Open

Mpumi Madisa: My view is that what COVID-19 will probably do is thrust us fully into the Fourth Industrial Revolution if we were lagging behind.

[Music]

Introduction

I am Paul Laudicina, chairman emeritus of Kearney and founder of its Global Business Policy Council and this is Coronavirus: a world transformed.

We’re recording this on Thursday, May 28. 

Many of us in the Northern Hemisphere would like to begin thinking of summer these warmer days. But despite the sunnier weather, we’re facing the fourth month of widespread lockdowns and continued growth in COVID-19 infections around the world. What will this next season of life look like for our world? How will COVID-19 continue to transform both our present reality and perspective about the future? 

New troubling data from a few studies suggests anywhere from 35 to 81 percent of people who test positive for COVID-19 are actually symptom-free, at risk of potentially spreading this insidious contagion unknowingly. What could that mean for the resumption of more “normal” everyday activities?

Today, we’re zooming in on the African continent, and South Africa in particular, where winter weather is looming. While Africa has fared better than most Western countries with the somewhat slower speed of the COVID-19 transmission, experts still predict that a quarter of a billion people across the continent will catch coronavirus over the next year. The severity of the cases and the number of those that succumb to the virus, however, we hope will be lower than those seen in Europe and the Americas principally because 98 percent of Africa’s population is under the age of 65.

In South Africa, we saw early reports that President Ramaphosa’s very strong, proactive measures to contain the virus were working. But more recently, as parts of the economy start to open up, the infection rate risks increasing. South Africa is not expected to reach its COVID-19 peak until perhaps a few months from now. What will that mean for leaders in South Africa and, more broadly, across the continent?

Interview with Guest

Paul Laudicina: Our guest, Mpumi Madisa, is the CEO designate of Bidvest, a South African services, trading, and distribution company that employs more than 125,000 people worldwide, of whom 100,000 are in South Africa. When she takes on the role of CEO toward the end of this year, she will be the first female to lead the company, the only black woman CEO of a Johannesburg Stock Exchange Top-40 company, and at 40 years of age, she’ll also be the youngest.

It has been a joy for me to get to know and work with Mpumi. And today, she joins me to discuss how the COVID-19 crisis is playing out in South Africa and how she’s making critical decisions during times of uncertainty.

Welcome, Mpumi. Help us, if you would, with a little context as we begin our chat today. How is the crisis playing out for South Africa? How do things look from your vantage point in Johannesburg, Mpumi?

Mpumi Madisa: Hi, Paul, thank you very much for the opportunity.

Today, we sit—we’re on day 57 of the lockdown. But over the past three weeks, we have been operating in a space where the economy has been slightly open, what we refer to as level four of the lockdown, where certain parts of the economy have been allowed to open up. And now we’re imminently waiting for an announcement by the president to move us to level four—to level three, sorry—which will further open up the economy. 

The lockdown has proved successful in that our rate of infection has plateaued since the lockdown. So, we don’t sit at the moment with a rapid or an exponential spread of the virus, like what you’re seeing in other countries. And really the other thing that the lockdown has enabled us to do is to increase the capacity of our healthcare system. We’re reducing the rate and the spread of the virus even though it is increasing but the rate is not astronomical. And we’re now looking broadly at how we can open up the economy even further.

Paul Laudicina: And of course, you are in South Africa dealing with the same issues everyone in the world is dealing with, about when should you open, whether you should open, what you should open, how do you reopen businesses? How do you take care of employees? How is Bidvest approaching these kinds of decisions in this environment of uncertainty and ambiguity and a threat, if you will?

Mpumi Madisa: Yeah. So, I mean, we’re living in probably the most complex environment I certainly have seen, and I think many of us have never seen this level of complexity. Paul, you know, you’re familiar with my numbers. We employ 125,000 people. 100,000 of those people are in South Africa, and the rest are mainly in our UK and Ireland operations. We have in excess of 200 subsidiary companies. And at the beginning of the lockdown, Paul, in level five, 75 percent of our operations were closed. So a significant, a really, really significant portion of our businesses just—their doors weren’t open. So the lockdown has had quite a significant effect on our businesses. 

