Mabuza must be firm to captain a troubled ship

Published Nov 20, 2012


IT was hard not to notice that Jabu Mabuza, the man who has succeeded Lazarus Zim as Telkom’s new chairman, likes his coffee strong. “With a dash of milk and no sugar,” he bellowed to the attendant.

Perhaps this was a preview of the firm stance he intends to hold as Telkom’s independent non-executive chairman.

If one thing is certain about Mabuza it is that his voice will have to be louder than that of any of Telkom’s shareholders, that is what minority investors will be watching for with beady eyes.

Yesterday Mabuza said that in his mind it was clear that the government set policy while Telkom’s board had the responsibility to drive strategy.

Mabuza attacked the elephant in the room head-on. “Certain elements of government may think that we are 100 percent government owned but that is not true,” Mabuza said.

Referring to Telkom’s minority shareholders he said: “We want them to know we take seriously [that] a lot of value has been lost. Some because of history, some because of negative perceptions.”

At this stage Mabuza’s bold statements may be cold comfort for shareholders.

One analyst, David Couldridge of Element Investment Managers, pointed out yesterday that MTN’s dividend to shareholders of the company, of about R15 billion, was nearly twice Telkom’s market capitalisation of R8bn, and Vodacom’s dividend was 1.5 times higher than Telkom’s market ascribed worth.

Several months ago Bloomberg quoted analysts who noted that there were better returns offering credit to Telkom than investing in the stock. The Public Investment Corporation last week expressed concern at the destruction of value at Telkom and the need for governance changes.

Institutional investors rather than shrink their investment in Telkom should apply the Code for Responsible Investing in SA which was launched last year and encourages investors to integrate into their investment decisions sustainability issues such as environmental, social and governance.


Former president Thabo Mbeki has become more and more outspoken in recent weeks. Last Friday he was at the World Wildlife Fund conference – which discussed ways to protect wildlife and the environment – in Stellenbosch in the Western Cape. He came out guns blazing against hydraulic fracturing for shale gas in the Karoo.

Noting that South Africans need to look only “as far” as the current bill of R30 billion that was required to rehabilitate almost 6 000 disused mines to understand the scale of the impact of mining. This number “does not include potential revenues lost due to the poor quality of this water or the extra investments required by the authorities to clean polluted water [to] make it available for human use”.

“In this context I sincerely hope that our government will remain open to further discussion of the proposal to allow ‘fracking’ in our country to produce natural gas.”

He said that he had been struck by the decision taken by the New York State governor Andrew Cuomo only six weeks ago. He had not allowed fracking in the state, pending further investigation and public hearings on its potential impact on public health.

“If Africa is to capitalise on its strategic resource endowment and utilise this position to rectify some of the global and local inequalities we face, we will need to ensure that we do not give away our crown jewels only to be left to clean up the mess after the party is over.”

Fortunately the former president didn’t mention anything about the current emperor having no clothes, but that probably would be more than one could expect.

NEF funding

The National Empowerment Fund has approved more than R4.5 billion for funding black-empowered entrepreneurs across all sectors of the economy since 2004.

The fund opened its office in KwaZulu-Natal yesterday in a launch attended by more than 280 people who, I understand, displayed hunger for innovation and entrepreneurship. If these potential entrepreneurs have bankable businesses, viable and sustainable ideas and a practical business plan they could be part of the Strategic Projects Fund, which has projects in the pipeline estimated at R30bn, with the potential to create up to 20 000 jobs in the next five years.

KwaZulu-Natal MEC for Economic Development Mike Mabuyakhulu warned against fly-by-night entrepreneurship.

The fund would now spend more time on stringent screening processes to avoid the repetition of a R300 million loss from unscrupulous business people.

And yes, maybe the NEF could be the hope for black entrepreneurs. In August this year it granted R3m to the Black Business Council to establish a hotline to monitor and assist with late payments for black entrepreneurs. However, late payments were unfortunately mostly from government departments.

Counting its successes in the province, the NEF said it funded Amajuba Berries farm in Newcastle where more than 400 full-time and seasonal jobs were created and the community received returns from 150 000 tons of berries produced mainly for the export market and Woolworths.

Umlazi township residents represented by Sizovuna acquired a 25 percent stake in the South Africa Corporate Umlazi Mega City project with NEF funding of R51.8m.

Overall, more than 31 000 people have been supported through the fund.

Although the fund insisted that the majority of funded businesses should be in the hands of black people it also called for partners across all races. The question is: does South Africa have enough skilled people to grab these opportunities?

Edited by Samantha Enslin-Payne. With contributions from Asha Speckman, Donwald Pressly and Nompumelelo Magwaza.

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