Deputy President Cyril Ramaphosa has disposed of all investments, excluding his property portfolio, with the sale of McDonald’s South Africa to Emirates-based MSA Holdings, according to a report.
“If you remember, in 2014 when we became Deputy President, he made a commitment to sell off his assets so he can avoid a conflict of interest. From what I understand from the information in the public domain, everything has been put in a blind trust and these are the last set of business interests that he owns,” confirms Marius Oosthuizen, from the Gordon School of Business Science at the University of Pretoria.
One concern that many may have is that McDonalds is no longer owned by someone locally based. However, Oosthuizen notes that this should not have an effect on the business on a consumer level.
“I do think what is significant is that there is a rising sense in South Africa that South Africans demand local ownership of large and influential businesses, and so I think the question of who is McDonald’s owned by, and who gets to benefit from their retail activities in South Africa in the case where a Middle Eastern party is now going to be the main owner of those shares, I think that is going to raise a question, but not about McDonald’s per say, but the broader question about who gets to own and benefit from business in South Africa,” explains Oosthuizen.
McDonald’s confirm the sale
In a statement by McDonald’s Corporation early last week, the company confirmed the sale of the business. “McDonald’s Corporation can confirm that there is a process underway to find a suitable replacement for (Shanduka or) Cyril Ramaphosa, the current McDonald’s Developmental Licensee for South Africa.
“This is in line with the public statement by Mr Ramaphosa on his election to the position of ANC Deputy President in December 2012 that he would undertake a review of his business interests.”
In an updated statement the company further elaborates: “McDonald’s South Africa can confirm that the process to find a new Developmental Licensee (DL) for its operations in South Africa is in the final stages. Competition Commission approval has been obtained and this allows us to continue with the final legal and financial processes which are nearing completion.
“The proposed transaction involves the sale of the business by current DL, Mr Ramaphosa, who declared his intention to review his business interests when he took up the position of Deputy President of the ANC in December 2012. One hundred percent of the McDonald’s business in South Africa is being sold by the local Auram Restaurant Company to a newly established local entity, MSA Holdings, which is owned by Emirates African Restaurant Management Company, based in the UAE (United Arab Emirates).”
McDonald’s further revealed that the proposed new DL owns over 160 restaurants in the UAE, in addition to being an award winning McDonald’s DL with over 22 years of experience and a two time winner of the McDonald’s Golden Arches Award*. “The proposed new DL is excited to invest in South Africa and in the McDonald’s business here and has immense knowledge and expertise to bring to the table to the benefit of our local operations.”
McDonald’s Corporation is a multinational company, and as such the local operation highlighted that its global practice is to identify suitable candidates for the DL role. McDonald’s South Africa reveals: “[McDonald’s Corporation] identified the potential new DL who will bring the necessary capital and experience to the table to further enrich and to continue the growth and success of the McDonald’s brand in South Africa.”
* As explained by ‘The MetroWest Daily News’: “The Golden Arch Award is the highest recognition for a McDonald’s franchisee and is typically received by fewer than 40 McDonald’s owners and operators worldwide each year. The award is presented to franchisees who deliver a superior customer experience, give back to their communities, ensure a positive employee experience and are leaders whose actions build brand trust in McDonald’s.”
A political move
There is the question of whether the disinvestment from McDonald’s signals a move by Ramaphosa to go after the presidential position within the ANC when it comes up in 2017.
Oosthuizen questions whether Ramaphosa would have the support of the ANC if he were to go for the top job: “I do think this a signal that he is committed to his political role in the foreseeable future. There are signs that this is a sign of his aspirations to ascend to the high office of the president. Of course that comes up against questions of whether or not he is able to do that within the ANC, whether he has the constituency within the ANC to achieve that.”
According to Oosthuizen, in 2016 we are seeing the repercussions of the dramatic events that took place in 2007 when President Zuma ousted then President Thabo Mbeki. “That was the start of a form of factionalism that the ANC had never seen before, and I think that those factions have now played themselves out to the point where we see the rift between the ANC in Gauteng, the ANC in Kwa-Zulu Natal and the North West are very aligned with Jacob Zuma and I think the inability of the ANC over that period to deal with things like corruption, lack of service delivery, is finally coming home and is putting pressure on the ANC from the electorate.
“I think as that pressure increases there will be calls for change within the ANC, and I think we are starting to see signals that people are beginning to identify President Jacob Zuma, and those who have supported him, as the faction within the ANC that should be held responsible for the decline.”
But does Cyril Ramaphosa have what it takes to become president? According to Oosthuizen, that needs to be looked at on three levels. “On the personal level, Cyril has definitely demonstrated that he has the capacity as a leader to engage in the kind of environments that a president would have to in dealing with complexity, dealing with large organisations, acting on an international stage, having the personal disciplines and intellect to be president. I think certainly he has what it takes.
“I think the two questions within the ANC are whether he will be able to muster the support, and the second question of whether across the country he would have popular support. I think that certainly from the business constituency he would have support. We have heard signs that the likes of COSATU may support him, not making a formal statement, but willing to support him in principle.”
Is another split for the ANC possible?
There have already been two splits from the ANC with the likes of the Congress of the People (COPE) and the Economic Freedom Fighters (EFF) based on different ideologies.
“As the pressure builds on the Zuma faction within the ANC, I think a split from that constituency, claiming to be the real ANC, with the support of Kwa-Zulu Natal and other provinces, I think is a more likely split. The question is, what does that leave behind for the likes of Cyril and the others?” says Oosthuizen.
Looking at the EFF, it was forecast that their support in the municipal elections earlier this year would double from those achieved during the 2014 national elections. Oosthuizen says that the recent results did indicate this, and expectations are that in the next national election, the EFF could break through to between 15 to 20% of the electorate.
“I think that is a very significant signal of the shifting of South Africa’s political landscape towards the left. I think as that happens the question is going to be whether the ANC and the DA, who actually are very close to each other in policy, are able to work together more strongly,” adds Oosthuizen.
#FeesMustFall
The way in which the ANC approaches the #FeesMustFall movement is going to be important. Oosthuizen highlights how this movement is reminiscent of the 1976 student uprising. A vital question during this time is whether or not the political elite (i.e. the ANC who represent a majority of the political elite) are aligned with the interests of the youth, or whether their policies clash with them.
“Strategically this is probably going to determine whether the ANC has longevity in 20 or 30 years. If they manage to accommodate what the youth want, they are likely to retain those voters, who are the children of their current supporters, but if they fail to meet the needs and demands of the youth, we are likely to see the youth go somewhere else for their political fortunes,” says Oosthuizen.
However, with the ANC presidential elections coming up next year, it is not easy for the potential candidates to voice their thoughts and opinions on this critical and important movement and moment within the country’s history.
“We need to consider what the culture of the ANC has been, they try to keep succession battles an internal matter. A person like Cyril or (Nkosazana) Dlamini-Zuma, if they were to come out and make public statements on issues that are not within their portfolio within the ANC, I think that would be frowned upon in the ANC. But I think there are subtle ways of them doing that. I think that on the platforms that they do have, Deputy President, or within the African Union in Dlamini-Zuma’s case, I think that if through those platforms they were to demonstrate some kind of a port for addressing the questions around #FeesMustFall, it would stand in a good stead from a public profile point of view.”