by University Of Stellenbosch

Sharing wealth

Business created wealth should benefit wider “shareholders”

Patrice Motsepe’s recent announcement that he will donate roughly half of his wealth to the Motsepe Foundation
Patrice Motsepe.jpg

Mining magnate Patrice Motsepe’s recent announcement that he will donate roughly half of his wealth to the Motsepe Foundation, has been described as a milestone in South Africa’s history. Many have estimated his worth to be as much as R25 billion, and he is the first African to make an announcement of this kind. 

According to Professor Arnold Smit, Director of the USB-ED Centre for Business in Society at the University of Stellenbosch Business School, this announcement is not only historic, but signifies that wealth created through business should benefit not just owners and shareholders, but also other stakeholders in society - in this case the poor.

“The real value of the power that comes with a high position and superfluous possessions only really gets released when it is transformed into productive use for those at the margins of society. It speaks about an inner sense of freedom, sufficiency and meaningfulness when an owner of so much wealth is prepared to create hope and opportunity for others,” says Smit.

According to recent reports, inequality in South Africa is increasing, while the World Economic Forum is highlighting inequality as one of the top global risks of 2013. Smit argues that Motsepe’s announcement should be read against this background.

“South Africans have become disillusioned by the self-interest displayed by powerful people in business and politics. Post-apartheid South Africa has not shaken off the label of being one of the most unequal societies on the planet and a change in political authority has not fundamentally addressed the structurally embedded  fault lines in our society.

“The Motsepes stepped out of the ring and created an example of what an alternative can be, namely to put their wealth in the service of mending the disparity gap between the rich and the poor in our society.”

However, Smit argues that is not just in South Africa that this announcement will make an impact. “Societies across the world are suspicious about wealthy and powerful people, resentful about where the benefits of capitalism are flowing to and disillusioned by democracy that offers ordinary folk political freedom, whilst falling short when it comes to economic empowerment. The Motsepe message here is that an alternative is possible and that business can play its part.”

Smit says that, given the magnitude of the Motsepe assets, this donation will go a long way in the helping out, pulling up and moving forward of people at the margins of South Africa’s society. He says, however, that following the Motsepe example is a decision that should be carefully considered.

“This decision came from a deeper inner conviction and it was done in consideration of the interests of shareholders and investors. As much as this is an act of personal will it is also interconnected with the will of a broader array of stakeholders. Many will be quick to say ‘but the Motsepes can afford it.’ Yet, the Motsepes seemed to have gone through a long period of reflection before they declared ‘how can we not afford to do it’.”

Smit says that the composition of the advisory council that will have a say in how the money will be spent is refreshing, as it will consist of church and religious leaders, traditional, disabled, women, youth and labour leaders and other respected NGO and community upliftment leaders. In other words, the money for the poor is therefore also governed in collaboration with leaders who understand their plight and needs.

“Although Patrice Motsepe is not the first person globally to give away such an enormous part of his wealth, the historic relevance of him doing so sits in the magnitude and scope of the financial value involved, the open hand with which it was done and the level of hope that it generates for millions of poor South Africans.

“While many wealthy people in South Africa may now also have the courage to do the same, the responsibility that comes with it should never be underestimated,” concludes Smit.

 

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