A healthy dose of chutzpah could transform the civic organisation into a leading empowerment company, writes Mungo Soggot
THE South African National Civics Organisation (Sanco) has stopped throwing stones and is going into business.
The radical anti-apartheid civic organisation is poised to move into the heart of capitalism when it branches out into direct insurance, marketing and advertising in the next two months.
This shift into the business world comes a year after Sanco, which spearheaded opposition to apartheid’s “puppet” local governments in townships, set up its own independent investment company, Sanco Investments Holdings, which operates from offices in Sandton.
Sanco’s move into insurance and marketing is aimed at building up a solid membership which will give the investment company the “people’s company” status it needs.
The men behind the transition – former Sanco president Moses Mayekiso and businessman Michael Levinsohn – have been plotting the quiet revolution since 1993, when it became apparent Sanco’s role would have to change with the arrival of a democratic government.
The political changeover deprived the organisation of its foreign funding and left it isolated – a marginalisation Levinsohn and Mayekiso intend to eradicate as they launch an ambitious scheme to rebuild Sanco membership and capitalise on foreign and local companies’ appetite for politically correct “empowerment” partners.
The plan is that profits from Sanco’s business operations and from the investment company will ultimately flow back into development projects and black empowerment schemes.
“We had to turn Sanco into a product, an empowerment organ,” says Mayekiso, who is also a former head of the National Union of Metalworkers and a member of the African National Congress’s national executive committee.
By the end of the year, Sanco intends to issue membership cards -credit cards with magnetic stripes – to its existing members in exchange for a R30 annual membership fee. Mayekiso estimates the existing membership base is about 1,2-million. Members will also receive a book of coupons offering them discounts for goods from about eight companies, including Tiger Oats and Ster Kinekor.
“We have been offering them a new marketing opportunity. We will be harnessing the buying power of the existing Sanco membership base.” In return, the companies pay for printing the coupons.
Despite the Mayekiso and Levinsohn mantra that Sanco and Sanco Investment Holdings have a separate, if symbiotic relationship, they talk about both in the same business tongue. “When we talk to a business like Tiger Oats, we represent two things. We are a mass-based black empowerment company. We genuinely represent people. But we can also participate in the financial arena as contractual partners. We bring something else to the table that nobody else can claim: we are a people’s company.”
The most daring part of the scheme is that they plan to use the barcoded coupons to build up a market-research data base which they will sell. “It will be a highly accurate market-research tool.”
Apart from the boon of the various discounts, members will get life insurance (R1 000 for funeral expenses and R1 500 a year for up to three children for three years). For an extra R10 a month additional insurance will be available from electronic “speedpoints” at Sanco offices around the country.
Next month Mayekiso and Levisohn will fly to New York to give a presentation to United States insurance group AIG – which is also backing the life-assurance scheme – in a bid to bring “direct insurance” to Sanco members. If they succeed, Sanco members will be the first South Africans with access to direct insurance, which cuts out the middle man by allowing customers to phone through their insurance requirements.
Mayekiso insists he has not abandoned his socialist roots: “I am more a socialist than ever. The only shift is that we now have to look for a new way of effecting empowerment. Before we just had to throw stones … We are now facing the reality that we cannot depend on rhetoric any more. We have to shift from throwing stones to using stones to build foundations for the future.”
In 1989 Mayekiso was tried for treason for his work with the Alexandra Action Committee. Perhaps the only amusing aspect of his trial was that the authorities allowed him to build up a substantial library of Marxist literature in his prison cell at Diepkloof, south of Johannesburg.
Mayekiso says the shift into business was vital. “We have to resort to these empowerment projects in order that Sanco can have a role and survive. Sanco has to survive as it is a crucial structure if we are to democratise our society.”
Levinsohn’s main job has been to get the investment company on the road. He arranged R1,5-million in start-up capital from insurance giant Liberty Life. A further R2- million came from Dato Samsudings’s Malaysian holding company SMG.
Mayekiso says Sanco Investments Holdings concentrates on investments which will promote black empowerment. Its portfolio includes a 26% stake in Vula Communications Group, which could become a key investor in a US satellite phone company; 20% in Powerlib, a “shell” company talking to Sasol and Engen about a possible black empowerment fuel operation; 20% of Solid Gold Commercial Radio, which is applying for a broadcast licence; and 51% in Price Tag Wholesalers, a door-to-door sales company started by Sanco. Levinsohn does not like to talk figures, beyond saying these investments should start yielding returns in three years.
It was Vula Communications’s possible involvement in the satellite deal which recently put Sanco’s business affairs in the spotlight. Since the Sunday Times broke the story, it has emerged that the satellite system is not geared to function above South Africa – a fact which does not bother Levisohn. He shrugs it off:”The reality of technology today is that technoogy is universally applicable.”
The link between Sanco and the investment company is the Sanco Development Trust, on whose board sits Mayekiso, Levinsohn and other Sanco executives. Levinsohn says the trust’s share of profits from the company will be distributed to regional Sanco offices.
The company’s link with development is the Ilima Community Development Company, which has won a R1-million tender from the Reconstruction and Development Programme office in the Eastern Cape. Levinsohn says the company also plans to make money by offering, for a fee, expertise on local communities to companies keen to invest in rural areas. “We will be an integral part of the communication channel between communities and business”.
In particular, it is targeting government projects like the Maputo Development Corridor. It will charge small fees to communities which use the facilities it develops.
Mayekiso has already lined up Swedish phone company Ericsson as a 6,6% shareholder in Ilima, and is looking for other multinational companies to take shares. “Ericsson has identified Ilima as a means of making true empowerment on the ground a reality.”
Mayekiso concedes that Sanco Investments Holdings depends on a substantial, established Sanco membership if it is to present itself as an authentic mass-based company. Apart from an initial 1,2-million from Sanco’s existing base, he hopes to attract about a million new members a year.
If the pilot project in the Eastern Cape is anything to go by, he might be on to a winner – 800 of the 2 000 residents of the village of Xalanga have signed up to the new Sanco and paid their R30 joining fee.