afford the false starts and frustrated expectations of the American Reconstruction. Our own experiment in non-racial democracy is too important to fall victim to pessimism and timidity.

The truly extraordinary thing about our present isn’t the array of problems confronting us, but how vastly far we have come since that day in 1994 when we went to the polls in South Africa’s first democratic election. Since then we have created internationally respected state institutions, implemented surprisingly effective development programmes and improved the lives of millions in a way that I have no doubt will prove sustainable and which provide a solid platform from which to move into the future with confidence.

Above all, I am encouraged by the sense of political renewal that seems to have swept our country in recent months. Everywhere, entrenched certainties are being challenged; where there was deadlock, there is now a new fluidity; where problems seemed intractable, solutions are again being debated. In part, of course, this is the result of the faultlines that are emerging in a governing party which we had begun to believe was monolithic and unchallengeable. But I cannot help feeling that the Obama phenomenon has also impacted on our politics. The really remarkable thing about Barack Obama's phenomenal rise from virtually nowhere has been his reawakening of something long dormant in the West – a faith in the salutary power of politics and a sense of hope about the worth of public service. Not since the early days of John Kennedy's presidency has there been so tangible a resurgence of confidence in politics as a beneficial means to change the world for the better.

Cynicism about politics has been one of the most defining characteristics of recent decades and has, of course, always been a powerful imperative in the United States, where distrust of government is deeply ingrained in the popular psyche. But cynicism can be a dangerous condition, if only because it sees things as they are rather than as they should be. I see it all about me in my own country, where it has taken the form of disappointed idealism, corroding our confidence in Government's ability to improve the lot of the impoverished, the homeless and the sick.

Amid our political squabbling and resulting state inertia, what South Africa needs now is to regain its faith in the nobility of politics as both a calling and a means of creating a better society. Having watched his progress through the primaries and the election campaign itself, I am convinced that my country is crying out for its own Obama era, in which a re-energised combination of citizens' hope and politicians' idealism is able to create the kind of society we know we deserve and to which we all aspired at the advent of democracy.

But threats of violence, expressions of intolerance and bellicose language are the enemy of such idealism and are no substitute for the reasoned discourse which our times demand. Nor are they a substitute for the resolute and effective exercise of government power in the interest of the most needy. In his speech at the Democratic Party convention, Bill Clinton said: “People the world over have always been more impressed by the power of our example than by the example of our power.” As we enter the build-up to our own election next year, it is my fervent hope that our own aspirant leaders take note of that truth. None of this is to suggest that Government, alone, can tackle the many problems facing South Africa. Without a strong, confident and socially engaged private sector, there can be no economic growth, none of the restorative innovation of which only the market is capable, and no large-scale generation of employment. My own company has since its inception sought to spread its influence by setting an example of social and economic excellence. Whether through our social investment programmes or our commitment to consumer sovereignty, Pick n Pay has striven to adhere to the principles handed down to me by three remarkable men.

The first was Professor William Hutt who taught me when I was a commerce student at the University of Cape Town. He believed implicitly in the principle of consumer sovereignty, and his words “Treat the customer like a Queen and she will make you a King” made a lasting impression on me.

And then more than four decades ago, it was the marketing genius Bernardo Trujillo who taught me about the “four legs of the retail table”. According to this simple but useful principle, each leg needs to be strong in order to balance the table. Trujillo's four legs are administration, merchandise, advertising and social responsibility, and a company's people.

Finally, Gottlieb Duttweiler, the founder of the Migros chain of grocery stores in Switzerland, was a remarkable retailer, who gave new meaning to customer sovereignity when he transferred ownership of the company to its customers, as a cooperative. Duttweiler also required that Migros contribute a percentage of profits to social causes and founded the institute that bears his name and promotes his principle "Focus on people, not capital". It was these three men – Hutt, Trujillio and Duttweiler – from whom I learnt that business is about so much more than the arid balance sheet. It was for that reason that Pick n Pay was one of the first companies in South Africa to make a strong commitment to corporate social responsibility and it remains to this day one of the pillars on which the company philosophy is founded. And it explains why, in order to make a meaningful and measurable contribution to the society within which we operate, that 8.6% of our after-tax profits go towards social investment programmes and projects.

Allow me to mention just one example of our commitment to the expansion of opportunity among those who were previously excluded from the formal economy. In converting 80 of our 126 Score stores to Pick n Pay Family Stores, we decided at an early stage that the franchisees would be drawn from the previously disadvantaged. I believe this is without doubt the most significant commitment to black economic empowerment ever undertaken in South Africa's retail industry.

Our experience has demonstrated that there is no shortage of very suitable and willing franchisees who are today poised to turn around the significant losses that Score has suffered over the last five years. From Ulundi to Vereeniging to Soshanguve, we have created new business owners, opened up access to entrepreneurial finance and increased sales both by the rebranding of the stores and by bringing the Pick n Pay experience to communities where we had no presence before.

