It may never have been his intention, but Sizwe Nxasana, the incoming CEO of First Rand Retail, could very well be employment equity and black economic empowerment’s (BEE) knight in shining black armour.
Nxasana, better known for his seven-and-a-half-year stint as Telkom’s CEO, says he owes his rise as one of the country’s most influential executives to the two measures put in place after 1994 to redress the race-based economic divide. “I am a beneficiary of BEE and of affirmative action and I am proud to say so.”
It is not uncommon that some black professionals would attribute their rise to affirmative action — Vuyani Ngalwana, the Pensions Fund Adjudicator, is one such professional. Nxasana is probably the most senior executive of a listed company to endorse the much-stigmatised affirmative action.
A chartered accountant by training and founding partner of the accounting firm Nkonki Sizwe Ntsaluba in 1996, Nxasana blows the perception that empowerment at the workplace or in business equals handouts out of the water.
His is still one of the very few black faces of major business organisations and some type of aberration in the industry led by white males.
He points out, though, that the financial services industry is not the only one where there is a dearth of black leadership.
“If you look at most of the CEOs of the top 40 companies, you realise that most of the CEOs were appointed by empowerment companies. Phuthuma Nhleko of MTN is one, but you can barely finish a hand counting them.”
It is thus unsurprising that he disagrees with one of BEE’s major critics, businessman Moeletsi Mbeki, who believes that empowerment is a failure and should be scrapped.
“I think it would be a mistake to say let us can BEE. We need a different type of BEE though,” he says.
For Nxasana, the type of empowerment found predominantly in small to medium enterprises that are run and managed by their owners risking their own capital is the way to go.
“We are sending a wrong message to young black people leaving school or university; that the only way to make money is by opening a nice office in Sandton and call yourself an investment company where all you do is do equity deals.
“Making deals cannot be the only way to drive economic empowerment,” says Nxasana. “Black people must learn how money is made and how it is lost. They need to get their hands dirty.
“The other model is what is becoming fashionable; where you have a situation where black people buy small equity stakes or buy minority stakes and they exercise some influence coming in as non-executive directors, but with control still in white hands.
“While there is space for that model of empowerment, I don’t call it entrepreneurship. I suppose you could call it entrepreneurship in the sense that someone sees an opportunity to make money and takes it. It is quite a different thing to establish a company from scratch and make it an institution that will outlast [the founders].”
Entrepreneurs, especially black ones, would therefore hope that in his new role as head of a major bank, Nxasana will tackle perceptions that banks stonewall small businesses by seeking guarantees they know small, medium and micro enterprises (SMMEs) are unable to provide.
Nxasana says there “is some validity” in the complaints by small businesses, but the fault does not only lie with the banks. “I don’t think there is a shortage of funders. We already have institutions like Khula and the Industrial Development Corporation. What we need to look at is how SMMEs are supported.
“There are systemic problems in how SMMEs are evaluated. It is not just the banks. The government has already acknowledged that some of the laws — the forms and the red tape — that SMMEs need to comply with are restrictive. The whole system has to be looked at,” he says.
Nxasana left Telkom, he says, because “it is not good for a CEO to stay for more than 10 years. For a company to grow you need new things, ideas and new blood.”
His many opponents — including consumer organisations, which believe Telkom abuses its monopoly; worker unions, which thought his cost-cutting measures were a threat to job security; and sections of the media — may have been happy to see the back of him.
Still, he has fond memories of his time at the fixed line operator. “I had a wonderful time at Telkom. There was never a dull moment; always something new, every day. If it was not from the government it was from the unions, the shareholders or other stakeholders. It was an absolute honour [being CEO of Telkom].”