Black Like You

by Mashaba, Herman;

  The Black Like Me experience was rather like being in a boxing ring. I had entered as a lightweight, seeing my fair share of knocks to the ground. I had bloodied my nose and been up against the ropes more times than I cared to remember, but like any professional fighter, I stood up each time and took on the next challenger. Each new contender taught me a few more techniques, and I was able to dodge the jabs that come out of nowhere. The Colgate-Palmolive venture taught me that the large corporate structure is not the only viable model in a vibrant capitalist economy such as ours. Big corporate companies are essential, but emerging small-to-medium businesses are the lifeblood of sustained growth in a developing country. South Africa makes it easy for entrepreneurs to get started. There is an enormous untapped labour market, materials are cheap in comparison with many western markets, and we have excellent business infrastructure in terms of access to commercial properties for trade purposes – and, most importantly, we have accessible and robust financial services, as well as advanced telecommunications that facilitate easy communication.

  Chapter 16

  The new century ushered in a thrilling decade for South African business. Black Economic Empowerment saturated parliamentary debates and almost daily the phrase screamed out from newspaper posters at traffic-weary motorists. Connie and I rarely attended a business function without someone asking, “So, Herman, what do you and Connie think – who will BEE benefit? Will it help the disadvantaged, or will it make the elite even richer?” TV debates raged around the possibility of white businesspeople taking advantage of BEE opportunities by hiding behind black faces. I shared some of these reservations and concerns, but I also felt a growing interest in and sense of excitement at what BEE might achieve.

  I’d had reservations about the strategy for some time, but by now I was beginning to feel curious as to what BEE might really mean for South Africa. Black South Africans had been severely disadvantaged under apartheid, as I knew from experience. My own family had lived in a “homeland”, where the pass system forced them to work in areas with very few employment prospects, and transport services were severely limited. Though the entrepreneurial spirit has long been active, apartheid punished black entrepreneurs for their endeavours. Not even Walter Dube had escaped the pettiness of apartheid laws. As a young entrepreneur who’d grown his first meagre earnings into a thriving shebeen, he became the target of jealous local officials, who shut him down. Of course, Walter bounced back, but not everyone had Walter’s resilience.

  By 2000, it was apparent that the government had plans to create an enabling environment for black entrepreneurs, but no one was sure what changes would be brought about, and how these would be implemented. The talk at the time was that BEE was a form of affirmative action that created opportunities for returning exiles as well as struggle activists and their families. Watching some of these men and women make big money very quickly, I felt that Black Like Me had taken a long, long road to success when there was a shortcut; suddenly, the company’s success felt like a bit of an anti-climax. I had built up a company without the help of banks or government. I had always been my own boss. Yet, still, I found myself wondering whether there might be an opportunity for an entrepreneur like me to participate in BEE. But would I have to be subservient to a corporation’s rules? Would I merely be a black front for a white company? Not likely. But I could not ignore the persistent niggle that perhaps somewhere there was a place for me in a BEE company.

  Richard Maponya and I were among those who had been active in the black entrepreneurial space for many years. But suddenly new names began to emerge – Patrice Motsepe, Tokyo Sexwale and others who, until then, were relatively unknown in the business world. Critics suggested at the time that many BEE deals were being concluded by an emergent black capitalist class that did not have the necessary cohesion to articulate its vision with confidence. This emergent group was, furthermore, criticised for its nationalist mindset: having emerged from the classless anti-apartheid struggle, they were said to lack class consciousness. They were criticised for being politically correct, for their apparently unconscious acceptance of the notion that it was wrong to accumulate wealth. Of course, there was irony in all this, but it nevertheless depressed me that the group adhered to such a notion: it fundamentally contradicted my own unapologetic support of capitalism. For many of the struggle generation, the accumulation of wealth was equated with greed, arrogance and the abuse of power. Indeed, such vices do exist. But to me it seemed counter-productive to indulge this mode of thinking. We need to be genuine champions of transforming our economy; if we are to establish a truly national business culture, the economy must be a true reflection of our national composition.

  I believed strongly in bringing about meaningful reform, and so I had been active in the first democratic elections. Black Like Me was a funder of the Voter Education Forum run by Dr David Molapo, his wife Mamiki, and Abner Mariri from the I Can Foundation. During my involvement in the Forum in 1994, I was able to hear the full range of political candidates – the Democratic Party, the ANC, the NNP, all of them. I listened as they all made big promises to the electorate, and it soon became clear that the one promise they all had in common was “Jobs for All”. I was sceptical; as an employer, I doubted whether any of the politicians knew who would provide the large-scale jobs they were promising. Business is about making money; it is not about creating jobs.

  It is easy to make election promises, as politicians do all the time: “Vote for Jobs”; “Vote for Houses.”

  When the voting public make their marks on the ballot paper, they do so because they expect delivery on electoral promises. In the same way that the election promises of jobs perplexed me, I was equally puzzled about the relationship between job creation and BEE. Was it all just election rhetoric? Yet I pricked up my ears: if the government’s intention was to create jobs, it had to be looking at local businesses to provide those jobs, and as a business owner I needed to know how this might affect me. I couldn’t understand how the government believed they could simply create jobs, because in my mind a business is created to satisfy a demand for products and services, and to make profits for the owner. As such, jobs are a by-product.

