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One of the things I did when I joined the National African Federated Chamber of Commerce and Industry (Nafcoc) in 2013 as head of communications was to propose a set of reforms.
These included a redesign of the chamber’s logo and a new payoff line to make it more business-friendly and appealing to a younger market.
I asked the question: What does Nafcoc’s payoff line, Rise in Faith, have to do with running a business?
It sounded more like the slogan of a religious organisation, I protested to both my CEO, Matodzi Liphosa, and Nafcoc’s then president, Reverend Joe Hlongwane.
In response, I was taken on an illuminating history tour of the organisation since its founding in 1954 and given a lecture on how difficult it was to start and run a business as a black person in the heyday of apartheid – and how it took faith in God alone to run a business against a litany of discriminatory and oppressive laws at the time.
I did not budge. I argued that conditions had changed in the post-apartheid era, with a democratic government that was receptive to black business needs and concerns.
However, I eventually relented as it became very clear that I was swimming against the tide of strong traditions and heritage which many in the organisation, especially at the leadership level, held dear.
Therein lies the bulk of Nafcoc’s challenges.
The new leadership, elected last week under the presidency of Sabelo Macingwane – who took over from Lawrence Mavundla – faces the mammoth task of not only rebuilding the chamber from the ruins of factional squabbles, mainly over the control of investment companies, but also of reconnecting the organisation to thousands of black small businesses in the country which have completely lost touch with, and hope in, the organisation.
For instance, during his maiden speech as Nafcoc president, Macingwane promised to close its multimillion-rand investment company, Silver Vanity Investments – shareholders of Gallagher Estate – saying it was a cancer that had destroyed the organisation.
In short, a national leadership position at Nafcoc guarantees one access to the organisation’s investment trusts, which control what is left of the R1.7 billion payout from the Tsogo Sun BEE transaction.
The major beneficiary of this transaction was Nafcoc’s now defunct investment arm, Nafhold, with its shareholders – chairperson Joe Hlongwane and CEO Michael Leaf – each raking in more than R40 million in 2009.
The rest was distributed to Nafcoc leaders and those close to them, leading to incessant squabbles that eventually led to a group of leaders forming a breakaway faction under Hlongwane.
Although the Hlongwane faction was nullified by the Supreme Court of Appeal in Bloemfontein in December 2014 – leaving the now former president, Mavundla, fully in charge – it remains influential and it controls millions of rands worth of investment trusts in the provinces of KwaZulu-Natal, Mpumalanga, Free State and North West.
Macingwane’s task will be to bring this faction under his wing through persuasion and diplomacy as legal processes have cost the organisation millions of rands – funds which otherwise should have been used for the development of the chamber and its members.
Nafcoc squabbles have even confused government, its very important stakeholder.
I recall a conversation in 2014 with current Energy Minister Jeff Radebe, when he held the post of minister in the presidency.
It took place in the lift of the Hilton Hotel in Durban. Radebe asked me which Nafcoc he would be addressing on behalf of then president Jacob Zuma to mark the occasion of Nafcoc’s 50th anniversary conference.
I had to explain the difference between the Hlongwane and Mavundla factions, with their separate head offices and parallel structures.
He laughed and asked: “When will the squabbles come to an end?”
It was a question I couldn’t answer until my departure at the beginning of 2015, following a court order disbanding the Hlongwane presidency.
Nafhold’s missing millions is one of the contentious issues that Macingwane will now have to deal with.
There is still a perception, particularly within the Mavundla faction, that the Hlongwane faction must still account for the missing millions from the Tsogo Sun BEE transaction.
The view is that, out of the R1.7 billion that was paid out, R500 million was used to pay tax, R700 million was distributed to qualifying members and R500 million in preference shares was to be paid out later.
The bone of contention is the distribution mechanism of the R700 million, which has left many members disgruntled.
This will be another headache for Macingwane.
Read: No silver lining for Silver Vanity Investments
There was even a Section 205 subpoena on the matter in search of these missing millions – leading to the Hlongwane faction launching a wide-ranging forensic audit whose findings remain a mystery to this day.
Regarding the question of investment vehicles, doing away with these will be like throwing the baby out with the bathwater.
The reason for the establishment of these investment vehicles was to ensure that Nafcoc would be self-sustainable and would not have to rely solely on membership fees.
However, the flipside of this is that these investment vehicles are abused by the leadership as a piggy bank to fund their lavish lifestyles, as is certainly the case with Silver Vanity, if speculation is anything to go by.
Perhaps Macingwane should look at professionalising and modernising the chamber by ensuring that there is a proper governance framework that clearly separates Nafcoc from the investment firm, like the National Union of Mineworkers (NUM) and its investment arm.
The investment business must be independent of the chamber and be run professionally by well-trained and well-paid professionals.
Proper governance structures will eliminate human flaws, such as greed and power mongering, that often creep in at voluntary associations such as Nafcoc.
As mentioned above, there will be no need to reinvent the wheel. NUM has been able to do this, and now has a growing portfolio of businesses and is supporting worthy causes, such as educating the children of mine workers.
Nafcoc, as a broad-based BEE structure, stands to benefit from BEE transactions.
However, the lack of professionally constituted structures which often characterises Nafcoc makes it unattractive to companies wanting to do BEE transactions.
Lastly, as part of Nafcoc’s long-term strategy, Macingwane and his leadership collective must ask themselves this: Does this 54-year-old black business organisation have anything to show for the R1.7 billion it made from Tsogo Sun?
What strategies is it going to put in place to ensure that such fatal mistakes never happen in future?
If these questions are difficult to answer, perhaps the time has come for the Nafcoc chapter to be closed in the annals of black business history.
Buthelezi is Nafcoc’s former head of communications (Hlongwane faction) and is currently co-authoring a book, How to Squander R2 billion – lessons not to be repeated by black entrepreneurs, presenting intimate details of the Nafcoc BEE transaction. He writes in his personal capacity
