A land reform farm in KwaZulu-Natal had everything going for it: prime land, capital, market access and top-notch mentorship. Today the estate is thriving – despite the best efforts of land affairs officials to throw a spanner in the works. Stephan Hofstätter reports.
There’s an image KwaZulu-Natal cane farmer Albert Makhoba can’t shake. It somehow sums up his dealings with government officials. H e is attending a meeting with a senior land affairs official, Thembeka Ndlovu, and several other small-scale growers.
Their future hinges on the outcome. Hundreds of hectares of prime commercial cane land wedged between their communal lands near Stanger have come up for sale. SA’s land reform programme, which aims to reverse the effects of decades of racist restrictions on landownership, entitles these farmers to access government grants to buy it – subject to approval from officials such as Ndlovu. All the applicants are skilled farmers. Some have reached sharecropping arrangements with less successful neighbouring farmers to increase their cane output, but none have any experience of running farms bigger than a few hectares, let alone a large estate.
This doesn’t concern them too much because one of the sellers, Dymock Brett, wants to stay on as managing director of the estate for a 10-year mentorship period. But Ndlovu doesn’t approve. She wants black farmers to succeed on their own. feels they don’t need whites to hold their hands. Makhoba tries to reason with her. Brett has 40 years’ commercial farming experience. He hails from one of SA’s most illustrious cane-growing families. His father Dr Peter Brett was in charge of plant breeding at the experimental station in Mount Edgecombe, and became the first person in Africa to cross-pollinate local varieties. For years Brett had helped them improve productivity on their communal plots by loaning them his equipment and giving technical advice, without ever charging a fee. They are thrilled to have him on board. Ndlovu will have none of it. rises to her feet, bangs her fist on the table, and bellows, “You either do it my way and get rid of this white guy, or I’ll stop the sale.”
It is this image – of a petty tyrant who must demonstrate her power at all costs, even if it destroys the people she is paid to serve – that haunts Makhoba.
The grant applicants refused point-blank to abandon Brett. In the end they came up with a face-saving solution by agreeing to cosmetic changes to their management contract with him.
Official boasts of stopping deals
Ndlovu later claimed the black farmers thanked her “through Mr Makhoba the chairperson” for the “suggestions and interventions that had been made”. She denied she tried to block the deal. She’d simply pointed out that objections raised when an earlier version of the application was first brought to the department two years earlier had not been addressed. She wanted to win concessions for the beneficiaries, and believed she had achieved this.
Makhoba is outraged by the suggestion. “I’ve got no reason to thank her for anything – she’s the biggest racist I ever met,” he says. “If we’d got rid of Brett we wouldn’t be sitting here – we’d be down the drain. With his involvement we are doing fantastically. What really shocked me is that she actually boasted about how many deals like this she has stopped. It’s scary that government officials are telling us not to work with white people.” Makhoba’s meeting with Ndlovu was the culmination of a three-year battle against suspicion, prejudice, negligence and obstructive behaviour by officials.
A promising partnership
The saga began in 2001, when Brett’s neighbour and business partner Tony Ardington was nearing retirement. None of his descendants wished to farm, so he offered to sell to the black canegrowers he and Brett had been helping for years. Brett, 56 at the time, said he would offer his farm too – on condition he could stay on as MD and mentor until retirement. The new estate, called Khanyakude (“shines from afar”) would have 500ha under cane and benefit from significant economies of scale. To limit the estate’s exposure to debt Brett and Ardington offered to cede a portion of the proceeds from the sale of their farms in exchange for a minority stake in the BEE company formed. In Ardington they could not have hoped for a better business partner.
The former chairperson of Anglo Vaal Industries and director of numerous corporates had been a board member of the National Business Initiative, chairperson of the SA Sugar Association (which represents growers and millers) for 10 years and of SA Canegrowers for 14 years. He knew the sector’s complex financial horse-trading backwards. But officials became suspicious that Brett and Ardington wanted to buy up the majority shareholding of Khanyakude later at a discount, thereby regaining control of their farms after being paid for them. In 2002 the provincial grants committee that approves disbursement of funds to buy land reform farms refused to endorse the proposal.
