It’s called vision

Corporate chairmen are given to recognizing Grand Moments that will shortly be forgotten, so we’ll go easy on Nicky Oppenheimer’s characterization of this week’s deal to sell 26% of De Beers Consolidated Mines, the South African unit of the De Beers diamond group, as “auspicious…ambitious…transformative.” Chairmen get paid for that sort of effusiveness.

But it’s a big deal, in more than its R3.8-billion (US$564-million) size. No doubt it has been one of the most anxiously awaited Black Economic Empowerment (BEE) deals, affecting the biggest player in South Africa’s diamond industry. The deals in the gold business will be larger, but none will have the worldwide impact of the one that changes the face of the world’s largest diamond miner.

Since the end of apartheid much has changed in South Africa, but it would be naive or disingenuous to pretend that, having destroyed an evil, nothing but good had come of it. Too many people, of all colours, were displaced, or lost their livelihoods, and social equality didn’t follow quickly behind legal equality. And out of the debris of the old system rose a class of oh-so-very empowered Black South Africans whose job was to lend the light of their countenances to the boards of otherwise White companies. Their success was no road to equality.

But what had developed below the surface of apartheid was more egalitarian; and at last, it is proving to be more enduring as well. That was the concentration of Black money in insurance schemes, savings associations, and investment funds — money accumulated by a modest middle class that had been forming on one side of the old racial divide. It was that pool of capital that has made a real difference in economic empowerment, and has brought it closer to its outward goals. Those goals were about shares in everyone’s hands, not about Benzes in a few driveways.

The De Beers deal shows those two approaches freely hybridizing — there are private companies and large individual shareholders, some (but only some) with the same kind of African National Congress links that opened doors in the bad old days of empowerment. But half of Ponahalo, the empowerment company that will hold the 26% interest in De Beers Consolidated, will be owned directly by employees, and 22.5% will be owned by trusts that represent women, the disabled, and the local communities around the De Beers operations.

So while De Beers has not done a perfect BEE deal, it has done one that is qualitatively different from many of the old ones. Looking at it as an exercise in compliance, the deal sweeps the board: De Beers Consolidated has a fully qualified empowerment enterprise owning 26% of the company, the BEE program’s final goal and not the 15% mandated by 2009. Ponahalo itself is not merely controlled by “historically disadvantaged South Africans” but 90% owned by them. And 72.5% of Ponahalo — so, almost 19% of De Beers Consolidated — will be owned by ordinary South Africans.

Local communities now see profits from the mines enriching them directly, rather than merely through spinoffs, and gain a revenue stream that can go toward easing some of the social problems that grew out of the old practices. That doesn’t just improve life in the townships; it answers an old charge about how South African mining created an ugly social mess around its workplaces.

In turning workers into shareholders, it is likely to make a bigger difference to the future of South Africa than any number of board seats set aside for ANC apparatchiks. For that makes it clear that nobody is being brought in to work as a wage-slave without getting a share of the wealth his labour is generating.

It is pleasing to think that at least a few of the new owners of De Beers Consolidated were men that went down the mines and lived in the hostels when exploitation was at its height. Ntle.