Cyril Ramaphosa – friend or foe? – BizNews, 14 April 2016

The supreme irony is that Ramaphosa’s vast wealth is founded on political access to white capital eager for access to government.

Succession is always a concern. No matter how much certainty one thinks the next leader will be better, there’s always a chance it could go in reverse. When it’s the leadership of a country at stake, the levels are raised that much higher. And despite the failed impeachment of President Jacob Zuma, there are still calls for him to quit, or be recalled by the ruling ANC. But who lies in wait, we’ve discussed two possibilities: Zuma’s former wife, Nkosazana Dlamini-Zuma, who is stepping down from the African Union in July, or current deputy president Cyril Ramaphosa. The Institute of Race Relations’ Sara Gon, looks at Ramaphosa’s credentials, and asks: is he friend or foe? – Stuart Lowman, BizNews 

By Sara Gon 

Cyril Ramaphosa, addressing an ANC summit for academics and professionals on 24 March 2016, said:

“For far too long this economy has been owned and controlled by white people. That must come to end. For far too long, this economy has been managed by white people. That must come to an end…Those who don’t like this idea – tough for you. That is how we are proceeding.”

The supreme irony is that Ramaphosa’s vast wealth is founded on political access to white capital eager for access to government.3

Donwald Pressly, editor of the Cape Messenger says that for Ramaphosa to win the presidency, he has to play a “double game”.

He has to keep in with black business, while appearing to be antagonistic to white “monopoly” business. His supposed meeting with Johann Rupert, Trevor Manuel and Maria Ramos over Nenegate has led the Zuma faction to cast Ramaphosa as the agent for “Big White Monopoly” capital and “Hence Ramaphosa’s attack on white business influence…”.

So how did Ramaphosa become Africa’s 29th wealthiest person?

Jacques Otto of News24 reports that Ramaphosa was one of the very few selected to be a ‘deployed cadre’ by the ANC to become a major beneficiary in empowerment deals aimed at creating wealth outside formal ANC structures.

In 1996, Ramaphosa resigned as Secretary General of the ANC, supposedly for not being recognised as Nelson Mandela’s successor.

He became Deputy Executive Chairman of New Africa Investments Limited (Nail). Nail, supported by Metropolitan Life, was the first broad-based black economic vehicle.

Nail then invested R 7 million to start an investment bank, Pleiade Investment Corporation. Pleiade was used as a vessel to raise capital but “publicly it was a financial advisor” and “brokered” an investment deal between SBC communications and MTN.

SBC simultaneously entered into a joint venture investing R 25 million into Pleiade (renamed AMB Capital).

In 1996, AMB acted as ‘advisory’ to a R 2.7 billion broad-based empowerment deal in which the National Empowerment Consortium (NEC) which took a share in Johnnic Holdings Limited (Johnnic). AMB also raised capital to the value of R 2.1 billion for certain members of the NEC to acquire a controlling stake in Johnnic.

The members of NEC mostly came from Cosatu unions and their pension funds, from which most of the capital was raised.

As part of this acquisition, AMB Capital “put forward” Ramaphosa as Chairman of Johnnic.

In 1996, AMB raised a further R 1.3 billion for the Ikageng Share scheme, AMB Southern African Investment fund and AMB Holdings (parent of AMB).

By the end of 1997, these broad-based deals had a stake of 10% of the total listed JSE shares. It took the Afrikaners nearly 20 years to achieve the same level of ownership on the JSE.

By being elected into executive and non-executive positions on the largest firms listed on the JSE, Ramaphosa helped favour these companies with government contracts and enhance their BEE status.

firms included Alexander Forbes South Africa, Black Economic Empowerment Commission, Johnnic, KreditInform (Pty) Limited, Sasria SOC Limited, Vancut Diamond Works, Rebserve Holdings Limited, Millennium Consolidated Investments (Pty) Limited, the Shanduka Group, SABMiller PLC, Capital Property Fund, Pan African Resources PLC, MTN Group Limited, the Bidvest Group Limited, Alexander Forbes Limited, Assore Limited, Lonmin PLC, Standard Bank Group Ltd, Bidvest Group Limited and the Commonwealth Business Council.

“I however think it would be unfair to say that Ramaphosa did not work for his wealth. He was certainly advantage (sic) based on the circumstances of the time.”

Otto noted that after three years of democracy local ownership saw almost 20% in the hands of the previously disadvantaged.

“It does leave a hollow feeling that this wealth has been obtained on the back of low income earners invested pension funds. Have those poor income earners pension funds gained wealth at the same rate as Ramaphosa?”1

BizNews interviewed Chris Bishop, MD of Forbes Africa, on The Ramaphosa Billions: How Forbes calculates his wealth at $700m (28 May 2014) when Ramaphosa divested from Shanduka to become the country’s Vice-President.

BizNews referred to Peter Attard Montalto of Nomura Holdings who said that foreign investors weren’t sure about Ramaphosa’s understanding of the capital world because he comes from a BEE market.

Bishop said that Ramaphosa learnt the hard way in business. “He’s a lawyer and he was a union leader. That was his background and the unions only came through because, as a lawyer, he was asked to set up the NUM, which he did in 1982. What I’m saying is that he’s actually had to learn business the hard way…”

Alec Hogg countered that Ramaphosa was given shares. “Yes, but what I’m saying is the actual dealing in the boardroom, he had to learn it. He had no experience before then.”

Hogg said that that’s not business; business is about creating. “If you have the McDonald’s franchise for South Africa, how wrong can you go? If you have one of four Coca-Cola Bottlers, you didn’t build it from scratch. You acquired ownership of it, so I’m not so sure that he’s learnt business the hard way. I think he’s actually had a very easy ride.”

Bishop conceded but said that he learnt a lot about the way this company works from the streets, particularly in 1987, when he led the strike.

By 1987 Ramaphosa’s NUM had 344 000 members. At its annual congress in 1987, the NUM adopted the slogan ‘The Year the Mineworkers Take Control’. Ramaphosa argued that the state had been decisively weakened by the wave of mass protest and that, with the aid of worker agitation, a ‘dramatic transformation’ was on the cards. It was a huge miscalculation.

NUM demanded a wage increase of between 40% and 55%; the Chamber of Mines responded with 12.5%. A strike was inevitable.

On the first day 340 000 people struck – more than 70% of all black coal and gold miners. Approximately 250 000 miners struck for all three weeks of the strike. At that point Anglo American threatened to dismiss its entire striking workforce. The NUM stood to lose more than four-fifths of its membership, so it ended the strike. It failed to win any improvement in wages, working or living conditions. Nine mineworkers had been killed, 500 injured and about 400 arrested.

For Ramaphosa the strike was a failure. Ramaphosa may have learnt something about big business from the strike. Whether it was what Bishop implies is unknown.

BizNews said that international investors did not necessarily believe that Ramaphosa was an ally of business, nor a free marketer. He has other priorities and obligations, within the ANC which are antithetical to a free market.

Bishop held that he’s a very clever politician. Forbes had asked him for an interview, but he refused to do it. “We wondered why and then of course, a couple of months later he is suddenly going to be in line to be the next President of the Republic of South Africa, so obviously, he was trying to play it both sides. He’s a clever politician.”

Does this anecdote show proof that he is a clever politician?

The country needs brave, forward thinking leaders who are prepared to buck the absurd idea of a command economy and recognise the value of a free market and private business, whatever its colour. But is Ramaphosa that leader?

Sara Gon is a Policy Fellow at the IRR,1 a think tank that promotes economic and political liberty. Follow the IRR on Twitter @IRR_SouthAfrica.

Read the article on BizNews here

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