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Khanyi Dhlomo and NEF hit back against reports

Khanyi Dhlomo and the National Empowerment Fund (NEF) have countrered reports questioning the celebrated 10% ownership by rural women in Dhlomo's controversial luxury department store, Luminance.

"The requirements were that their shares should be issued and warehoused by the NEF. This has been done. The shares are currently in the name of the NEF," said Khensani Mashamba on behalf of Dhlomo.

"The other requirement was that the processes required for the inclusion of the rural women should be concluded by the end of October. We are on schedule to achieve this."

They were responding in part to a Sunday World story this week that threw that aspect of the deal into confusion.

The Sunday World spoke to people from the five co-operatives, chosen in KwaZulu-Natal, to receive a 5% ownership stake, as well as potentially selling their crafts in the store. Another 5% will be distributed to five co-operatives in Gauteng, but this process is also still being finalised.

Many of the people interviewed, several of whom were leaders of the co-operatives, were hazy on the details. One didn’t know anything about it. "I don't want to lie, I've never heard of them [Khanyi Dhlomo and the NEF's Nokhuthula Fakude]," said Sthemele Nzuza, chairperson of the Vukani Arts and Crafts Centre in Nongoma, KwaZulu-Natal.

But the Mail & Guardian has established that the confusion about Vukani, at least, was down to a misunderstanding.

The NEF listed the wrong Vukani centre in KwaZulu-Natal as one of the co-operatives: Vukani centre in Nongoma instead of Vukani Arts & Crafts co-operative in Ulundi. Lindiwe Kheswa, chairperson of Vukani in Ulundi was briefed on the deal and told the M&G she was aware of the details.

"We met with the department of economic development and the NEF to discuss a business deal that we are very excited about. We were also told that some shares will be transferred to a trust and that we will get paperwork very soon. We have not made any products for them yet, but we are hoping they will place a big order soon," said Kheswa.

The co-operative is made up of 15 staffers doing beadwork, sewing, grasswork, woodwork and offers training to other co-operatives to improve their production.

The NEF and Dhlomo also went to great lengths to explain the remaining confusion surrounding the rural women component, in part in response to an M&G comment piece this week on the lack of response to the reports, particularly from Dhlomo. 

The NEF’s spokesperson Moemise Motsepe said interviews with ordinary members of the co-operatives were ill-timed. "This is an ongoing process," he told the M&G on Tuesday.

Dhlomo's representative agreed. "The reality is that Sunday World has reported on an incomplete process, one that we are in the middle of completing and that is being carried out as agreed in the funding terms of the NEF." she said. "It is conceivable that as the process is not yet complete, not all members of the groups will be up to speed. We have no problem with coverage and judgment, but judge us at the end of the process and not in the middle of it."

As part of the NEF’s R34-million funding of Dhlomo’s Luminance store, a 10% stake in ownership was set aside for rural women and a further 10% for staff of the store.

Motsepe said registering the trusts for the two 10% stakes and getting all the paperwork done was the NEF’s responsibility, not Dhlomo’s.

"From the outset, the plan was always to register a unitary co-operative trust by end October 2013. Thereafter the allocated shares will be transferred to all 10 co-operatives, which will be represented by a trust, and applicable contracts will then be signed by the relevant partners. There has not been any delay whatsoever."

Asked whether the rural women component could not have been finalised ahead of the store’s glamorous launch, Motsepe said this was impossible. "How so?" he asked. "The store is only one month old. At which point could we have concluded this? The expectation that it be concluded is unrealistic and impractical."

Motsepe said the NEF began the process of securing partnerships with the rural co-operatives as soon as the deal was finalised in August 2012. Dhlomo previously told the M&G that she first applied to the NEF in March 2012.

Motsepe insisted it would have been impossible to conclude the deal before the launch. "We still needed to identify the co-ops, we don’t have a database," he said. The KwaZulu-Natal provincial department of economic development and tourism, as well as Mintek, helped identify eligible co-operatives. Many of these are small, made up of typically seven people, working under harsh conditions with no electricity, cramped working space and an erratic supply of materials.

The launch of the store in the upmarket Hyde Park shopping centre was a glamorous affair packed with celebrities and high-flying politicians. But grumbling emerged on social media platforms on the night about the seemingly elite nature of the deal.

