Robert Gumede is one of South Africa’s most influential and successful entrepreneurs. He talked about his experiences with Stephen Williams.
Robert Gumede has had a prolific experience as an entrepreneur, beginning at the early age of seven, when he began to help his mother in her second-hand clothes business. This was in Neilspruit, in northeastern South Africa, close to both the Kruger National Park and the Mozambican border. He describes his home town as “one of the most beautiful parts of South Africa”.
But Gumede faced a number of challenges in his early years, being born on the wrong side of the tracks at the height of the apartheid era. One of seven children, his single mother was determined that he should go to school, but finding the fees, as well as money for food and rent, did not come easy.
Nevertheless, Gumede has built a business empire, owning a group that covers eight sectors: Investments and Private Equity; Infrastructure and Construction; ICT; Energy; Railways, Mining; Tourism & Hospitality; Water & Sanitation; and Strategic Business Consulting.
When asked if he had an entrepreneurial mentor, Gumede immediately credits his mother, who inculcated a spirit of self-reliance in the young man, ensuring that he joined his elder sister in the “family business” of selling second-hand clothes in the neighbourhood.
His mother would source the clothes, carefully wash and press them, repairing them if necessary, before he joined his sister calling door-to-door. The Gumedes were not alone in being short of money, and oftentimes customers would have to rely on the credit that could be extended to them. These were early lessons in weighing up commercial risk, evaluating trustworthiness and building client relationships.
Lessons that he learnt along the way held him in good stead later in life. Before he had even finished school he had part-time work as a caddy (at a golf club that he now owns), a gardener, a fuel station attendant and a bus conductor. All the while he was a careful observer of how businesses worked successfully.
He says with some pride that he currently employs more than 14,000 staff directly, but no one is a better salesperson than he is.
Recalling his time as a caddy, he says: “Most golfers were business people, professionals such as medical doctors and the like, and were always surrounded by the successful people. I learned a lot.”
But the fact still remained that race divisions were strictly demarcated. “Don’t forget, these were tough times; it was apartheid at its worst,” he says.
“I was born in1963 and named after Robert Kennedy, JFK’s brother, but my African name is Matana,” he adds. That was the year of Mandela’s Rivonia Trial, the trial that began the change in South Africa. By the time Gumede entered high school in 1976, the student protest movement was in full swing. When he graduated, he went on to study law before becoming a state prosecutor at Kabokweni Magistrate’s Court.
“I grew tired of being part of a process that was jailing people that had no work or food and were being prosecuted for stealing bread or powdered milk to feed their children.
“I decided to leave the courts and to pursue my own business interests. That was in 1990 when Nelson Mandela was released after 27 years of imprisonment. I was drafted in by the then Kangwane homeland government to become part of a delegation to the first convention for multiparty democracy in South Africa that laid the foundation for the new constitution.”
This brush with politics allowed Gumede to interact with leaders who had previously been detained and he describes being in the presence of Nelson Mandela as “really a great honour”. But Gumede also realised that politics was not for him. “I chose to go the business route as political freedom needed economic freedom to blossom,” he says.
He first got to know and love the rest of Africa and what huge potential the continent held before he identified a position with an Anglo-American subsidiary, LTA (now Grinaker-LTA) that was involved in the construction industry. He saw that as an opportunity to learn first-hand what corporate life was all about. As Gumede puts it: “You learnt responsibility, discipline, doing it right the first time, and accountability.”
“I wanted to change the education system,” Gumede explains, “and one of the businesses I identified was the manufacture and supply of scholastic stationery – materials I could never afford – so that each black child could have an exercise book.”
It might have all ended in tears however. Despite doing exceptionally well within the company, winning contracts for more than ZAR50m, and helping to build new infrastructure such a roads and schools, he found his own business, that had received the LTA board’s approval, facing corruption charges. A director had accused him of bribing to secure a ZAR6m school textbook publishing contract.
Gumede refuted the accusations completely and told his LTA bosses that it simply was not true. ”I wrote my letter of resignation and reminded them of the millions of rands of business that I had brought to the company without any corrupt practice. I felt insulted that these charges had been brought against me, and that LTA had even listened to them. Frankly, I said that they could keep their job.”
After a thorough investigation, the allegations were found to be false and Gumede was exonerated. “The group CEO, my boss, called me to a lunch meeting to apologise but I said ‘I’m not staying’.”
Gumede recalls telling him, “I don’t mind continuing to work with you; you can continue paying me, but as a consultant, not an employee.”
And it was in this way that Gumede turned what could have been a serious challenge into an opportunity. “I used my pension money to set up my office and that was the beginning of my formal business career. It pushed wind under my wings,” he says.
After building a team, and creating a 3,000-strong security guard business, Gumede identified IT services as his next focus. His motivation was in observing that, in the advent of a new democracy in South Africa, the IT service providers were all white-owned companies.
“I met with a friend who was working for IBM, and after talking to him I decided to begin a software and services division. The business grew rapidly and today around 70% of the top 100 public listed companies in South Africa are our clients and the government also uses our services.” Gumede says.
“It’s a unique position, but just one part of our business today.” In 2009 the British telecom group, BT, made an offer to buy the company for about ZAR2bn but Gumede walked away to keep control when it became clear that BT was less interested in developing a strategic partnership than tying him to an agreement where, after five years, they would have an exclusive right to buy the entire company at a price they could determine.
Nevertheless, as one door closes, another opens, and Gumede’s takeover of the struggling IT group Gijima created an even more powerful digital technology arm to the Guma Group’s holdings. Gumede executed a white economic empowerment deal, a black knight saving over 2,000 white jobs.
Commenting on BEE, Gumede says: “One questions is its sustainability. If we really want to change the landscape of the economy, we should have a Marshall Plan around food security. We should create commercial farmers … that can create hundreds of thousands of jobs.
“I am a major player in the tourism sector through my company, Tourvest, which has the likes of BA, Kenyan and Ethiopian Airlines as global partners. Tourvest also owns hotels, restaurants, airport duty-free shops, travel agencies, American Express FOREX and travel and game lodges.Tourism, just like agriculture, creates sustainable jobs and tourism brings the much-needed tourists who bring foreign currencies to our country for the sake of empowerment. And Tourvest is growing, with businesses in Brazil, the Caribbean, Europe, China and across Africa.”
Today, Gumede spends his time and money on philanthropic projectsas well, assisting African countries by investing in building new energy plants to power their economies, as well as building new infrastructure – including railways, and supplying locomotives and rolling stock. NA