Motsepe ARC listing on the JSE does not pass the economic transformation muster, sadly
On 7 September 20017 Patrice Motsepe’s investment company African Rainbow Capital (ARC) made its debut on the South African Securities Exchange, with the shares opening at R8,68. This is indeed a milestone Motsepe and his company which will give it a market value of R8.5 billion.
On any given day, a great move such as this, from a black business man is a critical advancement towards a completely transformed corporate South Africa and particularly the Securities Exchange. There is however a deep feeling of confusion, bewilderment and yes, a nauseating feeling with Motsepe’s choice of two white CEO’s, Johan van de Merwe and Johan van Zyl, for his newly listed company and the fact that this company is sold as a transformation company, simply because Motsepe is its chairman and majority shareholder feels troubling and offensive. For Director of Capital Markets at the JSE, Donna Nemer to also see the listing of this company as an acceleration to our economic transformation feels forced and dishonest.
Motsepe’s business approach is that black and white South Africans must work together, not just to build world-class companies as he says, but also to create jobs and express confidence in the economy. One cannot help however the feeling that this even attitude, both in its tinted rose glasses and in the fact that its a licence to gravitate towards whiteness as Motsepe’s own expression of trust quotient on black leaders. Motsepe’s attitude is akin to refusing to see colour, which naturally belittles the struggle of another human, in this case black professionals. But the problem with this premise lies in what goes unaddressed in the given reality of corporate South Africa.
Black Economic Empowerment is trying to highlight that there is demonstrable evidence that black people are highly underrepresented at the Chief Executive levels and at senior management levels in top companies, especially listed companies in South Africa and no effort must be spared in order to address that problem. The 2015 Jack Hammer Executive Report found a steady decrease in the number of black leaders heading 40 of South Africa’s top companies over the past three years, with black people representing just 10% of these. The research, which was conducted by Mercantec also found that most black people currently at senior positions in senior management are unlikely to go on to become CEOs of those businesses, with just 10% destined to reach the top. This means after 23 years of democracy, there is an evident fact that white people still refuse to trust black people to run companies and or are less motivated to invest in companies runned by black people. Black exclusion from corporate South Africa has been systematized.
It cannot be that Motsepe’s company, which proves these uneven and disturbing numbers to be true, would pass as an economic transformation company simple because its chairman is black. Its a misrepresentation of the term and against the spirit of black economic empowerment and frankly its misuse. The only measure of accelerating transformation is if any newly registering company at the JSE reverses these Jack Hammer Executive numbers. To add two more white CEO’s and be regarded as advancing economic empowerment is counter-intuitive and an abuse.
South Africa, because of our unique history of majority subjugation by a minority, we have no choice but to correct the injustices of the past, whatever the cost, whatever the sacrifices. In all aspects of corporate South Africa black people are holding the hard end of the stick, that when they are even allowed to hold that stick. According to then Association of Black Securities and Investment Professionals (ABSIP) president, Tryphosa Ramano in a Business Report opinion piece, ”Within the financial services sector, the total investment and savings industry is estimated at R6.5 trillion, however, only 4.4 percent (R283.1bn) is being managed by black firms. Our people are poor, they are unemployed, they remain excluded, even the skilled struggle to break the markets, even those who have made it, struggle to rise, this has to change sooner rather than later, and it has to be enforced much more forcefully.
Corporate South Africa could and should do more to facilitate the creation of majority owned and controlled black and women-owned businesses especially in their procurement supply chains. It is not acceptable for Motsepe to let white people run a company in critical positions and still sell it as an empowerment company.
Even more troubling for Motsepe’s business approach is what it means. For example, The ABASA 2017 convention’s theme was ‘fostering excellence to achieve economic transformation’. I found this theme troubling for 2 reasons. firstly, Excellency is great and should be what we all strive for but it is not a condition for economic transformation. To accept this theme is to suggest that the reason we are not transforming is because we are still fostering excellency on black professionals. This is offensives because it implies that something is wrong with black people. Let me be categorical. Nothing is wrong with black people. Transformation is about correcting the injustices of the past and not about investment BEE value or excellency or any of those aspirations. Excellency and growth has its own standard drivers and transformation fulfills a completely different imperative.
Choosing two white CEO’s for his company means for Motsepe, although he believes in black people and their power, for the moment at least, inferiority of blacks is something he has accepted.
White people of course already hold this attitude, along with their minority fears so that their reaction to any change that puts black CEO’s at the top, they have been ready to collapse the markets rather than share control, their top spots and their wealth. how do we get passed this? Certainly not by reinforcing it. If black people like Motsepe cannot invest in other black pole then why would we expect white people to do it.
According to Mohammad Amir Anwar, a Post-doctoral Research Fellow, University of Oxford, only 23% of the shares traded on the exchange are held – directly and indirectly – by black South Africans.
People who are likely to buy Motsepe’s shares are those already heavy players in the Securities exchange and if Motsepe thought his singular ownership of ARC improves our black ownership at the JSE, he is surely mistaken.
As the Treasurer General of the ANC said, we need to hunt together as South African Inc, all of us, government, business, Unions and Civil Society.
Black South Africans have not been part of that ‘together for a very long time’.
Yonela Diko is a Media & Communications Consultant