Monday, June 12, 2006

African leaders are seeking Iqbal Surv?s counsel ? his company, Sekunjalo Investments, has been central to the facilitation of a yet to be announced $20bn infrastructure project in a neighbouring country.

Walk out of a one-and-a-half hour discussion with Dr Iqbal Surv?, who describes himself as a ?medical doctor, philanthropist and social entrepreneur? and you will disregard all the skeptics and believe that there is hope for Africa to eradicate poverty, and not in our grandchildren?s lifetime, but in our lifetime.

?If India and China combined can bring 600 million people out of poverty in the last ten to fifteen years, then surely it?s possible for Africa to take at least 300 million people out of poverty by 2025??

He is not the first person to pose such questions, but he is presenting ideas and models of how to make this a reality, and more and more people and organisations the world over are seeking his views, including the likes of former US president Bill Clinton, Prince Charles and the World Economic Forum.

Surv?, who admits it himself, has an enormous capability to engage with people and a contagious energy, even at 9am in the morning. A man who debates issues with presidents and princes has no problem doing the same with lowly journalists and with just as much enthusiasm, it would seem. The difference between him and most other businessmen I meet is that he is not here to sell himself or his company, but rather a model for doing business, one that extends beyond Sekunjalo ? although Sekunjalo is providing the case studies to back Surv?s view that there are business models that can breach the gap between the rich and the poor.

?We are either going to widen this gap or can we say, hold it, can we do something now that brings more people into a situation where they are not poor?? he asks.

He believes we can. ?Let?s start the discussion, let?s start the process. We are never going to have the perfect answer from day one or achieve this in the process of five or even ten years ? this is a 30 year programme – but we must start somewhere, at sometime and their must be sufficient momentum to change the trajectory of business thinking, leadership and economic models.?

Surv?s desire to spread wealth is evidenced by his decision last year to waive R3,7mn (about $544 000) of the bonus and salary to which he was entitled until such time as he is satisfied that the profits made in all divisions of Sekunjalo are such that his salary will be insignificant to the total. His decision prevented the closure of a manufacturing operation in Gauteng resulting in the continued employment of at least 80 people who would otherwise have been retrenched. He is thought to be the first CEO of a major South African listed company to have voluntarily made such a decision.

Surv? is no stranger himself to poverty. His family was one of the very last families to have been forcibly removed from the Cape Town suburb of Harfield by the South African government under the Group Areas Act. As his relatives were removed from their homes they all piled into the Surv? household and at one point there where close to 20 people living in the two bedroom house. Eventually they couldn?t resist any longer and the family was moved to Lansdowne. Despite the hardships that the family faced, his father, who owned a corner shop, educated all of his twelve siblings and managed to send five of his children to medical school.

Looking at what Surv? has done with his life in the last twenty-odd years leads one to believe that he may just succeed in contributing to the end of global poverty. Like many of his contemporaries he was a political activist from his teens. He studied medicine and soon became known as the ?struggle doctor? because he set up an emergency services group that cared for victims of torture and detention in the country and treated many high profile political activists at the time including Govan Mbeki and Nelson Mandela. When authorities made it impossible for him to practice in the state sector he approached Professor Tim Noakes and studied an honours degree in sports medicine under his guidance. He went on to set up a sports medicine clinic in Lansdowne, and served as the team doctor to the national soccer team Bafana Bafana and to the All Africa Games National Team.

Then came Sekunjalo – the company was created through the coming together of about 20 former political activists, who were disillusioned by the lack of transformation in the Western Cape as opposed to other parts of the country like Gauteng, where big empowerment deals were starting to happen. Realising that it was up to them to bring about broad-based economic empowerment, the group began campaigning among the community to set up an organisation that would represent a different way of doing business. The group collected R250&Nbsp;000 from a number of small investors, with the individual investment limit set at R20 000 to ensure the wealth was shared and set up Sekunjalo.

Surv?, was the youngest member of the group, but found himself in the role of CEO, initially meant to be a temporary arrangement. At 34, this made him the youngest CEO of a JSE-listed company.

