AN OPEN LETTER TO MR. CYRIL RAMAPHOSA – CHAIRMAN OF SHANDUKA GROUP
Good day Mr. Chairman, my name is Taelo Immanuel. I am the owner and founder of Birth Communications, a through-the-line communications agency based in Johannesburg, South Africa. We focus on Design, Branding, Advertising, Annual Reports and Digital Marketing. I am also a committee member of the Association of Black Communications Practitioners (ABCoP), an organization that exists for the advancement of black people in the Communications Industry.
My business is currently not performing at all. This Mr. Chairman is not due to my incompetence as an entrepreneur or the Euro Zone Debt Crisis that is affecting local trade. This is mainly due to the ownership structure of our local Advertising industry and the disinterest of the State, Government and private business to procure work to local suppliers.
This industry is dominated and controlled by four foreign-owned media groups, namely: WPP (UK), Omnicom (USA), Publicis (France) and Interpublic (USA). These four media groups in turn own all the multinational agencies represented on our shores. At face value our industry appears to embrace competition but beneath the surface it is only four players passing accounts amongst themselves through their multinational representatives.
This Mr. Chairman is not a case of sour grapes on my part but perhaps a sense of patriotism since the net effect of the status quo is our ailing economy being drained by these four media groups through their multinational representatives. What complicates matters sir, is the BBBEE Act in that instead of aiding smaller black players to enter the game it acts as an insurmountable barrier to entry and empowers multinationals to dominate the local industry landscape. Naturally, the presence of prominent black equity partners, such as yourself, on multinational boards only guarantees these companies more profits, however, only a small portion of these monies stays in the country and the rest is spent overseas. Therefore, Black Economic Empowerment does not empower black people as intended, rather it empowers the British, Americans and the French in our context.
The following Mr. Chairman is a snapshot of how locally represented multinational agencies are structured:
Grey – 74.9% WPP, 25,1% Bongani Khumalo
Ogilvy – 59% Ogilvy Worldwide (WPP), 41% Local
Y&R – 70% WPP, 30% Memeza QRX
JWT – 70% JWT New York (WPP), 30% Delta Blue
Metropolitan Republic – 85% WPP, 15% Other
Media Edge – 70% WPP, 30% Memeza QRX
MediaCom – 74,9% WPP, 25,1 Bongani Khumalo
Nota Bene – 70% WPP, 30% Memeza QRX
Base2 – 70% WPP, 30% Memeza QRX
Aquaonline – 70% WPP, 30% Memeza QRX
TBWA – 70% Omnicom, 25% Shanduka Trust, 5%
2. Network BBDO – 60% BBDO Worldwide (Omnicom),
OMD – 54% Omnicom, 46% Local
DDB – 64% DDB Worldwide (Omnicom), 26%
Draft FCB – 50,1 Interpublic Group, 26% Barasque,
23.9% Staff Trust
McCann – 61% McCann WorldGroup, 39% Local
Lowe Bull – 100% Lowe and Partners (Interpublic Group)
The Media Shop – 51% Interpublic Group, 49% Local
Starcom – 64% Publicis, 35% Koni Media, 3% Other
Saatchi & Saatchi – 76% Publicis, 24% Management
From this picture, Mr. Chairman, it is evident that local participation is very low in our industry. These four media groups bleed about 70% of local industry profits overseas and only a small percentage stays at home, benefiting only a few individuals at that. When an investor such as yourself ventured into Advertising and bought a 25% stake in TBWA, it was a noble initiative at the time since black people in general felt a justified sense of relief that at least some of us were profiting from the fat of the land at last. Since many black professionals were still green at the time, we could not produce qualified individuals in numbers to fill certain key positions and own equity in the various corporations. Today Mr. Chairman, things are very different. As we develop in our corporate careers we find that the logical step is for us to own equity in the companies that employ us but we also find that since they are usually multinationals there is very little equity to be distributed since some of it is taken up by BEE partners anyhow. To break this glass ceiling, we have become entrepreneurs but only to find ourselves in the unfortunate position where the BBBEE Act is working against us. An investor such as yourself has the ability to lobby government and corporates successfully so as to direct their business to multinationals. Your network and their capacity make for a winning combination that guarantees lucrative accounts for multinational agencies. I would not be this concerned if these accounts were won by locally-owned agencies but they are not. Your presence as a BEE partner in a multinational agency guarantees large sums of money leaving our shores on a regular basis thus hurting our economy. Your presence in multinational companies has had the unintended consequence of marking local players out of the game because through the BEE Act, the multinational corporations you represent are seen as empowered beyond even black-owned companies thus hampering our ambition to own a portion of the economy. Would it not be a better idea sir, for an investor such as yourself to invest rather in black-owned companies and redirect accounts from multinationals to locally-owned agencies?
The way BEE has been implemented to date is somewhat problematic, sir. The notion of acquiring funding to purchase a minority stake in an existing company so as to guarantee that company lucrative contracts and in turn it bleeding most of the profits offshore is not true empowerment. Genuine empowerment should result in the economy reflecting the demographics of our country. We should not be trying to gain ownership of other people’s companies but rather building our own. We should be making it possible for black people to participate in the economy without tempting them with corruption through questionable tendering processes. Instead of changing the ownership of multinational companies we should be changing the ownership of the various industries. Instead of intensifying multinational and colonial ownership of our economy, we should be diffusing it.
We need to ensure that corporates and government procure work to locally-owned suppliers as opposed to ‘empowered’ multinational corporations because they can only take significant amounts of money offshore. If we can change our procurement policies and trust that after 17 years we have now built enough critical mass to handle significant portions of this economy successfully, we will begin to change the economic destiny of many black South Africans. As to why a dream such as this one sir, threatens many white South Africans is beyond me. Surely if profits remain in this country and are spent here, everyone stands to benefit. Multinational corporations do not necessarily enrich average local whites substantially anyway since they are also expected to ship the money offshore as their progenitors did during colonial times. If we can unlock our economy for it to benefit the majority, the minority will invariably feel the effects as opposed to pursuing the opposite.
Given our economic history of extraction and the dire need to empower black South Africans, an investor such as yourself is morally and ethically bound to respond differently to our challenge. It is not wrong to expect Mr. Cyril Ramaphosa, the great struggle stalwart who fought for the rights of the worker during apartheid times not to enrich multinational agencies purely on moral, ethical and economic grounds since he has an understanding of our history as a country and profound insights into small business being the catalyst for economic growth.
The Proudly South African slogan is ‘SHOW YOUR LOVE FOR SOUTH AFRICA. BE PROUDLY SOUTH AFRICAN. BUY LOCAL TO CREATE JOBS’. It would be a victory for our industry and many others if work could be procured not to those who meet the requirements of the BBBEE scorecard but rather to those who are PROUDLY SOUTH AFRICAN. You know this argument better than most as a businessman, therefore, I would like to ask you to SHOW YOUR LOVE FOR SOUTH AFRICA, sir. BE PROUDLY SOUTH AFRICAN. BUY LOCAL TO CREATE JOBS.
I would therefore appreciate a meeting with yourself, where you can meet with me and other like-minded individuals from our association, ABCoP, as soon as possible. In this meeting we can discuss the proposed solution and see how we can best map a productive way forward.
I would like to thank you so much Mr. Chairman for taking the time to read my letter and I am looking forward to a swift response from your office.
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