  In those early days, the government’s BEE programmes seemed to turn the spotlight on ownership – increasing black participation in ownership. But as its vision expanded, the government brought in further elements to encourage black empowerment. Among these were corporate social investment (the responsibilities of business towards civil society); enterprise development (financial or non-financial contributions to accelerate the development of a beneficiary); and employment equity (ensuring equitable representation in all levels of the workforce by previously disadvantaged employees). These elements all shifted the focus to broad-based ownership and the wider empowerment responsibilities of a company. I finally got it: BEE wasn’t only about new job creation, but rather about restructuring existing business models to accommodate members of a previously disadvantaged workforce – employees who couldn’t get the job of their choice due to discrimination, whether on the basis of gender or race or lack of educational qualifications.

  By now I had been in the cosmetics industry for twenty years, and the time had come to move on; perhaps there was a way for me to venture into new pastures to create a sustainable business. While speaking to the people in my network, I discovered that I had missed out on some excellent opportunities. Among those who had taken early advantage of the situation was Patrice Motsepe, a sharp attorney who had jumped into BEE and cleverly secured options on disused mineshafts, which he then reopened. Motsepe made a fortune, and today he is a billionaire on the Forbes list. I decided to throw my earlier qualms and caution to the winds, but by then many BEE opportunities had already been seized. One evening, Connie and I were having a long discussion about the situation, and I eventually said to her, “I’d better start getting familiar with exactly what BEE entails, because with or without me, BEE is a reality
in South Africa.” Connie agreed, and I decided to move into the next phase of my business career.

  I did intensive research into BEE, and was surprised to discover that many deals that had been brokered were in fact reallocation deals in which shares were merely allocated to previously disadvantaged employees. Despite there being an obvious material benefit to shareholders, the share allocation model was a handout that in no way empowered the staff who benefited from it – the maintenance manager was still the maintenance manager, and the tea maker was still the tea maker. As an entrepreneur, I believed that share allocation was short-sighted; it was nothing more than a salve to corporate consciences. While I appreciated the social philosophy behind the model and the need for redress, I also realised that this BEE model was merely shuffling things around, it was not developing entrepreneurs. The truth is, South Africa needs entrepreneurship, which benefits the economy by providing sustainable economic growth.

  I decided that if I was going to be a BEE participant, I would have to locate suitable business vehicles that would allow me to proceed in the business arena with integrity. There was some irony, of course, in accepting the benefits of my “previously disadvantaged status”, for I had succeeded in spite of apartheid disadvantages. I needed to fuse the BEE controls with my personal business ethics.

  There are many concerns about BEE, but I believe that the government was absolutely right in enforcing it. However, without the support of strong business leaders, BEE cannot hope to develop an entrepreneurial spirit; business leaders must therefore incentivise entrepreneurs by encouraging, supporting and coaching them in good business practice. While many black South Africans are willing to create jobs, they have not acquired the necessary business skills to sustain their businesses. It is precisely this lack of business acumen that perpetuates their disadvantaged status. While many will argue that it is impossible to teach entrepreneurship, I believe that it is vital that educational institutions and businesses teach entrepreneurial skills – self-motivational skills, time-management skills, financial skills, administrative skills, and sales and marketing skills – all of which can and need to be taught, not only to students, but also to employees. Failure to equip our workforce with these important entrepreneurial skills will frustrate the entrepreneurial spirit of the country.

  When I turned to investigating BEE opportunities, I realised that whatever I chose to become involved in would require a large financial investment. I needed funding, so I consulted with other business executives and discussed my intentions with Shane Ferguson. Having done so, I made a media announcement that I intended to start a BEE investment company.

  With Connie ably managing Black Like Me, I was able to devote all my time to establishing a new company. The first step was to investigate possible partners in order to establish a BEE investment company. The legislation insisted that BEE companies broaden their ownership. This was a response to criticism that BEE had benefited only a few black entrepreneurs – the Black Diamonds, as successful black people have come to be known. The new legislation wanted to see empowerment of black ownership on a broad base – including both men and women, and able-bodied as well as those who are physically challenged. In response to this technical requirement, I had to consider how broadly I would develop ownership. Also, I knew that I would be competing against business owners who had a political background.

  I therefore phoned my friend, Ronnie Mamoepa, who was at the time spokesperson for the Department of Foreign Affairs. I explained my situation and ended by saying, “Ronnie, I’m moving into the BEE space and I need to put together the right type of profile.”

  Ronnie suggested a couple of names and I checked them against the people I had in mind; soon I’d put together a group I thought might be interested. I approached Max Sisulu, who held a senior position in the ANC at the time, though he wasn’t in government. Then I approached Tommy Makgatho, who ran a string of supermarkets in Qwa-Qwa. Tommy was a Black Like Me distributor in the Free State, but also a friend who had travelled all over the world with me and my family in the early 1990s.