Today, Sekunjalo is a black-controlled investment holding company, focused on technology and innovations driven investments which include the following sectors: healthcare and pharmaceuticals, aquaculture, information technology and telecommunications, and financial services. The company claims that its contribution to the economy of South Africa for 2005 alone stands at (about $235mn). And Surv? has still managed to continue to further his education while at Sekunjalo, completing a senior executive programme at Harvard and a Masters in Business Administration at the University of Cape Town.

Sekunjalo has had its fair share of problems since it listed, including the collapse of one of its largest investments, Leisurenet, in 2000, an emerging markets crisis, the removal of import tariffs and a strengthening rand. However looking back on the last five years the company has proved its success – an investment in the group in November 2000 would have resulted in an increase of close to 280 percent, the company?s market capitalisation has increased by well over 247 percent in the same period and net asset value a share rose by some 188 percent between 2000 and 2005.

Surv? is quick to point out that he is an advocate of the market economy, but is interested in doing things in such a way that the market economy is sustainable.

?People often get confused that these business models and economic policies that I advocate could be perceived as either philanthropic or socialist, but they are not. The policies being put forward have got a sound grounding in the theories of economists that have been at the forefront of the market economy and that have won a number of Nobel Prizes for economics.?

Surv? gives me a quick crash course in the economic business models and theorists that have impacted on his way of thinking – from Amartya Sen?s theory of social choice and belief that only the market economy and freedom and democracy can raise the living standards of the poor globally to Joseph Striglitz?s economics of information, which explores the consequences of information asymmetries ? which in simple terms states that those who have less access to information flow in an economy are less able to make a decision. And a whiz through the books that have guided him, from Jeffrey Sachs?s The End of Poverty: Economic Possibilities of our Time to Jonathan Poddit?s Capitalism as if the World Matters.

To get to the point, what does Iqbal Surv? see as the economic model that will raise the general prosperity of the continent? ?I can give you economic models or I can simply tell you what I call the 5Ps.? I opt for the simple version.

The first P, I?m told, is that a business must be profitable – we must move towards investing so that investment becomes sustainable and is able to generate further investment. ?Whether we are dealing with social entrepreneurs or civil society organisations they need to conduct their business in such a way that it is profitable ? that is key,? Surv? explains.

P number two and three: business must be pro-poor and pro-consumer. ?Business must not exploit the poor ? but must create the basis for the poor to come out of poverty. We need to develop products that are affordable and we need to use technology to bring down the cost of products to the consumer.?

Fourthly, business needs to be pro-development. ?Every single country that is in the global GDP top 20 only got there because of the emphasis on human capacity development. They have invested significantly in programmes ? in educational programmes, programmes that allow for skills transfer, programmes that allow the society to operate differently and development means that when you conduct a business model you are taking into account the needs of the community, the employees and all the partners,? Surv? notes.

And lastly, business must be about partnerships. ?One can only grow through a partnership model. In other words, you partner with skills, partner with companies, with governments and with communities,? he points out.

Surv? believes that the five P?s are a crucial component in the types of business models we require in Africa today. And this model is certainly proving successful for him. He?s not giving anything away, but does let on that just a few weeks ago he met with the president of a neighbouring country in connection with a $20bn project that he is facilitating.

The project includes the development of a railway line and a power station, and will provide the country with much needed infrastructure and jobs. Sekunjalo is partnering on the project with a multinational and a resource company. ?What started off as a power station and a railway like to help with coal transport has turned into a railway line that is being connected to four different countries ? providing linkages and the infrastructure that Africa so desperately needs.?

Surv? explains that the project was a real meeting of minds. He says that the government was so accepting of the proposal despite the fact that Sekunjalo is a relatively small company because it had a different approach towards the development of the African economy. ?The government realised that we weren?t just another bunch of South Africans coming in and simply using World Bank or donor funding, making a profit and getting out,? he remarks.

Surv? doesn?t blame African leaders for viewing South Africa as the new imperialist. ?The problem with our companies going Africa is that many see it purely as a consumer market to exploit ? we are not sensitive enough to the need for development and to share benefits and develop sustainable business policies. But then that can be expected when South African businesses are not making these issues as priorities at home ? hence our 40 percent unemployment rate,? he notes.

