Hello everybody. My name is Nic Kohler. I’m from Hollard and as you may have heard, we have approached the competition commission to sanction our offer to purchase Etana. It gives me great pleasure to share with you all, our proposed new corporate identity…..
<<Hollard and Etana brands merge to become Etoll>>.
<<Hollard and Etana brands merge to become Etoll>>.
On a slightly more serious note…
Create the gap video
What you have just seen is our probable future if business continues to believe that the business of business remains just business – if industry in a capitalist society has as its ultimate and only goal the maximisation of shareholder wealth. While the picture painted might be a little extreme, it’s not actually all that far-fetched. And here’s why.
There is little dispute that capitalism represents the best of the various economic systems pursued by nations in the past – principally because it is founded on and protects the key links between personal initiative, risk-taking, economic reward, the rule of law and the sanctity of private property.
However, when we look at the formidable and unprecedented list of challenges facing modern societies, it becomes clear that capitalism as practised over the past several decades does not have all of the answers.
Conventional wisdom is that by being successful in their core businesses, companies grow the economy, and in so doing increase the number of jobs available and generally uplift society – the so-called “trickle-down effect” – with CSI programs then used largely to appease the corporate conscience about those left behind. However well-intended, these programs are fragmented and not generally designed to bring about real systemic change. The idea that successful companies will benefit all of society through the trickle-down effect is clearly and demonstrably not true, or at least not sufficient to deal with the world’s problems. This form of capitalism, which seeks to maximise shareholder wealth above all else, has, created worldwide turmoil, culminating in the Global Financial Crisis of 2008 and subsequent rises in unemployment, social unrest and austerity measures.
In South Africa, this form of capitalism has not resolved and may even have exacerbated what President Zuma referred to in his 2012 State of the Nation address as the…
Marikana was the consequence of a whole series of issues and we cannot afford to ignore any of those issues, but at its heart it was about inequality. Yes there was police bungling, yes there was probably management incompetence, yes there was political manoeuvring and yes there was quite possibly corruption, but it all sprang from the living conditions, discontent and desires of poorly paid miners. These miners were prepared to put themselves at risk in order to attain…
…the kind of lifestyle to which they are exposed every day when they interact with people like you and me. The causal link between levels of inequality and inter-personal violence is now well established in academic literature. Why is this? In countries where there are high levels of inequality, people tend to have less of a sense of community and the level of trust among citizens tends to be lower. The frustration of continual exposure to relative wealth without seeing reasonable prospects of acquiring such wealth…
…can easily boil over and result in violence.
South Africa is at risk of trending towards a future like the one we saw. While the official unemployment rate is around 25%, if “discouraged work-seekers” are taken into account, the figure rockets to around 37%. This additional 12% (or 2 million people) are in this category because they have “lost all hope” of finding a job. This hopelessness is something about which we should all be deeply concerned.
Gill Marcus recently quoted a youth unemployment figure of 53% but that again excludes discouraged work-seekers. Some estimates have put that overall figure closer to 66%.
Educational outcomes are poor on average and extremely uneven, which aggravates the excess supply of unskilled labour as well as worsening income inequality.
Almost 73% of South Africans have less than a matric and nearly 20% (or 9 million people) are functionally illiterate. When it comes to poverty measures, 36.4% of the South African Population lives on less than R25 a day.
But, as they said in Close Encounters of the Third Kind, ”we are not alone”.
In the USA, the bastion of shareholder capitalism, a recent edition of Newsweek pointed out that “Corporate earnings have soared to an all-time high. Wall Street is gaudy and confident again. But the heyday hasn’t come for millions of Americans. Unemployment hovers near 9 percent, and the only jobs that truly abound, according to Labor Department data, come with name tags, hairnets, and funny hats (rather than high wages, great benefits, and long-term security). The American Dream is about having the means to build a better life for the next generation. But as President Obama acknowledged at a town-hall meeting in May, “a lot of folks aren’t feeling that anymore”
So that dystopian future seems like a real possibility.
Now I ask us to put that all aside. I ask us to imagine an alternative future.
