Recently, one of empowerment’s youngest veterans, if one may call him that, put together a relatively small and simple deal, but one that launches his company to an important platform: the JSE.
Sandile Zungu, the executive chairperson of Zungu Investment Company (Zico), announced the formation of listed entity Makadebona, a diversified industrial holdings company.
The company was formed through the purchase of a JSE-listed cash shell Independent Financial Services. The company will undertake a share issue, while its 80% shareholder DNR Capital will renounce its rights to Zungu, the result being that Zico will hold at least 51% of Makadebona.
Makadebona is Zulu for “one who has seen it all” and implies wisdom acquired with age. Is this to reflect his long standing as an empowerment player — one that dates back to the days of New Africa Investments Limited and the formation of Johnnic (this when he turns only 39 this month)?
“One cannot divorce one’s own experiences from the company,” he says. “But the name is more forward looking.”
When it has been running for, say, 20 years, he would like to see the company regarded as uMakadebona. It will pursue opportunities in a range of sectors, guided by pricing and possible synergies between acquisitions. Most importantly, it will look for controlling stakes.
Zungu readily admits to having seen a lot, if not all, in empowerment and business. For example, he played an advisory role when the National Empowerment Consortium took a controlling shareholding in the formation of Johnnic. Thus the recent demise of Johnnic is bound to have tweaked a heart-string.
He describes the takeover of the former empowerment icon by HCI as the “closure of an encyclopedia” on empowerment. “I would not say it is the fall of a giant tree, because Johnnic did not live up to its full potential.” He notes that everyone involved with Johnnic, advisers included, should collectively reflect on its failure.
Zungu also says he has seen the “ugly side of human behaviour” through empowerment, one filled with back-stabbing and an attitude that says “if I cannot have it, I will destroy it”. Giving examples of this invariably points to people’s names, an exercise that Zungu eschews, but he attributes it to “a lack of maturity” on the part of black business.
Last year, he vociferously attacked the Financial Services Charter as lacking ambition in its targets and not taking things far enough. He qualifies the attack by saying it is on empowerment in general — the charter was merely a lightning rod. For example, he maintains that targets on women are inadequate when one considers the proportion of the population they account for.
He has also witnessed instances when empowerment stakeholders — from the government to funders to empowerment companies — do not take the process seriously. An example he gives is of the partial privatisation of parastatals that are set in motion, then a year and R5-million later, inexplicably cancelled. That example brings to mind his running dispute with Transet over the sale of the latter’s MTN shares. The R2,5-billion stake was awarded to Zungu’s Umthunzi Consortium, but more than a year later the shares have not been transferred after the Transnet board raised “corporate governance concerns”.
“Quite frankly,” Zungu calmly states, “[Transnet is] clutching at straws.” He notes that its concerns have not been articulated properly. Its most concrete concern, that of his commercial relationship with then-Trans-net financial director Sindi Mabaso — and the implied conflict of interest — has only been raised through media reports but never put to him directly. For his part, Zungu maintains the relationship is confined to the African Vanguard stable of companies and he trusts that Mabaso had said this during the tender process. Mabaso says she renounced any possible conflict. Zungu feels he won through a rigorous process, approved by Cabinet, and Transnet is reneging because “the wrong party won the bid”.
Zungu’s involvement in business has seen his company invest in the resources sector through African Vanguard Minerals and acquire investments in health care and logistics. He has chaired the beleaguered boards of Denel and Barnard Jacobs Mellet and established the South African Rail and Harbour Workers Union Investment Company.
As secretary of the Rivonia branch of the African National Congress, he probably faces a high probability of worrying about the Democratic Alliance gaining power.
He has no ambition for public office, but will continue to serve as an ANC office bearer as long his “time, energy and passion allows it”. So what does he make of the crisis that has engulfed the party over the past year? He flatly refuses to be drawn into party business, noting only that the party and the country need “a unifier”, but does not elaborate further.
He values his political connections as vital tools of doing business in a globalised world, but maintains he has never sought to use them to extract favours or advance his business interests.
Zungu attributes part of his entrepreneurial acumen to his University of Cape Town engineering training, which he believes encourages lateral thinking.
His wish for black business is to see it move from being a beneficiary of benevolence and “beauty parades” to becoming managers of real businesses. In his mind, this father of four, whose oldest daughter is about to start school at his alma mater, has made that migration long ago.