The company?s model could also see it making an entrance into another sector in the near future ? into the mining industry. When Surv? set up the treatment centres to help people with post-traumatic stress counselling, he helped a man for a year-and-a-half who had been tortured. Now that man has brought his community to Surv? to participate in a large mining project.

?The man is part of a group of communities that has held a concession for 20 years on what is probably one of the best diamond mining areas in the country. The group approached Sekunjalo to partner with them. Reason being that they liked our business model ? they see it as one in which they as a community will grow and get the benefits. Instead of equity transfers, what we need is a whole new approach towards mining in this country,? Surv? explains.

And evidence that Sekunjalo really does do business differently? Surv? gives the example of Premium Fishing, a subsidiary of Sekunjalo and a major participant in the local fishing industry, specialising in the harvesting, processing and marketing of fish and fish-related products.

?By taking a stand on corruption we have changed the industry significantly. The other major players followed, but not by choice but because the stand we took on corruption impacted on how government promulgated regulation in the industry,? explains Surv?.

When Sekunjalo entered the industry it soon realised that the industry was highly corrupt. For instance, companies were given permits to fish 200 tonnes of fish, but were fishing 500 tonnes. As a company Sekunjalo took a firm stand that it would not bribe inspectors, would not over fish by one single fish.

?We penalised because we refused to play ball ? it was a system where everyone was happy to turn the other way. But we said, its our resource, we do business responsibly, we develop our businesses and we partner communities and so we suffered ? the first few years of implementing an anti-corruption policy in the fishing industry saw us being savaged because at a technocratic level we weren?t winning. It was only after the government investigated this industry, brought in the Scorpions and arrested a number of people that suddenly the industry changed,? Surv? explains.

?If we didn?t take a view at the time that you grow an economy, grow a resource, grow an industry by not being corrupt we would have just contributed towards the destruction of an important resource in our country ? today South Africa has probably got some of the best sustainable fishing resources of any country because of these enlightened policies and because of people like us.?

Premier Fishing is one of the few companies where employees own a significant share and have received substantial dividends. It is an important and in many instances only employer in poorer coastal communities with thousands of families dependent the company for their livelihood. Sekunjalo has committed itself to a programme of only filing posts from within the company, and is giving employees the necessary training and skills programmes to make this possible. It has also built clinics and given managers incentives dependent on them developing the people around them.

Surv? says that the fact that the company is profitable and growing proves that their model is working, saying that the companies various awards we are simply a validation of this economic model. ?It doesn?t mean that it?s the perfect model ? no model is perfect. Its work in progress ? it changes all the time. The important thing is that we have started that process. Our success is important because it says, it?s possible to do something differently,? he notes.

He gives the analogy of the Greeks surprise win of the European Cup. ?What the win means is that the next generation of soccer players in 20 years time will know that if they are Greek they can win the EU cup, but also they know they can win the World Cup. That?s what innovation ? a new alternative economic business model can do ? it says maybe there is a way. Maybe Sekunjalo hasn?t got it completely right, maybe they have but we?ve proved that there is way.?

Surv? has been beating this drum for a long time, but what is refreshing is that more and more people are joining his crusade. A few years ago he told a journalist that he felt like a ?lone ranger canvassing and trying to get people to do things differently?. But that?s changed. ?There is a dramatic shift in people?s thinking. If you examine what I was saying five years ago, it?s exactly what I am saying today. But with many other people there is a change. In a sense they have been forced to change because government is doing things differently because people are saying that we have a right to participate in this economy, a right to basic things, it can?t be ignored, we are now at a point where we need to implement it,? observes Surv?.

?On a global level I am not alone in saying this, I am not same mad Maverick – the world is saying this and this is why I am participating in these global forums,? he adds.

Surv? honestly believes that South Africa has all the tools to overcome poverty. ?With all its resources, first world infrastructure, economy and banking system, its technological advances and good people ? surely it?s possible? But we have to change the mindset of buying Gucci bags and of being a Gucci society and look at life differently. If we cannot raise the prosperity of 46 million people, then what is the hope for poor India and China who between them have 2,4 billion people??

He cites Mahatmma Ghandi as one of his role models and I can see why. Ghandi said, ?Be the change you want to see in the world? and I would have to say that Surv? is doing just that.

Source: Business in Africa (link opens in a new window)