La Guerra Civil y la FNMT como impresora incidental de papel moneda

SQF does not directly involve community groups as partners in the business but separately conducts community outreach programs. Their primary approach in opening up their forest business for empowerment involves Imbokodvo Lema- balabala (IL), a black business group. IL directly purchased 10% worth of shares and partnered with Mondi to create SQF. This is a straight business-to-business partnership, unlike the SFP model. Apart from being a shareholder with voting rights at SQF, the main contribution of IL is manifested in its mentoring program called Fukamela, a business-mentoring program that trains individuals from their target community. A detailed discussion on Fukamela is contained in the next chapter on empowerment practices. The business partnership between SQF and

IL was fairly straightforward at start-up and avoided a lot of organizational chal- lenges that SFP experience with communities as business partner.

SQF and community outreach

Unlike SFP that preferred an alliance with a whole community for purposes of fulfilling their empowerment targets, Mondi’s chose a black business group who had the capacity to negotiate, and also look for financing to purchase their own shares in the new company, SQF. Although Mondi opted for a straight business deal instead of going the community route, there is still a substantial amount of community outreach that SQF undertakes.

SQF view the relationship they are creating with communities as going beyond just forestry activities. They regard themselves as facilitators, and the link between local communities and other public and private actors in the imme- diate region as well as those outside. During the research, SQF was holding meetings and conducting needs assessments in communities who reside within a 5-kilometer radius of the areas that they work. In outreach activities, the problem of community boundaries was not a problem, since it did not involve a lot of resources. Unlike SFP, SQF approach to community issues was specific, clear and not loaded with ambitious targets and promises. As the SQF manager for transformation explains:

We go to them [local communities], hold meetings and together we identify their needs, then we sit down and work out how we can assist. We emphasize that we are not going to fund everything but that we just initiate. We have started small, but as time goes on we would be doing bigger things especially as relates to job creation. When and if we initiate a project and fund it, we say this is how we are going to recover a portion of our money, it is not all a grant. (Interview 20 May 2004)

SQF cites two main reasons for their reluctance to have the community as business partner. They found it difficult, in light of several outstanding land claims in the area, to discern which community group had a more legitimate claim to the area. Thus they took the decision to wait for the completion of government’s land claims process, as this would not only point to the legitimate communities with which to work, but also delineate boundaries or place physical limits to their areas of operation.

Second, SQF claimed that local communities were not organized and prepared to do business when the state made known their intentions to sell. On the contrary, some local residents interviewed also cited a lack of information on the intentions of government and Mondi when the assets were advertised for sale. As one IL interviewee reported:

The announcement was made even to local communities here and the process was not an overnight thing. IL was interested in another deal in Mpumalanga but when they didn’t clinch that one, they were advised by the then Minister of Public Enterprises that they could still have a chance at the KwaZulu-Natal deal so they came here and teamed up with Mondi

because no one from this area was interested. One person who works for Khulanathi also told me that people here were disorganized until the last minute. (Interview 21 May 2004). The quote above also opens up another side of the debate that reflects the tensions between empowering business people who have access to capital and political connections, versus peripheral local communities who lack access to such power structures.

Like the SFP case, one other significant reason for non-involvement of neigh- bouring communities was a lack of access to financing. The 10% shareholding that was eventually sold to IL was valued at R10 million and IL was able to find its own financing. This amount, unlike that of SFP, was too great for low resourced communities to obtain in the absence of proper financing structures targeting such kind of deals. As mentioned earlier, institutions such the National Empowerment Fund, in 2001 were still in the early processes of being estab- lished, and the only option was to go through existing banks or development financing bodies whose interest rates were considered to be too high.

The other issue which local respondents were concerned about was in regard to the origin of Mondi’s partner at SQF. Although IL is a black business and their interest in the assets does not in any way violate the empowerment practice, local communities voiced dissatisfaction with the make up of IL that is made up from a Traditional Authority Investment Company (TAIC). TAIC, which controls 70% of IL Holdings, represents communities who are residents of the neighbouring Mpumalanga province, and not northern KwaZulu-Natal where SQF operates. Apart from encouraging transformation in both the public and private sector, most policy pronouncements emphasize the prioritization of local people in terms of jobs and other spin-offs in cases where there are investment activities. As said, the explanation for the local people’s missed opportunity in this particular deal, as given by SQF staff, pertains to their lack of cohesion and preparedness to venture into the business environment. However whilst the lack of organization into entities that could legally engage the private sector is due to a range of factors mentioned already; Mondi, as the major shareholder at SQF, has a history of engagement at the local level through a once successful outgrower timber scheme (Ojwang 1999). One would assume that similar communication and logistical structures that Mondi used during their outsourcing scheme would have been applied to mobilize communities during privatization. Mondi had ample logistics to partner with communities had they been interested, or if it had been a strict condition of the sale exercise

Although Mondi avoided considering local communities in a direct business deal, it employed other alternative means in outreaching communities in whose environments they operate. SQF classify these as community social investment initiatives. These include key business initiatives like Fukamela, but also encom-

pass support of smaller projects, mostly undertaken by the youth, such as block making, honey production, poultry and horticulture. Other support that SQF extend to these communities includes bursaries, donations to NGOs that target poor children, donations to school libraries, and assistance in school projects such as extension of classrooms.

