In conversation with
Dr. McEdward Murimbika
Chief Executive Officer | Siyathembana Group
FDI Spotlight: What is the DNA of Siyathembana Group and how has the organisation transformed since you became CEO?
Dr McEdward Murimbika: Siyathembana Group was founded in 2010 as a consolidation of multi-service entities. Before that, in 2003, I was the group executive of Nzumbululo Holdings, who acquired various independent small businesses. These businesses were all offering boutique services, acting as advisories to mining companies, operating within the public health sphere, focusing on socio-economic policy and applied business research and specialising in environmental management services to private entities as well as public SOEs such as Transnet and Eskom. I felt that these businesses could feed off each other and that we could become a multi-service turnkey consulting firm.
That is when Nzumbululo Holdings acquired entities which had the footprint and focus we were interested in. By 2010 we had converged into four major subsidiaries: Nzumbululo Heritage Solutions, Tshisele Investments, Mukhaha Consulting Engineers and FTT580 Consulting.
This permitted us to attain broad-based organisational management and ownership consistent with our growth objectives in business and skills development, and extend our geographical and market reach.
My vision was that I wanted to create a turnkey-applied solution provider within the above mentioned key sectors. Everyone who came from 2010 had to understand what my vision was. If you think about mining, for example, the companies in this sector generally have the same problems, no matter how big or small they are.
We have four divisions, each with their semi-independent executives: Environment & Infrastructure; Mining; Business Consulting and Heritage Management. We also have a small and centralised board which drives the group. The board, chaired by Dr Sakhile Ngcobo is pretty much a hands-on team responsible to shareholders for the management of the company and for the protection of its assets. It oversees Siyathembana Group’s systems of internal control and for reviewing their effectiveness.
There is a preconception that, to make money in certain markets such as mining, you can and need to do so quick and dirty. How can we challenge this idea and change the belief that to be successful, companies need to adopt a sustainable and honest model?
Dr McEdward Murimbika: The days of making your money quick and dirty are over. When you look at the historically destabilised regions such as the DRC, you can see that things are changing; the political structure is changing. Zimbabwe is another good example: even though their political system has been corrupt for many years, their economy, in a weird way and against any known economic principle, never completely collapsed. The governing party and the army have finally forced Mugabe to step down, and going forward, it cannot be business as usual.
A sustainable economy, one that develops and is profitable for everyone, is being found increasingly across the African continent. Coming in quickly, doing dirty business to make money and then moving out is not holding; it is clear when you look at Sub-Saharan Africa. In the next decade, we will have a different view of how to do business in Africa. We need to not only understand that there is a change coming, but we need to understand how the new environment will work.
That is why one of our business units focuses on the physical environment, as well as social and government structures of big entities. In South Africa, we do not even bother looking at the B-BBEE system, but instead how an entire structure works. We have seen, for instance, that simply having a CSR programme or ticking a B-BBEE box on a form is not cutting it.
Over the last five years, we have been dealing with disruption in the mining sector. Even though mining brings in a large amount of revenue, the communities in and around the mining industry are some of South Africa’s poorest. Within these communities in South Africa specifically, there is a history of migrant workers taking the bulk of the workload available. This creates animosity for the local communities who tend to feel exploited when mining operations use their regions resources, but no jobs or money trickles down to the community. The local communities, who are under the traditional leadership, and the migrant worker communities both live in precarious conditions.
What often happens within these communities is that there would be tension due to alternative paradigms and shifts within these archetypes that has nothing to do with political structures. What has happened over recent years is that the youth within these poor communities, who often find themselves stuck in these areas, have disrupted the mining operations. They would block the roads leading into the mines and sabotage the railway lines transporting the minerals or stage protests that could drag over long periods significantly disrupting the mining operations. This has halted operations in many mines across the country.
Many of the mining companies did not want this to become public knowledge or wanted people to know how big of an issue it was to avoid public hysteria and further concern around the mining industry. What many people do not know is that it was happening more often and at many more mines than what they knew about.
We decided to look at what the challenges were that continued to escalate the severity of the situation. Our current board Chairman had worked for years in the legal and corporate affairs departments at large corporations such as Anglo American-owned De Beers Consolidated Mines, so he understands how to work with both communities and the mining companies and the issues they face. He suggested that we set up a team and visit each mine and community to find out what the concerns were.
We found that not only were there problems between the local, youth and traditional leaders within the communities. In some cases, we found out that communities themselves created parallel leadership processes, which – I say again – has nothing to do with political or traditional leadership structures. Therefore, there would be three community structures within the wider area, each with their own interest.
We therefore created a team to talk to the individual communities. The youth’s biggest concern was the lack of employment; they want to be provided with chances to work their way out of poverty.
