Thebe Investment Company pioneered a new South African corporate culture but black business still has far to go, writes Charlene Smith
Seven years ago there were no black companies listed on the Johannesburg Stock Exchange; indeed there was not a single black corporation. Pondering this, Vusi Khanyile, then finance head of the African National Congress, developed an itch. It was an itch with ramifications, a little like the old story of a butterfly’s wings in China causing a tornado in Florida.
After talks with his ANC comrades and a few businessmen in November 1990, nine months after the unbanning of the ANC, Khanyile began the slow process that would lead to the opening of Thebe Investment Company in July 1992 with R100 000 from the Batho Batho Trust (whose trustees included Nelson Mandela, Walter Sisulu and Tokyo Sexwale), a donated desk, a chair and a telephone.
The birth of a new generation of African entrepreneurial expertise was not greeted with applause – although its birth influenced the development of what is now an avalanche of new black-owned businesses. Instead, the media lambasted it for its ANC links, white businessmen were cool and some in political quarters – most notably black politicians – criticised it and many of its first deals.
The early fuss has quietened down. Thebe is by no means the largest of the black corporates, although with assets of about R500-million its growth has been phenomenal. It still has not listed. And it no longer has ANC Cabinet ministers on its board of trustees; they resigned before the 1994 elections. But it is one of the most stable of the emerging companies, and an examination of Thebe and its growth paints a surer picture of corporate black empowerment than a study of almost any other vehicle.
Khanyile, the publicity-shy chair, has also become one of the major philosophers and strategists of black economic empowerment. Thebe has tracked every change in the new economic directions the country is taking. Some are simple – black empowerment companies now prefer to call themselves emerging companies; white corporations are better known as traditional companies. Race is out of the equation, but it has also never been more important.
Sitting in his simple office decorated with African beadwork and family pictures, Khanyile says: “When we started out we did not have a very clear business strategy, nor adequate experience. We could not create a clear vision and mission. We looked at the future through historic eyes and our vision was one of blackness. It took us about three years to intellectually work through that. Our primary agenda is to move business to black entrepreneurship and create supportive structures for the majority of our people, black people, to play a role.
“But it is not only black people who can do that. We are a country made up of different heritages, whether European, African, Asian or others. For those who recognise the struggle of the majority of people of our country there must be room to play a role.
“We are creating a new South African corporate culture from our own vantage point.
“At the end of the day it is not blackness that adds value in a company, it is the expertise you bring.”
Beyond that too, Thebe has decided to reposition itself as a southern African company and not just a South African corporate.
Eric Molobi, a compatriot of Khanyile’s in “struggle” education issues of the 1980s and head of Kagiso Trust, says there is another problem: “We are not managing the assets we are buying. We need to soil our hands in the management of the companies we have bought into; only then will we be able to change direction and reposition companies.
“We must mature to the reality of competitiveness. As we move into the future, it may not only be black companies that are given contracts and brought into partnerships; it will have to do with the quality of what we bring to the table.”
There has also been a clubbishness about black companies that has prevented competitiveness. Molobi says this has to change too: “We feel uncomfortable if we compete against each other. If we bid for a company we feel we should have done it together. We must realise it won’t always be like that, some time it will be the value people bring to the table that will qualify them for being partners in business.
“We must also realise that we are not going to add value if we are a jack of all trades. People are unbundling, companies are focussing globally, we need to think strategically and in internationally competitive terms.”
While traditional (code: white) companies are battling to find adequately skilled personnel with adequate amounts of melanin in their pigmentation, and at highly inflated pay packages, the black companies have had less of a problem, in particular Thebe.
Khanyile is candid that not all their new employees have had the right qualifications for the job – Moss Mashishi, who heads the huge Moribo division with interests in sports, leisure, broadcasting and gaming, was barely 30 and had not completed his articles as a lawyer when recruited to head Moribo. He had no business acumen, and yet he has proved to be one of the shrewdest businessmen in his field.
Khanyile sees it as a strength that they have recruited energetic young people, regardless of gender, given them opportunities and turned them loose.
The average age of Thebe top executives is under 40 – that includes Msele Financial Holdings head, Litha Nyhonyha, and Khaya’s dynamic boss, Pat Dambe.
Molobi says a lack of career pathing and training at management level and in the boardroom – where he complains of undue homage being paid to a central bureaucratic figure – are hindering the development of companies and ultimately the economy. “We need five-year employment plans to not only adequately introduce, manage and implement affirmative action but to boost the skills capacity of the workforce.”
Molobi and others in emerging companies have become increasingly vociferous about the need for a joint business/government view of the economy and joint strategies to develop it. The ANC has made some progress in recognising the need for public/private sector partnerships but that is a vision born more out of a need to allay chronic bankruptcy at local and provincial government level than a definite economic strategy.
Deputy President Thabo Mbeki has five weekly meetings with selected businesspeople from the black and white business communities, but that is more a closed-door scenario where he taps the brains of selected confidantes and hardly amounts to a strategy. Indeed, some businesspeople complain that it leads to him interfering in their business sectors.
The National Economic Development and Labour Council, with its focus on labour and a penchant for bickering, also falls short of this.
Khanyile believes that joint strategies to benchmark growth over five-year periods are essential for adequate growth. “And we need to involve the Central Statistical Services in this too. None of us knows what percentage of gross domestic product comes from businesses managed by the emergent companies. We need to find out and track that. If figures are low we need to investigate why.
“If we look at the total market capitalisation of the JSE, the percentage of black business is still insignificant [see table] – more than 90% of the JSE is still controlled by traditional business. How do we lift that figure up to 50% black control?”
Khanyile is concerned that black companies are still playing a marginal role in job creation. Thebe has a handful of black companies involved in greenfield development, the remainder are paperchasing in the ethereal environments of cyberspace.
“I go home to my village in KwaZulu-Natal and meet people I went to school with who were much brighter than me and they are unemployed. Our neighbours are unemployed. Such a disparity in lifestyles is a challenge that faces us all.”
Khanyile says that despite criticisms about paper chasing Thebe has found the financial services sector, through Futurebank, is a major job creator, with R400-million a year available to small and medium new entrepreneurs.
The growth of Thebe has not been without its stresses; at one stage Nyhonyha had large bald patches where hair fell out because of stress. It has since grown back. Khanyile joins the top echelon of black business at a northern suburbs health club at 5am every day to work out – and swap business strategy.
Thebe has not shown the most spectacular growth of the black empowerment companies, but then again Capital Alliance, which soared ahead rapidly, has seen its shares in JCI plunge from R54 to R16.
There is still a strong learning curve for the emerging companies, but there is no doubt they represent the most important economic growth indicator of this century in South Africa.