When is a black per­son fi­nally em­pow­ered?

Af­ter 16 years, how far do we still need to go to see full em­pow­er­ment of the masses?

Finweek English Edition - - Cover Story -

WHEN IS A BLACK PER­SON fi­nally em­pow­ered? Have the past 16 years of black eco­nomic em­pow­er­ment yielded any­thing pos­i­tive to­wards the re­al­i­sa­tion of eco­nomic lib­er­a­tion for black peo­ple? Must there be a dead­line by which to end the en­tire em­pow­er­ment process?

“Those are wrong ques­tions to ask,” says Cyril Ramaphosa, one of the in­di­vid­ual “usual sus­pects” of em­pow­er­ment. There’s been too much crit­i­cism of in­di­vid­u­als, with too much fo­cus on the own­er­ship as­pect of em­pow­er­ment, while all the other more im­por­tant as­pects – such as en­ter­prise devel­op­ment – have al­most been com­pletely ne­glected. “That’s the mis­take we make – look­ing only at eq­uity own­er­ship,” says Ramaphosa.

The first 16 years of South Africa’s black em­pow­er­ment pol­icy have brought with them mixed for­tunes for the coun­try’s pre­vi­ously dis­ad­van­taged black pop­u­la­tion. While em­pow­er­ment has pro­duced a thriv­ing and grow­ing mid­dle class – with in­di­vid­ual bil­lion­aires com­ing through the ranks of the black pop­u­la­tion who have gone on to rep­re­sent not only the black pop­u­la­tion but the coun­try as be­ing among the rich­est in­di­vid­u­als on earth – an es­ti­mated 10m South Africans were still liv­ing in ab­ject poverty at year-end 2009, says the Busi­ness Trust.

Ramaphosa’s an­swer to the crit­ics of the cur­rent form of em­pow­er­ment is that it “shouldn’t just be a num­bers game; we should fo­cus on the broad­ness of the process”.

It’s the qual­i­ta­tive work that’s needed, not just the num­bers. Says Ramaphosa: “The im­pact em­pow­er­ment makes on so­ci­ety is what needs to be looked at.” For a broader im­pact on the gen­eral pop­u­la­tion, Ramaphosa says the process needs to shift fo­cus and give more at­ten­tion to other ar­eas of the em­pow­er­ment score­card, such as skills devel­op­ment, em­ploy­ment eq­uity, pref­er­en­tial pro­cure­ment and en­ter­prise devel­op­ment, and more in­clu­sion of com­mu­ni­ties in em­pow­er­ment deals and com­mu­nity devel­op­ment.

That’s one of the Shan­duka Group’s strong­est points. When it was founded 10 years ago, Ramaphosa per­son­ally gave up eq­uity to two trusts: one fo­cus­ing on ed­u­ca­tion and the other on small busi­ness devel­op­ment. Specif­i­cally, small busi­nesses led by women and young peo­ple.

Ramaphosa has a ready-made an­swer to the ques­tion of bring­ing a dead­line to the leg­is­lated em­pow­er­ment process. “Em­pow­er­ment is like wak­ing up ev­ery day and brush­ing your teeth. It must be done ev­ery day.” Em­pow­er­ment should be seen as an on­go­ing process, just like democrati­sa­tion. “When do we have enough democ­racy?”

He says em­pow­er­ment can never be re­garded as com­plete un­til all the dif­fer­ent eco­nomic as­pects have been paid enough at­ten­tion and SA’s pre­vi­ously dis­ad­van­taged pop­u­la­tion is able to stand on its own feet and run busi­nesses with­out hin­drance and eke out a de­cent liv­ing from their jobs or busi­nesses.

Given SA’s his­tor­i­cal skills and ed­u­ca­tion prob­lems, there’s a process that needs to be fol­lowed to bring blacks to those lev­els of com­pe­tency as de­vel­oped busi­nesses. Re­newed fo­cus needs to be paid to en­ter­prise and skills in or­der to de­velop more eco­nomic ca­pac­ity.

Ramaphosa also won­ders if those “other as­pects” of em­pow­er­ment can ever be achieved in one go. “All those things are part of em­pow­er­ment and they haven’t been done to a level that leaves peo­ple fully em­pow­ered. We can only be­gin dis­cussing full em­pow­er­ment when those things have been done to per­fec­tion and leave black peo­ple in charge of their own des­tinies,” Ramaphosa says.

Al­though he be­moans the un­due fo­cus of the past 16 years on only the eq­uity own­er­ship side, Ramaphosa de­clares he’s happy with the progress with re­gard to em­pow­er­ment so far, de­spite his ad­mis­sion it hasn’t ex­actly achieved all that was ini­tially hoped for. “Mea­sured by black own­er­ship of eq­ui­ties on the JSE,

em­pow­er­ment hasn’t suc­ceeded as well as we would’ve liked,” says Ramaphosa. At an es­ti­mated un­en­cum­bered 4%, black eq­uity own­er­ship isn’t what it should be.

But that brought a pos­i­tive side: em­pow­er­ment has evolved. Some of the small eq­uity stakes gath­ered through debt in the early days of em­pow­er­ment have helped fa­cil­i­tate a grow­ing list of sig­nif­i­cant black-owned busi­nesses, such as Shan­duka and Sexwale’s Mve­laphanda Hold­ings.

“Whereas 16 years ago black busi­ness­peo­ple had to rely solely on debt to fund eq­uity pur­chases, to­day we now bring a cheque­book to a deal,” says Ramaphosa. “I’m happy with the way em­pow­er­ment has gone. We’ve used those small stakes to boost our bal­ance sheets,” us­ing Shan­duka’s 1% own­er­ship of Stan­dard Bank as an ex­am­ple.

Com­pa­nies such as the Royal Bafo­keng and the Minework­ers’ In­vest­ment Com­pany (MIC) emerged in sim­i­lar fashion. With a few oth­ers, they all have since made sig­nif­i­cant in­roads into main­stream busi­ness by buy­ing large strate­gic eq­uity stakes in com­pa­nies like Pri­me­dia, Im­pala Plat­inum and Har­mony Gold, which have helped black groups move to op­er­ate some com­pa­nies them­selves.

Many black busi­ness own­ers aren’t seen be­cause they don’t be­come in­volved in big ticket em­pow­er­ment deals that grab head­lines like the usual sus­pects. “They’re get­ting on with their work of de­vel­op­ing their busi­nesses,” says Ramaphosa.“We should be proud of that.”

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