We profiled different communities and part of this was to speak to the mining houses themselves. The issue for the miner is – they are miners and extract minerals. For this, they need efficiency and there are specific human resources, certain machines and processes they use to increase that. They can only employ a few locals, especially the youth, to work on the mines as labourers, security personnel, and those who do social community work. Unfortunately, there are only so many ways the mines and the miners themselves can help the local communities. As heavy-duty mineral resources extractors, you need a certain set of skills and training which are hardly available in these remote or rural communities.
While they are very excited about local acquisition and more than happy to buy products from the locals, there are only so many of those products they can use on the mines. Unfortunately, these mines spend billions on what they need and if they need to spend a certain share of that locally, the question is who are they going to spend that on and what will they buy which is core to their primary mineral extraction business?
Another issue that was brought up was that of beneficiation. This is a big concern and is core to the current government policy. The miners are in the business of extracting minerals do not necessarily want to beneficiate the minerals they extract because that should be someone else’s responsibilities. It is important to note here that beneficiation should not only be discussed within the mining policy, it should be discussed within the strategy and regulation policy too. One of the studies we do is regulatory impact assessments, so we went back on all the conversations we had with the various parties and did the study to see what the likely impact of a change in regulation within the mining space would be on the community.
From this study and all the data, we collected, we came up with an initiative called Youth In Mining. It is an initiative from different chambers across the country; we rolled it out in Limpopo, North West and the Northern Cape. The idea was to get the youth to talk about a different solution than nationalising the mines; many people do not understand what that means and it is not only important to educate them but it is important to make them aware that it may not be the best solution nor is it the only solution. Nationalising the mines is one way to address a real problem, but with mismanagement, it has the potential to be a catastrophe.
It is a difficult dialogue, for example the debate about the new mining charter has triggered a stand-off between the mining houses and the minister. One of the thorny issue is what has come to be “once empowered always empowered” dispute where most major mines have increased their B-BBEE statuses to above the previous target of 26 % B-BB ownership. On the other hand, the State is asking how has that changed things, because it has done no real empowering of the people, particularly the local communities. The people in most local communities we have been surveying have said a share of B-BBEE is not enough, they are not interested in that. For instance, the local youths are interested in getting empowered to be the service providers; they want to be contract miners who work for the mines for seven or ten years. However, the problem with that is the lack of skills in the local communities. The people would need extensive training to be miners or professional service providers to the mines. Regarding enterprise development, there is no supply to develop locally; the system is flawed from this perspective.
After years of looking at these problems, we participated in an inaugural Youth in Mining Summit in June 2016 in Johannesburg focusing on Procurement Transformation – Driving Youth Business participation in the Mining. After the first summit, several follow-up events in provinces followed. However, given the fact the mining sector is one of the most prominent debating point in the South African economy, we were sucked in by the political noise surrounded the new Mining Charter and the youth in mining. The 2017 summit did not materialise. We have also lost a lot of support for the Initiative as the debates began focusing more on the politics surrounding mining in South Africa than pursuing fact-based solutions to specific local challenges and context led interventions.
However, the mission, agenda and where to attack is still there. The youth are not interested in being B-BEE beneficiaries in the mining sector. They are interested to go through supplier development where they can integrate themselves in the value chain. The solutions we provide are part of a continuous process and it is not something we put out there as a populist move. If our solutions are used in that way, we will all go back to the failures that drove us to these solutions in the first place. On paper, they will look perfect. However, if you will not pursue and follow them in terms of both political and commercial leadership, they will fall away.
If they are used and implemented correctly they will lead to long-term and sustainable profitability and empowerment.
What would you say are the pros and cons of running a regional business, as opposed to a South African business?
Dr. McEdward Murimbika: I have a very globalised family; I am Zimbabwean and have a multi-citizenships family. Therefore, even when I am not working, my perspectives about issues are globalised. Trying to bring that global perspective into business is tricky, but the outcomes can be very rewarding.
I have worked on several unusual assignments. For example, one of Siyathembana client wanted to extend one their mines in rural Limpopo Province. That particular mine sought conversion from open cast mine into an underground one. This meant that they needed to convert their mining license into one that would allow them to run an underground mine. They followed all the correct steps and submitted the correct papers and the Department of Minerals and the Department of Environment. Expanding the mine would mean it would potentially operate for another three decades with an investment of up to R60 billion – it is a massive undertaking and the impact would be great across the board.
However, the mining house were challenged by an unexpected group against the expansion or conversion of the mine from open cast to underground on the grounds that the mining was unsustainable and a threat to the local environment and the near-by World Heritage Site. Ironically, the mining company was actually making their impact and negative footprint on the environment smaller. The important aspect to extract from this is how powerful local community initiatives can be; the matter eventually ended up on UNESCO World Heritage Committee agenda.
What all mining houses operating in this space did not look at was that everything we do is part of the global value chain, not only the local value chain. The local communities were not specifically referring to the mine itself, but to other resources such as water reserves from which the mine pumps water remotely for its operations. Once again, ironically, the mining house was a leading proponent of nature conservation in this region having played central role in creating the national park that formed part of the UNESCO WHS. Therefore, the people have every right to speak out against their operations.
