'I’m hugely thankful for the transactions I did not close'
BUSINESS INTELLECTUALS: Phuthi Mahanyele-Dabengwa discusses her entrepreneurial father, investment advice, lessons from globalisation, artificial intelligence and South Africa's economic prospects
This is the seventh interview on Our Long Walk, my blog about the past, present, and future of South Africa. I'll be talking with South African business leaders to gain their perspectives on the lessons from history. Previous interviews were with André de Ruyter, Herman Mashaba, Jannie Durand, Paul Clüver, Magda Wierzycka and Anton Rupert’s biographer, Ebbe Dommisse. Please consider a paid subscription to access the full interview and all of my twice-weekly content, including columns, guest essays, and summaries of the latest relevant research.
Phuthi Mahanyele-Dabengwa is a South African business executive and the current chief executive officer of Naspers South Africa.
1. In the 1990s, your father served as CEO of the newly privatised National Sorghum Breweries, navigating an industry marked by apartheid-era regulations and oppression. How do you reflect on his experiences steering NSB during this pivotal time in South African history, within an industry deeply affected by its historical context? How has this legacy influenced your understanding of the intersection between business leadership and history?
In the Washington Post of July 20th, 1993, my father is quoted as saying, “You gather around in a circle, and everyone squats. Then you pass around the calabash, and everyone drinks,” demonstrating the traditional manner of consuming sorghum beer. He identified the importance of sorghum beer in our African cultures. Through his focus on product and culture fit to his customers, he was able to reverse the long-term decline in sales of low-alcohol and high-protein drinks after buying the business from the state-run monopoly in 1990.
At that time, just 2.4% of managers in SA were black. The country had only 63 black Chartered Accountants. This made my father’s success even more remarkable; many people had thought that he was being set up to fail when he acquired the asset.
Together with his management team, they had to overcome highly derogatory and racist views of the drink at the time, and the fact that it had become a target for boycotts and burnings in townships. The view of my Dad’s management team was to overcome that. So where did this all start?
Following a period of consulting work after he completed his economics undergraduate degree, the opportunity to acquire the business from the state became available. Dad had to raise US$20m to acquire the business and its 21 factories nationwide. However, he had no access to capital. He then did something that had never been done: he sold shares in the proposed asset to Black people and organisations using the well-known stokvel concept. Upon conclusion, my Dad had 10,000 shareholders, more than 90% of whom were black.
Upon acquisition of NSB, he hired black managers, sourced black contractors, and employed a quarter of SA’s black chartered accountants at the time. Having resolved the operational challenges in NSB, they began paying dividends of 20% or more.
In my view, collaboration between business and government has always been particularly crucial. The country’s transition from apartheid to a democratic society required visionary leadership from both the political and business sectors.
2. You studied in the UK and the US. How important is it for potential entrepreneurs to build experience in different contexts and cultures? Is this experience perhaps even more valuable than a university degree, especially given the plethora of online tools that make upskilling now much more accessible than before? Do South Africans put too much emphasis on a degree certificate rather than real-world experience?
In my view, there’s a significant difference between a company executive and an entrepreneur. A company executive operates in an environment where there is a clear indication of their role and responsibilities, the company’s focus, and its risk management. For this work, they are compensated through an agreed salary, short-term incentivisation for work done well, and long-term incentivisation for their commitment to the company.
The role of an entrepreneur is completely different. The individual personally takes on far more risks and typically fills more than one role. The earnings of the entrepreneur are completely dependent on the work of the entrepreneur and their team. To this extent, there’s the potential of facing zero income but there is also the potential of receiving significant income.
Shortly after joining Shanduka, we faced the potential of not earning a salary unless we raised more capital as we had no income stream at that stage. Thankfully the business scaled beyond our expectations and made a number of people wealthy at a relatively young age.
Any country needs both company executives and entrepreneurs. I have had the opportunity to be an entrepreneur while at Shanduka and Sigma Capital, as well as a company executive at Fieldstone in NYC, the Development Bank of SA, and now at Naspers.
In my view, to succeed as a company executive requires education and having access to education from different global environments, which places the individual in a great position as they have a much broader view of issues beyond the environment in which they operate.
