ICMM - International Council on Mining & Metals

CASE STUDY

Zimele boosts success of black firms

Anglo Zimele is the enterprise development and empowerment initiative of Anglo American. Every year Anglo Zimele invests in around 15 new business ventures. The aim of this initiative is simple: to help emerging black businesses into South Africa’s economic mainstream and the success rate speaks for itself.

Businesses that have been supported by Zimele over the years have a 90 per cent survival rate and many continue to grow and prosper. Help, which is frequently unavailable from other sources, takes the form of equity and loans as well as short-term minority stakes in ventures.

“We are looking for people with passion and entrepreneurial vision – and there are many out there,” says Zimele’s managing director Nick van Rensburg.

The initiative seeks to develop sustainable, commercially viable businesses, primarily in the SME sector. One important spin-off from Zimele’s work is the job creation which stems from any thriving enterprise. Zimele is currently investing in 27 businesses, employing over 2,000 people. These investments collectively turned over R264m (US$38.9m) in 2004.

As small black economic empowerment (BEE) companies frequently have problems raising equity, business development officers (BDOs) based in Anglo American’s operating divisions assist in putting forward business plans to Zimele for approval.
If the venture is viable, Zimele will take a minority equity stake
and provide financial support and skills transfer.

The initiative adds further value through the hands-on transfer of business knowledge and skills and provides advice on strategy, markets, finance, systems and corporate governance. It uses an incubator approach to nurture investments and entrepreneurs, matching up partners and businesses, and complementing technical skills. The approach also allows for a gradual reduction of dependence on Zimele.

In 15 years of operation, Zimele has created in excess of 100 BEE companies and has developed a successful model that helps a small business to survive through the difficult early stages, develop its ability to attract and manage capital and introduce the governance standards required by commercial banks. In line with its ethos of “independence through enterprise”, Zimele has a clear exit strategy for all its investments, and any profit is re-invested in other businesses.

One of the many success stories has been Bambanani Health and Safety, a flourishing business supplying personal protective equipment for the mining and industrial sectors, set up in 1999. The business plans to make an estimated turnover of R5 million (US$737,460) over the next 12 months. As further proof of a growing business, managing director Solly Mogola has recently employed a second person, Walter Mokwana, and opened an office in Middelburg, Mpumalanga.

Mogola, formerly a fitter in the coal mining industry, held an initial share of 67 per cent with Zimele holding the remaining 33 per cent stake in the company.

After gaining substantially from Zimele’s incubator approach of strategic knowledge and skills transfer, Mogola is now the sole owner and oversees the daily operations, sales and marketing functions.

Anglo Coal’s business development manager Louwrens de Jager sits on Bambanani's board of directors, and plays a key role in putting Mogola in touch with important sales leads. Mogola says: “It is great to have the support of big business, which recognises the need for the integration of black business people into the mainstream economy.”