Bloomberg News

Ramaphosa Rises From Unionist to Tycoon as Presidency Calls (2)

May 05, 2014

ANC Deputy President Cyril Ramaphosa

Deputy president of the ruling African National Congress and South Africa’s second-richest black man, Cyril Ramaphosa is a leading candidate to succeed President Jacob Zuma, who’s leading the party in May 7 elections and must leave office by 2019. Photographer: Marco Longari/AFP via Getty Images

When boos for President Jacob Zuma threatened to spoil South Africa’s memorial service for Nelson Mandela, Cyril Ramaphosa, the master of ceremonies, stepped to the podium.

Switching between English and Zulu in front of President Barack Obama and other world leaders, Ramaphosa challenged the hecklers in the crowd of about 50,000.

“Are we going to be disciplined?” he shouted four times. “Will there be order?”

The jeers faded and calm was restored.

In taming the crowd on that rainy December 2013 afternoon in Soweto, Ramaphosa, 61, showed his credentials as a possible unifier in an increasingly divided nation. Deputy president of the ruling African National Congress and South Africa’s second-richest black man, worth at least $248 million, he’s a frontrunner to eventually succeed Zuma.

Polls show the ANC will win more than 60 percent in the May 7 elections. That would assure a second and final term for Zuma, who is facing a corruption scandal. The president is expected to put Ramaphosa in charge of implementing the government’s economic program.

Ramaphosa “understands labor and business,” said Dennis Dykes, chief economist at Johannesburg-based Nedbank Group Ltd. (NED), South Africa’s fourth-largest bank. “One would look to him to provide much more economic leadership, which has definitely been lacking in this government.”

McDonald’s Stake

Reaching the presidency would cap a career that includes establishing South Africa’s largest labor union, negotiating the end of apartheid, leading the writing of the nation’s democratic constitution and building an investment company from scratch that’s worth 8.8 billion rand ($839 million), based on public information. Between the company and his own investment, he controls the McDonald’s Inc. (MCD:US) franchise in South Africa.

Zuma, 72, was accused by the nation’s graft ombudsman of having unduly benefited from a state-funded 215 million-rand upgrade of his private home. He denies wrongdoing. Since the Mandela memorial, he’s been booed several times on the campaign trail and at a match of the national soccer team.

Ramaphosa has been close to South Africa’s political summit before, losing out to Thabo Mbeki as Mandela’s successor in 1999. He left front-line politics for business while keeping a spot on the ANC’s national executive committee.

In recent months, the ANC tapped Ramaphosa to negotiate an end to feuding among labor-union allies that are crucial to delivering the vote. Zuma sent him to South Sudan to help mediate an end to the civil war in Africa’s newest nation.

‘Action Man’

“He’s an action man, he gets things done,” said National Union of Mineworkers General Secretary Frans Baleni.

To his critics, Ramaphosa is a symbol of what is wrong with the ANC-led government, in which some leaders have grown personally wealthy while violent street protests for better housing and education occur almost daily. South Africa remains among the world’s most unequal nations.

Asked in a 15-minute interview during a campaign stop in the New Crossroads township in Cape Town last month about being so wealthy amid rampant poverty, Ramaphosa said, “It’s not tricky. We want everyone to have the same opportunity because this is what our democracy should mean to people.”

After the election, Ramaphosa will take over management of an economy that suffers from power cuts, 25 percent unemployment and protracted mining strikes.

Business Understanding

He will implement a 20-year National Development Plan he helped draft, according to two people familiar with the plans of the ruling party who asked not to be identified because the decision hasn’t been made public. The program aims to create 11 million jobs in Africa’s second-biggest economy by 2030 by loosening restrictions on business and expanding railways and ports to boost exports. It targets average economic growth of 5.4 percent, double the rate the central bank forecast this year.

Ramaphosa has served on numerous company boards, advisory panels convened by Coca-Cola Co. and Unilever NV (UNA), and as a mediator in Northern Ireland.

“He really understands politics in the ANC and South Africa, but now after 14 years of being outside he understands big business and small business,” said Kojo Mills, a Harvard Business School graduate who helped him start the investment company in 2000 and remains a shareholder and board member.

The company is named Shanduka, or “change,” in Ramaphosa’s native Venda language. His family trust owns a 29.6 percent stake in Shanduka.

Buffalo Cow

There was a public uproar in 2012 when Ramaphosa made a failed 19.5 million-rand bid for a buffalo cow and calf at a game auction. A lover of jazz and fly fishing, he keeps a cattle ranch in the eastern Mpumalanga province and has submitted plans for a house on a hillside overlooking the sea in Cape Town’s exclusive Fresnaye suburb. City deeds records show his trust bought the land for 30 million rand.

Shanduka Chief Executive Officer Phuti Mahanyele said Ramaphosa hasn’t used his political connections to help his business.

“He’s never called on that,” she said at the company’s offices in Johannesburg’s Sandton financial district. “He’s never gone out and said, ‘Let me call this minister because I know her or him and I need this done.’”

Ramaphosa did come in for criticism from some labor unions in the wake of the police shooting of 34 protesters at Lonmin Plc (LMI)’s Marikana platinum mine, about 100 kilometers (62 miles) northwest of Johannesburg, in August 2012.