As we look forward and we think and we start planning around reopening, our biggest focus is our people. We are a business that is about people. When you’ve got 125,000 people, if you don’t have those people, you don’t have a business. You know, that’s just our reality. So creating a safe working environment is top of mind, and it is our only focus at the moment. Making sure that the required health and safety protocols in terms of social distancing, wearing masks, implementing hygiene practices, etc.—all of that is key for us.
 
Because of the decentralized nature of our operations, we’ve created a digital platform, and essentially it’s an app, Paul, that enables us to track and monitor the implementation of all the required health and safety protocols so that at a press of a button really, we’re able to see and have visibility of the number of people that have reported to work, verify that our employees have conducted their COVID inductions before reporting for duty, and all of those COVID inductions are digitized, be able to have visibility if there are any employees who, from a temperature-screening perspective, have been found to have temperatures that are higher than normal, be able to very quickly pick up what protocol has been implemented in terms of either isolation or quarantining of any individuals that we may think are at risk, etc., etc. And so we’ve digitized the process of being able to one, view the workplace, but also implement the relevant health protocols that we need because this is now the new way of work and this is our new environment. 

Paul Laudicina: Well, in addition to creating that kind of safe working environment for your staff and putting your people first, you also have taken some decisions during this crisis that have demonstrated how people are first. As I understand it, executives have agreed to a 40 percent pay cut during the lockdown. Board members took a 30 percent cut in their compensation. You’ve also set up a fund to ensure that the most vulnerable employees receive as close as possible to their full salary even if they couldn’t work. 

Amazing initiatives they are, especially when you consider that Bidvest has a portfolio of companies that are so diverse, with a high degree of local management authority. So it’s really impressive that you’ve been able to do that, Mpumi. And you, I know, are by background a mathematician, and you’ve spoken before about fact-based thinking and how that is one of the foundations for your leadership style. How do you use that fact-based thinking mentality when facts about the crisis are often hard to come by, and there’s so much that we don't know about what’s likely to happen?

Mpumi Madisa: Paul, so you can imagine that I’m losing my mind, right? All I want to do is open up a spreadsheet and put some numbers in. And of course, I can’t do that during this time. So yeah, this crisis is absolutely like no other, and it is very difficult to try and predict what will come, so I’ve taken the view of—and I’m still using maths, but I’m using it differently—to rather than try and predict the future, I’m trying to look at trends. Even though the data points may not be many at this point in time because we’re not long in this COVID period, but look at some data points both in South Africa and globally, and read into what that story tells me, to enable me to think about some of the important business decisions that we need to make. 

So if I can maybe touch on about four areas that I’m looking at at the moment.

Firstly, the one is economic growth. So as we are living in COVID at the moment, and we are dealing with the significant supply shocks and demand shocks at the same time, and obviously a healthcare crisis, that complicates it even further. One of the things that is our next wave, in fact, it’s already started, is deep economic contraction. And so that’s an area that I’m trying to get my head around. The forecast that we have at the moment in South Africa in terms of GDP contraction to December 2020 are in the range of 10 to 15 percent. Paul, this type of contraction is a depression. It’s not even a recession.

Paul Laudicina: Yeah, and also the unemployment, I gather that the forecast is that it could affect as much as a third of the workforce.

Mpumi Madisa: In fact, Paul, it’s 50 percent of the workforce. 

Paul Laudicina: Wow.

Mpumi Madisa: So what we’re predicting is that the impact of COVID-19, we’re going to end up with an unemployment rate of about 50 percent. So to live in an economy in a country, Paul, where—where half of your population that can work is unable to is very severe.

Paul Laudicina: And so the growth challenge was a pre-existing condition, which has been compounded by COVID-19.

Mpumi Madisa: Absolutely, absolutely. Because you’re absolutely correct. We were already finding ourselves in a low-growth environment. And that’s really just been exacerbated by COVID-19. You know, so one of the things that I am looking at, Paul, is reflecting back to the 2008 financial crisis. 

