Eastern Cape needs more investors to plough money into their home province
Black business moguls and corporate executives are helping to boost the poverty-stricken region
On a recent trip to the Eastern Cape, my first visit to the province since Covid-19 struck our shores a year ago, I found myself beaming with pride and filled with a sense of hope after what I witnessed there.
My exuberance stemmed from a positive trend that is beginning to emerge, of Eastern Cape-born black business moguls and corporate executives investing their money and time to uplift their home province.
These business people are using their networks, entrepreneurial nous and corporate experience to exploit business opportunities, mainly in farming, agro-processing, tourism, leisure and hospitality, where the province has an unexploited comparative advantage. It is still early days to fully applaud the growing interest in the province, but what is unfolding is exciting nonetheless.
During my visit I had the pleasure of meeting one of these investors, Simpiwe Somdyala, a former Old Mutual executive who has taken over as CEO of Amadlelo Agri, a company that operates and invests in diversified agribusinesses. Through an investment venture called Tulsacap, Somdyala and a group of black professionals and business people, including Saki Macozoma and Rojie Kisten, bought a 46.4% stake in Amadlelo in 2017. Bulelani Ngcuka’s Vuwa Investments owns 18.8% of the business while 50 commercial farmers and 150 workers own the balance of the shares.
The company has distinguished itself in operating five dairy farms, a piggery and a macadamia farm. It has a long-term plan to grow its non-dairy holdings. In almost all the projects it invests in, it partners with the communities that own the land where production takes place.
This is Somdyala’s second major bid to breathe life into Eastern Cape agriculture. The first attempt was in 2007 when he established a state-owned rural development agency, AsgiSA-EC, with start-up funding of R100m. The agency’s mandate was to attract R60bn over a 10-year period and halve poverty in the former Transkei.
The agency never fulfilled its intended objective after the ANC’s factional battles spilt over into it after the 2009 Polokwane elective conference, prompting Somdyala and a number of nonexecutive board members to exit AsgiSA-EC, which ended up morphing into the Eastern Cape Rural Development Agency after a merger with other smaller agencies.
There are other entrepreneurial investors besides Somdyala who have gone back to their roots to sink cash into the province. Gloria Serobe, founder of investment group Wiphold, is growing white maize in Centane and Mbhashe on 2,500ha of communal land belonging to 2,252 families from 34 villages. She is also the owner of the 41-room Wavecrest Hotel & Spa on the Wild Coast, which she upgraded to the tune of R50m in 2019.
Serobe’s consolidation of the communal land into a commercial entity has grown by leaps and bounds since its inception in 2014, so much so that it has attracted Afgri Agri Services to construct a state-of-the-art grain bunker in Centane to cater to the project. The bunker has a storage capacity of 15,000 tonnes.
Newly appointed Net1 Southern Africa CEO and former Standard Bank executive Lincoln Mali has invested in Liamara Estate, a luxurious guest house built on 23ha in Winterstrand village near East London’s Sunshine Coast.
In 2017, the late Dr Vuyo Mahlati and her husband Gil set up a 3,500m² wool and cashmere factory in Butterworth, which sources wool (sheep) and cashmere (goat) from local farmers for production of woven and nonwoven textile products and high-end fabrics.
Eastern Cape premier Oscar Mabuyane needs to seize on this moment and encourage his investor homeboys and homegirls to turn his province’s economic fortunes around. Mabuyane, who I understand is an economist by training, has to put to good use what he gleaned from economics textbooks while cajoling private investors to plough money into the Eastern Cape, thereby providing much-needed revenue and employment.
I am sure when Mabuyane drives to his hometown of Ngcobo in the former Transkei from Bhisho, Eastern Cape’s capital, he is exposed to high levels of underdevelopment and poverty in an area that has been left behind by the rest of SA. The province’s impoverishment sticks out like a sore thumb, resulting in thousands of Eastern Cape residents fleeing their birthplace for greener pastures in other parts of the country.
This exodus was lamented in 2018 by the province’s former finance MEC, Sakhumzi Somyo, who noted that the 2011 census showed that more than 326,000 people migrated out of the province. That outward migration has led to the province receiving reduced budget allocations from the National Treasury based on the equitable share formula. In 2018 the Eastern Cape suffered a R13.9bn reduction in its budget due to outward migration.
The time has come for Mabuyane to free his people from the yoke of underdevelopment and despair. He has two five-year terms at his disposal to engineer a full-scale turnaround of the Eastern Cape, something his predecessors have failed to do in the ANC’s 26-year rule of our country. But he first needs to deliver on the rollout of infrastructure and cut off funding (grants and loans) to corrupt politicians and their business associates, who are crowding politically unconnected entrepreneurs out of the market.
Mabuyane must tap into the R791.2bn infrastructure investment the national government has allocated to replace old, or build new, infrastructure, particularly roads, dams, ports, bridges, power stations and railway lines. If he does this the queue of Eastern Capers heading home to invest is bound to grow exponentially.
• Ntingi is founder of GetBiz.
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