Sunday, November 21, 2010


As Tanzania eyes a new Mining Act scheduled to be tabled before the Parliament early in April, the potential for domestic economic success is more alluring than ever.But those who remain skeptical of the effects of people-centered policies in resource-endowed countries should take heed of the story of a single tribe that rose from simple livestock keepers to become one of Africa’s richest tribes, Reports Our Staff Writer who visited South Africa’s “Platinum Province” recently.The Royal BaFokeng’s journey from the Central African plateaus to South Africa had begun in earnest search for arable land and grazing areas for their animals, but little did they know that they had stumbled upon one of the world’s most mineral-rich zones.

Like many other native tribes in Africa their major economic activities were cattle raising and subsistence farming, and they depended largely on outdated and poor technology.From these humbled beginnings, however, the Royal BaFokeng, bounced back with a takeover strategy to buy their alienated land from Boer feudalists, offering an inspiring lesson of perseverance and business acumen.According to oral tradition, the BaFokeng settled in what is now known as Rustenberg, about 112km northwest of Johannesburg at the foot of the Magliesberg. As the valleys amongst the hills in the area captured heavy overnight dew, the people realised it was fertile and the community would prosper there. In honour of the occasion, the tribe took the name 'BaFokeng,' literally meaning 'people of the dew'.

The BaFokeng are in some ways as remarkable for what they are not known for as for what they are. They are not known for stealing from public coffers or robbing their fellow citizens. Nor did they get involved in shoddy deals or suspicious just used their courage and savvy to negotiate a better deal in the interests of their people. They were not ready to be used by external forces or cheap politicians to destroy the image of their land, but were guided by what the future promised for hard work and practical thought.They didn’t see foreign investors as invaders but as partners — as long as they were ready to work with the locals for the benefit of all. Of course some paid a heavy price, especially during the apartheid regime, but the Bafokeng didn’t give up and continued to stand up for their rights in constructive ways.

They never squandered their resources, but rather ensured that what came out of their land would materialise in the form of taxes, royalties or dividends, and that those profits would go toward the people’s development.Today, their courage has paid off, making them the richest tribe in Africa with a per capital income of $50,000 per annum. When I first visited this province in 2006 as a tourist and as a researcher on how locals can partner with investors to bring development, I couldn’t believe what I saw.
From modern infrastructure to a well-planned residential area, from sophisticated mining plants to international hotels like Sun City, from a crime-free zone to modern schools and hospitals, Rustenburg stands as an example of how well exploited and equitably shared resources can change lives in Tanzania and the rest of Africa.Rustenburg is the third oldest town of the former Transvaal Province and offers numerous places of interest. Its jacaranda tree-lined streets are the hub of a thriving agricultural and mining industry. Rustenburg has a population of about 1 million people.When the Boers arrived in South Africa, they posed new challenges to the BaFokeng. Ownership of land now meant purchase, and purchase meant money. The Boers were recruiting BaFokeng to work their farms, but only in return for food, clothing and accommodation.
The then recently discovered diamond mines in Kimberley provided the answer and Chief Mokgatle of the BaFokeng sent his young men to work there. 

They went on foot (a considerable journey) and worked on contract for six months to a year. At the end they returned home and paid their earnings into the tribal 'kitty'. This provided some of the capital to legally buy back their lands.With the help of the missionaries who were active in the area and the efforts of Chief Mokgatle to build good relations with the missionaries, the ancestral lands of the BaFokeng were bought back. Little did they know what treasures lay hidden under the surface!
Unknown to the BaFokeng until 1925, the farms bought both by the tribe and individuals were located on the Merensky Reef—the outcrop rich in an alphabet of minerals ranging from asbestos to vanadium, the most important of which is platinum.After discovering that their arable land held huge minerals reserves, the BaFokeng introduced a policy known as ‘use it or lose it’, which among other things required mining companies to pay royalties directly to the community’s coffer. Under this program, mining companies may utilise the underground rights of the land, but the surface rights belong to the BaFokeng. The miners have to pay royalties to the tribe and provide job opportunities. The Royal BaFokeng’s prominence rose strongly during the 1980s when they demanded compensation and royalties from the mining companies who had been mining platinum in the area.

In 1999 the late Kgosi Lebone Mollwane Molotlegi II won a 10-year legal battle for royalty payments from Impala Platinum Holdings (Implats), which had begun mining platinum on Bafokeng soil in the 1960s.Their win entitled them to 20 percent of the platinum mined on their land and royalties amounting to an estimated $120 million at the end of the 2002 financial year. An agreement reached between several mining companies and the Royal BaFokeng administration resulted in the Bafokeng receiving further compensation payments and annual royalties from the mining companies that extract minerals from the land.In 1998, the Bafokeng, using taxpayer money, bought one million Implats shares worth about $70 million¬ — a move that allowed them a seat on Implats' board, which is currently occupied by the new king, Kgosi Leruo Molotlegi.