So whilst that is very different to what we are going through at the moment, what I’m interested in is, is how Bidvest responds to that steep contraction in the economy. So in South Africa in 2008, our GDP contraction was 5 percent. So now I’m looking at that doubling in the next six months. And so I’m going through an exercise of seeing how various parts of Bidvest respond, have responded previously, to that kind of contraction. Our business, as you know, is very different. We touch very different parts of the economy. We’re not one homogenous business. And so the manner in which we will feel that kind of contraction is going to be different across the group. So I’m going through a process of getting some visibility in terms of which areas of our businesses are likely to be hardest hit, to what extent, how long does it take us for recovery, etc., etc. So that can give me some kind of a picture. 

The other area, Paul, that I’m also looking at, and this is both in South Africa and globally, but I think the global data points are quite helpful, are some of the long-term structural shifts and long-term structural changes that we need to get our heads around. I mean, one of the things that we’re already seeing globally is that countries are becoming more inward-looking. Already around April, 24 countries had imposed export controls on essential products like masks and ventilators and medical componentry, etc. And the definition of an essential product is likely to expand beyond just these medical products. And countries, in an effort to de-risk their reliance on large export economies like China will start looking at building domestic manufacturing capacity. 

So we’re definitely looking at a more inward-looking approach by countries coupled with a reduction in people movement that will really drive an unconscious move away from globalization. So that’s one of the areas that we need to think about in terms of what the opportunities are, then in terms of local production.

The other structural shifts that are also top of mind: issues around increased use of technology. What does that mean for our business? Which aspects of our businesses are sufficiently digitized, which aren’t and what do we do around the space of technology?

I think the supply chain, Paul, is also one of the areas where we’re going to see huge shifts that are driven by changes in consumer behavior, changes in demand patterns, changes in buying patterns, etc. So there’s a big stream around understanding what’s happening in the supply chain and therefore what that means for our organization. 

And then there’s also industry evolution, Paul, that we need to think about. I mean, for example, the aviation industry is one of the hardest-hit sectors globally. The number of retrenchments, that we’ve heard from Virgin, BA, etc., are massive. We’re also seeing our local aviation industry really collapsing; it’s like a domino effect. And so there are some sectors that are really going to look exceptionally different, the demand patterns will never be the same. And we need to think about our exposure as Bidvest in some of those sectors, so that’s one of the areas just around the long-term structural changes that are coming that we’re getting our heads around.

Mpumi Madisa: The third area, Paul, is green shoots. So in the complexity, we have to look for green shoots. We have to look for aspects locally where we’re able to grow our business. We have to look for the wave that is rising that we can catch. We’re looking and assessing which new products or service offerings that may be complementary to us that we can then start looking at. 

And remember, Paul, that we also grow by acquisition. So whilst we’ve put acquiring any businesses on hold at the moment, and really, it’s just because it would be difficult right now to do an accurate valuation of a business, once the storm has calmed a little bit and we’re more comfortable that we can again be in a position to look to look at buying businesses, that again also gives us an opportunity to see which businesses we can add on to our portfolio. 

And the last area, Paul, is I think there’s an opportunity for collaboration with government. I think that moving forward, public and private sector has to work more closely. I think that going forward, we need to look at public-private partnerships. We need to think about how we combine the public sector and the private sector balance sheet to enable us to be able to invest in the country. And so for me, that's, that's an important one and conversations and being alive to what we can do in partnerships and as teams is going to be important between the public and the private sector. 

And linked to that is also social partnerships. Paul, if we’re talking in South Africa about an unemployment rate of 50 percent, it is clear that the role of the private sector in ensuring social equity has become exponential. We now have an even bigger social responsibility. And so the role that is expected of the private sector is going to be big. And I’ve got absolutely no doubt that South African corporates will rise to that occasion.

Paul Laudicina: I want to pick up on the technology question that you raised. I mean, obviously, you are already employing important technological innovation, like your digital platform for just managing the safety of your workforce. But I know that you’re a strong believer in the impact of the so-called Fourth Industrial Revolution technologies, that the impact that they will have on the world to be sure but on Africa in general and South Africa and Bidvest in particular. I remember President Ramaphosa some time ago talking about the Fourth Industrial Revolution saying that “We’ve missed the last Industrial Revolution. We can't afford to miss the next one.” 

Are you optimistic about how these technologies will net out in terms of their impact for your company and your country, especially in light of those structural changes that you were talking about, and the inward sort of looking a focus of governments and ultimately, companies that are forced to work in a world that's less globalized, perhaps post COVID-19, than it was prior to the pandemic?

