South African Blacks Gain Economically
Customers flock to Niki’s Oasis, a downtown bar and eatery that attracts the up-and-coming black elite of new politicians, artists and journalists.
Owner Niki Sondlo and other black entrepreneurs are not yet the South African norm, but they still represent an encouraging sign of progress.
The end of apartheid two years ago dissolved white minority rule but not white economic dominance. Since then, however, black South Africans have made strides in gaining economic power, particularly in forming consortia led by big names to buy chunks of some of the country’s largest companies.
In the months after President Nelson Mandela’s African National Congress came to power in 1994, blacks controlled only a handful of companies that accounted for less than one-half of 1% of total equity of the more than 600-member Johannesburg Stock Exchange.
Now that stake has increased to 10%, and black-owned groups have cut major deals such as the recent purchase of at least $333 million in shares of a major subsidiary of the giant Anglo American Corp.
Major players include Dr. Nthato Motlana, Mandela’s physician who heads New Africa Investments with holdings in banking, insurance and media companies valued at $262 million on the stock exchange.
But so far, changing ownership hasn’t created jobs, and economists say it is new, small businesses -- like Niki’s Oasis--that can get the impoverished black majority working to create a middle class.
Sondlo quit her job with an employment agency and put up her apartment and all her savings as collateral for a $44,500 loan to open Niki’s Oasis a year ago.
Since then, she’s added lunch service, hired extra staff to help her eight full-time employees on the weekends and grown used to working 12-hour days, seven days a week.
With its mauve walls and cool jazz, the renovated store front does feel like an oasis in the crowded downtown streets. But Sondlo remembers how hard it was during the African winter to lure people from their homes.
“Sometimes when you’re experiencing problems, you think, ‘How did I get myself into this?’ But you do feel good when you know you’re working for yourself,” she said.
The challenge for any new business in South Africa, whether black- or white-owned, is daunting. The country’s high crime rate is news around the world, worrying potential foreign investors, sending skilled, white South Africans fleeing overseas and keeping restaurant patrons at home at night.
Since February, the rand currency has fallen 20% against the U.S. dollar, battered by concern about the crime rate and other factors. Economic growth has hovered at around 3% in recent years, half what the government says is needed to create jobs.
Some people, though, have managed to take advantage of the changes.
JafPen Landscapes, started last year by Penwell Msimango and Jaftha Nyama with just two workers, now has a staff of 15 and envisions employing as many as 50.
Msimango and Nyama borrowed $6,660 from a white developer to buy lawn mowers, a truck and other start-up equipment. They do about $5,300 a month in business as a direct result of government policy--they plant gardens around homes being built with state subsidies, earning $33 per plot from the developer.
The government wants to build 1 million homes for poor blacks by 1999, though there are signs the goal is too ambitious.
But even if the housing plans fall short, Msimango and Nyama believe JafPen will expand with the black middle class. They’re planning to start a nursery to grow their own trees and sod, and say they’ll be first in line for landscaping contracts when the government builds parks and schools in new subdivisions.
“As an entrepreneur, you see opportunities and you use them,” Nyama said.
Others say frustrating obstacles still exist for blacks. Makhaola Mohanoe and his two partners, Metsing Malebo and Perpetua Makhuba, struggled for a year to find start-up funds for a business.
Even their parents tried to discourage the three--all in their mid-20s--from leaving secure jobs in advertising. In the end, they turned to a franchiser, who helped them get a bank loan and find rental space for their King Pie fast-food joint.
“It’s almost impossible to get anything on your own. You still need a white face to present your case,” Mohanoe said.
The white-owned King Pie corporation has provided advertising support and expertise, the partners acknowledge.
