The Big Read: Bank a failure but founders were giants

12 August 2014 - 08:22
By Justice Malala

It is not all doom and gloom. Every so often a name pops up that reminds you that South Africans are a resourceful, entrepreneurial bunch who can achieve absolutely anything they want.

So the big business news of the past week has been the meltdown of African Bank, with billions of rands of value destroyed and CEO Leon Kirkinis leaving.

Last night it was still uncertain whether the bank would survive.

Business writers and analysts are very clear that the warning lights have been flashing over African Bank for years - but no one at the bank appears to have noticed. Crucially, the board maintained its faith in Kirkinis even as the share price tanked and the warnings became ever more dire.

So where is the good news here? Well, I liked a story in Business Day last week which, amidst the doom and gloom of the African Bank debacle, took us back to the formation of the bank by a few visionary, resourceful and doughty businesspeople.

The journalist who wrote it, Phakamisa Ndzamela, spoke to one of the lead founders of African Bank, Sam Motsuenyane, now 87. I love the story so much I will quote parts of it.

"Motsuenyane spearheaded the formation of African Bank. At the 1964 Nafcoc conference it was strongly argued for a black-owned bank to be created to provide credit to black South Africans. Motsuenyane and his team went through a great deal of hardship to open the bank.

"It took Nafcoc 10 years to raise R1-million to form the bank, Motsuenyane says in his biography, A Testament of Hope.

"Financial support had to be solicited from homeland leaders before the bank was registered in 1975 and its first branch inaugurated in Garankuwa, near Pretoria."

I want you to cast your mind back to the 1960s. The National Party was enacting one heinous discriminatory law after another. Blacks could not own businesses in the major centres. The Group Areas Act was in full swing. The pass laws were being enforced with enthusiasm.

And a group of black men and women decided to start a bank. What courage, what strength, what resolve. The ability to see light in a dark room, to dream of tomorrow in the midst of a nightmare, is one that no oppressive and murderous regime in the world can defeat.

If Motsuenyane and his peers could pull off such a feat in the 1960s and 1970s, what is to stop us from incubating many more entrepreneurs today? How do we open up the space for people to operate and create jobs? Are the millions of rules and regulations we have put in the path of entrepreneurs helping? We should think deeply about these things if we are serious about making the new Ministry of Small Business a success.

Motsuenyane made a trenchant point about why African Bank lost its way. He pointed to the bank's positioning as an unsecured lender.

"When we started African Bank we started it as a savings and loan institution. The new people who took it over did not see the need for blacks to save.

"They saw us black people as borrowing people. Savings are very important," he said.

Who can argue with that? Last month Deputy Finance Minister Mcebisi Jonas said: "In comparison with our Bricsa peers, South Africa ranks lowest in gross savings. According to World Bank data, in 2012 China's gross saving rate was 51%, India and Russia were at 30%, Brazil 15% and South Africa 14.2%."

This is an issue South Africa needs to grapple with intensively over the next few years. We shall be nothing for as long as we are lured by the need to buy flashy cars and flash the bling.

The story of the fall of African Bank has many elements to it - greed, the hubris of executives and a board that failed to stem the losses as they mounted. It is a grubby story.

For me, though, it brought back memories of men and women who never said die. I often drive past an orange farm in Winterveldt, just north of Pretoria, which Motsuenyane has helped the local community rehabilitate. He has made the people of the area believe in themselves. They are entrepreneurs.

There is no greater gift than this - to enable people to stand on their own feet, start their businesses, become self-sufficient and send their children to school. No amount of welfare grants can surpass education and the gift of empowerment.

This is what we should be preaching every day, and celebrating.