As I write this, I’m sitting in Centane, a rural town in the Eastern Cape and a world apart from my office in Houghton, Johannesburg. Centane, along with Butterworth and Ngqamakwe, forms part of the Mnquma local municipality — home to about 300 000 people.
Yesterday, I visited the grave of King Phalo, the last monarch of an independent and united Xhosa nation, who ruled until 1775. The women of Qombolo, the village where I’m staying, fetch their wood from a forest named after Khawuta. Khawuta was the son of Gcaleka (son of Phalo) and the father of Hintsa, whose son was Sarhili. This place, and especially Centane, seems to be a hub of Xhosa history and tradition.
In spite of this rich history, Centane has to be one of the most poverty-stricken parts of South Africa. Development is patchy. It’s great to see a reasonably advanced electrification programme — we’ve had electricity in our rondavel since 2002. It is also such a pleasure to drive on the 25km upgraded road from Butterworth to Centane. Before 1994, I used to think it was a 90km stretch because it took about an hour and 30 minutes to navigate. Driving further to the beautiful Wild Coast from Centane is, however, less than pleasant. Water and sanitation are not yet realities for most houses in the area, and the provision of financial services is erratic. Jobs or opportunities to start-up enterprises are limited.
When the Financial Sector Charter (FSC) highlights the need for transformational infrastructure (water and sanitation, roads, electricity, et cetera), access to financial services for poor people or agricultural and enterprise development, one cannot help but think that it is describing Centane. And that is why I am here. We at Wiphold believe our company has a big challenge to take black economic empowerment (BEE) to its logical place — the areas in South Africa that need substantial transformation. These are rural places like Llembe in KwaZulu-Natal or the Mnquma and Mbashe municipalities in the Eastern Cape. They are also poor urban townships, such as Kliptown in Soweto or Khayelitsha in the Western Cape.
More specifically, as the BEE partner to Old Mutual, Nedbank and Mutual & Federal, Wiphold is responsible for taking transformation in financial services to districts like Mnquma, Mbashe and Llembe. So, together with our partners, we are rolling out a fairly ambitious programme of going into areas where our broad-based share-holders are to be found. The objective is to listen to how these communities would like us to deliver on the spirit and the substance of the charter. This does not have to be corporate philanthropy.
On the contrary, we share the perspective of international management strategist CK Prahalad, who argues that ”collectively, the world’s billions of poor people have immense entrepreneurial capabilities and buying power” and that large companies ”can learn how to serve them” and, in so doing, ”help millions of the world’s poorest people escape poverty”.
This needs us, as Prahalad further argues, to ”challenge the conventional wisdom in delivery of products and services”.
In essence, we need new business models to deliver economic transformation through products and services that are profitable for the companies providing them.
This is a venture with little precedent or points of reference. It requires the taking of calculated risks and needs the mind of a social entrepreneur. The job of linking Houghton to Centane cannot only be the job of the government. It must also be the responsibility of companies like Wiphold, which have been enabled by BEE policy to play in the mainstream economy.
At Wiphold, we often call this the second phase of defining BEE our way. Our first phase — in 1994 — was about forcing the inclusion of women into the mainstream economy and about defining a model of broad-based ownership as we understood it. Our initial product offering to women only in 1996 is yet to be replicated anywhere else in the world. This is perhaps what led to the Wiphold case study by the Swiss-based International Institute for Management Development winning the award for best case study in Europe in its category. This case study has been shared with other top business schools such as Harvard and Insead. It may be that Wiphold in its small way has started to contribute to the definition of an inclusive economy.
We hope to take this definition further through this second phase of actualising the policy of broad-based BEE by taking it to places like Centane.
Gloria Serobe is the CEO of Wiphold