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Ndaba Ntsele reigns supreme among South Africa’s entrepreneurshen Ndaba Ntsele tells me a Warren Buffet story – a tale of one of his investment faux pas – it is clear that he, like Buffet, is a man who is unafraid of failure. In fact, such is his appetite for risk, that he almost appears eager to look failure in the eye, outstare it and live to fight another day.
It is a truism that great entrepreneurs take more risks and weather more storms – mild and severe – than other people in business. But their successes are the big payoff.
Ntsele is pragmatic about the setbacks in his career, regarding them as learning experiences and “good case studies”.
From humble beginnings, this son of Kliptown, born in 1952, grew up watching entrepreneurs such as Richard Maponya and Reggie Hlongwane overcome the odds and succeed in spite of apartheid restrictions. “They were the first people I looked up to in business,” he says.
Ntsele comes from a family of entrepreneurs, and as a child he helped his aunt sell fruit and vegetables. “She threw me in the deep end,” he recalls. “It was my first lesson in dealing with clients and money. Fortunately, I loved maths. It was one of my favourite subjects
at school.”
He went on to sell peaches, buying them wholesale then selling them on the streets and to shops. This was his first taste of business success, and it proved addictive. “I had money to go to the cinema,” he recalls. “I didn’t have to ask anyone for it – I earned it myself. That sense of independence was powerful.”
“When I was pushing trolleys for the OK Bazaars in Eloff Street, I used to watch the men in suits and ties go into the Rand Club,” he says. “I decided I wanted to be a millionaire when I grew up.”
For many young black men growing up in apartheid South Africa, such a thought would have been heretical. But Ntsele saw the possibility of change, the promise of the future.
Today, as chief executive officer of Pamodzi Investment Holdings, a black-owned, black-controlled company, Ntsele has raised R16 billion in funding, most of it offshore. That in itself is an impressive achievement.
At the outset, Ntsele eschewed vendor financing. “We have always hunted for ourselves,” he tells me. “You must always be in control of your business.”
For that reason, he has ring-fenced each of his businesses, so if one fails, the others will be unaffected.
Pamodzi has invested in six sectors: finance, resources, food, leisure, technology and vehicle retail.
Today, Pamodzi’s investments are worth more than R880 million, and those who invested in the company in 2000, believing in Ntsele’s vision of a Pamodzi giant, recently have enjoyed a 10% return on their money. In March, Pamodzi’s year-end results yielded R255m in dividends.
“I wish you had been here to see these people’s faces,” says Ntsele. “When I told them the money was in their bank accounts, they couldn’t believe it.
“I like to say that Pamodzi is not an empowerment company – it’s an empowering company.”
Such largesse is typical of Ntsele, who always has rewarded teamwork and loyalty.
The power of independence was one thing – he sold newspapers, clothing, whatever seemed lucrative – but it was when he teamed up with friends Solly Sithole and Ncedi Manyoni in 1979, that the seeds of Pamodzi were sown. Pamodzi, after all, means “oneness”, “togetherness”.
It was one thing to buy his own car – a Morris Minor – in Matric; quite another to achieve millionaire status and buy three 380 Mercedez Benz vehicles with his partners before
turning 30.
Success in the apartheid years
The early years were challenging in the extreme. The apartheid era was a struggle in more ways than one. Black people could not set up offices in white areas, where most of their clients were based. White companies refused to take them seriously.
Luckily, a white furniture manufacturer doing business with Ntsele agreed to front for them and they secured an office at the Carlton Centre – in those days, a prestigious address in the Johannesburg central business district.
Ntsele discovered his talent for raising capital when, as managing director of Pamodzi Property Construction, he set out to help his clients raise money for home loans. Selling houses seemed to be as good an opportunity as building them.
He also had to raise R6.5m to take on roadworks to service 2 400 houses in Soweto in order to be taken seriously by the Urban Foundation’s lily-white consortium.
With long-term vision, Ntsele saw past the discouragement, the timidity of naysayers, and raised working capital even when owing millions to banks.
In the ‘80s, Ntsele and partners hit their first snag and learnt about failure firsthand. The banks withdrew their money from urban black areas when the South African National Civic Organisation called for boycotts on the payment of rates and taxes.
With no cash flow, Pamodzi came to a standstill and Manyoni pulled out of the business, having little appetite for such risk.
The mid-80s construction slump was disastrous but, like all successful entrepreneurs, Ntsele bounced straight into another commercial venture – this time, selling jewellery, Kruger rands and electronic goods, working with a Hong Kong supplier.
