Rumney_-_Who_owns_South_Africa

R. Rumney, 2005, “Who owns South Africa: an analysis of state and private ownership patterns,” in J. Daniel, R. Southall and J.Lutchman (eds.), State of the Nation: South Africa 2004‐2005, HSRC: Pretoria.

[Audio] Ownership, particularly of land, stirs up strong emotions in South Africa, evoking memories of great wrongs and resentment at theft on a grand scale. This violence of dispossession continues to ripple from history into the present, not unique to South Africa, as it occurs in many lands. Tyrannical leaders and revolutionary movements can exploit these emotions for political gain. The discussion of ownership highlights the ongoing struggle over the 'commanding heights' of the economy, with the ANC's approach to this issue still uncertain..

[Audio] Control of companies has always been as important, if not more important, than ownership. The late Harry Oppenheimer's ability to direct the fortunes of the Anglo American monolith - and benefit from those fortunes - while owning legendarily only 8 percent of the shares is a testament to this fact. Ten years ago, Anglo, a still dominant conglomerate, controlled 43 percent of the JSE's market capitalization, which is the worth of all the shares. The top five groups - Anglo American, Afrikaans firm, Rembrandt, and life assurers, Sanlam, Old Mutual, and Liberty Life - controlled 84 percent of the JSE..

[Audio] Despite the dawn of democracy, income inequality persistently remains. Although there have been slight improvements, they have not been dramatic. Within racial groups, the divide has widened, as a few black individuals have become extremely wealthy. Historically, property ownership has been the true measure of wealth, with whites holding a significant advantage. As a result, there has been a lack of attempts to measure this form of inequality..

[Audio] The ANC government has chosen to allow individuals to manufacture and enter various trades, crafts, and professions. However, nationalisation remains a topic of discussion, particularly regarding the mineral wealth beneath the soil and water. Nationalisation is seen as a way to redistribute wealth and promote state control. Although the ANC has abandoned nationalisation of the banking industry, the Minerals Act has nationalised mineral rights and water. The government is reluctant to give up national ownership of land, fearing the consequences of cheap real estate falling into foreign hands. Instead, the focus is on broadening ownership through privatisation and enhancing economic efficiency..

[Audio] The privatisation of the state's sorghum or traditional beer interests in 1990, in National Sorghum Breweries (NSB), was the first BEE company created by privatisation. Around the same time, the ANC accepted privatisation as one option for SOEs, aiming to promote racial equality. Afrikaner capital, led by Dr Nthato Motlana, started selling shares to black capitalists, planting the seed for New Africa Investments Ltd. BEE presented another trade-off, as Anglo American Corporation and other conglomerates supported it to gain political credibility and create a black buffer middle class..

[Audio] Land in South Africa is sought after for both farming and residential purposes. However, not all state land is suitable for these uses, as only 13 percent of the land is arable. The former residents of the Lohatla army training ground are claiming back their land under the government's policy of restitution, while the South African army advises caution due to the presence of unexploded munitions. Furthermore, demand for land for housing is primarily found in or near urban areas, close to job opportunities, rather than in homelands. Some state land ownership is legitimate, with the United States having over 40 percent of its land owned by the federal and state governments. Privatisation of land is also an issue, with some advocating for the distribution of state assets to promote greater equality in ownership..

[Audio] Public servants in South Africa are increasingly becoming part of the private sector. This trend is exemplified by individuals such as Khetso Gordhan, Mac Maharaj, and Andile Ngcaba, who have traded their prestigious titles for roles as board directors. This shift raises concerns about the potential exacerbation of inequality, particularly in light of the experiences of the former Soviet Union. While privatization has not been aggressively pursued in South Africa, existing examples suggest that it has not significantly contributed to the redistribution of assets for black economic empowerment. For instance, the Telkom privatisation saw less than 1% of its shares acquired by new black owners, resulting in a mere 2% of the company's total shares being owned by the broader populace. The remaining majority remains in state or corporate hands..

[Audio] Privatisation opportunities for broadening ownership of the economy through Black Economic Empowerment (BEE) appear limited. Although there is no actual policy change, privatisation is on the back burner. The government shows hesitation in privatising its core assets, focusing instead on dividend returns from Eskom, for instance. Liberalisation efforts have stalled, with the state remaining heavily involved in key sectors like telecommunications and electricity generation. While some initial steps towards introducing competition in electricity generation have been taken, the state remains a significant player in these industries..

