South African billionaire and now philanthropist Patrice Motsepe’s charitable foundation should be able to count on annual cash inflows of at least R1.2bn, but probably much more, following the mining entrepreneur’s decision to allocate at least half of his existing and future income towards worthy causes.
Motsepe, the founder and executive chairman of JSE-listed mining group African Rainbow Minerals (ARM), announced on Wednesday that he and his family have taken up the challenge inspired by the legendary US billionaire investor, Warren Buffett, and Microsoft founder, Bill Gates, for wealthy individuals to spend most of their money on charitable and social investments.
“It’s recognition that people in my position have a huge responsibility to other South Africans who are less fortunate,” Motsepe said. “[I would like to] make a humble contribution to improve their lifestyles.”
The contributions would be channelled through the Motsepe Foundation, a charity the businessman established in 1999, to be used during his (and his wife Precious Motsepe’s) lifetimes and beyond.
Motsepe made it clear the commitment would not entail the liquidation of assets. Instead, half of the proceeds from his investments would go towards the foundation.
“There is no intention in the short- to medium-term to go on a process of selling shares, because there is no need to do that,” Motsepe said. “We’ll make sure there are significant resources available.”
Motsepe didn’t want to elaborate on the value of his wealth or the funding that would be made available. However, Forbes Magazine in November estimated his net worth to total $2.65bn (almost R24bn). According to a shareholder analysis on the website of ARM, Motsepe’s privately owned African Rainbow Minerals & Exploration Investments holds a 41.26% stake in the JSE-listed entity, which translates into a current value of R18bn, based on the company’s market capitalisation of R43.54bn on Wednesday.
Should Forbes’ assessment of Motsepe’s total wealth be close to the real figure, and one works on the very conservative assumption that the businessman seeks an average return of 10% on his investments, the Motsepe foundation should stand in line to be the recipient of at least R1.2bn per year, on average.
Motsepe said investments in education and health would be a big priority, even though the trustees of the Motsepe Foundation would have wide discretionary powers as to where the funds would be allocated. An advisory council would also be established for the foundation, consisting of religious, traditional, women, youth and labour leaders, among other NGOs.
“The issues that will get preference are the ones where there is a clear focus on self-sustainability and independence,” he said. “We want to assist our people to take control of their lives.” He said the foundation’s primary commitment would be towards South Africa, but that this won’t exclude investments in other locations, especially where ARM has other business interests.
Gates, meanwhile, congratulated Motsepe on the commitment in a recorded message that was played at Wednesday’s announcement at a Sandton hotel.
“When the Motsepes [informed] me they wanted to make this announcement I was really thrilled,” the former Microsoft CEO said. “I want to congratulate them and say that this is a great milestone and hope they enjoy philanthropy has much as I [do]. I look forward to staying in touch and learning from each other as [the Motsepe family] goes down this path.”
Slams corruption, declining competitiveness
Motsepe, meanwhile, also used the opportunity to slam corruption and convey his concerns over South Africa’s declining competitiveness.
“The biggest beneficiaries of an anti-corrupt environment is business; it is critical and very important,” he said. “There is nowhere in the world that you [as a business] will have good ties with the government all the time, and it shouldn’t be so.
“We as business must be the ones who lead the drive and say we have a zero tolerance towards corruption.
“And let us compete; let the best among us compete. Let the tenders be issued to those who compete the best.”
The event, billed as “historic and very important” by ARM’s investor relations department, was attended by cabinet ministers, other prominent businessmen, religious and traditional leaders as well as sport officials.