Such activities are guided by a socio-economic assessment toolkit. The toolkit is a product developed by Anglo-American Group of which Mondi is a member. SQF views these activities as mutually reinforcing to the idea of BEE. Hence the decision to intensify their facilitation of smaller economic activities with communities, rather than pursue a formal business partnership with high transac- tion costs. Trends in South Africa’s larger business environment portray a shift of emphasis away from such conventional social investment activities. Instead, such activities are viewed as a smaller component of empowerment as companies look to the bigger picture through diversifying access to activities such as procure- ment, ownership, management, and a concerted transfer of skills to the less elite citizens. Both case studies reveal that there is still a thin line, and sometimes obfuscation, between what should be considered as social investment and what constitutes empowerment practice. More significant business activities, like procurement at the micro-level, are understood as reinventing corporate social responsibility, and taking the concept to a higher level. These are done by intro- ducing the target population to mainstream business, as opposed to merely boosting their strategies for better livelihood.

Mondi’s non-core business activities have always been clearly defined within the parameters of what such activities contribute to the company’s bottom line. In an earlier study by Ojwang (1999), while the other giant forest company SAPPI was keen to market their socially relevant activities as such, Mondi maintained that their involvement, even with local communities, was counted not in terms of what it was giving but on what it was getting out of such ventures. Mondi’s once successful Khulanathi outgrower scheme, where individual growers were given incentives under contract to sell back timber to Mondi, is one such example. SAPPI at the time also ran a similar outgrower timber project called Project Grow but, unlike Mondi, they categorized it as part of their social responsibili- ties. The Anglo-American social investment framework that Mondi and SQF apply in their community engagement programs also limits this relationship, as they indicate, to one that is mutually beneficial.

As indicated earlier, the major shareholder, Mondi, through a seconded management team carries out SQF daily operations. The agreement was drawn up with IL because of Mondi’s vast experience in forestry and IL’s lack of it. But IL as a junior shareholder indicated their interest in getting involved in some

way, even if it was not in technical operations of SQF. Consequently, a training arm of SQF called Fukamela was established to train potential black contractors. Beyond community outreach

SQF, having made progress with Fukamela, as discussed in the next chapter on empowerment practices, is trying to expand the shareholding to community groups as well. Like SFP that started its empowerment initiatives through a large group of communities and later mixed this with certain individual strategies, as detailed in the next chapter: SQF is doing the same, but in reverse. SQF started out with an individual black enterprise as partner, but lately it is trying to offer another 10% shares to a community group in its area of operation. In this new attempt to diversify the way communities can benefit from their operations, SQF has run into problems that are of a similar nature to the ones SFP went through during the creation of the community Trust.

SQF’s parent company, Mondi, for many years has been situated in the Richards Bay area of KwaZulu-Natal. During this time, it has established a tradition of creating a relationship with local communities through the local traditional authority structures. SQF, since its inception, has also followed the same system of entry. While SQF used traditional authority structures to get to the broader community, they, unlike SFP, did not use this as a springboard to set up autonomous committees or task teams to represent the interests of communi- ties. Four years into its existence, Mondi’s decision to offload another 10% of its SQF shareholding but this time to surrounding communities, is challenged by the individual interests of the traditional authority. The problem for Mondi and SQF has been how to access the whole community without being bogged down by the red tape that exists within the structures of traditional leadership. The traditional leadership on the other hand, claims a portion, say 40% out of these 10% shares to go to them directly. This would translate to individual ownership, which is in contradiction to Mondi’s intentions of broadening the ownership base via the collective route and offering communities another option for contributing and benefiting from the forest economy. The logic behind the traditional leadership preferring private ownership rather than one on behalf of or together with their ‘subjects’ contradicts their own role as custodians of land, and also exemplifies further their own role in the erosion of traditional authority system. In the same vein, for Mondi and SQF to seek to engage a community organized under the customary tenure system, and bypassing the leadership structures, makes more difficult an already complex situation.

Both SFP and SQF interact with traditional structures, especially to gain an audience with the rest of the area residents. SQF are experiencing a lot more problems in negotiating with the leadership than SFP. The explanation lies in the

fact that the traditional system in KwaZulu-Natal where SQF works is still potent, stronger, and less eroded than that on the Eastern Cape, the base of SFP. SQF therefore faces obstacles in overcoming the local red tape of traditional authority in engaging the people. Hence nothing real, in terms offloading part of ownership of SQF to local communities, has materialized.

Common issues for SFP and SQF: The concept of community