The BaFokeng have formed Royal Bafokeng Resources Holdings (RBH) to manage the mining-related interests of their communities.The BaFokeng have used their income from mining to build schools, roads, clinics and other infrastructure such as a sports complex incorporating a soccer stadium with an athletics track, an Olympic-size swimming pool, tennis courts, basketball courts and a gymnasium. Almost all the infrastructure has been planned, designed and funded by the Royal BaFokeng. For decades, mining royalties and dividends were invested in community development through a single agency: the Royal BaFokeng Administration (RBA), which was responsible for developing and maintaining infrastructure and delivering social services.

RBH is leveraging its new partnerships to produce additional benefits, not only for the BaFokeng community, but also for neighbouring communities in the North West province.RBH, Astrapak and investment banker JP Morgan have pooled resources and supported the SA Institute of Entrepreneurs to train 700 teachers to take classes in basic business and economics skills in 80 North West schools, hopefully placing pupils in a better position to become entrepreneurs in a world where opportunities in formal employment are diminishing.By investing in such groups as SA Eagle, RBH also hopes to create a platform for development of financial products tailored to the needs not only of the BaFokeng, but also of other small communities.
Kgosi Leruo sees his role in particularly ambitious terms. He is of the view that in order to become prosperous, a community must produce one "world class" entrepreneur from every 20 of its members. With 300,000 Bafokeng living in South Africa — and half of them in the BaFokeng area — this means the community must strive to produce no fewer than 15,000 entrepreneurs. RBEB offers would-be entrepreneurs coaching, advisory services, mentoring, on-job training, and formal, in-class training. It has also facilitated the consolidation of numerous micro-enterprises into a few sizeable companies, enabling them to compete for contracts in the Bafokeng area and further afield.

Development of enterprises has in part been spurred by the South African government's black economic empowerment policy. Thus, local entrepreneurs have formed joint ventures with established companies to supply mines in the BaFokeng area. This has led to the establishment of locally based companies specialising in such enterprises as drilling operations, manufacturing of overalls, and engineering. Thus, Kgosi Leruo Molotlegi is consolidating the gains his people have made over the centuries, establishing a broad base for them to grow and to realise the goals of Vision 2020 and beyond.

Interestingly, they have funded the construction of a state-of-the-art soccer stadium that will be used in the FIFA World Cup this year. The Royal BaFokeng Sports Palace will host matches in the tournament, and the 42,000-seat stadium is named after the BaFokeng people who live in the area.The North West Province has a definitive comparative advantage in mining. Known as the Platinum Province, it is responsible for 94 percent of South Africa's platinum, 46 percent of the granite and 25 percent of the gold produced in the country. Mining is responsible for more than a third of the province's GDP. Platinum comes from the Rustenburg and Brits districts which produce more platinum than any other single platinum production plant in the world. Diamonds are mined at Lichtenburg, Koster, Christiana and Bloemhof. Fluorspar is exploited at Zeerust. Granite and marble are also mined, and copper and nickel by-products also yield substantial earnings annually.

Over the past decade, mining production in the North West Province has continued to reflect positive growth with the Province increasing its contribution to the overall mining output of South Africa from 26.4 percent in 1990 to 29.2 percent in 1999.Five of the 12 platinum group metal-producing mines in South Africa are situated in the Rustenburg area of what is known as the Bushveld Igneous Complex.For several decades now, these 5 platinum mines have been producing about half of the total platinum group metal yield of the famous Merensky and UG2 reefs. Three of the mines in the area are owned and operated by one of the world’s leading mining houses, Anglo American, while the other two belong to Impala Platinum and Lonmin.
Some of these mines are in joint venture partnerships with the Royal BaFokeng Nation.Mines in the North West Province still have a substantial reserve base of metal bearing reef, which at the current rate of exploitation is likely to last for many years to come.Increased world demand for platinum has seen the price of the metal soar over the past few years and consequently, platinum mining in the North West Province is booming.With the increasing environmental consciousness world wide and a continually expanding list of new applications for platinum, investment activity is rife and huge expansions worth billions of Rands are already underway at many of the platinum mines in the area with additional growth on the cards — all ensuring a highly promising long term future for the metal.

When mining companies invested in the area during the apartheid regime, it was agreed that corporate tax and other related taxes would be paid directly to the government, but that the royalties would be paid to the Royal BaFokeng.The BaFokeng nation currently spans 44 farms and extends over 70,000 hectares. The kingdom is sub-divided into 72 traditional dikgoro (wards), each of which is regulated by a hereditary dikgosana (headman) and mmadikgosana (headman’s wife). Today, locals here see investors not as plunderers of their resources, but as partners in business and development.The hostility that once clouded the two sides was ended not by deployment of thousands of armed forces or expansion of prisons, but through amicable discussions aimed at giving locals their share of the cake.From the documented records it wasn’t an easy battle, but finally there was a deal on the table.For instance, in this Platinum Province, the federal government of South Africa does return back about 10 percent of the total taxes it earns from various mining companies operating here.The idea, according to the architects of this policy, is to force the government to give back to the people from whom it has collected huge revenues of taxes.This is the success story of Royal Bafokeng—Africa’s richest people.This report has been written with great assistance from various documented online researches and interviews conducted in Rusterburg, early last year.

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