Black Empowerment in South Africa: "Patriotic Capitalism

BLACK EMPOWERMENT IN SOUTH AFRICA: “PATRIOTIC CAPITALISM” OR A CORPORATE BLACK WASH?

Georgina Murray GriYth University, Queensland Australia

Abstract

This article triangulates data to show that black empowerment in top business is not happening. Black empowerment (de ned in this context as initiatives to give the black community access to corporate ownership and management roles) has made little impact in South Africa since 1994. The sample of three black empowerment companies and ve top South African companies shows that top business remains predominantly white, with few signs of black integration into ownership or management. The failure of black empowerment was ensured when the African National Congress government failed to nationalise key industries (as the Afrikaner National Party did in 1948) or even to bolster its parastatals (government organizations) enough to build a strong black middle class. The ANC could not over- come its fear of white-capital- ight (a ight that happened anyway) and withstand the pressure from economic liberals. The Growth, Employment and Redistribution (GEAR) programme is the tragic result of this fear.

Key words Black empowerment, neo liberalism, economic liberalism, Anglo-American, Johnnic, NAIL, Sanlam, Liberty Group, Rembrandt, Old Mutual, parastatals, ANC, Afrikaans National Party

Introduction 1 In South Africa, black empowerment can be de ned as happening when members of the black community gain access to corporate ownership and management roles that give them equal access to scarce resources. Black empowerment became part of a set of expectations that followed the 1994 win of the African National Congress (ANC). For example, President Mbeki in November 1999 spoke of “patriotic capitalism [where we must work] to ensure that there emerges a black bour- geoisie” (quoted in Good, 2000). Similarly, black workers expressed hope that the new government would empower them in the same way that the 1948 Afrikans National Party empowered the Afrikans (Mabogoane,

Critical Sociology 26,3 184 georgina murray

1995, HaVajee, 1997)). To this end parastatals (state based organizations) such as the Industrial Development Corporation were given $A1.3 million to support black empowerment (Rumney, 1994). There was a shared belief that programmes of black empowerment would “support black business to enter the mainstream” (Mabogoane, op. cit.) and that this in turn, would mean a “transfer of working class people into management positions (to) give us an opportunity to begin to fundamentally trans- form the industries of this country so that they move away from serv- ing the interests of the bourgeois” (Assistant General Secretary, COSATU, Zwelinzima Vavi,2). Despite these expectations, the changes bought about by black empowerment have been minor and self interested. That is, they have been adopted by individual companies in ways calculated to combat their all- white management image, to improve the company’s black distribution network, to gain control of black workers’ pension fund monies, to place the responsibility for enforcing massive redundancies or for crack-downs on militant black labour into the hands of black managers and to improve social stability generally. White family capital, like that of the Oppenheimers, Ruperts and the Hertzogs, continues to dominate South African big business. Black poverty has not been challenged by the few poor black empowerment companies that have emerged (only sixteen of which have been identi ed by Mbendi, 1997). These black companies typically have small black stakes, with a titular male black head operating within a majority white board whose members dominate decision-making. Nor is there reason to expect black empowerment to accelerate in the foreseeable future, given the widespread corporate anxiety over declining global economic pro ts and the contingent ANC commitment to its optimistically named 1997 policy of GEAR (Growth, Employment and Redistribution). In other words, economic liberal policy and practice will continue to inhibit the growth of a black middle class. These arguments are not original to this article (see Barchiesi, 1996; Lanegran, 1996; Ramsamy, 1996; Bond, 1997). What is original here is the use of corporate data showing the demographics of top business and management in relationship to black empowerment. First, I want to place this data within a brief background sketch of South Africa to show how little touched by black empowerment are the mass of the people. I will also show the substance of the ANC’s market deregulation policy embodied in GEAR, to indicate how that political framework mitigates against black empowerment. black empowerment in south africa 185

South Africa—the Background Context Mbendi argues that the black community (76% of the South African population and 34.3 million people3) is ambivalent about the call for black empowerment. Although they are proud of their leaders, they see them in “pursuit of self interest before the interests of [their] brother, leaving the vast majority of the black South Africans as economically disadvantaged as they were before South Africa’s rst democratic elec- tion in 1994” (Mbendi, 1997). The following table shows post apartheid social mobility.

Table 1 Changing Income and Average Incomes for DiVerent Groups (in rand)

Top Income Qunitile Bottom Income Quintile

African – 1990 2% 34% – 1995 6% 38% Coloured – 1990 8% 12% – 1995 9% 13% Indian – 1990 17% 8% – 1995 27% 15% White – 1990 51% 3% – 1995 33% 6%

Source: Sidiropulos et al., 1998: pp. 276/281.

Table one shows that there has been some positive change in income particularly amongst blacks moving into the top income quintile within ve-year period between 1990–1995 but it also shows that there are a corresponding number of blacks moving into the lower quintile in that time. Whites (12% of the population) seem to be losing some of their income superiority in this period, but a surge in migration, predo-mi- nantly of whites, occurred in the period after 1994. In the two years between 1994 and 1995, for example, 1,949 people were recorded leaving South Africa. This accounts for the loss of top income earners (for example, 1,127 professionals have left in 1996). Coloureds (9% of the population) have increased their mobility least. 186 georgina murray

Table two shows the average income gures by sub category.

Table 2 Average Incomes for Different Groups (in rand)

Average annual income by sub categories

Male 48,000 Female 25,000 Management/Professional 101,000 Average Income – 1990 67,000 – 1995 83,000

Source: Sidiropulos et al., 1998: 276/281.

In 1995 men earned almost fty per cent more than women and the average wage for all groups was eighty-two per cent of the average managerial income. At the lowest end of the income scale (not shown in the table) is the black average 1995 income of only 48,000 rand or forty seven per cent of the 1995 managerial average income (101,000 rand). South Africa has 17 million people living below the poverty line. The wealth of the top three families serves as a stark contrast. The Oppen- heimers (associated with the Anglo-American company) have wealth of $A1.3 billion (R3.9 billion); the Rupert/Hertzogs (associated with the Rembrandt Group) have $A1 billion (R3.1 billion) and the Gordons (associated with the Liberty group) have $A1.3 (R1.6 billion) (TURP 1994:52). The enormous polarization of wealth in South Africa (Adams, 1997) even amongst blacks (Barrell et al., 2000) is actually getting worse in this post apartheid period (Sidiropoulos, 1998: 280). The ANC is very defensive about this. President Mbeki has said that the claim that “wealth and income” disparities are growing “was a racist red herring” (quoted in Good, 2000). The evidence is against Mbeki, for income disparities amongst South Africans between 1991–1996 show that the richest 10% of black households have gained on average 17% of income whilst the poorest 40% had lost 21% (Barrell et al., 2000). Income distribution statistics show that in each decade blacks fall behind whites in real purchasing power (Alkamimat, 1997:215). Partly as a result of these poor conditions and low wages for blacks, South Africa is one of the few places on the globe where union membership is growing (at 130% growth between 1985–1998 (Bramble, black empowerment in south africa 187

1998)). In 1997 there were 2.95 million paid-up union members. Trade union superannuation funds are sought after as a source of investment monies for black empowerment companies and consortium. Ryan suggests that this connection of unions to business compromises labour interests (Ryan, 1996). Trade union leaders frequently aspire to moving into high oYce within the ANC, and thus are also put in a com- promising position of wishing to remain ‘respectable’ (Singh, 1997). Furthermore, one of the few sources of economic mobility is for shop stewards to move into management positions, a consideration which also dampens militancy (Bramble, op. cit.). The above brief description of uneven distribution of economic power since 1994 shows that black empowerment has not impacted on the black community as a whole. The emerging pattern of black power- lessness has been exacerbated by the ANC’s adherence to the ideology and practice of what they call neo liberalism and what is generally referred to in the literature as economic liberalism.

Economic Liberalism

MacEwan argues that economic liberalism is the ideology used to justify corporate and state actions that maximise corporate pro ts, speci cally in the post-1970s period when global economic stagnation moved into genuine economic decline (MacEwen, 1996). The political document that carries the neo-liberal message to the South African people is called GEAR. GEAR was introduced by the ANC, in June 1997 and covers the following major points:

Fiscal reform—tax reforms, lower de cits, lower in ation; Relaxation of exchange controls and release of exchange rate; Trade and Industrial reforms—incentives and lower tariVs; Speeding of privatization measures; Stepped up state and corporate investment in business infrastructure; Deregulation of labour and weakening of the labour movement; Forging an agreement to facilitate wage and price moderation (cf. Tyson et al., 1997: 57).

The problem with this economic liberal programme of scal auster- ity is that “this unduly conservative micro-economic framework will con- strain growth, employment and redistribution” (Adelzadeh, 1996:1). This 188 georgina murray directly impacts on black empowerment because it reduces the purchasing power of the already poor black community that contains the potential backers of black business. It also reduces the size of the state, and the size and number of the state contracts needed to bolster black empowerment businesses. If support for black empowerment cannot come from an under-resourced black community, or from an ANC state over-committed to economic liberalism, this leaves only the corporations as an alternative source of impetus for black empowerment. The next section describes the demographics of my sample of the ve top businesses and the three black empowerment businesses and their directors to look for evidence of black empowerment in top business.

The Sample

Big business in South Africa is concentrated into ve top companies. The following table shows how these top ve dominated the Johannesburg Stock Exchange (the JSE, South Africa’s only stock exchange) between 1984–1996. Although the top companies have slipped from 82% control of the JSE in 1987 to only 71% in 1996, they still provide an out- standing example of the concentration of wealth.

Table 3 % Control of the Market Capitalisation of the JSE

1984 1986 1987 1989 1991 1993 1995 1996

Anglo-American 54 54 56 45 42 38 40 28 Sanlam 11 11 10 9 13 12 13 11` Rembrandt 3 4 5 16 15 15 10 11 Old (or SA) Mutual 3 11 9 10 10 11 9 10 Liberty Group 2 2 2 3 4 6 6 11 Black Control .3 6.3 Top 5% control 72 83 85 80 85 83 82 73

TOTAL 100% 100% 100% 100% 100% 100% 100% 100%

Source: 1. Mcgregors, (1997) Who Owns Who in South Africa. black empowerment in south africa 189

These companies, listed by Mcgregors’ in their business manual Who Owns Whom in South Africa (1997) (Table 3), are the basis of this research.4 This study is triangulated with secondary data ( nancial magazines, newspapers, CD Rom editions of Mcgregors 1997, etc.) and ten interviews that I conducted, between June and October 1997, with directors from top white companies and from black empowerment companies. I was then living at the Business School at the University of Witswaterand and was for a variety of reasons restricted to interviews in and around Johannesburg. In practice, this meant interviews in Johannesburg’s depressed CBD and in the rich northern suburbs. I identi ed the directors through Macgregors (1998), an excellent company and director directory. The interviews were face-to-face with a schedule of questions such as: “What do you think is happening with black empowerment?” Those not able to be interviewed personally were questioned over the telephone or sent a questionnaire. The majority of the secondary source data was gathered from the Internet and libraries. There are 130 directors in the sample with four overlapping directors shared between the boards of Anglo-American, Johnnic, NAIL and JCI. The sample was divided into CEOs (6), executives (9), non-executives (70), chairpersons (7) deputy chairpersons (6), alternative directors (31) and technical director (1). All directors are appointed by the con- trolling shareholders and through their monthly meetings are responsi- ble to the shareholders (Scott, 1997a). South African board sizes are large, with an average of eighteen members and, at the upper end of the scale, with the Anglo-American Company (AAC) board having forty- three directors. The interview data plus the secondary source data was coded and entered in a database. The data was then run using SPSS cross-tabulations. The cross-tabulations describe the directors’ ethnicity, their ultimate control of their company, their gender balance, their education, their quali cations and their networks (de ned as membership of boards and clubs). Directors from two distinct types of company were coded: from the three black empowerment companies and from the top ve white companies. I will give a sketch of the director’s companies. 190 georgina murray

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Overview of the Companies The sample’s companies fall into three ethnic groups. The rst of the top white companies is Afrikaans, this included Sanlam and the Rembrandt Group; the second is English and includes Anglo-American, Old Mutual and Liberty Group; and last is the black empowerment companies, NAIL, Johnnic and JCI. Table four summarises the major characteristics of these eight companies.

The Top Five White Companies Both Afrikans and English companies ourished under the apartheid- nationalist regime. The companies formed webs that were an important feature of the apartheid police state (Savage, in Scott, 1997: 100–101). The ethnically English-identifying companies in the sample are very large, especially Anglo-American Corporation (AAC), and are developing a global presence (Mbendi, 1998f ). Anglo-American is South Africa’s richest company and the world’s largest mining house (Mbendi, 1998). The Rembrandt Group and Sanlam grew from the process of Afrikans empowerment following the electoral victory in 1948. Sanlam and Rembrandt were empowered by the Afrikan’s victory to make nationalistic and economic inroads into the English-dominated South African state. The growth of Afrikan’s companies took place in an economic environment of low share prices were low, interest prices were at rock bottom and the economy was on the rise after a period of depression (Bond, 1997). As Bond notes, this Afrikans development is thus parallel to but diVerent from that of the new black empowerment companies.

The Black Empowerment Companies The new unbundled companies are predominantly in black-dominated and labour-troubled hot spots such as mining. Johnnic and JCI came into being from the 1995 break up of Johnnies, an Anglo-American Company subsidiary. “Johnnies was split into JCI, Anglo-American Platinum and Johnnic” (MB, JCI, September 14, 1997, interview). AAC has retained much control of both these new black empowerment companies through cross directorships (that is, Wadeson, Deuchar, ex- Khumalo, Ramphosa and King) and, more importantly, by substantial shareholdings of 39% (and a further 8.2% through DeBeers and ACC company) in Johnnic and 39.6% in JCI. 192 georgina murray

JCI has had a knife-edge history since African Mining Group put together a successful consortium for its acquisition. Capital Alliance’s Mzi Khumalo, the new CEO, had impeccable black empowerment cre- dentials: Black and male, he completed a Bachelor of Commerce from UNISA (the University of South Africa) whilst a political prisoner on Robben Island and is well placed in the ANC’s network. Khumalo was at rst treated with caution by capital. Even while he was negotiating the sale of the new company its share price dropped and the nance houses proved reluctant to give the necessary nancing. But gradually they warmed to his toughness with the traditionally militant miners. He was described in the nancial press, in September 1997, as the ‘high ying architect . . . [who] knows where he is going and has no problem in proving it’ (Furlonger, 1997:3–6). One of his rst acts as CEO was to retrench 4,000 mine workers and to “contemplate [retrenching] 1,500 more” (Mantasche, 1997:6). The National Union of Mineworkers accused him of reneging on an informal deal involving worker retrenchments “We expect more heart from someone like Mzi; it’s a heartless decision” (Mantasche, op. cit.). Unfortunately for the major stakeholders, Khumalo’s talent for re- trenchment was not enough to compensate for the company’s lack of liquidity, and Khumalo was forced to resign after the JSE delisted JCI on 24 September 1998. Out of this dissolution came JCI Gold, which listed on the 6 July 1998. Consolidated African Mines (CAM) now controls, and will soon be merged with, JCI Gold. According to company sources “This creates a substantial black empowerment vehicle with focused gold investments as well as a number of operational businesses which are pro table in their own right. The merged CAM/JCI will use its technical skills to generate new growth opportunities in the non-gold area.” ( JCI online, 2000). Mbendi suggests that NAIL and Johnnic, like other black power companies, suVer the scepticism of the investment community at large. Nail is dismissed as a pyramid of holding companies adding little to the companies that it feeds (Mbendi, 1998c). NAIL, rst listed in July, 1994, has three major business interests—the operation of cell phone networks, the publication of the Sowetan newspaper and Life Assurance (particularly Metropolitan Life which has a ninety per cent Black client base). The NAIL consortium, with the help of Rembrandt, has made a successful bid to take over Gold Fields of South Africa in May 1997. Cyril Ramaphosa, the CEO of Johnnic and a member of the NAIL consortium, has used his union connections to help secure union investment funds for both NAIL and later Johnnic. Ryan suggests that Ramaphosa black empowerment in south africa 193 has become a very rich man with an estimated income of between R16–46 million (Ryan, 1996b: 1). Ramaphosa now has a substantial ownership of the press. “It is an irony worth noting that that the man many people believe has driven Mr. Ramaphosa into the political wilder- ness, (now President) Thabo Mbeki, has something of a pre-occupation about white media control. It now appears that his wish for redress is about to be realised” through Ramaphosa (Editorial, Financial Mail, April 6, 1996:1).

Characteristics of the Directors Relationship of directors to ultimate company control The data compares the directors in the ve top companies with the directors in the black empowerment companies. The rst point of com- parison is where ultimate control of the companies lies. Family interests predominantly drive the big ve companies (79%) whereas the black empowerment companies are director driven (100%). However, this seemingly straightforward family-director/white-black dichotomy disguises the complexity of the overlapping company connections; remembering that Anglo-American still has 39.6 and 39.2% control of JCI and Johnnic, with both Ramaphosa and, until 1998, Khumalo both sitting on the AAC board. This connection means that these black empowerment companies, through Khumalo and Ramaphosa, are only 11% away from the category where ultimate control lies with a white family.

Table 5 Ultimate Control of the Companies of the Individual Directors

Private Family Director Total

Top 5 Companies frequency 18 74 – 92 percentage 20% 80% 71% Black empowerment – – 38 38 100% 29%

Total 18 74 38 130 14% 57% 29% 100%

Source: Mcgregors, (1997) Who Owns Who in South Africa. 194 georgina murray

Table ve shows the existence of an important traditional family company corporate structure, or kincon, (Zeitlin, 1974) in South Africa. Family clustering is clearly absent from the black empowerment companies. This South African data, showing the strength of the family as a unit of wealth accumulation, gives support to other national research indicating the family’s importance (Mizruchi, 1982; Zeitlin, 1974) rather than dismissing it as an anachronism of early capitalism (Berle and Means, 1934).

Orientation to sources of prot and investment

The ethnically English kincon directors believe that what is now happening with black empowerment is a re-enactment of previous experi- ences with the Afrikaners in 1948.

MB: Black empowerment is a replay of what happened after 1948 when the Afrikaners took power. What happened was government contract work was clearly steered toward Afrikaner companies. Anglo-American at this time made Gencor available to the Afrikaans. My family is English. It was all very nationalistic. They wanted to nationalise the mines and private businesses. In any event this didn’t happen but it did begin their economic renaissance. Prior to that, the Afrikaans had been involved with agriculture. They started oV by becoming inuential in the civil service then they became very interested in business. (M. B., JCI, September 14, 1997). The same AAC director saw his company’s commitment to black empowerment as exemplary because it had invested capital and set up companies and education programmes: MS: Both Johnnic and JCI ( former AAC subsidiaries) are the most signicant black empowerment commitments that we have. Our black empowerment initiatives are very substantial; we have done much more than necessary. GM: What is the reason for that? MS: You might say self preservation is behind it. There is no question for us, going forward to have a stable society we need to empower black people. Genuine empowerment. AAC has been doing for a hell of a long-time: through education and skills. That is, other than only operating at the paper shuÞing level of rearranging big cor- porates into the hands of black owners, we have also had a very signicant impact in terms of small business, which has been ongoing for years. We have been practicing aYrmative purchasing polices and also providing technical assistance and capital. These are very signicant, not just the big deals such as JCI and Johnnic. These are the only ones that hit the press (MS, AAC, October 8, 1997). black empowerment in south africa 195

By contrast, the black directors view the situation very diVerently. They have no long-term con dence in the white kincon’s bene cence. Instead they want their own ANC government’s support and access to black union pension funds: GM: Will black empowerment work? CN: This depends on public policies. Whether blacks get government tenders and contracts. We need to get contracts for black business and for established monies to be invested in black business. It is also important that unions invest their pension funds in black business (CN, NAIL, October 7, 1997). Black directors (as above) indicate the need for the state to intervene to sustain black empowerment for they do not trust established capital—kincon, private or state capital—to work in their interests. Predictably, the new black empowerment companies have more black directors than the old established companies, but surprisingly, they still have more white directors on their boards than blacks.

Table 6 Ethnicity of Directors

Anglo-S.A. Black Afrikaans Jewish Indian Total

Top ve Companies 68 2 18 46 – 92 74% 2% 20% 46% 14% Black empowerment 24 10 1 1 1 38 63% 26% 3% 3% 3% 29% Total 92 12 19 5 1 130 71% 9% 15% 3% 8% 100%

Source: South African Who’s Who in Business, 1997; 2. Mcgregors, (1997) Who Owns Who in South Africa.

The marked ethnic diVerences in power lead to diVerent perceptions of the progress of black empowerment policies. Black business people are beginning to express disillusion and scepticism about the implementation of black empowerment in business. GM: What do you think about black empowerment? JN: If black empowerment is a success it will create a black middle class. Frankly there is not much evidence of this or the money needed to do this. GM: Mcgregors say that there is 6% black corporate control of the market capitalisation on the stock market. 196 georgina murray

JN: 6% control of the share market sounds high to me. There is not much evidence of this. There needs to be at least 40% to show that blacks are beneting from black empowerment, for you to start feeling it. There are very few blacks beneting from black empowerment. There are a lot of failures in black business that we don’t hear about. Blacks get into business without capital and are reliant on the normal lending institutions. They cannot get it from black institutions. Most people have dismissed the whole thing because they say its not what democratising the whole economy is all about; when they look around and see there are a few blacks who are owning minority stakes all over the place. It doesn’t make sense. You can actually feel the discontent from the established businesses. They are saying, “Why should we have to do black empowerment?” “Why cannot blacks pick themselves up?” It is taken therefore as a welfare thing and its quite closely linked to the negative connotation of aYrmative action. “We set them up, they couldn’t set themselves up”. We will now nd politics will suVer. Up until now whites have been totally politically content but redistributing power in business is the last arena for them to ght for their survival so I see a lot of racial problems and competition coming ( JN, NAIL, September 8, 1997). Blacks who do make it into the big companies and onto the big boards complain that when they do get there they are patronized: JN: No, they (white directors) don’t look for new ways they believe in mechanical ways of doing things. We call them ‘School Principals’. We know that when we have a guy who is so brave as to list all of the things that have to be done and is prepared to say so. They’ll say “No there is a proper way to do this”. But if we say “No let’s discuss this here as there are a number of issues around this they we could look at”. They’ll say “No! We are going to do it this way!” ( JN, NAIL, September 8, 1997). Black directors recognise that the strongest argument for including blacks on boards is that it will extend the client base and thus attract more pro t: GM: Do you think that there will be a real redistribution of wealth through black empowerment? CN: Not necessarily, there has been minimal role by black people in these institutions. They are not treated seriously by people in management. Blacks are put there by whites to bring in black business. Some of the empowerment companies have established a rent- a-black company to achieve their full correctness (CN, NAIL, October 7, 1997). Correspondingly, a white director admitted that instrumentalism was behind his company’s involvement with black empowerment: RA: We have a stake in a black empowerment company. GM: What’s the reason for this? RA: To be quite honest there are two reasons, it is to improve our distribution networks into the black community. The second is that with increased worker participa- tion in pension funds we would obviously feel more comfortable if there is a black empowerment company (RA, October 3, Liberty Group, 1997). black empowerment in south africa 197

This means that black companies typically have a titular black manag- ing director or chairperson, and a majority white board who take the dominant role in decision-making (Mbendi, 1997). The black directors I interviewed felt that black empowerment made little impact on the creation of a black middle-class or on the lives of the mass of poor blacks. An indicator, perhaps, of the real social diVerence between black and white directors is data (not shown here) that indicates that black directors are younger and have larger families than do their white colleagues. The white directors’ motive for embracing black empowerment is to improve their company’s `white only’ corporate image, to improve their distribution networks, to get blacks to control diYcult black labour, to get blacks to make black redundancies, to gain control of black workers’ pension fund monies and to generally improve social stability whilst bene ting the status quo. So if blacks, as a disadvantaged group, cannot look to big white business for their empowerment, what does this mean for others such as women or more speci cally for black women?

Position of Women Directors Despite black women being the “ avour of the month for companies who want to sell stakes in empowerment partners” (HaVajee, 1998), women directors of any colour are not common in either black empowerment or white-dominated companies. Capital, which theoretically should be gender blind, in fact employs and promotes few women in absolute terms despite the doubling of directorships held by women in the years 1996–97. White women hold 65% of these new positions. Qinta argues that “black women have a longer wait” for “there may be a pattern developing where white women may be used as a buVer against progress by black men and women” (Qinta, 1997: 26). This means that if the conservative white establishment is going to make concessions they will start safely, by making room for white women. 198 georgina murray

Table 7 Gender DiVerence amongst the Companies

Women Men Total

Top ve companies 2 90 92 2% 98% 71% Black empowerment 2 36 38 5% 95% 29% Total 4 126 130 3% 97% 100%

Source: South African Who’s Who in Business, 1997; 2. Mcgregor’s (1997) Who Owns Who in South Africa.

A female director I interviewed saw herself as experiencing a dual dis- advantage: her blackness and her gender: GM: What is it like for you as a woman in big business? JN: It’s tough, really tough. There is denite competition because men have been in the game longer, they have trained in specialized areas and they have been taught to live their work. The one that I hate most is the man that applies pressure that says “remain nice, don’t dabble into competition and the harsh realities of business because if you do we will shock you by delivering twice as much as before”. You have to be a nice person and behave like a lady and be diplomatic. And you spend most of your time not being yourself, by trying to respond appropriately and trying to be nice so that people like you. That is the part that I hate very much. GM: They are applying a double standard? JN: Yes. You just have to throw yourself out and be like them. If you can still keep being a woman that’s ne but the confusion is that it’s expected of you to be intuitive but not assertive. To be nice is hard because you know that blacks are associated with being aggressive and that’s a racial thing. So when you are black you are not seen as being competitive but as unbearable and violent. “An uncomfortable personality that woman!” How you survive the male culture of business is a miracle! As black people we are also under so much pressure. Black people need to stand down and take stock. We are all so scared of failure because it is like conrming all of the white stereotypes about us: “If I fail I will be seen as a typical black”. And it is the same contradiction imposed on women. In large business it is all white male. I cannot tell you the sorts of stereotypes that you hear there. ( JN, NAIL, September 8, 1997). In sum, there are few women, either white or black, in any South African big business but the conjecture is that white women will make it there rst. When black women do get into big business they are not black empowerment in south africa 199 taken seriously as equal participants on the board. Their role as business leaders is contradictory; they have to be aggressive whilst appear- ing feminine, they have to ‘nicely’ struggle against racism and patri- archy. They also face unrealistically high expectations from their own community.

Education Any schooling in South Africa was strictly segregated until 1994. Only whites received free education. Black education was under-funded, very expensive and often impossible because child labour was (and still is) an essential component of many families’ meagre income. This meant that black children were (and are still) to be found working in the elds, hawking beside roads or working in very small businesses. Education therefore is one of the most glaring indicators of diVerence between South Africans.

Table 8 Secondary Schooling of Company Directors

Private Elite Public Elite Public Total

Top ve companies 37 12 3 52 71% 23% 6% 62% Black empowerment 7 12 13 32 22% 37% 41% 38% Total 44 24 16 84 52% 29% 19% 100%

Source: South African Who’s Who in Business, 1997.

Before apartheid ended in 1993, a commission estimated that fty- six per cent of South Africans were functionally illiterate (National Manpower Commission, 1993). Remarkably, this fundamental discrep- ancy in educational status did not prevent some black directors from gaining high quali cations. Table nine shows that blacks had 38% of all the postgraduate quali cations held by South African company directors. 200 georgina murray

Table 9 Highest Quali cation of Company Directors BA LLB/ Bec/BSC MA/ PHD Chartered Other Total LLD BE/Bcon MBA Acc Top ve companies 4 3 5 8 9 2 2 33 12% 9% 15% 24% 27% 6% 6% 62% Black empowerment 2 1 5 1 6 2 3 20 10% 5% 25% 5% 30% 10% 15% 38% Total 6 4 10 9 15 4 5 53 11% 7% 19% 17% 28% 7% 9% 100%

Source: South African Who’s Who in Business, 1997. Black empowerment business leaders are so well quali ed partly because fty-two per cent of them gained their quali cations from the external university UNESA as political prisoners on Robben Island. The right to do university work, rather than rock breaking in the quarry, was the rst major victory won by these prisoners. They (or their pre- decessors) gained this by boycotts and hunger strikes in the 1970s. A small number of black directors were also educated overseas after they were exiled outside South Africa.