In that regard, young people are very fortunate these days as they also have access to online learning, which can bridge the gap in terms of access to global lessons and global cultures.
Entrepreneurship is different; you start your business with your own risk capital. With that in mind, having formal education can be irrelevant; as we all know, some of the world’s most successful tech entrepreneurs do not have a formal education. However, what sets them apart is that whilst they may not have formal qualifications, they are highly informed and educated about their industry both locally and globally. Therefore, there is ‘education’, it may not be formal, but it remains.
In an emerging economy such as ours, nothing is more important than access to both formal and informal education. Education is not only about the syllabus that you learn but about the habits that you form – continuously reading, being inquisitive, and always questioning. In a country where the majority of our youth are un-educated, South Africa does not, in my view, place too much emphasis on formal education. We need much more of it for the majority of our population.
3. Before joining Naspers, you were a cofounder at an investment holding company, Sigma Capital, and before that, the CEO at another investment company, Shanduka Capital. What is the most important investment advice you ever received, and from whom?
The most important investment advice I ever received was to, ‘never be too eager to close a transaction at any cost’. Too many transactions have been closed at a PE ratio that was nonsensical, a partnership that was fraught with tensions, and by a team that did not adequately understand the asset nor the existing management’s manner of operating the business. I’m hugely thankful for the transactions I did not close whilst at Sigma as well as at Shanduka.
4. The 2000s were marked by high growth and optimism for South African investors, but the 2010s saw a decline in growth and a shift to pessimism. Given that investing is inherently forward-looking, how do you promote South Africa Inc. to investors during periods of negative sentiment?
I believe that with consistent efforts and a clear vision for growth, alongside careful risk management, South Africa can navigate these challenging times and resurrect investor confidence.
At Naspers, I can say that we are very committed to creating significant value for our shareholders. We have a firm belief in South Africa’s future and are committed to playing our part in creating economic opportunities and contributing towards the country’s continued progress.
Collaboration is the key to unlocking the possibilities of the future, particularly in South Africa. All sectors of South Africa, from the government, the private sector and civil society, need to pull in the same direction, towards common goals, and at an accelerated pace, for the best interests of our economy. We need to focus on creating a conducive policy environment and regulatory framework that encourages investment and supports local innovation.
A great example of public-private collaboration to improve the economic climate of the country was when CEOs from more than 130 of South Africa’s leading corporations signed the BUSA and B4SA pledge, underpinning their collective belief in South Africa and their determination to assist in realising its potential. The scale and diversity of the companies and CEOs behind this pledge is unprecedented, with a combined market cap of R11 trillion, employing more than 1.3 million people.
The SA business community is also supporting the government in implementing key interventions in the areas of Energy, Transport and Logistics, and Crime and Corruption, working closely with the National Energy Crisis Committee and National Logistics Crisis Committee to move the dial on energy security and logistics performance.
As Naspers, we believe that we can make the biggest contribution to South Africa’s future through digital transformation. It is through technology that we can contribute to elevating South Africa’s potential as an investment destination.
Ultimately, my view is that the collective power of the South African business community is central to the country achieving its development goals and reinvigorating our economy, not just to breed a fertile ground for foreign investment but to also improve the daily lives of South Africans.
5. You’ve mentioned that when you were a teenager, your father bought you shares in Naspers. You said, “it would have been a stretch to think that I might one day be an executive at a company that was once synonymous with the ‘old South Africa’”. To what extent do you think a company’s future is tied to its history? What is it about a company’s history that it ‘inherits’?
Working at Naspers has been a significant privilege for me. How many organisations do we know that have operated for more than 100 years and can pivot to the extent that Naspers has?
Naspers has grown from a media business operating in one jurisdiction to a global tech organisation operating in 100 markets and serving 2 billion consumers globally. Working for Naspers has taught me that you can remain who you are, but you can also be open to change for the better and continue to grow culturally and from a value perspective.
Keep reading with a 7-day free trial
Subscribe to Our Long Walk to keep reading this post and get 7 days of free access to the full post archives.