Fixing the gap
To an extent, we already pay premiums at an industry level. The insurance industry inherently provides an instrument for social benefit. We pay premiums every time we pay a claim, assist someone to improve their risk profile, or help someone reach their dream through saving. I am sure that there are those among us who would argue that the short-term industry paid excessive premiums last year what with the St Francis fire and the Johannesburg hailstorms! We need to ensure that this social aspect of our business remains top of mind at all stages of product development, sales, administration and payout.
We have also paid premiums by leveraging our power for good. Just as Walmart changed the future by using their power to change the entire light bulb ecosystem, we exerted our collective power as the largest commercial purchaser of geysers to encourage a switch to environmentally friendly water heating methods (the so-called Green Geyser project coordinated by SAIA). This is a great initiative and a substantial premium contribution. As an industry, we need to look for other areas in which we hold leverage and can drive positive change – the automotive and towing industries are obvious targets in the short-term space. I know there are initiatives under way, but I would ask if we are aiming high enough and if we fully understand our leverage.
We can also pay premiums by participating as an industry in furthering the aims of the NDP. . While, the NDP is by no means perfect and it is certainly not a panacea, as a number of players from all over the political spectrum have pointed out, it IS undoubtedly good in its analysis of existing problems, and its vision of the future. It calls on ALL players to help to realise that vision, and it’s getting us thinking and talking about solutions. It also recognises that business is a vital role player because the size of the challenge…
…exceeds governments capacity to do it alone – we need to accept this responsibility and find ways to participate, and in so doing create momentum behind the NDP so that we can hold government to account for the part they need to play. We have made positive noises about the NDP, now it is time to roll our sleeves up and bring all of that deep understanding of risk, all of that innovative thinking, all of that leverage in the service of something way bigger than ourselves .
If we create momentum behind the NDP and do our bit, we will be in a position, as collabroators, to hold government to account for the part they need to play. How about starting with the SETA’s – we have all at one stage or another complained about the SETA’s, but we don’t use our power as an industry to bring about the required change.
Finally from me, but there are a myriad other examples of the good we can do, I’d like to make brief mention of Empowerment. There is no doubt that we have seen progress in our industry, but is it enough to ensure our sustainability and support the national empowerment agenda? I doubt it. We can, and must, do so much more.
You have spent the last 40 minutes or so watching the most elaborate infomercial ever. Les Franken would have been proud. It’s now time for me to repeat the problem, recap the benefits, tell you that for less than One Rand a day you can secure a gazillion rand in benefits and be the envy of your friends and neighbours.
Seriously though, I do believe that we are faced…(CLICK)… with a choice right now. We can continue to operate as we do, believing that business is still just about business and that our responsibility as individuals, as companies and as an industry starts and ends with ensuring that our shareholders are happy, with some CSI on the side. I believe that if we do this, then the nightmarish future that we sketched right at the beginning will become more probable. If we do not start to embrace the concept of a more conscious form of capitalism, if we do not accept the burden of thinking about how to address inequality, if we do not accept the responsibility of becoming more constructive contributory members of society, then I fear we will lose our right to operate and become helpless observers of an unravelling.
Or we could change. And become a force for positive change.
The influence and power that is held by the people in this room this afternoon is immense. Life insurance industry looks after more than 1.45 trillion Rand in assets. Roughly 13% of our GDP flows through the Life and Short-term insurance industries. Around 24% of the adult population have at least one insurance policy with one of us. If we understand our influence and power and we commit to paying premiums and becoming advocates for this insurance policy, then I am convinced that we can shape the future.
I believe that we have an opportunity to follow our own version of the American Dream – the Vision for 2030 described in the National Development Plan, which in a nutshell is to provide our children with a better life than we enjoyed. An opportunity to get individuals, business and government pulling together in the same direction. An opportunity to effect real and sustainable change. But it is not an opportunity that will remain open indefinitely.
If all of us decide, at an individual, company and industry level that we want to move from a reactive to a proactive footing, that we think of ourselves as members of the same team endeavouring to create a better future for all of us and our offspring, and if we start behaving like team players in order to secure the payout of a brighter 2030, then I am convinced that nothing can hold us back. Sign up for your Change2030 policy today. And become an Activist.
Because the business of business can definitely no longer be JUST business.