Mpumi Madisa: So Paul, my view is that what COVID-19 will probably do is thrust us fully into the Fourth Industrial Revolution, if we were lagging behind. And for me, I think it's just a function of the fact that we are going to be operating in a new world, right? And so if our new world and let's take a sector as an example, education will never be the same. Children will have a hybrid now. 

Because what children are learning during this time of a lockdown is how to continue with the curriculum, when you don't necessarily have to be in class. And so whilst we weren’t prepared for it, it’s been amazing to see how quickly that particular sector has capacitated itself. It’s been amazing to see how quickly technology companies have come to the table with reduced costs of data in South Africa to enable that, with distribution of laptops and whatever technology equipment is required for learners to be able to continue learning. It’s been amazing to see how even in the public sector, initiatives have been put in place, and teachers are already teaching remotely. In fact, we’re busy with a project at the moment, Paul, that will be funding for the government to put curriculum on free-to-air channels so that it doesn’t matter where you are as a learner, you should be able to source your content by switching on your television station and not even needing a laptop or data, etc. So in fact, my view is that what the lockdown has done, and this new way in which we need to work is really just thrusting us into a space where digital is the way that we’re going to be working. Digital is the way that we're going to be learning. 

I think the challenge, Paul, that’s going to come is a funding one. And so when I think about the conversations that I’m having, South Africa has huge structural inequalities and so there are areas where just structurally, the technology network doesn't exist. And we haven’t been prepared to put that in place quickly. And it is expensive. And so I think that the way we’re going to be challenged is, how deep is our purse? And how far can we go to put in the infrastructure that is required to enable the country to operate as digitally as possible? 

But I certainly think that what COVID-19 will do is push us. And those organizations that stay behind, unfortunately, I think are going to be in trouble. And in fact, I don’t think that there’s any sector that can stay behind during this time.

Paul Laudicina: Well, it’s interesting that the growth of importance of course, the Fourth Industrial Revolution technologies, AI, IoT, virtual reality, additive manufacturing, is undeniable and as you say, the infrastructure and the investment that's necessary to leverage those technologies is quite significant. At the same time, you talked about how governments, economies, are becoming more inward-looking. It would seem, to me at least, and I would value your assessment of this, that African countries need to collaborate more closely in order to pool resources and ensure that capital is effectively leveraged to be able to access those technologies with the investments that are needed that could service, you know, cross-border needs.

Mpumi Madisa: Absolutely. And in fact, we had a session with the president today, Paul. And one of the things that he was raising quite sharply with business was exactly that: the need for Africa to work together.

The collaboration that you talked about is—you’re absolutely correct. 

And, in fact, even pre-COVID, Paul, we were already having sessions as business that were facilitated by the president where he was saying, “Please talk to me about what your operations on the continent look like. Where are you successful? Where are you not? Talk to me about some of the blockages and the difficulties in doing business on the continent. And more importantly, talk to me about how we can unlock better partnerships between operations and businesses in South Africa and businesses elsewhere in the continent.” 

Paul Laudicina: Well and you're also fortunate, aren’t you, that your president, President Ramaphosa, has a rich background in business as well as in government, and so he understands, as do you, how business and government can work together. Early in your career, you took a few years out of the business world to work in provincial government, and you were quoted as having said about that experience, “It was interesting to be the person in the room who could see both worlds and understand why in some instances they clash.”

So what do you take out of that rich experience in both worlds that would be useful to share with our audience about what leaders need to do, who are trying to cross that divide, whether government to business or business to government?

Mpumi Madisa: So Paul, the first thing I would say is we need to listen, one.
 
And then secondly, rather than jumping to the areas where we’re not potentially aligned, start with the ones where we are. If we’re talking about 10 issues that we may not be aligned on eight, let’s start with the two. Because that's how you start making progress. And it’s like a flywheel, right, Paul? So you collaborate on the first one, you see the results, the attitudes and the postures start changing because you now know that you can deliver when you work together. You're then more open to working on the second project. And what that also does is it builds trust. 

Paul Laudicina: Well, you know, building that trust that you talk about, Mpumi, is so critically important, isn't it? And the Edelman Trust Barometer, which is released every January for the last 20 years just released an update because of COVID-19. And in that report, they indicate that trust in government has increased substantially. And trust in business has in fact declined. 

