Renowned political economist Moeletsi Mbeki says that Cyril Ramaphosa and other politicians don’t know how to grow South Africa’s economy.
Mbeki shared his views for the Race to the Bottom documentary, which focused on race-based legislation in South Africa.
He said President Cyril Ramaphosa acquired shares in Standard Bank, McDonald’s, and other companies through black empowerment deals.
However, despite becoming a large shareholder in these companies, he lacked knowledge about their industries and did not contribute to their success.
“President Ramaphosa has no idea how a bank makes money, how it is run, or what the risks are,” Mbeki said.
“He has no idea how to make a hamburger, how chips are fried, or how to make a McDonald’s milkshake.”
“However, despite his lack of knowledge, he became a billionaire through his shareholding in Standard Bank, McDonald’s, and other companies.”
Mbeki explained that Ramaphosa and other connected individuals live lavish lifestyles funded by black empowerment deals.
However, despite appearing to be successful businessmen, they lack the knowledge to drive economic growth.
“After 30 years of people like Cyril Ramaphosa running the economy, we are sitting with 40% unemployment,” he said.
“Ramaphosa and his buddies are billionaires, but they have added no value to the South African economy.”
Mbeki stated that from the outset, he was opposed to Black Economic Empowerment because it did not generate economic value or create wealth.
“Transferring shares from white people to black people does not grow the South African economy,” Mbeki said.
“BEE did not contribute to the South African economy and did not create new wealth. They were distributing the existing wealth,” he said.
Dawie Roodt’s comments on Cyril Ramaphosa
Efficient Group chief economist Dawie Roodt said Ramaphosa became wealthy through BEE deals rather than launching and building successful businesses.
Roodt said he could not think of a single business Ramaphosa started and built that created his wealth.
Typically, it was easy to identify the businesses that other wealthy individuals had established, which contributed to their wealth.
He referenced Herman Mashaba, who became wealthy by creating the hair product company Black Like Me.
“Mashaba became rich by starting and building his own business. I have much more confidence in him running the economy than Cyril Ramaphosa,” he said.
“Ramaphosa did not start any businesses. He became rich through all kinds of black economic empowerment deals.”
Roodt also shared Mbeki’s view that Ramaphosa does not know how to grow the South African economy.
He said Ramaphosa’s focus on capital, land, and labour resembles the thinking of communist Karl Marx, which is outdated and damaging to a modern economy.
“It sounds like the president got his economic training in the 1920s. He sounds like Karl Marx, who thinks economic growth centres around capital,” Roodt said.
He said the government’s empowerment objectives should focus on quality education and skills development, as well as creating a business-friendly environment.
“You need good quality roads, reliable electricity, good railways and trains, good infrastructure, and a safe environment to run a business,” Roodt said.
South Africa has been deindustrialising and is losing its factories due to a lack of reliable electricity, poor logistics services, and deteriorating infrastructure.
Roodt added the idea that increasing wealth by redistributing it through BEE is entirely misguided.
“Clearly, our president does not understand the importance and essence of a modern economy,” he said.
How Cyril Ramaphosa became a billionaire
Cyril Ramaphosa, a former anti-apartheid activist and trade union leader, is now one of South Africa’s wealthiest individuals.
It is challenging to find credible information about his wealth. However, Forbes Magazine estimated Ramaphosa’s net worth to be around R6.4 billion in 2015.
He had a rising political career, having been elected ANC secretary general under Nelson Mandela and serving as the ANC’s chief negotiator in the apartheid negotiations.
After South Africa’s first democratic elections in 1994, he became chairperson of the Constitutional Assembly, with some viewing him as Mandela’s likely successor.
However, he left politics in 1996 and started to capitalise on the emerging business trend, Black Economic Empowerment (BEE).
His primary source of wealth was the Shanduka Group, a pioneering black economic empowerment company.
As executive chairman of the group, Ramaphosa facilitated investments across sectors including mining, energy, real estate, and telecommunications.
In addition to his role at Shanduka, he chaired Bidvest for nine years and MTN for over a decade, and from March 2007, Mondi, an international paper and packaging group.
In 2011, Ramaphosa’s company acquired a 20-year master franchise agreement to operate 145 McDonald’s restaurants in South Africa.
He also became a member of the Coca-Cola Company International Advisory Board and the Unilever Africa Advisory Council.
His non-executive directorships included positions at Macsteel Holdings, Alexander Forbes, SABMiller, Lonmin, Anglo American, and Standard Bank.
By 2014, Shanduka was valued at over R20 billion, with the Ramaphosa family’s Tshivhase Trust as its majority shareholder.
Ramaphosa returned to political leadership in 2012 and was elected Deputy President of the African National Congress (ANC) on 18 December 2012.
He divested from his business interests to avoid conflicts of interest. He stepped down from various boards and sold McDonald’s South Africa to MSA Holdings.
In May 2014, after Jacob Zuma’s re-election as state president, Ramaphosa became South Africa’s deputy president.
In November 2014, Ramaphosa announced his disinvestment from Shanduka and merged with the black-owned firm Phembani in 2015.
Companies which Cyril Ramaphosa owned
Source: BusinessTech