Apart from enterprise creation, growth in sales and job increases, the Family Stores are creating opportunities for small-scale local suppliers – especially in terms of fresh produce. This last point is important, for it is absolutely essential to our economic prosperity that South Africa should do very much more to stimulate the country's agricultural sector by creating the kind of environment in which our farmers can flourish. Mr Chairman, while I speak of my own confidence, I am at the same time aware that confidence in a country – as in a company – is a fickle and unpredictable thing, influenced as it is by perceptions and events that are often beyond our control. Like a damaged reputation, confidence may take years to be rebuilt and for negative perceptions to be reversed. The challenge confronting all of us, therefore – be we in government or in business – is to develop and enhance the levels of national confidence to which I have referred. I suggest there are four ways in which we can do this.

Firstly, business must realise that social responsibility is not a fashionable burden to be borne with resigned fortitude, but an essential component of sustainable success. To embrace corporate social responsibility is not only to act in a philanthropic way, but to practise enlightened self-interest. In Pick n Pay's case, this means a conviction that the more economic freedom pervades South African society, the more scope there will be for growth in the retail market. Our view now is as it was when we first listed on the stock exchange in 1968 - big business must work together towards securing the economic security and social well being of generations to come.

Secondly - and I direct this particularly to those political figures who believe they are riding on a wave of leftist resurgence – there is nothing more dangerous to our reputation in a nervous and jumpy global marketplace than ill-considered talk of radical change to those aspects of macro-economic policy that have brought us the stability of the past decade. Competition for foreign investment is fierce and unforgiving, and if it goes elsewhere as a result of unrestrained utterances by the disciples of discredited socialist solutions, we shall pay a dreadful price in terms of job losses, social stability and our ability to raise capital for desperately-needed infrastructure.

Thirdly, we must accept that South Africa already has all the characteristics of a social democracy, with enormous allocations of public money to social services, housing, health and support grants which are without equal in the developing world. Our challenge is not the allocation of more resources, but the efficient and cost-effective utilisation of what we already have. It is not public policy that is at fault and in need of far-reaching change, but often the levels of corruption, waste and incompetence that erode so many of our efforts to uplift the poor and bring relief to the needy. Now is not the time to talk of major overhauls of policy – rather it is the time to perform better with the excellent tools we already have.

And fourthly, we must do all in our power to discourage the flight of skills and experience not only from our public institutions, but from our shores. What causes me the greatest degree of confidence in our future is the resilient determination of my children, their generation and their children to remain in the country of their birth and to contribute to its progress. Day after day as I move around the country, I encounter South Africans of all races and ages who realistically understand that the transformation of our society will take time and will be strewn with difficulties. And that is the source of their optimism rather than a cause for despair.

Our challenge now is to wrench politics back from the corrosive effects of cynicism and regain that enormous faith we had in 1994 that Government, working in tandem with a socially-responsible business sector, has the ability to meet our lofty expectations that it is able to build a more compassionate, safer and more prosperous society for all our people.

Despite all I have said, none of us can deny that business is experiencing a period of severe stress. Beset by high interest rates and elevated inflation, and buffeted by a formidable financial crisis which has seen the virtual collapse of banking systems and currencies, we are navigating perilous waters. As a player on this turbulent world stage and as Minister Manuel has cautioned us, South Africa cannot hope to be immune to these difficulties. However, I am reminded of the ancient Chinese curse that dooms us to live in interesting times. But my experience over a long lifetime has also persuaded me that such times are also periods of stimulating challenge, of opportunity for the brave, and of optimism for those with the courage to hope, work hard and think strategically. As danger and possibility jostle for the upper hand, I therefore have no hesitation in asserting that we are well equipped to weather the storm. Every period of storm is followed by an era of revitalisation and reinvigorated energy in which our ability to rise to the challenges and remake the world is tested. Our country has time and again demonstrated its capacity to respond with innovation and initiative to changing economic, political and social circumstances – and I have no doubt we shall continue to do so.

And always I return to the reassuring equilibrium of perspective – a perspective that tells me that we must maintain that sense of confidence and promise that is altogether different to the restricted, inward-looking siege sentiment of only two decades ago. Our economy has never been better managed. What we often forget in the angst of our growing pains is that we have created a climate in which a whole new generation of upwardly-mobile, ambitious and entrepreneurial South Africans for the first time enjoy access to and participation in the formal economy.

It was the Austrian Holocaust survivor and psychotherapist Viktor Frankl who taught us that one of the principal avenues by which an individual can find meaning is by doing something meaningful or creating something meaningful. In seeking to live out that maxim, I have lived all my life as an optimist and have never yielded before the force of those who argued that the best was impossible. It was for that reason that I never lost my faith that one day South Africa would emerge from the long night of apartheid and regain its status as an envied land of promise. I have no intention of abandoning my confidence now.