Black business is big business
* South Africa Over US$1.1 billion of economic power has shifted from white to black control over the past two years. And the process continues. By the end of 1996, 17 companies listed on the Johannesburg Stock Exchange were under black control, and included black empowerment as one of their business objectives. The share price of these companies doubled during 1996, producing a total share value of R26.5bn. Four years ago the percentage of the Johannesburg Stock Exchange controlled by blacks was zero. It is now approaching 10%.
NEC, one major "black" consortium, states its objectives as "to obtain financial empowerment by acquiring meaningful stakes in growth sectors, and economic empowerment by participating at an operational
Because black enterprises have a positive advantage in dealing with government institutions, white big business is keen to link itself to these companies, which, it is hoped. bring 'empowerment-credibility' to new investments.
Thabo Mbeki, deputy President, recently cautioned black business not to project itself as "a parasitic class that can thrive only on pillaging state resources". He said most black empowerment deals appear limited to existing economic activities, and created no new jobs. Government, he said, would like to see the emergence of more black consortiums, but stressed that their investment should focus on sustainable growth and job creation in sectors such as manufacturing. The colour of the money
The black press has commented on the explosion of 'fictitious capital' or 'credit financing? Most new black companies are controlled by "heavily levered pyramids". In other words, control over even large companies has been achieved with limited mainly borrowed capital. Borrowed from the white establishment, and backed by the country's trade unions. The three interlocking black conglomerates all have trade union in-
Economic empowerment deals are largely spearheaded by the white sector with the backing of local and international capital - making the white-controlled financial sector the major beneficiary. Black empowerment is "unquestionably being helped by a corporate establishment alert to the pitfalls and opportunities of fundamental social
(FM 7/2/97) This makes "sound business sense and shows a realistic instinct for survival" by helping "to sustain a market oriented political philosophy". Miners' leader turned businessman Cyril Ramaphosa, 28 International Viewpoint
(previously NUMSA General Secretary, now chairman of Johnnic) is unrepentant. "If black economic empowerment does not become a reality, successful transition from apartheid to democracy will be in jeopardy," he argues. "Then everyone loses, including white business"
White business has recognised the challenge. SANLAM has made available assets worth R8.bn ($1.8 bn.) and Anglo-America R16.bn. ($3.6 bn.) in interwoven deals. "Anglo extracts a steep price - the diamond monopoly and a premium on the equity" But Anglo knows when to be generous. The majority ownership of JCI, which includes South Africa's top gold mine, Western Areas, recently passed to the African Mining Group Anglo announced that it will not charge the group interest on the R2.9bn. ($640 million) price tag (interest on such a deal would normally reach R70m. ($15.6 m.) if the buyer was late with payments. No explanation for this generosity was given. Nor is it necessarv.
According to The Independent newspaper, the South African labour movement. "one of the world's last outposts of militant socialism", is being subdued to capitalism. "The weapons? Union investment companies!" (The Independent, 2 February 1997). Three years ago only SACTWU & NUM were toying with the idea of an investment company - today very few unions are opposed. COSATU itself has an investment arm Kopana ke Matla. Even the SACP is investigating the possibility of making
Former SACTWU leader Johnny Copelyn is frank. "People who focus too much on the cleanliness of each transaction they're doing and don't build a capital base are really missing the gap: a small window for black empowerment". NUM General Secretary K. Motlanthe, NUM General Secretary, admits: "you can't run a business in capitalist society on a comradely basis". According to The Independent, the SACTWU/ NUM axiom seems to be: "maximise profits to deliver benefit to workers and to educate their children so that they don't need to be workers like their parents" - an approach that "finds redemption in individual upliftment and in the possibility of the middle class".
There is already dissonance between unions militating against privatisation, and the union-owned investment companies which are preparing themselves to acquire privatised companies. Once union officials sit on company boards via the investment companies, how will they deal with the demands Crossing the Rubicon
Even the South African National Civic Organisation (SANCO) "has moved into the heart of capitalism through their investment in direct insurance, marketing and advertising". SANCO Investment Holdings, run by former union leader Moses Mayekiso, describes itself as a 'people's investment company' It is also a tool to rebuild membership in the radical anti-apartheid civic organisation (R30 joining fee). The plan is that profits from SANCO's business operations will ultimately flow back into development projects and into popular black empowerment schemes. Profits will be distributed to regional SANCO offices.
SANCO also plans to make money by offering, for a fee, its expertise on local communities to company's keen to invest in rural
"We will be an integral part of the channel between communities and business" their brochures promise.
•We had to turn SANCO into a product, an empowerment organ, harnessing the buying power of the existing (1.2 m.) membership base," says Moses Mayekiso. "We are a mass-based black empowerment company - we are a people's company... I am more socialist than ever. The only shift is that we now have to look at a new way of empowerment. We are now facing the reality that we cannot depend on rhetoric any more. The shift is from throwing stones to using stones to build foundations for the future." * 1. There are 24 Unions in the National Empowerment Consortium that acquired a 35% interest in AAC's Johnnic. 5 of the 20 directors are from unions (NUM, Sarhwu, Saccawu, Fawu). The ANC was also involved in