Now, we talked earlier about all of the things that Bidvest is doing to leave by example, both in terms of executives tightening their belt as well as protecting the health and financial security of your workforce. How do you see that manifesting itself in a return on trust? Do you have some sense of what the engagement is with your employees, how this is all being received?

Mpumi Madisa: So, you know, the difficulty that we face at a group level is just the decentralized nature of our structure. But Paul, I have to say that the data points that I’m certainly seeing are as follows. 

April was exceptionally tough, Paul, and I won’t lie. When you’ve got 75,000 people—and that is our number: 75,000 people who are not working—you’ve got 75,000 people who are extremely anxious. You’ve got 75,000 people who are exceptionally desperate. You’ve got 75,000 people who need hope. 

And it’s complex because we’re also dealing with a threat that none of us can see. And so the month of April was really difficult. I think that having come through that, certainly for me the barometer, there is less anxiety in the organization. People have received their salaries. The government relief package has delivered. Eleven billion rand has been dispersed. Bidvest has received a couple of—100 million—of that, and that has been dispersed through our through to our employees, our 400 million has been triggered. We’ve still got a significant amount of that left over, and we will continue to use it and stretch it as far as we can. 

And I think at the moment, there is calm, Paul. I do want to be honest though and say that the anxiety that is in the air in South Africa in general, is that it is known that we are going to be moving to half of the population not working. So I’d be lying if I said that I thought that there was total calm because I think that the calm is here, but there's still a lot of uncertainty. And we need to manage that uncertainty.

Paul Laudicina: And in managing that uncertainty, I would imagine since Bidvest has such a diversity of business and sectors in your portfolio of companies, some people in sectors that perhaps are most heavily impacted by the pandemic long-term like travel, leisure businesses, might feel that sense of insecurity, even though they're protected in the short term.

How do you manage as complex a business, as diverse a portfolio, as you have with security services, logistics and freight, financial services? Is it just straight talk with people about taking care of the immediate and focusing on how you can optimize the long term? What’s the formula, Mpumi?

Mpumi Madisa: So we’ve taken the view of being open and transparent, Paul, and communicating. My view is that uncertainty creates great anxiety. And so we have been really, really very honest with our employees in the various businesses of what is going to come. 

The businesses that have been okay have been able to operate. And we don’t feel that there is necessarily any significant structural changes that need to be made. Those employees know that they are okay. 

The businesses that, as you say, and the industry that you talk about a spot on—the travel industry, hardest hit, and in fact was already dealing with significant reduction in demand pre lockdowns, pre COVID, those employees, we have had to have the honest conversation around what the plan is, we've had to have the very honest conversation about restructuring that needs to take place, what the nature of that restructuring will be, and also giving them an indication from a time frame perspective in terms of what that is likely to look like. And I think very strongly that during this time, it’s better for people to know what’s coming down the line, rather than have thousands of people guessing what is likely to happen. 

One of the things we are implementing, Paul, is that where we are unfortunately going to find ourselves in a situation where we have to retrench people and right-size the business for the demand that exists, we're going through a process where we're actually keeping a record of every single person. I have asked every single business that anyone that you lose during this time, we keep a record of every single person, their ID numbers, their contact details, etc. 

Because Paul, the tide will change, right? We’re not going to stay in COVID forever. And when the economy comes back, I very strongly want to go back and find my Bidvest people. And for me, it’s been a very strong message that says unfortunately, the inevitable may happen and will happen in certain businesses. But when the tide changes, and we begin to start ramping up again, and whether that’s in 18 months’ time or two years or even three years, we should be able to pick up a phone and try and trace the people that worked for us, that were part of us and unfortunately, may have found themselves in a situation where, because of the complexity that we're finding ourselves in, we couldn't retain everybody. But certainly for me, it is really around open and honest communication during this time.

Paul Laudicina: Amen to that, Mpumi, and it would seem that what you’re saying is in effect that COVID-19, the coronavirus, the pandemic has, in fact, accelerated a whole series of things related to long-term structural changes in the economy. But especially it sounds like, Mpumi, the public–private sector cooperation. Do you see it that way from your vantage point, Mpumi?

