Irish entrepreneurs grapple with complexities of ‘endlessly fascinating’ South Africa

On a dull, thundery afternoon in Cape Town, two coaches packed with Irish executives and assorted dignitaries pull up to an abandoned cement factory in the heart of a township. As far as the eye can see, stretching in every direction across this area can be glimpsed the dizzying web of communities and homes that make up the ever-expanding network of townships dotting this part of the Cape Flats region.

The specific object of the Irish group’s attention this afternoon is Philippi Village. Part community hub, part business development agency, it is all welcomes for its Irish visitors. The facility shines like a De Beers diamond in this troubled but tenacious country.

This visit of more than 100 Irish entrepreneurs is part of this year’s EY Entrepreneur of the Year (EoY) executive retreat, taking place in the legislative capital of South Africa this week. It’s a delegation comprised not just of this year’s 24 finalists but many of their predecessor finalists and winners along with a support team from the big four firm, led by EY partner lead for EoY Roger Wallace and Eimear McCrann, director, EY Private and EY Entrepreneur Of The Year. The programme is also supported by Enterprise Ireland, Invest NI and Swiss wealth manager Julius Baer.

A packed agenda sees the group taking part in high-level executive education sessions with major South African figures such as Jannie Durand, chief executive of Remgro, one of the largest publicly listed countries in the country. They also hear from Willem Roos, the former chief executive of Ireland’s newest car and home insurer Outsurance, along with Irish-born H&M South Africa head Caroline Nelson, among other high-profile guests. In between there are trips to a 300-year old winery in the leafy Stellenbosch area of the Western Cape and even a night safari at a game reserve. Rugby World Cup-winning Springbok coach Rassie Erasmus also pops in, speaking fondly of his time in Limerick as Munster head coach. So too does former Springbok prop Tendai ‘the Beast’ Mtawarira and Olympic gold medallist Penny Heyns.

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Yet one issue more than others comes to hang over the early discussions: South Africa’s upcoming general election, taking place next Wednesday.

“You have arrived,” political analyst and adoptive South African Richard Calland tells the group on Monday evening, “at a very interesting moment in a very complex time in a very complex country. I have probably begun a presentation like this for 20 years by saying almost exactly that same thing. This country has been endlessly fascinating.”

Riven by infighting and scandal, what was once the party of Nelson Mandela is being pressed by its rivals on all sides

The African National Congress (ANC), which has dominated electoral politics in South Africa since 1994, is tipped to lose its majority for the first time ever. That means next week’s election threatens to be one of the most divisive and potentially destabilising in the just 30-year-old democracy’s history.

Riven by infighting and scandal, what was once the party of Nelson Mandela is being pressed by its rivals on all sides. From the right it is the liberal Democratic Alliance, the second-largest party in the country. It won just over 21 per cent of the vote last time out. The pro-business grouping, led at the national level by John Steenhuisen, is already in power at local level in the Western Cape province where Cape Town is located, drawing its support from among the middle classes and the business community in the city and its environs.

Democratic Alliance may have hit “a ceiling” with its public support, says Calland, and is not considered likely to seriously threaten the ANC as the largest party.

However, in a doomsday scenario for the ANC and President Cyril Ramaphosa in which its share of the vote drops from the 50 per cent required for an outright majority down into the low 40s, Democratic Alliance – which derives much of its base from the Afrikaans and English-speaking white as well mixed-race voters – might be the ANC’s only option to form a coalition.

Another option, much to the terror of the country’s capitalists and the more well-heeled residents of the Western Cape, might well be the Economic Freedom Fighters (EFF). Led by the charismatic and controversial Julius Malema, the revolutionary socialist party is also considered likely to increase its presence in that national assembly when voters go to the polls next week against a backdrop of worsening economic inequality and upheaval.

Yet the real wild card in the deck, explains Calland, is disgraced former president Jacob Zuma. Just as many of the EoY delegation were arriving in the country on Monday, South Africa’s constitutional court ruled Zuma was not eligible for election due to the 15-month prison sentence he served in 2021 and 2022 for contempt of court. Since leaving prison, Zuma has formed his own political party, a left-wing nationalist grouping provocatively named after the former armed wing of the ANC. He believes that together with the EFF, his new formation could garner as much as a fifth of the vote, enough to make him kingmaker – even if he is not himself on the ballot paper.

An ANC with a 40-something per cent share of the vote combined with a Democratic Alliance share of about 25 per cent could be a stable partnership, says Calland. But many businesspeople here, including Ivor Queally, a finalist in the international category of this year’s EoY competition, are looking for a better showing from the ANC. “The best outcome is an ANC 45 per cent to 47 per cent with one or two minority, smaller parties,” says the Kildare native, who runs the South African arm of his family’s meats group, one of the biggest processing and cold storage operators in southern Africa. “That would keep the checks and balances in place.”