Dhlomo, an already wealthy woman, and her mother, Venetia, own 65% of the store. Wealthy local businessperson Judy Dlamini, the wife of First Rand chief executive Sizwe Nxasana, owns 15%. The three were at the forefront of the launch, along with NEF chief executive Philisiwe Mthethwa who gave a speech. Most of the criticism of the deal has been aimed at the fact that already empowered people were receiving further government help.

Asked if it would not have been a good idea to have had the rural women at the launch, Motsepe said: "I don’t understand why."

"They are going to be there when the trust is fully registered; there will indeed be a public celebration for the milestone. The life of an organisation has many stages, and that will be one of the stages," he said.

But according to Luminance's Mashamba, there won't be much of a celebration. "There is no need to celebrate and single-out what is in effect an intrinsic component of the business. At the very most there will be a press statement about it, given the media interest," she said on behalf of Dhlomo.

Motsepe added that delaying the store’s launch to coincide with the rural women’s part of the deal being finalised would have delayed repayment of the loan. "I think it is in the public interest for the loan to be given out to NLV [Ndalo Luxury Ventures] to be repaid as soon as possible.”

A few of the women interviewed by the Sunday World said their deal with Luminance had been "all talk" so far and nothing had been signed.

But one co-operative interviewed by the M&G said that although no paperwork has been signed, they trusted that they would benefit very soon from this deal. Angie Hlongwa of the Simunye Handcraft & Jewellery co-operative said the partnership already proved to be useful as she and her team just returned from a crafts exhibition in Chicago.

"[The] NEF and [trade and industry department] organised this trip for us to meet with craft buyers overseas. Although they did not buy anything from us, the exposure to the market was good for us to set our standards high and to be able to have our products in Khanyi’s shop," she said.

About the promised cut in the 5% share, Hlongwa said: "We have had two meetings so far, and they have mentioned that they wish for us to be able to employ more people to handle the orders that would be coming in. The more work we supply, the bigger the profits will be for both businesses."

She said that they have been promised training and chances to exhibit. There seems to be a great deal of faith in the deal, although there has been no paperwork yet. "We have been taking our own minutes and the NEF told us that the contracts will come soon, they are still busy with their lawyers.”

In the meantime, Luminance has ordered and paid for a few products that it will sell in their store in Hyde Park, Johannesburg. 

The other co-operatives that Sunday World managed to track down include Zan Zan Décor and Ababumbi ceramic maker. Their chairpersons, Thandiwe Ntuli (Ababumbi) and Phindile Zanomkhize (Zan Zan) said Khanyi Dhlomo came to see them accompanied by the NEF and took photographs of their work, but the NEF and Dhlomo denied this, saying Zanomkhize only met Dhlomo at a meeting at the NEF's office in June.

Zanomkhize said that a deal has not been finalised yet. "I'm still waiting to hear from them again, they said they will be back."

Ntuli said ownership of shares was mentioned in their first meeting and she is hoping that in the next planned meeting there will be a breakdown of what that means for her co-operative in terms of income. 

Meanwhile, the NEF said they were not at all disappointed with Trade Minister Rob Davie’s directive, announced in the fall-out after the store’s opening, that government funds may not be used to support the importation of finished goods and services.

"By the end of September this year, 81% of NEF’s funding [to Luminance] will have been used for local purposes," he said.  "The cost of importing brands made elsewhere are about R14.2-million – which will largely come out of the contribution by the three shareholders of R15-million."

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Verashni Pillay
Verashni Pillay is the former editor-in-chief of the Mail & Guardian, and inaugural editor-in chief of Huffington Post South Africa. She has worked at various periods as senior reporter covering politics and general news, specialises in mediamanagement and relishes the task of putting together the right team to create compelling and principled journalism across multiple platforms.
Khuthala Nandipha
Khuthala Nandipha is a journalist for the Mail & Guardian. This involves writing about various social issues that develop and change on an hourly basis. Her interests are, in a nutshell, how South Africa and the world’s revolution affect the person on the street: “the forgotten voting citizens”, as she calls them. She loves writing, and taking photos as a way to complement her stories. She grew up on the south-east coast of East London in the Eastern Cape. She studied journalism at Rhodes University in Grahamstown. She is not new to Jo’burg, having spent the first eight years of her journalism career working for various newspapers and magazines there.

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