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JOB CREATION VS CHARITY DRIVE

In 2004, politician-turned-businessman Cyril Ramaphosa went out of his way to dispel the claim that he was one of four people in the country owning a Maybach 62 – the luxury car priced at more than R3m.

Ramaphosa was not only trying to set the record straight; it was a move to ensure that SA’s new generation of black business people, many of them with a trade union or ANC background, would be seen as engaging in a more compassionate way of doing business. Included in this model is heavy spending on corporate social investment (CSI).

But are the new elite in fact good capitalists? Opinions on this vary. Firstly, there is a general assumption that emerging black businessmen, most of whom have first-hand experience of poverty and have fought for social justice, are the natural allies of socially responsible business.

But there are those who argue that imposing a heavy burden of social responsibility on emerging black business is counterproductive.

“It will constrain them from amassing sufficient capital to become powerful capitalists. As fully fledged capitalists they will make a significant dent in social ills by creating jobs, as opposed to distributing crumbs to charities,” says one industry analyst.

CSI purists are dismissive, arguing that many black economic empowerment (BEE) companies have invested in socially unfriendly businesses such as microlending and gambling. They use CSI mostly as a “marketing gimmick”, says Luvoyo Mkangelwa, a director of Sakhikamva, an investment group owned by five nongovernmental organisations.

It’s encouraging that BEE companies are beginning to embrace CSI, he says, though there are few meaningful implementation programmes.

The apparent sensitivity of the emerging black businessman to social issues did not start with Ramaphosa’s defensive gesture. It is evident in a number of CSI initiatives undertaken by BEE groups.

Ramaphosa has pledged to spend R100m before 2014 on social projects through the Shanduka Foundation, a CSI organ attached to his business vehicle, Shanduka.

The launch last week of the Sexwale family trust by politician-turned-businessman Tokyo Sexwale is another such effort. CSI foundations and trusts linked to established BEE groups are springing up all over the place. Fani Titi’s empowerment group has its own and it holds 16% of Tiso’s equity. So do other prominent players, such as Hosken Consolidated Investments (HCI), Kagiso Trust Investment (KTI), Wiphold and Sekunjalo .

These four are widely viewed as the most pro-active when it comes to CSI.

Under the leadership of the late Eric Molobi, KTI became a model of a holistic approach to CSI. “Eric was adamant that KTI would invest only in assets that were not harmful to humankind, and ones that would contribute to our new democracy,” says current MD Johnson Njeke.

KTI’s investment portfolio focuses mainly on interests in broadcasting, which no doubt fits the objective of building SA’s democracy. The group was established in 1994 to serve community development needs and continues to be held 55% by the Kagiso Trust, an NGO that supports charitable and development projects.

Under the stewardship of its CEO, Iqbal Survè, Sekunjalo is stringently pursuing a sustainable business model. The group won the FM’s 2006 Top Empowerment Companies award, largely because of its contribution to broad-based black economic empowerment. It also scored high on the softer aspects of the BEE scorecard, such as skills and enterprise development.

Survè is adamant that Sekunjalo will invest only in companies that advance sustainable development. “We have always built our business model around issues of sustainable development. It was there long before this was officially rewarded, because it is the right thing to do and because we need to do business differently,” he says.

Groups like HCI, holding company of e.tv and gambling group Tsogo, among others, derive their community development credentials from their trade union origins. HCI is run by former unionists Marcel Golding and John Copelyn and continues to be majority-owned by the SA Clothing & Textile Workers Union (Sactwu).

Golding and Copelyn have allocated part of their personal HCI shares to a Sactwu fund that finances educational initiatives for trade union members and their children.

Source: Financial Mail – Sibonelo Radebe