FIN24 - SUNDAY READ / 18 AUGUST 2019 - 09.29 / FERIAL HAFFAJEE
Pieter du Toit’s smash-hit book called The Stellenbosch Mafia was born out of a campaign against “white monopoly capital” which was started by the global multinational Bell Pottinger for the Gupta family.
Sculpted ironically by a company that was the apogee of white capital until it went bust after trying its tricks in South Africa, the campaign had legs because the private economy in South Africa is unyieldingly closed to a new generation of business. From that campaign was birthed a smaller one, driven largely by the EFF and other forces mustered against the clean-up against state capture, this time against what it termed the Stellenbosh Mafia.
SA's richest man Johann Rupert. (File photo: Gallo Images)
The author set out to write about the history of a fabulously successful group of business people. As Du Toit has found, the coinage really belongs to Alec Hogg, the don of financial journalism who first wrote it to describe the fabulous wealth that accrued to the small and beautiful Winelands town that is ringed by mountains and also by history.
Like many such towns, rich Stellenbosch is eye-poppingly beautiful with its natural and built environment. Buffering it are townships and farm compounds that reflect the spatial inequalities and lingering oppressions of the twenty-first century.
There is work to do but there is also a lot that nascent or rising black business can learn from the book and what Du Toit has discerned in his investigation into the major businesses that call Stellenbosch home or which were started by business people who are from there.
Among them are Remgro (although CEO Johann Rupert denies he is even from Stellenbosch); Mediclinic; Shoprite; Capitec; FirstRand; PSG; Naspers and Steinhoff (although you want to learn absolutely nothing from former CEO Markus Jooste except what not to do).
Here are 5 things that black business can learn:
1. Use your context
While the older generation of business leaders like Rupert and Shoprite’s Whitey Basson as well as G T Ferreira, who was one of the team that started the wildly successful FirstRand group, deny a state hand-up, that’s not quite true. The apartheid system was designed as a building block for whites. While Du Toit notes that its architects were initially skeptical of capitalism, they cottoned on to the political network effects of supporting and growing a “patriotic bourgeouisie” as Marxists call a supportive ownership class.
This took the form of the creation of markets (by suppressing black business), licences (today’s Naspers owes a big part of its success to the broadcasting licence that allowed it to create the satellite platform M-Net and later Multichoice) and access to capital.
The ANC does the same with the black economic empowerment laws which include preferential procurement (selling to the state at a premium price), supplier development (setting aside supply lines for small and medium-sized black-owned businesses) as well as set-asides in ownership.
2. Network and Share Knowledge
While almost every single person Du Toit interviewed denied the existence of a business mafia, an organised grouping to grow super-profits, the book is in fact filled with examples of how the business people support each other. Enmity among them may be high (for example, the older business culture is often at odds with the hard-balling style of a newer business culture exemplified by Jooste) but in pockets, they get together and share ideas and support each other.
This support can take the form of cross share ownership, venture capital or being the angel investors for the next generation. I learnt, for example, that Jan Braai’s venture to build social cohesion through instilling braai culture is supported by Capitec’s social philanthropy arm.
3. Pay attention to Detail
Du Toit writes that Rupert would be his own merchandiser. While out shopping, he would draw a finger over the top of lined up cigarette boxes (his father, Anton Rupert, started the Rothmans cigarette company and together they grew it into one of the world’s biggest brands until the anti-smoking lobby arose to point out that it was a killer product) and if it was dusty, he knew his staff were not doing their jobs.
“It’s the oldest trick in retail: check for dust, because it tells you whether the rep has been doing his job. At Rembrandt, we inculcated a culture of attention to detail,” said Rupert.
Capitec Bank’s Michiel le Roux recalls how Rupert insisted on approving every new marketing campaign or brand design whenever the Stellenbosh-based Distillers Corporation planned to launch a new product into the market.
4. Know your Customers – and Respect Them
When Le Roux and his co-founders started Capitec Bank, they created it as the antidote to how banks treated their retail clients. When you go into a Capitec Bank branch, you sit facing a seated assistant who turn their computer to face you. Older banks had tellers or assistants standing imperiously, often turning up their noses at whatever they were seeing about your money on-screen. Banks kept the times that suited clients, opening on weekends and staying open later. The newcomer bank (now one of the biggest) has revolutionised how banking is done in South Africa. It has shown that white-owned company can build a black client base with great success.
5. Keep your Sunny Side Up and Spot the Gap
Former FNB CEO Michael Jordaan is part of the new generation of Stellenbosch business leaders. He is always optimistic and sunny side up. He spots the gap in the market as he is doing with RAIN, the nimble data company. It’s what Capitec did to bank the unbanked. And what Curro schools achieved when they realised there was a market in low-cost private schools delivering decent education.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER