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How the guard has changed since Rhodes stormed the SA economy

'Without the Jewish people, the country would have taken many more years to evolve'

IN 1959, companies started by Jews - who represent only 0,7% of South Africa's total population or 3,7% of the white population - controlled 55% of the market capitalisation of the Johannesburg Stock Exchange and generated more than 30% of the country's wealth.

This astonishing statistic has emanated from a study on control of market capitalisation at the JSE by South Africa's various identifiable groups from 1959 to 1996.

Without the contribution of the Jewish community, the country would, at best, have taken many more years to evolve economically to its current position. At worst, it would never have reached the heights that it has.

Although some Jews arrived at the Cape in the 17th century, it was not until after the second British occupation in 1806 that they arrived in any numbers. They came from Lithuania and Poland, in flight from the religious persecution of 1880, and from Germany and Britain.

One of the founding directors of SA Mutual (now Old Mutual), Saul Solomon, was the son of the first Jewish settler in the Cape, Benjamin Solomon. Saul became the printer of the Cape Argus in 1857, and its owner in 1863.

While he was active in the Cape, the Mosenthal brothers were creating their trading empire which extended throughout the country.

It was the discovery of diamonds and gold that attracted the greatest number of foreigners, amongst whom were entrepreneurs such as Beit, Lippert, the Barnato brothers and their nephews the Joels, Isaac and Barnet Lewis, Samuel Marks and Hans Merensky.

They were all to play major parts in South Africa's economic development, along with the likes of the Albu's, Sam Cohen, the Schlesingers, David Isaacs, Adolph Brodie and the Lubners, the Beares, Harry Jaffee, the Frankels, the Hersovs, Menells, Kirshs and the Katzs. The Afrikaners' quest for economic empowerment began in 1939 with Die Eerste Ekonomiese Volkskongres, which gave birth to Federal Volksbeleggings in 1940. But it was not until 1959 that Afrikaner control over the market capitalisation of the JSE exceeded 1%, and only in 1979 that it reached the 9% blacks have achieved in just four years. Two events accelerated the Afrikaners' rise in the business world. One was a gradual break from a stifling mould of bureaucracy engendered by paternalistic leaders, and the other, the determination of a small band of men to penetrate the world of mining. Sanlam was the conduit. It had been established to house government and Afrikaner insurance and pension funds. With the backing of Sanlam, Federale Volksbellegings spawned Mynbou in 1953. Its beginnings were coal mining, which led to the formation of Trans Natal Coal Corporation in 1962, the largest coal producer in South Africa. Along the line Fedmyn also acquired some gold interests and what was later of greater significance - diamonds.

THE two acquisitions which changed the face of Afrikaner economic power were undoubtedly General Mining and Union Corporation. Both involved the undisputed corporate giant, Anglo American.

It has often been said that it was Anglo American's political foresight, perhaps even generosity, that "allowed" Fedmyn to take control of General Mining in 1964. However, recent revelations by JDF Jones in his book Through Fortress and Rock suggest that Anglo was in fact attracted to Fedmyn's coal interests and, more importantly, concerned about its diamond holdings.

A deal was therefore struck that Anglo and Fedmyn would form a 50/50 partnership to buy control of General Mining provided that, if Fedmyn or General Mining were to become interested in any further diamond ventures, they would offer a 51% stake to Anglo. The political issues were seemingly a bonus. But it must be said that, having achieved this goal, Anglo sold Fedmyn another 1% of General Mining to put its control beyond doubt.

The Union Corporation takeover 10 years later - with Afrikaner control of the JSE still languishing around 7% - reads like a John Grisham novel and lay the foundation for the establishment of Gencor, now South Africa's second- largest mining house.

The cut and thrust of the Union Corp deal, which lasted from July 1974 to May 1976, illustrated the strategic ability of General Mining's Wim de Villiers and his colleagues to beat off corporate giants like Barlow Rand and Gold Fields of SA.

THE deal would not have happened without invaluable assistance from Anton Rupert, who used it to launch Rembrandt's diversification into food, timber, steel and its considerable influence in GFSA. Indeed, Rembrandt's contribution is illustrated by the fact that Richemont - essentially the outcome of Rupert's offshore expansion - alone now accounts for 3,2% of the JSE's market capitalisation.

