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Royal Bafokeng Holdings (RBH) has assets of R30bn but people of the tribe still live in little huts without water and electricity and their kids try desperately to sell oranges on the road to Sun City.
When will they see the benefits of the platinum deep beneath their feet?
Indeed, do the benefits accrue to the whole tribe, or is the Middle Eastern model being followed, where oil wealth goes to the sheikhs and the people live in squalor?
Does the king of the Bafokeng, like the king of the Swazis, have a Mercedes Maybach?
Niall Carroll, CEO of Royal Bafokeng Holdings, laughs at the idea.
“I’ve never seen a Maybach out there. No, I can assure you, the governance of the company and the tribe is outstanding and meets King 2 rules. From the king, Kgosi Leruo Molotlegi, to the peasants, they are a humble people.”
The Royal Bafokeng Nation, owns 100% of RBH, a legal entity representing 300 000 people occupying 1 200km² of land in North West Province. The nation and the company are governed by a tribal council, which decides on how cash flows are to be spent. The councillors represent 44 areas and are democratically elected.
RBH is an “inter-generational trust”. The plan is to divert platinum cash flows into social projects and other assets.
First there are shares in the platinum mines themselves. Indeed, the 13,4% stake in Impala Platinum, worth R16bn at the time it was purchased, is the biggest unencumbered shareholding in black hands of any local company.
RBH also holds shares in ferrochrome producers SA Chrome & Alloys and Merafe and vehicle parts maker, Metair. It has diversified determinedly into financial services through the recent offer for 50% of Mutual & Federal and the earlier purchase of 10% of Zurich. Then there are significant holdings in MB Technologies, Zaptronix and the former co-op, Senwes.
These assets are designed to reduce the community’s total exposure to platinum over time and ensure that there are other assets when the platinum runs out.
Carroll says the process of diversification will be slow. The company makes a good deal of reinvestment and that means some constraint on dividends. RBH has been going only two years in its present form.
No wonder not every member of the community has a bicycle, let alone a car but the vision is a prosperous self sufficient community of 700 000 by 2020. Education enjoys special priority and within that, entrepreneurship is taught and encouraged.
The Bafokeng have been as far-sighted as the Norwegian government, whose pension fund has saved oil and gas money for four decades. Now every Norwegian has a rather large nest egg even before the hydrocarbons are depleted.
How is that the Bafokeng, unlike the tribespeople who lived in and around Kimberley and Johannesburg, own the land and the mineral rights?
Their forebears displayed unusual prescience and remarkable frugality way back in 1866, when the Kgosi at the time started purchasing land with the help and protection of the Lutheran Church. He encouraged tribespeople to work on the Kimberley diamond mines and to send money home for land purchases.
It was 100 years after the Bafokeng bought their land that the Merensky Reef, the world’s largest platinum deposit with lashings of ferrochrome, was discovered.
Their title to that land survived apartheid, Lucas Mangope’s Bophutatswana and the discovery of platinum. The Bafokeng area was overlooked and neglected by Mangope’s administration and is therefore even worse deprived than the rest of the province.
Although Mmabatho was a Nationalist Party showpiece and there were revenues from Sun City as well as the platinum mines, Bophutatswana itself received less tax money under the Nat’s than the rest of SA. So the backlogs in the area are worse than the SA average.
Even today, there is a feeling in the SA government that this community is better off than others and it takes some persuasion to prevail on Pretoria to spend in this corner of North West Province.
Dividend flows from RBH are all devoted to social projects. Carroll explains that the shareholder charges the company its cost of capital plus a charge for equity. Any excess cash is paid out. Dividend cover is effectively about three.
Carroll, formerly a top-rated analyst at Deutsche Bank, said the insurance investments were another step to diversify beyond platinum and resources.
The Bafokeng tribe is one of the most eligible black economic empowerment partners. Not only is it broadly based, but it has cash. Its strong eligibility is one reason its offer for control of M&F is at a premium of only 5% to the market price.
The Bafokeng are a Batswana people. Indeed, had the Brits and Boers drawn the border according to tribal lines, instead of the arbitrary way they did way back when, they might well have been part of Botswana.
But, like the people of Botswana, they are peacable, law abiding and hard working. Like Botswana, they promise to become another African success story.