If politicians are dancers on a stage and electoral permutations are choreography, the economic and social realities of life in South Africa are the music to which whole performance is set. The official unemployment rate is about 33 per cent – a rather conservative figure, according to Prof Mikael Samuelsson from the University of Cape Town’s graduate business school, who spoke to the group on Tuesday – and youth unemployment stands at about 68 per cent. Planned power cuts, known as load shedding, are another challenge as the creaking South African electrical grid struggles to cope with demand. These cuts can last for anywhere between two and 12 hours, locals say, although they are conspicuous by their absence in the week before the election.

Doing business in South Africa is a question of negotiating complexities, the EoY group is told, whether it’s the country’s 12 official languages, its rainbow of ethnic groups or the economic context in general

But the entrepreneurs that form the delegation, many of them who operate in South Africa or – like Queally – are based here, are optimistic by nature. “With challenges comes massive opportunities,” he says. “If you look at load-shedding, we had 12 hours a day last year with no electricity. You have to make a plan. So, we rolled out lots of generators. We now have 12.5 or 13 megawatts of solar. We’re going to bring that up to 20 megawatts of solar over the next seven, eight months.”

Doing business in South Africa is a question of negotiating complexities, the EoY group is told, whether it’s the country’s 12 official languages, its rainbow of ethnic groups or the economic context in general. Benchmark central bank interest rates remain at a 15-year high of 8.25 per cent at the moment against the backdrop of stubborn inflation that makes our own situation in Europe seem rather quaint.

“We can’t look at things, like in Ireland, where we have a 20-year visibility or 10 years,” says Queally. “So if we invest in something today, we have to look five years ahead.”

Clare Hughes, chief executive of veterinary pharmaceutical company CF Pharma, agrees. A finalist in the established category of this year’s competition, her company does about €1 million a year in sales in South Africa, in veterinary targeted products in areas around digestive health and parasite resistance. But she says there are huge benefits to doing business there, not least the people themselves. “Even though the company that we actually started working with her has been bought three times,” Hughes says, “and there has been a lot of consolidation in the veterinary market, they’re incredibly loyal. They’re all about education. They’re very into sustainability and doing the right thing.”

Doing the right thing could be the unofficial slogan for Philippi Village. On Tuesday afternoon, the group is led around the facility, a space reclaimed from the muscle and sinew of an abandoned cement factory in the middle of a township, by the bubbly Angela Teffo, head of special projects at the hub. A local of the area, she explains the origins and function of Philippi Village. Out of its main building, Teffo says, the hub plays host to some 37 local businesses who rent office space from the non-profit, which is supported by humanitarian groups such as Open Society and the Bertha Foundation. From the repurposed shipping containers that form part of the perimeter of the space, Philippi Village operates workshops and retail units for local entrepreneurs. It also incorporates social spaces including a library, a football pitch, the beginnings of a skate park as well as a small chicken farm and a recording studio.

The organisation is in a constant state of negotiation with the local township residents, Teffo says. Their access to basic facilities such as toilets and running water is never secure and Philippi Village has had to build relationships and trust with the community to convince people of its utility in their daily lives. That has meant advocating on their behalf and, to some extent, lobbying the government for better access.

Funding is another constant challenge, says Teffo. The group transitioned from a private company to a hybrid structure to facilitate greater investment from the South African government. It also wants to be able to attract international corporate donors by securing tax-exempt status.

“That has literally forced us to [go] from a sort of privately owned company into this hybrid model where we are privately owned but at the same time we’ve got non-profit status,” she says. Apart from money, the most important thing that the organisation looks to bring to the community is knowledge transfer. “It’s such a big need for township enterprises, especially for those doing business in the township space,” she says.

“What I find is a person will wake up and just have an idea – I want to wash cars, or whatever. And they haven’t thought about is that it actually could be a sustainable model. You’re the only one on this road. So how do you make that into a sustainable business and not just something that’s going to put food on the table?”

But beyond that and regardless of next week’s election result, Teffo says she wants to see the new government prioritise equal access to services for the people of the townships. She gives the example of a tap and drainage system at the entrance to the Philippi Village complex, which frequently floods because so many people use it to wash clothes. “It’s not our drainage system,” she says. “It’s the community’s drainage system but it then floods our entrance and cars can’t get in and out.

“If we weren’t an organisation of the size, we would wait about three weeks for the government to come through and to pump it out. But as an organisation, we are able to then help the community get things faster.”

Networking and professional development opportunities abound at every edition of the annual EoY retreat. But this year’s cohort should, with any luck, be leaving South Africa on Saturday with insights and experiences of a far more valuable nature.

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