[Audio] In South Africa, the ownership of residential properties is divided across various strata, spanning from informal settlements of shacks to modest suburbs and even luxurious gated communities. The legacy of apartheid still influences the distribution of property ownership. Although the government has made strides in providing housing subsidies and constructing homes for the poor, the majority of housing in traditional residential areas remains in the hands of whites. The absence of a substantial rise in housing prices among black buyers indicates that the market has not yet witnessed a significant shift towards increased diversity in property ownership..

[Audio] The new black middle class, including Africans, has experienced a significant increase in South Africa, although evidence is mostly based on anecdotes. However, there has been a notable surge in house prices. According to ResearchWorldwide.com, South African house prices have risen by 22.7 percent year-on-year, the highest among the countries monitored, surpassing well-performing countries like Australia and the UK. This rise in house prices can be attributed to low interest rates, the emergence of a rapidly growing black middle class, and the longest period of uninterrupted economic growth in the past 50 years..

[Audio] South Africa's management services have observed that low-income households are unable to use their housing units to generate capital. There is property in the residential suburbs that has potential for capital growth, but with banks being pressured to not discriminate against newly black neighborhoods, homeowners may not be stuck with devalued properties. According to Gordon and Nel, owning a home among the poor presents a chance for them to better their financial situation. However, a secondary market for low-income housing has not emerged, and lenders view low-income areas as high-risk..

[Audio] South Africa faces a significant imbalance in land ownership, with only 17 million hectares of land available. However, 60000 predominantly white-owned farms occupy 86 million hectares, including the majority of the limited high-potential arable land. This disparity is worsened by the fact that only 15% of land owned by black individuals is suitable for agriculture, while white-owned farms have six times more potentially arable land. Despite this, the focus of land reform efforts has been primarily on land restitution, resulting in limited progress in redistributing agricultural land. The government has prioritized other expenditures, such as arms procurement, over land redistribution, citing the economic importance of agriculture..

[Audio] In 2004, R. Rumney's analysis of ownership patterns in South Africa was featured in the book "State of the Nation: South Africa 2004-2005". This analysis sheds light on the ownership of agriculture in South Africa and its impact on the country's economy. According to a Department of Agriculture Strategic Plan produced in 2001, agriculture alone contributes 4.5% to the country's gross domestic product, while the larger agro-food complex accounts for another 9%. This means that the 50000 predominantly white, large commercial farming operations are responsible for nearly 10% of South Africa's total exports, amounting to roughly R16 billion. However, this focus on commercial farming has also resulted in slow progress in land reform. This could be attributed to a lack of resources and the inability to effectively utilize the allocated funds. Additionally, the Department of Land Affairs has shifted its focus from simply handing over land to black communities without providing the necessary support and aftercare for their success. This has led to a change in mindset, with the current Minister of Land Affairs prioritizing the creation of a class of black commercial farmers, aligning with the developments in Black Economic Empowerment (BEE). The chaos in neighboring Zimbabwe, where land expropriation has been fast-tracked and given legal backing, has also had an impact on land reform in South Africa. The violent land invasions in Zimbabwe have caused uncertainty among white South Africans and the international community about property rights. This issue was brought to the forefront when land invasions, sponsored by the P government, occurred in Kempton Park in July 2001, drawing media attention both domestically and internationally. The South African government has recognized the importance of land reform and has taken steps to address the issue. The chaos in Zimbabwe has served as a wake-up call for the government, and efforts are being made to ensure that land reform is carried out in a responsible and sustainable manner. It is crucial for all communities, regardless of race, to have equal access to land and opportunities for economic growth. For further information and insights on this topic, the book "State of the Nation: South Africa 2004-2005" can be downloaded from the HSRC Press website..