  “Tommy, I’m giving up shampoo and going into BEE – come and join me,” I said when I called him.

  “Hey, what do I know about BEE? No, I’m not keen to go into anything right now – but maybe I’ll consider it when I know a bit more about it,” he said.

  I continued canvassing, and eventually I had a group that included Max Sisulu, Ronnie Mamoepa, Jerry Majatladi, Sipho Madlopha, Thebi Moja, Puseletso Ramoipone, Jacqueline Mufamadi and Jane Phiri – people I hoped would give me the BEE profile that was needed by the new legislation. Not long afterwards, Leswikeng Mineral & Energy (Pty) Ltd was born.

  The problem was finding the first vehicle – the starterpack, if you will – to launch the investment company. This took a while, but eventually Shane Ferguson came up with some useful information: “Samancor own the Mogale Alloys smelter in Krugersdorp, which they’ve mothballed because the ferrochrome industry has fallen into a slump,” he said. “A whole lot of white senior management at Samancor have been retrenched from the closed facility. But there’s this ex-employee, Johan Oosthuizen, who says that the closure of the plant could be an opportunity for them to start something on their own.”

  It sounded like exactly what we needed, so I said, “Get onto it.”

  Shane spoke to the ex-employees and they entered into discussions with Mintek, the government research agency, to reopen the facility. However, for the ex-employees to make a strong case to Samancor, they were advised that they’d need black partners to meet the BEE requirements. I seemed to be in the right place at the right time, and Shane facilitated a meeting with the ex-employees. While they negotiated the lease of the smelter, I tried to find someone who had a metallurgical background. At the end of 2002, I was introduced to Dr Noel Machingawuta, who worked for Samancor. A Zimbabwean, Noel had a doctorate in metallurgy, and after half an hour of sitting across the desk from him, I knew that he was the man we needed. Noel’s measured manner was especially reassuring. After twenty years in England, he still had his Zimbabwean accent, and as we spoke, I remember thinking, “We have to employ this guy on a full-time basis.”

  Feeling completely at ease with him, I decided to trust my instincts; I told him my life story and shared my dreams of what I envisaged in the BEE arena. Noel agreed to join Leswikeng as a full-time employee. This was a huge commitment from him; even though he had a stable and secure job with Samancor, he was prepared to go out on a limb and join Leswikeng.

  That was one of the few times I’d employed someone without going through the appropriate channels, so I had to back-pedal a bit. I called a meeting of the Leswikeng shareholders at the Rosebank Hotel one Saturday in 2002. I explained that the purchase of a 10% share in Mogale Alloys was progressing well, but that it was important for us to have qualified personnel to manage our interests.

  “I’ve met a reputable metallurgist who has agreed to join us in February next year, and I think we’re very lucky to have him. But, to retain his services, I think it is only fair to give him an equal shareholding in Leswikeng,” I said.

  I didn’t expect the volcano that erupted in that boardroom.

  “I’m not giving away a single percent of my shareholding.”

  “Why can’t we employ him on a contract basis?”

  “Why isn’t he content with a salary?”

  “Give him incentives.”

  I was stunned.

  The Mogale transaction hadn’t even been finalised yet, and we were still in the middle of negotiations. I wasn’t only astonished at their reaction – I was furious.

  “You’re being short-sighted,” I said. “Instead of thinking about money, you should be thinking about strategy, because at this stage we don’t even own a share in Mogale.” Leswikeng itself didn’t yet own any assets, and already shareholders were greedy. I ignored their pettiness, and because I liked and trusted Noel, I dec
ided to trust my gut feel.

  “That’s fine, if that’s how you feel. It’s been nice knowing you all. We can dissolve Leswikeng. We don’t have any assets yet, so it will just be a formality,” I said and got up to leave. “In fact, keep Leswikeng – I’ll form a new company with Noel.”

  I think that was the moment when the greedy people saw their dreams dissolving in front of their eyes. Some of the more moderate shareholders came over and pleaded with me. Eventually, common sense prevailed. We put it to the vote, and the majority of the shareholders said that they trusted me to do what was best for the company.

  The Mogale transaction was negotiated and finalised, and Noel Machingawuta joined Leswikeng as technical director in February 2003. Our business relationship has been very rewarding financially, for both of us. Noel excels at technical issues and is a strategic thinker. I rely on him to explain complicated technical issues, and he accepts that I will make the final business decisions. He is my right-hand man and we trust each other implicitly.

  At first, Leswikeng didn’t have an office, so Noel and I operated from the Black Like Me premises. Mogale Alloys soon proved to be one of the highlights of Leswikeng, not just because it was the springboard into BEE, but also because of its financial success.

  Over time, Noel has become more than a business partner; he is also my friend. We play golf twice a month with Alex Darko – a Ghanaian who moved to Johannesburg when Ashanti concluded a deal with Anglo-American – and my old friend, Louis Mkhetoni. Louis and I have come a long way from the two hungry hustlers we were in Hammanskraal.