‘Dastardly Criminal’

Evidence presented before a judicial commission of inquiry investigating the killings showed Ramaphosa had e-mailed executives at Lonmin, in which Shanduka had a stake and at which he was a non-executive director at the time. Saying he would try to persuade government ministers to address the turmoil, he described the strike-related violence as “plainly dastardly criminal” and said “concomitant action” was needed.

In a letter written to the commission in May last year, Ramaphosa said he had sought to prevent further loss of life at Marikana and that the shootings weren’t the result of his discussion with government officials about the strike.

His assurances didn’t impress Irvin Jim, the general secretary of the 341,000-member National Union of Metalworkers of South Africa, a Cosatu affiliate. He sees the events at Marikana as evidence of Ramaphosa’s switch in loyalty from workers to big business.

“From where I’m sitting I think we have got somebody who is seriously conflicted,” Jim said in an interview. “I would not vote for Cyril as president.”

ANC party spokesman Keith Khoza said he couldn’t schedule a formal interview with Ramaphosa after at least 10 phone and e-mail requests, while Shanduka referred queries to the party.

Policeman’s Son

Ramaphosa, the son of a policeman, grew up in Soweto, the group of townships on the southwestern fringe of Johannesburg. Active in organizing Christian groups, he started traveling the country as a teenager, according to a 2007 biography of him by University of Cape Town politics professor Anthony Butler.

He became involved in anti-apartheid politics when he was a law student in the 1970s. The white minority regime locked him up in solitary confinement twice for a total of 17 months.

After university, Ramaphosa started giving legal advice to the unions and began forming a new mineworkers’ union. Within a decade of its 1982 creation, the National Union of Mineworkers had recruited 300,000 members and posed a growing threat to the white government, which drew much of its revenue from coal and gold production. Five years later, Ramaphosa led one of the biggest strikes in the nation’s history, cutting gold output by a quarter of a million ounces.

With Mandela

The workers’ struggle fed into the wider battle against apartheid and the NUM linked up with the ANC, taking Ramaphosa into the heart of national politics. When Mandela delivered his first speech after being freed from prison on Feb. 11, 1990, after serving 27 years in jail, Ramaphosa was at his side on the Cape Town city hall balcony holding the microphone.

Ramaphosa became the ANC’s secretary-general and led the team that negotiated a peaceful end to white minority rule.

At Shanduka, Ramaphosa drove his executives to seek deals and left them to arrange the finer details as he set the strategic direction, according to Mills.

Shanduka bought assets in major industries, including stakes in Standard Bank Group Ltd., Africa’s biggest lender, MTN Group (MTN) Ltd., Africa’s biggest mobile-phone company, and control of a coal joint-venture with Glencore Xstrata (GLEN) Plc. It also owns 70 percent of Coca Cola’s local bottling operations.

Chinese Investment

China Investment Corp., the nation’s $575 billion sovereign wealth fund, bought a 25 percent stake in Shanduka for 2 billion rand from Old Mutual Plc (OML) and Investec Ltd. (INL) in 1991.

Ramaphosa cared more about the chase than about the details, said Ndoda Madalane, a corporate finance specialist whom Ramaphosa recruited from Old Mutual to become Shanduka’s first chief executive. While the business ran smoothly for the first two or three years, tensions arose after Ramaphosa became operationally involved -- something he was ill-equipped to do, said Madalane, who quit as CEO in 2006.

“He tended to revel in deal momentum,” Madalane said in Johannesburg. “Deals for him become a personal thing. The rigor of the investment process that we tended to apply was not really a key consideration for him. You mess up going into a deal, that’s a mistake you can’t fix.”

Shanduka paid 18 percent in annual interest on the loan it needed for its 30 percent stake in Alexander Forbes Ltd., Africa’s biggest independent retirement-fund administrator, in 2002. That rate was based on the company’s projected performance, though it fell short of that starting in the first year. The arrangement was “just a disaster,” Madalane said.

Nigeria Issue

Alexander Forbes Marketing Manager Lynn Stevens didn’t respond to an e-mail and a phone message seeking comment.

Madalane says Ramaphosa’s “mettle and gravitas” make him the right choice as president. He recalled how when MTN was having trouble repatriating money from its Nigerian business in about 2004, Ramaphosa, then the company’s non-executive chairman, flew to meet then-President Olusegun Obasanjo and the issue was quickly resolved.

Ramaphosa, a member of the tiny Venda ethnic group in the north, may face competition to become South Africa’s next leader from ANC treasurer Zweli Mkhize and Nkosazana Dlamini-Zuma, the president’s ex-wife. Both, like Zuma, are Zulus, whose home province of KwaZulu-Natal holds the biggest block of party members.

Ramaphosa is touting his experience as a successful businessmen and proven negotiator as he campaigns.

In New Crossroads township last month, he spent about 20 minutes inside a one-room tin shack belonging to Nozipho Bebheza, 63, a wheelchair-bound woman who lost the use of her legs in a car accident.

“It should pain every leader of our revolution to see how our people all over the country live,” Ramaphosa said. “Everyone can do more and business especially. They haven’t grasped the nettle yet, that’s what I’ll be driving.”

To contact the reporters on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net; Franz Wild in Johannesburg at fwild@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net Karl Maier, Anne Swardson


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