Valued at R34-billion, or $4,4-billion — more than dollar billionaire Patrice Motsepe’s empire — Royal Bafokeng Holdings (RBH), the investment arm of the Royal Bafokeng Nation, has added about R2-billion to its asset base through its recent BEE deal with Vodacom.
But, says Niall Carroll, chief executive of this interesting financial vehicle, growing Royal Bafokeng wealth is not about royal land rights or a monarchy’s investment whims, as some critics would have it. It is about managing a community’s resources for generations to come.
The Vodacom deal is in line with the company’s strategy of diversifying income sources away from its traditional reliance on mineral and other resource wealth. This strategy has seen RBH acquire a host of commercial assets in the past few years, including interests in the courier company DHL Express, the agricultural cooperative Senwes and the insurance company Zurich, formerly SA Eagle.
While various splits in the Vodacom deal still need to be negotiated, RBH believes the value of the deal to be ”in the order of a couple of billion rands”, says Carroll. This will make the company’s total value about R36billion.
The commodities boom of recent months and the rising value of the company’s mining interests has made moving away from the traditional sources of wealth more complicated. ”As fast as we try to buy non-mining interests, the value of our mining interests rise,” he says. ”In a way the strategy is a dismal failure, but a pleasant problem.”
The diversification strategy seems to be working, however. According to the company’s annual review, as of December last year 79% of RBH’s assets were in mining, down from 85% in the previous year.
”All the investments have done pretty well,” says Carroll, apart from the ”clear laggard” Astrapak. Carroll puts the poor performance of the packaging company down to massive oil-price increases and a resultant rise in the cost of plastic.
All this money is not being used just to make more money. Spending on social development directly benefiting the Royal Bafokeng Nation sits at about R600million a year, says Carroll. This is spent on infrastructure and maintenance, including basics such as roads and sewerage, as well as on schools.
The spending is set to increase in line with inflation and as the requirements of the Bafokeng people change.
”Of course the more we make, the more there is to invest in social development,” says Carroll.
Part of that social development will take place through the roll-out of the master plan to implement the Royal Bafokeng Nation’s ”Vision 2020”. The aim is to lift up the community through better education, agriculture and infrastructure, environmental awareness and better healthcare and social services.
”There is a need to look at ways to diversify wealth and create a services-based economy and an educated, skilled population which can make a living,” he says.
”The development of the whole Rustenburg valley area has been rather haphazard,” Carroll says. He notes that neither local municipalities nor provincial government have achieved much success. The master plan, he argues, is the first attempt to look at the development of the entire area in an integrated way and over a long term.
”Nowhere in government has a development plan been created for 30 years,” he says. ”Politicians can take a five-year view; they have a … a 10-year plan at most.”
He is quick to point out that Bafokeng success benefits everyone in the region. Of the 300 000 people who live on land owned by the Royal Bafokeng, only half are Bafokeng, he says. More than half the children in Bafokeng-established schools in the area are not Bafokeng and the Bafokeng-created infrastructure in the region benefits others as well.
Carroll expresses a great deal of respect for the way the community’s wealth is being managed. Contrary to commonly held notions, the Royal Bafokeng Nation’s monarch, King Leruo Molotlegi, does not operate with absolute power. The king is ”a leader among many” he points out, in a community that has its own ”democratically elected ward councillors and headmen”.
Any major investment decisions made by the company must be approved by a Royal Bafokeng council of up to 70 people, who vote much as shareholders would, says Carroll. RBH also holds meeting with the community twice a year in the nation’s ”capital”, Phokeng, with a formal presentation to the community and a report offered in English and Setswana.
”The Royal Bafokeng Nation have a long-term view on things,” he says. ”There is a clear sense that these assets have been bequeathed by former generations and there is a responsibility on the current generation to hand them over to the next generation in better condition.”
