Chance to steer Gijima back to its former glory

It can’t have been the best week of your life to see Gijima delisted? It’s not the worst week. Remember, if you’re an entrepreneur, your job is to always look at opportunities that present themselves even though it was never in your plan. I saw it as an opportunity to really do something that’s going to return the company to its former glory. I’ll be able to own 100% of the business and be able to give it direction, provide financial support from my group and really spend on the growth that we are already achieving.

But there must be disappointment?

Yes, sure. I took over a company that was listed way back in 1997, which then had serious managerial and financial problems when I did the deal to save the old AST and I injected my profitable business into [it] to form Gijima AST.

AST at the time was technically insolvent. I looked at the business, I looked at the client base, staff members and the platform that it had and that’s what I bought into. The rest is history — that I took a business that was on its way to demise and I turned it into a successful business. One can say the Gijima of today is not facing the same challenges as the old AST.

But having said that . . .

I think I became disappointed from 2010 when I began to realise that we were having serious managerial problems. I must hasten to remind you that in 2008 I stepped down as an executive and . . . left the business under management. When I stepped down, we had over R600-million cash in the business and the business had grown substantially. Two years later, things had changed, when we had the problem with the Department of Home Affairs, then what followed was other undisclosed financial commitments that really hit the balance sheet of the company.

With hindsight, do you regret the decision to step down as an executive?

Definitely. Professional managers never lose out, it’s always shareholders who lose out. If you are a shareholder in a public listed company, when you want to push things, using your entrepreneurial expertise, people think you are interfering. But when there are losses caused by mismanagement, guess who’s first in the queue to lose money? The shareholder.

So you ascribe Gijima’s woes

to its managers?

Without a doubt. But remember, I appointed that top management — and that is what has been disappointing. In 2013, we had a rights offer of which I underwrote 50%, so I put in hard cash to really implement a turnaround strategy and we have had successes. In order to spur the turnaround, I had to, together with the board, get rid of all our top management and appoint a new management team under Eileen Wilton and it’s been looking very good and we’ve been able to take out the costs that were in the business . . . [for example] the sales team cost the company almost R200million a year without bringing in any new business.

Can Gijima right itself?

I’m not a naive businessman to put in almost R200-million of my hard-earned cash into something that is failing. I’ve built a business from nothing, I was able to save what was then a white, failing company [AST] and I made it a success . . . this is what I’m faced with and I’m confident that with the management team that I’ve assembled, we will be able to take Gijima back to its former glory so I can get back the cash that I had to inject and also the value that I lost.

Would you consider relisting Gijima?

Look, I’ve had very good partners in the form of Allan Gray — they’ve been very good as coinvestors. My take is that once we have turned the corner and done the correct thing, I will consider taking the business back to the stock exchange. But it must be for the right reasons. I wouldn’t go and list again if there is no need for money to grow the business.

One of the challenges for entrepreneurs like myself [is that] since 2005 when we did the deal, I’ve never sold one share ... because that’s a challenge with the stock exchange — as a shareholder of reference, if I sell 1%, say, of my stock, the market will punish the business. And that is one of the things I’ve learnt that impedes entrepreneurial flair . . . [this convention] allows everyone else to trade their shares except yourself.

Have you had to face particular hurdles as a black entrepreneur in South Africa?

You know, generally, when you look at Gijima, I must say that the private sector has been very, very good to us. We have not lost business in the private sector. They have been very supportive. Today, 70% of our income comes from private-sector clients with long contracts and they have really been a darling. But what is important for them [is that] they’ve not just taken to support Gijima because it’s a black company; they’ve supported [us] because we have good people who deliver. In the private sector it’s about delivery, delivery, cost, cost. And we’ve been able to demonstrate that to our clients — that doing business with Gijima they are guaranteed the best service and they are guaranteed to save costs over time.

Ironically, the government has given you the most difficulty . . .

One of the challenges in government is the silo mentality. Whereas in companies, they are able to centralise their IT and they are also able to plan on projects. But most importantly, they have within their employ the best IT people who take responsibility, make sure that they have all the tools available to an implementing partner — in this instance, a Gijima. If clients don’t have the expertise internally, it becomes very difficult to implement projects.

Is that the biggest problem?

If you look at the challenges we faced in home affairs, it’s been precisely that . . .

Many people today, they say that we lost home affairs — that is not true. [Former] minister of home affairs [Nkosazana Dlamini-Zuma] issued a press release in 2010 to say that we had resolved our issues, and Gijima is continuing to deliver services. As we are today. You know, you wouldn’t be able to get your smart card ID if Gijima was not also part of the service delivery at home affairs.

What about the Vulindlela project with the Department of Rural Development and Land Reform? That was also a disaster and the project has been investigated for corruption.

I think that is also a classic case. You refer to Vulindlela and you look at what we have done as a company. In spite of all the problems inherent in the project, the fact that we’ve been losing money on that project — not because of our own doing, but because of the myriad problems that we’ve encountered in the delivery. We stuck in, we continue to deliver a service, even without being paid.

Is that project over?

It’s still ongoing. And it’s been loss-making ever since, but we believe that come June we shall be able to break even on the project. And the department has also learnt in the process.

Talevi is a BDTV presenter