Empowerment and enrichment South Africa: Who will benefit when black investors acquire major conglomerates?

December 16, 1996

NOT ALL blacks lived in poverty under apartheid. A great majority did, but there were also black millionaires. Most of them owned taxi fleets, beer halls and sports clubs serving black townships. But some of the relatively few black professionals also became wealthy.

This wealth is hidden no more. Black investors have bought big chunks in two conglomerates. One is Johnnic, which owns some of the country's biggest white newspapers (including the Sunday Times, Business Day and Financial Mail) as well as stakes in South African Breweries and other industrial companies. The other, JCI African Mining Consortium, will give black business control of the country's sixth largest mining company.

Through these deals, blacks are entering South Africa's economic mainstream. In order to succeed, they have to be able to compete with white-controlled companies.

There is no reason to think that these conglomerates will not thrive under black control. But since most of the money for the acquisitions came from black labor unions and their pension funds, their participation will present some tricky challenges. Pondering this problem, Financial Mail weekly editorialized, "Trade union leaders. . . . are going to have to decide whether to take their future rake-off in the form of dividends or wages -- and dividends are tax free. Guess what the rank and file are going to choose?"

This matter is particularly delicate because the buyers include some African National Congress standard-bearers. The new chairman of Johnnic is Cyril Ramaphosa, a former general secretary of the ANC. Another key figure is Dr. Nthato Motlana, a Soweto physician and wealthy businessman with long involvement in ANC and personal links to Mr. Mandela.

Many have welcomed these acquisitions as signs of black empowerment. Others wonder just who will benefit: a handful of rich individuals or the masses? "Whenever anybody goes into business, he goes for himself," opines Dr. Motlana. "What happens to other people is a result of your own personal empowerment."

Pub Date: 12/16/96

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