Following an article I wrote recently, titled, Africanisation And Globalisation: Are They Diametrically Opposed to Each Other, one of our South African readers, gave the following feedback, “Mugabe, well written article and very enlightening; something I have been pondering, would be interesting if you could shed light on the notion of Africanism in the context of SA, in terms of economic thinking and planning. Is the desired industrialisation route we seem to be embarking on Africanist or more a repetition of European Industrialisation or more recently Eastern?”
Great question I thought, but how do I answer it? Is there even an answer to such a question? Then, a few weeks ago, I read a Sunday Times Business Report article, an interview with, Niall Caroll, the CEO of Royal Bafokeng Holdings, a Community Investment Company based in South Africa and as I read the article and heard some of Niall Carroll’s sentiments, the answer came to me quite clearly.
The Bafokeng tribe sit on the world’s largest deposits of platinum-group metals. In 2002, they decided to bring in professional people with management skills to look after their commercial assets. In 2004, the Royal Bafokeng king, Leruo Molotlegi recruited Carroll from Deutsche Bank and together they formed Royal Bafokeng Finance, which later merged with Royal Bafokeng Resources to form Royal Bafokeng Holdings.
The result has been that, the company has grown its asset portfolio from about R8 billion in 2006, when 96% of its assets where in mining, to R35 billion this year. Compound growth of 24% a year has resulted and the company has diversified to the point where now only 57% of its assets are vested in mining. The company recently bought an increased stake in one of South Africa’s top investment banks, Rand Merchant Bank (currently at 15%), for R8 billion. Not only do profits get re-invested into the business for expansion, but a lot of the profits have gone into building infrastructure and affording opportunities to the Bafokeng people, which has made the tribe one of the most affluent on the continent. The standard of living and the quality of life of the majority of the Bafokeng people has improved because of this.
In fact, this community investment company is flourishing to such an extent that, they are now looking to expand into the rest of Africa, to generate greater returns for the benefit of the 300 000-strong Bafokeng tribe. As CEO, Niall Carroll said in the Sunday Times article I was reading, “we believe we can be a relevant partner in particular in the financial services sector for the mining, and the oil and gas industries in the rest of the continent.”
Carroll believes that the Bafokeng’s success, built on visionary, smart leadership, as shown by Bafokeng king, Leruo Molotlegi, as well as a structured business model, with professionally skilled people to manage and run things, can be replicated by other communities on the continent.
As he said in the Sunday Times article, “a lot of rural communities have been awarded mineral rights through reparations of some sort. The trick is to provide enough structure, capacity and maybe even starting capital to provide the right space to enable communities to turn those mineral rights into an income stream that can be used for community upliftment.” Instead of debating nationalisation and supertaxes, government should enable communities to help themselves to reap the benefits of South Africa’s mineral wealth.
The Royal Bafokeng model, is the answer to the question of whether we can “Africanise” our quest for industrialisation as opposed to simply trying to copy the methods used in the East and the West.
The Bafokeng tribe have ownership of the mineral rights, through the visionary leadership of their king, they’ve gone into partnership with the business sector, managed to get a share of the profits that come from mining the minerals that are within their territory, started an investment company with the aim of growing these profits through other avenues, so that they can have even more resources to build infrastructure, educate themselves and improve their quality of life. As a result, they are not reliant on government to provide them with the infrastructure they need in order to flourish as a people. They can simply use the money that’s accruing through their investment company to meet their needs and ensure a better life for all. They have their future in their own hands and as a result they are truly economically emancipated as a people.
This model incorporates the traditional African societal structure, with modern business practices and skills in order to benefit the community at large. It is a model that could be used all over Africa, be it in Nigeria and Ghana, where there’s oil wealth, the DRC where there is an abundance of minerals and many other parts of Africa which are resource rich, and yet the local people continue to live in abject poverty, whilst the profits from mining activities go overseas. The Royal Bafokeng model is about local companies, owned by local communities, but run by professionals, invested on local courses on the continent, that are Africa-based with management teams focussed on the real development of Africa and African communities specifically, as opposed to the current model, where we have companies that are primarily listed in London, New York and other parts of the world, whose operations are run from those overseas locations, coming in to extract minerals from the continent and then taking the profits out with no concern for the interests of local communities, investing in infrastructure, social development and so forth.
This is a workable business model that gives ownership to local communities through partnerships with established businesses, looks after the bottom line, creates jobs, builds infrastructure and in general benefits the community at large. It combines the African social structure with the best practices of Western business models and structures and professional skills in order to make profits as well as serve the interests of the people. It is a uniquely African model that can lead us to the industrialisation and modernisation that we so desperately seek as a continent, and the best thing about it is that it minimises our reliance on politicians by empowering local communities through partnership with international skills and expertise, to maximise their well-being. It also means that we can have African businesses looking to invest in other African countries, as the Royal Bafokeng are looking to do, without having to rely on foreign capital per se.