Seeds of distrust
Makhoba says the first official who tried to block the deal, Richard’s Bay land affairs chief planner Khethukuthula Nzimande, began spreading false information and sowing seeds of distrust from the start. The beneficiaries were told Brett and Ardington were out to exploit them, and told to insist each family be paid R50 000 in dividends each year. Nzimande also told them they were eligible for grants that did not exist. “How can you demand dividends up front? No business runs like that,” says Makhoba. “He didn’t know his job and never apologised to us for his mistakes.” Nzimande says it’s unfair to blame officials for delays in concluding the deal. He became suspicious when Brett and Ardington wanted a clause included in the sale agreement that gave them first option to buy their farms back if they collapsed. He interpreted this to mean the sellers wanted to regain control of their farms. But the main sticking point was the sellers’ insistence on a 10-year mentorship period. “The applicants were experienced sugar farmers and did not require extended hand-holding for even five years,” he says. He also asked the sellers to provide a comprehensive skills transfer plan that justified a 10-year management contract, but claims this was never forthcoming. But no one ever disputed the growers’ farming expertise.
By their own admission their major weakness is financial management, which is why all board members are attending accounting courses. Makhoba is also doing computer courses and a junior farm management course before going on to take a senior qualification. “I’m not saying blacks can’t do this on their own, but this is a big commercial venture. You need to absorb experience – and that takes time. Our intention is to become experts in 10 to 15 years, and pass the knowledge on to the next generation,” says Makhoba.
With hindsight Ardington understands the need for caution. In the early days of democracy there was no shortage of savvy farmers taking green government officials for a ride. “Blacks have every reason to be suspicious when they’ve been swindled for 300 years,” he says. But he insists he simply wanted to contribute to transformation in the sugar industry. “I could have sold to (white) neighbours who wanted to buy the farm. It would have been over in three months.”
Reviving the deal
A new deal was put on the table in February 2003. The sellers would be paid out in full and Khanyakude would become 100% black-owned. A business plan was drawn up and the effective date of transfer of risk and reward was set for April 2004. This gave the buyers enough time to raise funds and transfer the land. Grant approvals seemed certain. But early in 2004 a land affairs official objected to Brett’s proviso that he manage the estate. This prompted Brett to withdraw his offer to sell, with Ardington following suit because the estate would not be viable with only one farm. At this point the Inkezo Land Company stepped in to mediate. Inkezo, a non-profit company funded by the SA Sugar Association to speed up transfer of cane land to BEE entities, managed to revive the deal by including 20 farmworkers with a combined stake of 37% paid for by their grants, thereby reducing the company’s exposure to loan finance and making it more broad-based.
Brett would stay on as mentor and Ardington as independent director. In 2005 the application was presented to a district screening committee that vets funding proposals before they reach the provincial approvals committee, and duly approved.
But two days later Ndlovu, who sits on the screening committee but had failed to pitch up at the meeting, put her foot down. She objected to Brett’s management contract, despite being assured by Inkezo it had been benchmarked against comparable management positions in the industry. She demanded to take the issue up with the black farmers, but not even her table-bashing antics could sway them. Unqualified success In the end a reduction in Brett’s contractual period and pension contribution was agreed on and the deal went ahead – three years after Ardington first mooted selling his land. Khanyakude has proved an unqualified success. In its first two seasons it produced good crops, reduced debt by 20% and paid out dividends of R480 000. Each worker-shareholder was elated to receive a R10 000 dividend payout at the end of the first season.
Both the land and share value of Khanyakude have appreciated considerably. Brett says the farm’s success confounded expectations in the district. At first white farmers feared the neighbourhood was about to go downhill. “Now they come and ask us for help. This company is an asset to the community.” He expects the estate to consolidate its gains after he leaves. “Touch wood – and weather permitting – they’ll have paid the farm off by the time I retire. Then they can start buying the neighbours’ farms,” he says. “The only thing that can kill us now is the drought.” |fw