Stellenbosch, Sandton and Soweto

Andile Khumalo, a Johannesburg venture capitalist, recently raised the following vexing questions in a blog post (and Sunday Times column): “Is Stellenbosch going to continue to be the economic capital of South Africa, whilst Africans, in their townships and villages, remain the systematic consumers of its myriad of goods and services? Think about where you do groceries? Afrikaans capital. Think about where you bank? Afrikaans capital. Who grows your food? Afrikaans capital?”

Then the conundrum: “Why can’t Black people think-up, develop and roll out these ideas for themselves by themselves… to themselves?” Stellenbosch is widely seen as the bedrock of white, mostly Afrikaans-speaking capital, and for good reason. According to the most recent Forbes list, five of the wealthiest forty Africans live in or close to Stellenbosch, and a sixth teaches at the University. Johann Rupert, fourth on the list, is chairman of Richemont, which owns brand names such as Cartier, Alfred Dunhill and Montblanc. Christo Wiese, eight, is the chairman and largest single shareholder of the continent’s biggest retailer, Shoprite. Twenty-seventh is GT Ferreira, chairman of the financial services company RMB Holdings. Jannie Mouton, executive chairman of PSG financial services (which he founded in 1995), is thirty-first on the list, while Michiel le Roux, thirty-third, founded Capitec in 2001.

The perceived wisdom is that Stellenbosch is a legacy of Apartheid, that most of this is “old money” from the days when whites were fortunate to have access to protected markets and state resources. Certainly some of this money is “old”, but there is little evidence that a large share of it was acquired with considerable government support; in fact, as an excellent history of Apartheid economics in the latest Cambridge history of South Africa (and, more anecdotally, Johan Rupert’s biography) clearly suggests, in many cases the needs of white entrepreneurs (for example, the need to appoint blacks in skilled or semi-skilled positions, the need for a high-educated, black labour force) were subordinate to the interests of a government committed to the vision of a racially segregated country. In truth, most of Stellenbosch’s “white capital” is “new capital”, acquired after the fall of Apartheid when white business was forced to enter a more equal playing field.

But how is that the former oppressor, now with less political freedom, gained in economic wealth? Clem Sunter, in a 2010 News24 column, eloquently answered this when he wrote:

“During the years of apartheid, there was a culture of entitlement among the volk (white, Afrikaans-speakers). With a good education you could end up as a Cabinet minister, a top civil servant, head of a parastasal or a senior executive in an Afrikaans-owned business like the Trust Bank or Sanlam. If you weren't so privileged, you could get a job on the railways as an artisan, join the ranks of the army or police or work for a municipality.

After 1994, all these expectations came to an end. Suddenly Afrikaners were out of power. They had to take a leaf out of Steve Biko's book: you are on your own and you will have to fend for yourself. And they have done so - fantastically well. I was told the other day that the fastest growing element of the Johannesburg Stock Exchange are companies owned and run by Afrikaners. The whole coast north of Maputo in Mozambique is now a string of safari lodges and dive shops established by entrepreneurs from Pretoria. The list goes on and on all around South Africa, and increasingly north of the border and elsewhere in the world.”

1994 liberated not only black South Africans. Instead, I would argue, white South Africans were liberated from an incentive structure that guaranteed a ‘safe’ job in the public sector, or in white-owned, state-supported business. Whites were forced to create jobs for themselves, not simply fill jobs; entrepreneurship, not political (or Broederbond) contacts, became a way to gain power. This is true of many cultural minorities across the world that has little political power: why is it that Somalians thrive in South Africa while their own country falls apart? It is because they know that here they are on their own. There’s an attitude of “if we fail, there is no one to blame but themselves”.

Ironically, the 1994 transition may have had exactly the opposite effect for black South Africans. While a democratically elected government brought political freedom, it also created an incentive structure of entitlement. The attitude was that “we had suffered enough during those dark days and should now share in the economic spoils”. Government policy made this easier: black economic empowerment, for all its good intentions, did not create entrepreneurs, it created a class of connectors, networkers, tenderpreneurs or whatever you would like to label those with the skills not in creating something new, but in redistributing. A few years ago I gave a lecture in parliament on trade policy. During tea, a PAC MP came over to ask one of the most important questions we’ve not answered as a collective. In his village, he told me, the farmer, the baker and the shopkeeper (read: the entrepreneurs) are still there, two decades after Apartheid, doing what they did back then. Only those with political connections have moved up, out, working in government departments. (I guess he included himself in this list.) Of course the next generation realises this. All the kids want to become politicians, not engineers, because that’s how you make money. In contrast, I told him, Afrikaans kids don't dream about becoming president of South Africa; in Stellenbosch, at least, they dream about becoming Mark Zuckerberg. How to change this?

Andile Khumalo writes: “Black man, wake up! Your ‘real’ freedom is being outsourced to the minority, whilst you occupy yourself with meaningless politics and tenders. You are busy drinking skinny cappuccinos in Melrose Arch, whilst your markets are being penetrated by those who dare to dream, and do.”

Khumalo is correct in saying that Afrikaans capital has prospered. But it’s not because white South Africans are inherently more entrepreneurial (or, worse, that they have mafia-like tendencies that aim to control the lives of the masses), or that black South Africans tend to enjoy the luxuries of Melrose Arch more. Stellenbosch is thriving because it has accumulated a group of highly skilled individuals – black and white – that realise that prosperity is not tied to political contacts, but to innovative ideas and to the people that help turn those ideas into reality. Their attitude is: You are not on your own – Khumalo knows this when he says that great ideas always secure funding, and Stellenbosch is not the worst place to start looking – but that creating wealth is your responsibility. These are the virtues – creativity, diligence, responsibility – our society must reward. The only way South Africa – and especially black South Africans – can prosper, is if we start spreading these ideas (Khumalo calls them dreams) to the Sandtons and Sowetos of our country.

*Photo by Ashim D’Silva on Unsplash.