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3/27/2023 "The Black Economy 50 Years After The March On Washington"

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Wall St. and Business Wednesdays: South Africa's New Black Billionaires by Rory Carroll

Cruising into the Johannesburg River club for a round of golf, lifting off in helicopters for weekend retreats, sipping champagne at black-tie functions: they are South Africa's new randlords.

They spend long hours in towers of steel and glass running financial empires, but it is when they come out to play that the public get a glimpse of South Africa's first black rand billionaires, men who have zoomed from modest means to mega-wealth in a few years.

They are saluted by some as models of what is possible in the post-apartheid era; condemned by others as the embodiment of crony capitalism, which enriches a few and leaves many in poverty.

In the debate on whether they should be encouraged or reined in, the latter seem to be winning. The government is cooling its enthusiasm for what one minister recently called with irony the "gentlemen of empowerment".

In 2003 the African National Congress introduced black economic empowerment (BEE) legislation, designed to transfer chunks of the economy to those "previously disadvantaged" by white minority rule.

A decade after apartheid white people, who make up 10% of the population, still own and manage most of the country's assets and big companies.

Reg Rumney, the head of the thinktank BusinessMap, said: "For political stability and progress everybody agreed we needed to move black people into the mainstream economy and redress inequality of ownership."

With mining and financial corporations backing the empowerment laws, barely a week passes without a company handing shares and directorships to black people.

The pace will quicken in the coming months as all sectors of the economy, from tourism and transport to healthcare and information technology, implement their transformation strategies.

Last year there were 189 empowerment agreements worth 3.6bn. A code of conduct to be published soon should increase the number, the trade and industry minister, Mandisi Mpahlwa, said.

But critics say the juiciest deals keep going to the same people, invariably men with ANC connections. The most cited are Cyril Ramaphosa, Patrice Motsepe, Tokyo Sexwale and Saki Macozoma.

Beginning in humble roles in the ANC and labour movement, all four are now immensely rich from stakes in mining, telecommunications, newspapers, banking and energy.

Ajay Lalu, an empowerment consultant with Ernst & Young, said: "Calling them gentlemen of empowerment is too kind; they are the usual suspects. BEE has become part of the inner circle of the old boys' club."

They deserved credit for seizing opportunities, and their success could inspire young black people to enter business, he said, but there would be trouble if they continued bagging the best deals.

Other commentators have been harsher, comparing the "over-empowered" to Russia's oligarchs and the kleptocratic acolytes of Mobuto Sese Seko who looted Congo when it was called Zaire.

Moeletsi Mbeki, a businessman and the brother of the man who devised the scheme, the South African president, Thabo Mbeki, called BEE a device for white-dominated corporations to build bridges with the ANC elite. "It doesn't create wealth or add value to the economy," he said.

With unemployment at 40% and millions in poverty, his accusation resonates with the Communist party, an ANC ally, which has questioned why banks spend billions of rands on empowerment deals while evicting the poor from their homes.

Mr Rumney said it was too early to judge BEE, inspired by a similar policy in Malaysia which yielded mixed results, but that he was worried black businesses might be encouraged to expect handouts.

He said the policy could also fail because of the well-established practice of corporations using black facades to mask white ownership and control.

Black people control less than 4%, by value, of the shares on the Johannesburg securities exchange, and nine out of 10 senior management positions are held by white people.

Empowerment's defenders say it is the only way to create a class of black entrepreneurs after the destruction of black business and education under apartheid. And the government has made it clear that it expects the policy to nurture smaller businesses in future.

One entrepreneur wrote in a letter to the Johannesburg newspaper Business Day: "Despite our crippling past, I now can also have business hopes and dreams.

"The white minority males can now take us seriously."

The columnist Christine Qunta said that those who resented the new tycoons and complained about empowerment were racists.

"The real subtext is, of course, that Africans have no right to be millionaires.

"Like their mothers and fathers, they should spend their lives being gardeners, mine workers and domestic workers."

None of the big tycoons were available for interview.

Note: This article first appeared in The Guardian Newspaper

Guardian Unlimited Guardian Newspapers Limited 2004

Wednesday, September 8, 2004

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The views and opinions expressed herein by the author do not necessarily represent the opinions or position of or Black Electorate Communications.

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