[Audio] Slide 15 out of 23: The book State of the Nation: South Africa 2004-2005 includes R. Rumney's analysis of ownership patterns in South Africa. It discusses the country's challenges as it moves towards democracy within a ten-year period. One of the main issues that needs to be addressed is land reform, particularly targeting the poor to prevent unlawful land seizures by the government. The Landless People's Movement has emerged as the leading voice for a more efficient and inclusive land reform process. This involves a quicker process focused on the poor, rather than the current approach that caters to wealthy and well-resourced local elites. There are concerns about the agricultural development approach to land redistribution, which is primarily based on BEE and may require further evaluation of its effectiveness. In light of these concerns, the Finance Minister has allocated an additional R700 million in the latest budget towards land reform. This demonstrates the government's efforts to address the issues surrounding land redistribution. Despite missing the 2005 deadline to settle all restitution claims, the government continues to allocate funds for land reform and restitution. Changes have also been made to legislation that give the government more power to expropriate land, bypassing the "willing seller, willing buyer" route that has been criticized for causing delays and increasing costs. Land redistribution remains a significant issue in South Africa, and there are doubts about whether political pressures have hindered land tenure reform, as suggested by Leon Louw in 1996. For further information, please visit www.hsrcpress.ac.za..

[Audio] We are now looking at slide number 16, where we will be discussing the racial ownership of the JSE Securities Exchange in South Africa. This has been a highly debated topic, particularly in relation to government policies on empowerment. There is no denying that the resentment of the poor towards the wealth of the white population has the potential to cause violent retaliation. The ownership of companies also plays a significant role in this issue, although it may not be as visibly evident as the racial land monopoly. Looking at pictures of the boards of most companies listed on the JSE, it is clear that the majority of faces are white, middle-aged, and male. There has been some argument that the emergence of new black multimillionaires, such as Tokyo Sexwale, Patrice Motsepe, and Mzi Khumalo, has brought about a shift in ownership, creating a new black face of capitalism in South Africa. However, the reality is not as straightforward as it may seem. According to research by the BusinessMap Foundation, it is estimated that only 12-15% of the value of shares on the JSE is owned by black individuals, both directly and indirectly. This does not reflect the demographic makeup of South Africa, with white people only making up 10% of the population. It is worth noting that this percentage is based on the entire ownership of the JSE's share capital. There is also a significant presence of foreign ownership in the JSE, with 32% of shares held by foreign investors in 2002, according to the BusinessMap Foundation. It is important to acknowledge that it would be unfair to expect foreign investors to bear the responsibility of correcting the racial imbalances in ownership. As we come to the end of our presentation, it is clear that the issue of ownership in South Africa is a complex and multi-faceted one. Our analysis of R. Rumney's book "State of the Nation: South Africa 2004-2005" has provided valuable insights on this topic. Let us now move on to the remaining slides and continue this important discussion..

[Audio] This presentation will discuss the ownership patterns in South Africa as presented in the book 'State of the Nation: South Africa 2004-2005' by R. Rumney. This is slide 17 out of 23. One of the main themes in the book is the unintended consequences of the Black Economic Empowerment (BEE) policy. Initially a voluntary initiative by the private sector, BEE is now driven by the state's purchasing and licensing power and guided by state policy. In the beginning, there was a focus on direct empowerment stakes, but in developed countries, investment through institutions like life assurance companies is more common than individual or consortia ownership of shares. BusinessMap has been tracking direct investment since 1996 and has found that the black-controlled companies' share of the Johannesburg Stock Exchange's market capitalization has remained around 3 to 4 percent in recent years. Institutional investors hold a significant 35 percent of the JSE and the Government Pension Fund owns at least 10 percent, meaning that most of the black ownership is concentrated in these institutional investments rather than through direct shareholding by ordinary black individuals. It is important to note that the perception of BEE solely focusing on equity transfers in listed companies is incorrect. While this will continue to be a key aspect of BEE, the Government's Broad-Based Black Empowerment Act and its associated strategy aim to shift the focus towards other legislation that promotes affirmative action, skills training, and procurement of goods and services from black individuals. BEE is often associated with high-profile deals in listed companies in the mid-90s, but the true success of BEE lies in the transformation of the business landscape through various initiatives. For more information, the book 'State of the Nation: South Africa 2004-2005' can be downloaded for free from www.hsrcpress.ac.za. Let's work towards a more inclusive and diverse business environment for all..