The Union Mining takeover was also the beginning of the meteoric rise of Afrikaner economic power - an ability epitomised by the saying "'n boer maak 'n plan".

Latter-day exponents of Afrikaner entrepreneurial and business acumen are Bill Venter with his technological empire and Christo Wiese who, not content with a global retail chain, operates just as successfully in the financial sector.

The change in Afrikaner culture from bureaucracy to business led to eminence. The catalyst throughout the rise of Afrikaner power, to a large degree, has been Sanlam. Black businessmen are demonstrating the same determination, and it is no surprise that the institution which has responded most readily to their need for financial aid has been Sanlam. This is no coincidence. In its early days, Sanlam went through similar, although far less severe, deprivation and exclusion from the mainstream of the economy. Its empathy with black empowerment is evident in the way it has been first to see opportunities.

The culture of productivity in the black community has been affected by circumstances. Those with employment have been demotivated by years of poor working conditions and no hope of advancement, and the unemployed have had to demonstrate their considerable entrepreneurial talents to survive.

Political change is helping the working environment but to change attitudes to work will probably need a new generation. The entrepreneurs, however, are coming into their own and they are the ones who are giving real meaning to "black empowerment".

The latest acquisition, by Mzi Khumalo's African Mining Group Consortium, follows the NEC's takeover of Johnnic and is a credit to Anglo American's foresight.

Not only does Anglo rid itself of many non-core activities, particularly the vexatious press, but it also brings the black community into the mainstream economy with a bang.

What is of interest, however, is the destination of the R5,5-billion realised by Anglo in these two deals. Exchange controls have been blamed for the concentration of economic control in South Africa, so what has made this massive deconcentration possible? One hopes the funds will be used for domestic greenfields development.

With the takeover of JCI, the black community now controls almost 9% of the market capitalisation of the JSE and its rate of increase of control, from 1991 to 1996, has been far greater than that of any other group in the past 40 years.

DR NTHATO Motlana must be viewed as the pioneer of black empowerment. His Corporate Africa and New Africa Investments Ltd, established with the considerable financial assistance of Sanlam, have since developed into substantial corporations in their own right.

Nail was the main mover behind the Johnnic deal, but lost the race for JCI's mining interests to Khumalo. It must have funds available, either for consolidation or for further acquisitions, so we may see the percentage of black control climb even higher in the future.

It is impossible to quantify the contribution to South Africa of the Oppenheimer family. The Anglo American Group is a state within a state. It provides work for 500 000 people, it generates at least 25% of the country's GDP and it operates in every sphere of commerce and industry, here and abroad. The world seeks its advice on mining technology. Its very size and complexity, however, must create enormous problems. Reversal to core business is another modern buzz-phrase and perhaps the unbundling of JCI and the sale of two of its components is a sign of a leaner and meaner Anglo.

South Africans of Anglo-Saxon origin have a hard act to follow. Cecil John Rhodes has many detractors but he stands head and shoulders above any other entrepreneur of Anglo-Saxon origin.

Certainly, there are many names which have contributed their share to the economy, such as Rudd, Phillips, Bailey, Stuttaford, Barlow, Scott, Saunders, Hulett, Crookes, Haggie, Anderson, Campbell, Harris, MacKenzie, but none to match the present-day Oppenheimers, Ruperts and Gordons.

Over the past fifty years, the Anglo-Saxon seems to have largely lost his entrepreneurial spirit - possibly because he has not had the incentive of hardship to develop his unquestionable abilities, or perhaps he has been more comfortable in the bureaucratic security of non-competitive conglomerates. Let us hope another Rhodes presents himself in the near future.

South Africa's cultural diversity affords a rich mingling of incentives and abilities and whether one wears jeans, a yarmulke, an old school tie, a safari suit, a fez, a turban or a Mandela shirt, South Africans - on the sportsfield or in the boardroom - are a formidable force. „McGregor, author of Who Owns Whom and a director of the Competition Board, is writing a book on the contribution of South Africa's various communities to the country's economic growth.

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