Construction was on ice for the time being and profits flowed again.
“As an entrepreneur, you learn to adjust to extreme conditions,” says Ntsele. “You have no choice but to adapt.”
In the ‘90s, Ntsele and Sithole looked for more business opportunities. They won the Nike licence for South Africa, beating more than 200 countries that applied. They went on to exceed cash flow projections, making R49m in the first year and about R62m in the second.
Ntsele and Sithole then sold Nike South Africa back to Nike International in 1997, at a time when turnover was R400m a year.
In the same year, Pamodzi Investment Holdings was born and the company went on an acquisition spree, buying Auckland Health for R45m and stakes in Wesbank Auto, Sodexho, NamITech, a BMW dealership, Altech Data and more.
Foodcorp was another acquisition, though the company recently sold its 77% stake in the company for more than R500m.
Recently, Pamodzi also acquired Boxmore Plastics. “It was an outright acquisition,” Ntsele says of Boxmore. “We have a controlling stake as Pamodzi.”
His blue-sky vision was muddied by the Pamodzi Gold debacle, though, when funding dried up due to the credit crunch. Scrambling for a way out, Ntsele was faced with the fact that nearly R300m in loans, and interest, was owed to the Industrial Development Corporation. It proved impossible to raise funds in time.
When the JSE-listed Pamodzi Gold was liquidated last year – and the liquidation itself was not without controversy – the fallout was painful for Ntsele, particularly as the company was the first black-controlled entity listed on the JSE.
“But you can’t run away,” says Ntsele. “You have to say, ‘This brand is my child, I won’t disown him, no matter what happens.’
“You can’t learn those kinds of lessons at Harvard. It does test your leadership qualities.
“People were saying Pamodzi was finished and we were all washed up. That was obviously hurtful. But it was not true,” he says.
Despite the fall, Ntsele continued looking ahead. “Like a mountain climber, you have to keep your eye on blue skies,” says Ntsele. “Yes, the falls may be really painful, but you have to keep climbing.”
Awards for achievement
Ntsele’s entrepreneurship has been recognised both in South Africa and internationally. In 2007, he received the Ernst & Young World Best Entrepreneur Award (South Africa); the Black Management Forum’s Progressive Company of 2007 award; Financial Mail’s Mover & Shaker of 2007; and Top Entrepreneur for 2007 from the Association for Black Securities and Investment Professionals.
In May 2008, he was inducted into the World Entrepreneur of the Year Academy and today, he himself judges entrepreneurs from all over the world.
“Entrepreneurs can be developed,” he says firmly. “Yes, some of that drive is inborn and entrepreneurial families inspire youngsters to follow that path. But environment is
also important.
“There are many hawkers in Africa, but they should not choose to remain hawkers. They must uplift themselves and work together.
“You don’t have to live in a certain city or have access to certain resources. It all starts with you – your vision, your ability to stay positive. At the same time, teamwork is important – don’t think ‘Me, myself, I’,” he adds.
Ntsele is passionate about sustainable wealth creation in South Africa. “Our biggest challenge is to create a sustainable tax base and have entrepreneurs become corporate boffins,” he says. “That will uplift the country. At some point, every entrepreneur will hire someone.”
His Pamodzi Trust ploughs money into social welfare. “Entrepreneurs often become philanthropists,” he smiles.
“I think entrepreneurs get better as they age, maturing like good wine. I never want to retire – my aim is to keep creating wealth and set up foundations that will support their own initiatives, not rely on handouts.”
As an honorary professor at the University of the Free State, Ntsele tells students to be innovative.
“We were talking recently about what would happen once the World Cup was over,” Ntsele says. “I told them that we have to make opportunities. We still need to attract investors. We should host local and international sporting events at our stadia and get the best teams to compete on our soil again. Those stadia don’t have to be white elephants.”
At only 58, Ntsele is not about to slow down any time soon. “I love mentorship,” he says.
“It means something to teach students, to inspire them. Particularly in the Free State.
“Johannesburg was always multiracial and multicultural, to some degree, but that part of the country has taken longer to catch up. That’s why I’m happy to lecture there now.”
He loves to read business books – hence his fount of Warren Buffet stories. “I was never keen on fiction, even when I was young,” he says. “I always read about how to
make money.
“Money is not the root of all evil. It depends on what you do with it. If you create wealth – and that is my job – then you uplift society,” he concludes.
Fiona Zerbst