Networks Networks, through clubs and boards, are always important in business (Granovetter, 1985). The large size of South African boards (that

Table 10 University Attended by Directors

Elite Elite Elite Non Elite Unisa- Other Total SA US UK UK Robbenisa

Top ve companies 23 1 6 2 1 1 34 68% 3% 18% 6% 3% 3% 62% Black empowerment 6 1 2 1 11 – 21 29% 5% 10% 5% 52% 38 Total 29 2 8 3 12 1 55 53% 4% 14% 5% 22% 2% 100% black empowerment in south africa 201 is, with 6% having over 20 directors on their board, see Table 11) indicates that board networks are important. Networks are very important to the emerging black directors, as this director said:

JN: Let me tell you, networks are very important in business. Black companies involved at this point in time network just for the sake of strengthening themselves, because there is a need for this. They are very weak entities, so they need to keep on doing that, but there is very little that they can oVer individually to one another. They are all ghting for their own individual existence. There is no equivalent to the Broderbund for blacks because blacks belong to a number of ideologies-ANC, PNC, communists and so forth. There is nothing that binds them as the Broderbund has done for the Afrikaans. Theirs was just a commitment to apartheid. It was a common ideology to eliminate blacks from any power. We have no equivalence today for blacks. ( JN, NAIL, September 7, 1997).

Over forty-one per cent of company boards, both black and white, have more than eight members. Boards in other countries are not similarly engorged with directors due to the growing duciary liabilities of directors and the greater work involved in being a director when the economy is no longer a protected one. This will, no doubt, impact on post-apartheid South Africa.

Table 11 Multiple Directorship

1–5 6–7 over 8 Over 20 Total boards boards boards boards

Top 5 Companies 16 4 12 2 34 47% 12% 35% 6% 67% Black empowerment 9 1 6 1 17 53% 6% 35% 6% 33%

Total 25 2 18 3 51 49% 3% 35% 6% 100%

Source: South African Who’s Who in Business, 1997.

The data collected on club membership, (from the South African Who’s Who in Business), indicates that the majority of directors (22) who are club member are found in the top- ve companies, each of them belong- ing to between 1–5 clubs. Five black club members were noted, indicating that they are also entering into the culture of business clubs, ironically, clubs that would have prohibited their membership until 1994. 202 georgina murray

Conclusion We have seen that in South African business today there are two very diVerent groups of directors, respectively representing old and new capital, white and newly emerging black capital. They contrast starkly in their relation to ultimate control of their company, their access to nancial security for their companies, the ethnic composition of their boards, their ages, their family size and their education. Black empowerment company directors do not have the security of their company being secured by family ownership. They are younger than the whites and, although they are as well educated ( nally), they are not embed- ded in capital-sustaining networks for their community is poor. The characteristics that the two corporate groups share are the gender imbal- ance in the composition of their boards and their selective recruitment strategies. The white directors were most likely to express in interviews some satisfaction with the ANC government who are doing more for big business than they anticipated: I think that one of the important things to bear in mind is that the current government is much further down the track to an open free market than even the previous government. At the end there may have been an elementary understanding of the market but it was hardly there yet. The current people are very receptive (MS, AAC, October 9, 1998). I asked a black director if the ANC could control capital in such a way as to make it possible for black empowerment to work. He answered in the following way: CN: No you cannot control capital but we have to avoid a boycott by capital—capital ight. We have to introduce new ways we cannot nationalize or we will have a Cuba. Economic power at the present moment resides with white capital, with the ve top companies, they have created oV shore companies, so that they could bale out of here and create chaos. That took place last year and a strategic intervention by unions to gain a large control of shares has helped to counter this white ight (CN, NAIL, October 7, 1997). The director is arguing that black empowerment needs the inter- ventionist state without nationalisation of assets. But state intervention for black business through the implementation of GEAR is very unlikely. Nor is support likely to come from a black community that remains desperately poor. Only black union pension funds are a possible source of capital for black business, but this is a support that violates the very basis of unionism, that is, a collective struggle of workers against capitalism. black empowerment in south africa 203

Black empowerment in the end is a token corporate blackwash for there is nothing patriotic about capital—it knows no community, state or national loyalty—only the competitive reality of ruthless survival in its disjointed and incoherent march towards globalisation.

Notes 1. Acknowledgments for this article go to the Business School, University of Wits- watersrand for the facilities necessary to collect the data, the Sociology Department, Essex University for a room to write the data up in and to GriYth University for giv- ing me leave to gather the data. Thanks to Dr. Allan Gardiner for editorial comments. 2. Vavi quoted by Buhlungu and Van Holdt, 1994. 3. If not stated otherwise all the gures quoted come from Tyson et al. 1997. 4. The original idea for this research arose from a discussion between Professors Vishnu Padayachee, Charles Crothers and myself at the University of Natal, in 1998.

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