Discovery CEO Adrian Gore announced that the Group would launch its Discovery Bank in March 2019. It caused a stir, especially on social media after it became known that the bank would give 10% of its shares to its black clients. In an open letter addressed to Gore, Solidarity Chief Executive Dr Dirk Hermann described the bank’s plans to exclude white people from its share ownership plan as “abnormal” and “unacceptable”.

Dear Mr Gore

Discovery is making me sick

I hear Discovery is starting a bank. Apparently, it is a first for banking. I believe the bank is unique because people’s benefits will be determined by their behaviour.

However, it is not just behaviour that will determine people’s benefits, but race too. Unfortunately, behaviour cannot change race. Race is an appearance and it is the way it is by birth.

Ten percent of the bank’s black clients qualify for free shares. White clients will not get any shares. You are re-introducing racial terminology and so, in discussing your deal, we must unfortunately talk in terms of black and white.

Discovery’s decision to exclude white people from its new share scheme based on race makes me sick.

It makes me sick because an overly simplistic pencil test is being used to determine the right to gain access to the benefit. It makes me sick because it is presented as being the right thing to do.

The 1,65 million Discovery clients and potential clients are classified by race – no, not according to need but by race. Not all black people in South Africa are poor and not all white people are rich. This is a simplification – black is a proxy for need. The criterion is not inequality, disadvantage or class; race is the only criterion.

South Africa’s demographics and challenges are far more complex than black and white.

Your undiluted racial approach is lacking nuance and it is outdated. When it comes to shareholding I would have expected a far more innovative approach from Discovery. As it is, using need as criterion would have had a better moral basis.

The loyalty of thousands of white Discovery clients will not be considered; only their race. Discovery was built on the back of the white middleclass to a large extent. Based on assumptions made from figures from Stats SA, 35% of your clients today are, conservatively speaking, still white. In other words, around 570 000 of the members belonging to your medical fund are white, and if their dependents are added to this figure then it adds up to a total of 1,2 million white people.

What you are underestimating is that the representation of white people in the medical market is 4,5 times higher than their representation in the national demographics. They still have incredible buying power.

You are prepared to tell this group: “We don’t see you as being part of us. We are keen to see black South Africans becoming owners of our company – to such an extent that we will let them have shares without risk. White people may, however, remain clients only. We will only take their money”.

You are alienating a large portion of your clients. They feel excluded. This is not just happening at Discovery; it has become commonplace. However, there is a huge difference between the state that excludes a minority, and a company you have to trust with your health and with your money.

Your entire model is built on loyalty. Your decision to trade loyalty for race betrays your own model, and your clients will punish you for it. Your loyalty programme taught clients that loyalty is rewarded, and disloyalty gets punished. Good behaviour earns benefits; bad behaviour deserves punishment. Your scheme will be seen by thousands of your clients and potential bank clients as bad behaviour.

You will be punished because your decision to exclude white people does not rest on a moral basis but is a pragmatic decision taken to comply with the requirements set for empowerment. Not even your black clients will see this as a noble, sacrificial gesture because it isn’t one. They are being used to score points.

White clients must be kicked out, so you can earn enough points to protect your white profile at top level. You own about 7% of Discovery, and your worth totals around R7 billion. I understand that you are affluent because you are the symbol of innovation and entrepreneurship. Discovery’s top 20 all have shares, black and white alike. When it comes to awarding benefits there is no discrimination based on race at top level. The shares you and a few other top people own almost equal the shares you want to give to black clients. At the end of the transaction you and the other white top executives will still have your shares, but your white clients will have nothing.

You are trading white clients’ loyalty for points on a scorecard. The worst part of it is that it was not necessary. There is no empowerment charter neither the Banks Act nor Reserve Bank, that demands that white people must be totally excluded. In fact, quotas are prohibited by law. Your absolute exclusion is going too far. You are not building an inclusive South Africa; you are classifying South Africa by race. Of late, we have seen quite a bit of this harsh racial approach – white people being kicked out of Sasol’s employee share ownership plan and the young white unemployed who are excluded from Pres Ramaphosa’s YesForYouth programme.

It is not just white people who dare not allow race to be the determining factor and for society to be classified by race again but, as a whole, South Africa dare not allow it. We dare not allow racialism to be presented as non-racialism; inequality as equality, exclusion as inclusion, and enrichment as empowerment.

To offer racial programmes for redress that have no nuance, is false.

We dare not allow a new ideology of race to become normalised.

Discovery’s type of transformation programme is making South Africa sick. We must look for a different type of normal together. It is a balance in which imbalances are addressed but the dignity of all is respected; a balance where race of the past is not replaced by institutionalised race in the future; it is a balance of mutual respect and recognition. Simple exclusion is imbalance.

What we are asking is simple: Reward all existing clients according to loyalty, also with respect to shares in the new bank. You can give new clients access to banking services based on need and not on race.

You are known for innovation. Go back to the drawing board. There is nothing innovative about simple racial exclusion.

South Africa and Discovery cannot afford this deal.

Yours faithfully

Dr Dirk Hermann

Chief Executive of Solidarity