When we were brought on board, the mining house was understandably unhappy and somehow uncertain. However, given we are experts within the field of world heritage sites, we will assist in a real way.
We found that they could add value by protecting the water estate on the heritage site. We needed to find a way how they could improve on their water extraction rights, which meant that they had to accelerate the improvement program of their current infrastructure to be more efficient in how they manage their water extraction and how they give water to the park. They had to go back to the lease agreement they have with South African National Parks and had to do a different world heritage site impact assessment, which had nothing to do with South African legislation.
We then intervened and made the assessment using UNESCO regulations, not South African legislation. However, South African authorities cannot assess the assessment itself, so as the state party to UNESCO, South Africa has to go to them and request an assessment on their behalf. After the papers were submitted to UNESCO and the assessment was done, the mining company set up more resources for water management and could still expand their mine.
Another example we worked on was at NAMDEB mine in Namibia where a historic Portuguese shipwreck was accidentally discovered during marine diamond mining operations on the Atlantic south-west coast. When the shipwreck was discovered, NAMDEB was in unchartered territory as to what to do with the maritime heritage. A debate ensued as to what should be the procedures to follow given the shipwreck was yielding the largest haul of gold and silver coins, ivory and more than 80 tonnes of historic cargo dating to the 1490s AD. Eventually, we were brought in to resolve this potential international dispute over the wreck with Portugal and Spain interested. We stepped in, did the research and discovered that according to the law, NAMDEB was in the right because the ship was considered as their property. This led to a whole joint initiative between an international team of experts including American, Canadian, Portuguese, German, Kenyan, Spanish and UNESCO’s Africa World Heritage Fund team coming in to assist on the final recover of the wreck and subsequently extending the local Namibian legislations and regulations to include international marine heritage. Eventually we assisted the Namibian government towards ratifying the Underwater Heritage Convention.
In both these cases, our solution led to real community interaction and consultation, and real change in how companies act and think about what happens downstream, not just what happens upstream. The policy that was created in Namibia came from what we do and what we set out to do with Siyathembana Group.
It is important to look at what big companies do and where they do it; ask yourself why one large international mining company would de-investing, for example, from South Africa and instead investing in Zimbabwe. If you do not, you are missing a regional approach. You cannot only follow the politics side of things; look at what else is happening in the counties and in the region as a block. Africa is not homogeneous; you cannot approach it with one mind and one train of thought.
As an entrepreneurship senior lecturer, what attributes would you say the next generation needs to be successful entrepreneurs?
Dr. McEdward Murimbika: I am an advocate of training, and in my opinion, there are not enough institutions that focus on entrepreneurship. There are many training centres, but there are few who focus on entrepreneurship. It is a very different mind-set and you need a different set of skills and knowledge for it. Everyone aspires to be an entrepreneur, but there are very few who can make it happen. That’s what motivated me to take time out of my executive schedule and offer my expertise teaching to Masters classes at the Wits Business School.
The next generation needs to have a globalised outlook, be adaptable and have an innovative mind-set. I have seen that one of the biggest challenges in creating African entrepreneurs is that South African students do not understand Africa, going into it or how to approach work on the continent. They think it is a straight road, which is a complete misnomer. The understanding needs to be there that you need to learn about Africa and understand it.
Students need to understand that even though South Africa is the strongest economy on the continent, other African countries will and are already changing that. Nigeria, for example, has a population three times the size of South Africa. This means that Nigeria has a huge internal market, which will give it a huge push especially in terms of digital innovation. In terms of industrialisation, Ethiopia is doing far better than South Africa. Here you have a lot of stagnation, where Ethiopia is exceeding in their exports and manufacturing. When you give this information to South African students they have a hard time to believe it, which shows how much there is for them to still learn.
In terms of innovation, one model I focus on is innovation in technology. I look at the current issue of convergence and exponential technologies. When I look at the mining sector, one of the demands is that they cannot advance technology faster than what the regulations allow. Robotics or full atomisation, for example, are not allowed in South Africa’s mining sector. Yet, a lot of South African mines, particularly the gold sector, are old, unstable and unsafe and if you combine this with labour instability, the mining shafts are being retired not because the mineral resource is gone, but because the gold mine has become inefficient to maintain. These inefficiencies can be solved with technological convergence such that we see in robotics.
The students come back and say people will lose their jobs because robotics will take over everything. This is not only wrong but a narrow perspective. These students are thinking about unemployment and about the future incorrectly. All you are doing is delaying going to the toilet because you are afraid you will be hungry. Introducing robotics will increase productivity, sales, and everything that follows that. Unemployment, then becomes a different issue and a different problem to solve by applying innovation spurred by convergence of technologies as opposed to the current retrogressive approaches trying to save jobs by seeking to block technological progress.