South African activist-entrepreneur clinches agri-business deal with former foes

Khehla Mthembu, who in May signed one of the first significant black empowerment deals in South Africa's agricultural sector, was a founding member and former president of the Azanian People’s Organisation (Azapo). From 1967, when he was 14, to 1986, he says, he spent most of his time dodging the Security Branch and three or four months every year in detention for his opposition to apartheid. In 1978 he was banned and under virtual house arrest for six months in Soweto.

Now he has climbed into bed with a bunch of white Afrikaner farming types who for most of his life epitomised everything he hated most. They own and manage a thriving R500-million-a-year ($70 million) agribusiness, Kanhym Estates, which he thinks will make him plenty of money and be an effective vehicle for what he believes is the long overdue empowerment of South Africa’s emerging black farmers.

Mthembu put together the consortium, which has bought 28% of Kanhym. He did this while working as the CEO of Old Mutual Gauteng, which he left at the end of April. The hardest part of going on his own so far has been getting used to life without “the corporate comforts.”

He won’t divulge how much his consortium paid but it is believed to be around R140-million ($20 million). Eight percent of the 28% stake will be held by Kanhym’s black workers. The remaining 20% was paid for, with the help of Standard Bank, by Mthembu and two partners. This is a sizeable amount of money to invest in a sector that he admits is not nearly as “sexy” as mining, banking and information technology, which have attracted most black interest up to now.

Mthembu spent five years at Old Mutual studying sectors and companies for their investment potential and recognises a good deal when he sees one.“I try to avoid a crowded arena because in a crowded arena you normally don’t get good buys. When you go into an area where nobody is looking, the likelihood of good buys and picking up very good opportunities is very high.”

He admits agriculture is a new world for him. "That’s why I had to make sure I’ve got a partner who understands it, and that is Thys.”

Thys Pelser is another of those white Afrikaner types he opposed so bitterly such a short time ago. They met when Mthembu was running a management head-hunting business and wanted to cater for blue-collar workers as well. Pelser had started a recruitment agency for blue-collar workers and they were introduced. “There was a lot of chemistry.” Pelser studied agriculture and used to be a farmer. Now they’re joint owners of a 2000- hectare cattle farm in Naboomspruit and close friends as well as business partners.

Mthembu is motivated by the belief that agriculture is “the main base for any economy. If black people don’t look into food security, making sure that they participate in serious commercial farming, you are leaving the whole responsibility for this to other people (that is, whites).” Then it becomes like “the Zimbabwean thing”. When there was “a big crunch on white farmers the whole economy crumbled”.

Using Kanhym as a vehicle, he intends providing access to modern technology and sustainable markets to emerging black farmers. Kanhym specialises in pig farming and producing feed for chickens, cattle and pigs. Its most valuable asset, believes Mthembu, is a deal with the UK-based Pig Improvement Company, which gives it the right to market and sell its sophisticated pig-breeding genetic technology throughout sub-Saharan Africa.

This will greatly enhance the quality, and marketability, of the pigs emerging farmers produce. And when thinking of markets for Kanhym’s pig genetics, feedlot technology and feed don’t just think 40 million in South Africa, he says. Think 200 million in Southern Africa. Think of the huge potential market in Mozambique and in Zimbabwe when it begins to rebuild its shattered agricultural sector. Mthembu has an option to buy 51% of Kanhym within a year, which he intends exercising.

Mthembu admits that his impression of white Afrikaans farming types has improved considerably since he got to know them. But he still has reservations. When scouting for a farm with Pelser, the reception was “quite hostile,” and the moment owners knew that a black man was interested in buying they doubled the price, assuming the government would pay. Eventually Mthembu had to pretend to be Pelser’s driver. “I decided I am not going to be the number one guy they see.” He told his partner, “Thys, go and talk to the volk.”

Sunday Times