Mpumi Madisa: Absolutely. And, Paul, I touched on it earlier. That right now is the time for partnerships. Right now is time for collaboration to see how we rebuild the economy.

Our president has come out to say can we imagine, allow ourselves to imagine, a New South Africa, and let’s start working towards a new South Africa. If that’s what we’re going to do, then we have to do it together. We can’t do it sitting in different parts and not working together. 

And one of the other things that I really also feel strongly about is that we need to find a mechanism of putting together the public sector balance sheet and the private sector balance sheet to enable us to do things that are required to rebuild the economy. 

Paul Laudicina: Well, as you begin to reimagine, envision and build this new South Africa, Mpumi, you’ll be taking on the mantle of CEO as the youngest, and only, black woman, chief executive of a JSE-40 company, at this time of re-envisioning, rebuilding, and all of the upheaval and change associated with that. What advice would you have for other young, aspiring women in South Africa and elsewhere, as they come up against the glass ceiling which you obviously have shattered in your impressive career thus far, Mpumi?

Mpumi Madisa: So, I must say, as complex as this environment is, Paul, just personally, I’ve got an amazing team. And so I am confident about walking into the seat in the next couple of months. I’ve got some of the best executives in this country. I’ve got an army of 125,000 people who are committed to this organization. And so we will do what we need to do and we will come out. 

We have got 30 years of success behind us, and we know how to pull on that. So, I—yes, it’s complex. Yes, we’re going into the worst macroeconomic environment. But I've got definitely the capacity and the capability within the organization. So have really no anxiety about the leadership role that I walk into. 

So what do I say to other women? I say to other women, there’s a huge opportunity now for women leaders. I say to other women as a woman, I will look out for you as other women. I say to other women I will talk to my brothers in other organizations and ask them and agitate why they don’t have sufficient women in the executive teams. I will say to other women what we will be able to do when we lead is create work environments that are conducive for women. And I will just say to other women that the key really is do your best, be the best of the best in your team. And then more importantly, find a home. Find an organization that is part of you. That is part of your value system. Choose your home. I chose Bidvest 15 years ago, and I was clear that this is where I’m at and I’m not leaving. And this home is a home that recognizes talent, that recognizes hard work and pulls it up. Find a home like that and then be your best. 

And of course, it won’t just be me. Interestingly, Paul, in the last six to eight months, there have been a number of other female, and in particular black female, appointments as CEOs in South Africa. And so it’s—the change has really been fantastic. Whilst I may sit from a top 40 JSE-listed entity as the only black woman, there are many women in South Africa that have recently been appointed, and we will all work together to make sure that the voice of women in our own organizations is as loud and equal, you know, to everybody else.

Paul Laudicina: Well, Mpumi, that is wise and inspirational insight for us to end this discussion. I want to wish you the best of luck with the extraordinary demands that will be placed on you. I congratulate the wisdom of the board of Bidvest in selecting you as the CEO designate. Not only have you found a good home in Bidvest, but I think Bidvest has found the ideal person to be at the helm through this period of challenge and opportunity that lies ahead. So thank you very much for joining me today, Mpumi, and stay well.

Mpumi Madisa: Thank you very much, Paul. Keep well.

Wrap-up (Paul Laudicina)

There’s only so much ground we can cover in one interview, and we’re aware there are undoubtedly many more questions that you might wish we had been able to discuss during each podcast. So don’t hesitate to be in touch with me with any additional insight we might be able to provide by contacting me at [email protected] or on Twitter at @paullaudicina, and I would be happy to respond. 

We’ll be back with new episodes of Coronavirus: a world transformed soon. So stay tuned. More is coming.

 

About Mpumi Madisa

Mpumi Madisa is the CEO-designate of Bidvest Group. Previously, she was chief director in the Gauteng provincial government. 

During her time at Bidvest, she has held various senior management and executive board director positions, such as general manager of business development, divisional director of business development, corporate affairs director, and sales and marketing director. She is a director of numerous Bidvest subsidiaries.

She was appointed as a non-executive director of the Adcock board of directors on November 23, 2017 and as CEO designate on March 4, 2019. She was also appointed as a non-executive director of the Comair Limited board of directors on January 21, 2020.