[Audio] The State of the Nation: South Africa 2004-2005 contains R. Rumney's insightful analysis on the ownership patterns in South Africa. Slide 18 out of 23 discusses the ownership of South Africa. According to Rumney, the goal of transformation in South Africa is to provide black individuals with a share in the economy, similar to that of white individuals. This would be achieved through various means, including retirement funds, endowments, and unit trusts. The government has also enacted legislation to make these schemes more tax-friendly, and employee share-ownership schemes have been introduced. Although there has been improvement in the overall measure of black equity in the Johannesburg Stock Exchange, it may have misled commentators in the past. Currently, 3-4% of the JSE is held by black individuals, black companies, and "broad-based" consortia, which may eventually be owned by black individuals once the consortia disband. As direct black ownership increases, it would strengthen employment equity and skills development for black individuals, leading to an increase in indirect ownership as more newly-employed black individuals invest in pension and insurance policies. The full report can be downloaded from www.hsrcpress.ac.za, which also discusses other interventions aimed at bringing black individuals into the mainstream economy by promoting ownership, creating a real property market for newly-housed individuals, and implementing land reform for viable black-owned farms. This is where Black Economic Empowerment (BEE) offers hope. However, BEE has been associated with luxurious indulgences, such as fly-fishing and single malt whiskies, and it is disappointing to see that ideas such as employee share-ownership schemes and other incentives have not been fully explored and implemented. Although the first two schemes, Johnnic's Ikageng and M-Net's Phuthuma, were not successful, it is crucial to continue pursuing BEE initiatives carefully. In conclusion, Rumney's analysis emphasizes the importance of giving ordinary people a stake in the economy. When properly implemented, BEE can lead to the normalization of the economy. We must not forget that it is not only about ownership but also about creating a more inclusive and equitable society for all..

[Audio] The state of the nation in South Africa has seen significant changes in ownership patterns over the past ten years since the first democratic elections. However, the lack of available data makes it challenging to accurately measure these changes. Furthermore, the issue of gender representation remains a pressing concern, with women CEOs still being underrepresented in the corporate world. The Broad-Based BEE Bill has also highlighted the exclusion of white women in its provisions. There appears to be a continued emphasis on direct equity and black groupings, raising questions about pressure from vested interests. The government's official definition of broad-based BEE aims to promote a transformative process, but navigating a balance between a broad or narrow definition remains crucial..

[Audio] The wealth of most white South Africans does not lie in having shares in specific companies on the JSE. They own houses, or are in the process of paying bonds on houses. What money white South Africans have put away is usually in the form of contractual savings, amounts taken from bank accounts through debit order or by their employers to be funnelled into life assurance companies..

[Audio] In the late 19th century, Mugabe's views on ownership were shaped, and he failed to recognize that in today's globalized economy, owning a piece of land is no longer the key to success. Microsoft founder Bill Gates built his fortune by owning intellectual property, specifically computer software code. This highlights the importance of intellectual property in generating wealth, often overlooked in traditional discussions about ownership. The rise of open-source software poses a threat to Bill Gates' corporation, as it challenges the notion of exclusive ownership. Interestingly, Mark Shuttleworth, a South African-born entrepreneur, backs this movement, having made his fortune by selling software developed in South Africa to a US-based company. The focus on race in South Africa has led to the neglect of the growing foreign ownership of the economy and the increasing concentration of ownership within sectors. Many large South African companies have their headquarters abroad, and foreigners own a significant portion of the Johannesburg Stock Exchange. Globalization has brought benefits such as increased competition, but it has also led to the concentration of industries to compete against foreign rivals. This underscores the need for strong competition authorities to mitigate the unintended consequences of globalization..

[Audio] The income inequality present at the dawn of democracy persistently remains. Although it may have improved slightly compared to the apartheid years, the difference is not significant. According to South Africa's Gini coefficient, the primary indicator of income inequality, the value stands at approximately 0.6, where 1 represents complete inequality and zero represents complete equality. Furthermore, the gap has widened within racial groups, as a small group of black individuals has become extremely wealthy. Historically, however, the true measurement of wealth has been property in various forms, including cattle, precious metals and gems, land, and company shares. In this regard, the country's playing field has been noticeably tilted in favor of whites, leading to a lack of effort in measuring this type of inequality..

[Audio] In conclusion, it is clear that the ownership patterns in South Africa are intricate and multi-faceted. The data presented shows the substantial disparities in ownership between different racial groups, with white individuals holding an excessive amount of wealth and assets. The study also reveals that the majority of black-owned businesses are small-scale and operate in informal sectors, whereas a small elite group of black entrepreneurs has successfully accumulated considerable wealth. Moreover, the report underscores the necessity for effective policies and interventions to address these inequalities and promote greater economic empowerment among previously disadvantaged groups..