We ate our own dog food

Magna Carta is a reputation management agency, established in 1994. We are turning 20 this year and have grown in leaps and bounds since inception. We pride ourselves in professionalism and being one of the best in the communications sphere. With all that in mind, it came as an uncomfortable surprise when Brendan Seery awarded us the PR Onion in his Orchids and Onions column in the Saturday Star (February 15, 2014). The Onion, which is an award to a PR agency for getting something wrong, was for a basic PR101 procedure. (See PDF: SaturdayStarOnion)

As a reputation management agency – our own reputation is of utmost importance. No client would trust us with their brand(s) if we didn’t have the reputation we have – a reputation that took years to build and polish. But as the saying goes; every dog has its day – and it was our day. The Onion provided us with the opportunity to eat our own dog food. It was our turn to show how we handle ourselves when our reputation is being questioned – put to practice the advice we give to our clients.

Ignoring the Onion was an option with the hope that none of our clients saw it – but as Magna Carta CEO Vincent Magwenya states “perception can easily turn into reality”. Another option was to go on the defensive and blame it all on the intern in question. But that would be a contradiction to how we consult with our clients on matters similar to this one.

Take Responsibility.

For a brand to retain any credibility during a crisis, taking responsibility is the first step. “The Onion from Seery was a clear indication that something had gone wrong with our management protocols of interns and our interface with the media – we had to accept this fact and take action” explains Magwenya.

Magwenya, who makes it clear that “communication is about leadership”, did exactly that and made contact with the Journalist. Part of managing a reputation includes building and continually maintaining relationships. Ignoring the matter would have meant Seery would forever have had ill-feelings towards any mention of Magna Carta. The relationship between reputation consultants and journalists is the most important factor of our field – it affects our clients at the end of the day. Clients will not feel comfortable working with an agency that doesn’t have great relations with media representatives. “Media relations management is our bread and butter.”

In his message to Seery, Magwenya unpacked Magna Carta’s plan of action as to how we’ll ensure that such a slip up will never happen again. “It is never enough to just take responsibility and apologise. It is also important to show that measures have been formulated to remedy the issue at hand”, said Magwenya. This was simply not a “find the intern- fire the intern” issue. Being reactionary would mean that we solved the problem at surface level but didn’t get to the root cause of the problem.

Quick real-time action from Magna Carta’s CEO put the company back into the good books of Seery. After the response he awarded us an Orchid for our peace effort and most importantly we mended our relationship with him. (See PDF: SaturdayStarOrchid)

Budgets, even good ones, merely allocate resources

Solutions lie outside of the fiscal tool and key is in implementation

This year’s budget, the last of the current sitting administration and possibly the last budget of finance minister Pravin Gordhan, was a mix of conservatism as well as practicality given that we are in an election year.

While it did bring about an income tax relief of R9.3 billion to households, increased tax cuts and support to SME’s, incentives and funding for Special Economic Zones (SEZ), and continued funds for infrastructure development as well as to social services, it was somewhat conservative in its approach to the challenges South Africa faces in reducing the current 24% unemployment rate.

While the National Development Plan (NDP) is aimed at creating an equal society where all can partake of the economy the latest budget fell somewhat short in terms of reaching these objectives.

With an estimated economic growth rate of 2.7% predicted for 2014 we are still far off the 5% growth per annum needed as outlined in the National Development Plan (NDP) to make an impact on structural unemployment.

While many quarters of society, most notably labour, have not given their full support to the NDP, its implementation remains critical in order to get SA on the right economic path. While this budget did not allocate specific amounts to the NDP, key sectors outlined in the plan have been allocated their share of resources.

Infrastructure spending over the past five years has amounted to R1 trillion with R847 billion allocated over the next three years for numerous projects including rehabilitation of dams, refurbishing of Metrorail coaches as well as support for IPAP &SEZ.

Education remains the key pillar for NDP to be successfully implemented. As such it receives an allocation of R256 billion. Another key sector for the successful implementation of NDP is that of healthcare.

With the NHI pilot programmes already underway and R1.2 billion allocated to piloting general practitioners code, the sector still faces numerous challenges which no amount of budget allocations can resolve unless structural reforms are initiated.

Employment remains but the biggest obstacle currently facing the country. While strides have been made in creating employment for all, the negative theme far outweighs any good news on the topic. Allocations to employment include the expansion of the Public Works programme as well as the introduction of the youth wage subsidy, both of which needs some time in order to judge it a success or not.

Momentous political year officially kicks off

Over the next two weeks, two events that define the political economic agenda take place in parliament in Cape Town. Tomorrow evening, President Jacob Zuma will deliver his state of the nation address and in two weeks’ time, Finance Minister Pravin Gordhan brings out the speed point machine to explain how government will pay for all its needs over the coming year when he presents the budget.

The two events take on added significance as they take place in a year when South Africa is due to hold elections while celebrating 20 years of democracy.

President Zuma will most likely use his State of the Nation address to reflect on his government’s five year term but also the ANC’s 20 years in power. He will most likely point to success in the improvement of access to water and electricity, improved access to education as more children now enter Grade R and the improvement of the lives of the poor through access to social grants.

The opposition will be keen to point out that no significant movement has been made in reducing unemployment while the public health and education system are crumbling in part. Crime, while stabilising, remains high and South Africa’s competitiveness in many areas of economic life has either stagnated or is deteriorating.

Those complaints are likely to simply be drowned out by pomp and ceremony and sense of occasion.

The main reason that President Zuma will have to fall back on history in his address is because he has little to share as a current achievement. Infrastructure spending, his point of strength throughout his term of office feels like it has ground to a halt, with no new projects confirmed and actual spending lagging behind what was planned.

There is thus unlikely to be any new initiatives announced, all that might be saved for the new parliament, where the ANC expects to retain its majority and Zuma fully expects to lead it as president.

One of the most remarkable achievements of South Africa’s democratic government has been the reform in public finances. The reform was part of the adoption of Growth Employment and Redistribution (GEAR) as the official economic policy in 1996.

The process started with the merger of the department of finance and the department of state expenditure to create what is today known as the National Treasury. This led to the introduction of the three year budgeting system, the Medium Term Expenditure Framework (MTEF), which has brought stability and predictability to the budgeting process.

It then evolved to produce one of the most evolved and sophisticated and transparent budgeting systems in the world, but it also produced the budding romance between Minister Trevor Manuel and his director general at the time, Maria Ramos.

The most remarkable feature of South Africa’s budget is the phenomenal growth it has undergone, with spending now exceeding R 1 trillion, but also how spending has been redirected. When the ANC took power in 1994, South Africa spent more on servicing the interest on its debt than it did on education.
That changed in the early 2000s, when the reduction of national debt through selling off its assets and slowing down capital expenditure allowed government to reduce debt and therefore interest paid on it.

The most keenly watched item on the budget will be measures to boost economic growth as a way to fight poverty and unemployment. Opposition parties will also watch the growth of the Public Service Wage Bill, which has grown briskly over the past few years, due to higher numbers of employment and generous wage increases.

This in turn influences the Public Service Borrowing Requirement, where markets will watch closely to ensure that SA does not borrow to pay its civil servants, a slippery slope for any country to be caught in.

South Africa’s re-engineering of public finances has been compared to redesigning a plane in mid-flight. It is a technically complex undertaking that is probably the single biggest reason we have a stable democracy to celebrate. It should never be taken for granted.

By: Thebe Mabanga, Media Director Magna Carta