Mandela’s South Africa dream succumbs to tycoons

As the former president enters his 96th year in a hospital, his dream of widely distributing the country’s riches has faded.

BLOOMBERG NEWSJuly 29, 2013 

SAFRICA236

The all-white settlement of Kleinfontein, South Africa, has a guarded entrance gate. Only white Afrikaners who share Afrikaner culture, language and religion are allowed to settle in the town.

PER-ANDERS PETTERSSON — The Washington Post

MAANDAGSHOEK, South Africa — Prudence Moime looks up from stirring a pot of corn meal in front of her two-room shanty in northeastern South Africa and gazes across the surrounding rocky hillside. Just beyond her view lie some of the world’s best platinum deposits.

She says she waits in vain for some of the money promised to her village by African Rainbow Minerals Ltd., part-owned by Patrice Motsepe, the richest black South African and a beneficiary of the country’s policy to spread the wealth to blacks after the end of apartheid.

Discontent is mounting 19 years after former President Nelson Mandela’s election over how a tiny elite with ties to the ruling African National Congress benefitted from more than $61 billion in so-called black economic empowerment deals.

Villagers say that in 2000, Motsepe’s people offered them an 8.5 percent stake in the Modikwa platinum mine on credit, promising to develop schools, hospitals, homes and roads in the hills of Limpopo province. While Motsepe today is a billionaire, the 80,000 community members still collectively owe about $16 million on their share.

“They promised to develop the village,” Moime said in front of her crumbling home, where a row of bricks serves as a kitchen surface. “Houses were never built. Roads weren’t built properly. We’re not happy at all.”

Modikwa officials say the company has spent $11 million on community development projects, including a $7 million road, and recruits more than three-quarters of the mine’s workforce from the surrounding area.

“Sometimes the mining industry doesn’t get the recognition it deserves for a lot of the good, good work we do,” Motsepe said at a Johannesburg press conference on Sept. 3, 2012.

Almost 14 percent of South Africa’s 53 million people live on less than $1.25 a day, according to the World Bank. Black citizens on average earn a sixth of what their white counterparts do, and 1.9 million households have no income, census data shows.

Motsepe is worth $2.2 billion, according to the Bloomberg Billionaires Index. His 40.7 percent stake in African Rainbow is worth $1.39 billion and a share in financial services group Sanlam Ltd. is worth $597 million. He also has about $200 million in cash and is the board chairman of Harmony Gold Mining Co. Ltd., in which African Rainbow has a 14.6 percent stake.

Motsepe declined to be interviewed for this story. African Rainbow executive director and former chief executive officer Andre Wilkens and head of investor relations Jongisa Klaas declined to comment.

On Jan. 30, Motsepe pledged to donate at least half his family’s future income to charity “to uplift poor and other disadvantaged and marginalized South Africans,” joining Warren Buffett’s Giving Pledge initiative to boost philanthropy.

His family foundation, established in 1999, already funds educational, religious and community projects, according to its website.

While black empowerment programs have enriched a few black leaders, significant financial power remains in the hands of South Africa’s white population. They occupied 73 percent of top business management posts, the Employment Equity Commission said in an April 20 report.

Of the 54 South Africans who own listed shares worth more than about $50 million, a dozen were black or of mixed race, a study published by Johannesburg’s Sunday Times newspaper last year shows. Four of them hold or have held senior posts in the government or ANC, including Cyril Ramaphosa, the party’s deputy president, and Tokyo Sexwale, who was human settlements minister until July 9.

“No one in his or her right mind would disagree with the need for structural transformation of our economy,” Mamphela Ramphele, the former chairwoman of Gold Fields Ltd., said in a May 8 interview. “Yet for the last 10 or 15 years we have seen the same people benefitting from a multiplicity of deals. They are the people who are politically connected.”

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