A YEAR after government gazetted indegenisation and empowerment regulations compelling foreigners to dispose controlling stakes in companies valued at US$500 000 and above, the empowerment drive has taken a new form: community empowerment.
This entails community trusts — chiefs and subjects — owning significant shareholding in mining ventures.
But during a tour of the Royal Bafokeng Holdings (RBH), a shining example of community empowerment in South Africa, government could have picked up a lot of useful hints.
Royal Bafokeng Holdings CEO Niall Carrol had words of wisdom for the Zimbabwean delegation comprising of Indegenisation minister Saviour Kasukuwere, National Indegenisation and Economic Empowerment Board chairman David Chapfika and his CEO Wilson Gwatiringa: carry out smart empowerment programmes and have strong community leadership structures to avoid messing up the investment.
He had other tips: have claim and rights to the resources.
Carrol said: “The Royal Bafokeng story is very much about generations passing on to their children and grandchildren the wealth that we create today. Without knowing exactly your individual circumstances, I think as an outsider I can say a lot of nice things about RBN.
The first and important thing is the ownership of assets themselves. Whether its land, it is very important that the land is clearly owned by the community or an entity owned by the community. So the ownership of the land important…”
But Bafokeng’s success has not been without its own fair share of troubles. And Zimbabwe is no exception, Carrol said.
He says whenever there is wealth to be created, problems emerge with various parties jockeying to position themselves for the new riches.
“We call it being tested by the devil,” he said “It happens in SA all the time at the first sniff of money, there come this leader and that leader in the community and etc and it becomes complex quickly. The RB governance structure is very robust. People have their arguments and debates. People disagree but ultimately everyone knows how the structure works.”
Carrol says the road to building RBH has not been easy with the kingdom fighting long and hard to get ownership. He said at first the kingdom held royalties for years until much later when they swapped royalties for actual ownership — 16% stake in Implats, the second largest platinum producer.
“The Bafokeng has fought long and hard to establish that ownership and hang on to it. The second most important is to get rights and ensure that the community members themselves know how to govern themselves because it is a very strong governance process,” said Carrol.
He said: “My only final advice for a community that is starting off that has a piece of land and mineral rights and so forth is: secure the land, make sure your government structures work properly, decide to employ the right people, to protect and grow that asset. Decide how you are going to spend that money to deliver on the social projects.”
RBH has done well and oversees a significant portfolio of assets in the resources sector with interests in Impala Platinum Holdings Ltd (Implats), Bafokeng Rasimone Platinum Mine, a joint venture between RBPlat and Anglo Platinum, Merafe Resources, South African Coal Mining Holdings. RBH’s portfolio of mining assets makes up more than 85% of an investment portfolio that is currently valued at approximately R33,5 billion, according to the RBH’s website.
In addition, RBH holdings, holds 2% in Vodacom SA, a cellular communications company with a 54% share of the South African market, financial assets make up the smallest asset class in the investment portfolio and include an investment in Zurich Insurance Company South Africa.
The investments are in Astrapak, Metair Investments and Bafokeng Concor Technicrete, a joint venture with Concor Technicrete. The investments are in: Fraser Alexander, MB Technologies, Senwes, DHL Express, Pasco Risk, Praxima, M-Tech Industrial and MOGS.
But the Zimbabwean situation is different. A number of mining ventures have gone on without even the community’s involvement. While there has been notable development in Zimplats mining town, the local chief — Chivero — is not happy. Chivero was part of the delegation that visited Bafokeng last week and is keen to go the Bafokeng way.
Government officials accuse Zimplats of not investing back in the community, a charge the company denies.
But this would not be the first time communities have been roped in at a shareholder level. Needgate, a consortium bidding to buy 15% of Zimplats a few years ago had reserved a 5% stake for the Ngezi community through the Ngezi Development Trust.
It remains to be seen how government will implement the community empowerment exercise. And if it fails, analysts say government will be squarely to blame.