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Communists with capital

By Ferial Haffaje, Mail & Guardian, 20 June 1997

As part of a push for empowerment, the SACP is to seek opportunities in business.

The South African Communist Party is going into business. Soon it will start one or more companies either on its own or with partners.

Mum's the word right now on where investments will be made or what capital the party will use. Garth Strachan, a central committee member heading the foray into hitherto untouchable terrain says: "We are not averse to forming an investment company which may acquire shares in companies that unbundle."

It's a mark of changing times that Strachan arranges to meet at the Hyatt Hotel in Rosebank. The hotel's African chic decor spells money. It has become a meeting place of the new elite where many deals are cut above the constant ring of cell-phones.

The move into business is part of a pitch for self-sufficiency. Finances are not in the red, but traditional sources of funding from communist parties around the world and Scandinavian countries are drying up, signed-up membership (of about 80 000 members) does not match paid membership (of less than 40 000 members) and not all party members despatched to government are paying the 5% levy. All SACP members committed themselves to pay this levy when they were elected to national, provincial and local government.

Besides cutting business deals, the party is also on a mission to get these members to pay up, say other sources. Only one in three communists in government currently pays the levy.

Among those targeted by the funding lobby for not paying up include welfare minister Geraldine Fraser-Moleketi and her safety and security counterpart, Sydney Mufamadi. Fraser-Moleketi told the Mail & Guardian she has paid, and Mufamadi did not respond to queries.

Communist Cabinet members who hand over levies are public works minister Jeff Radebe and trade minister Alec Erwin.

Strachan says many deal-makers scurrying to put together consortia for black empowerment contracts and buy-outs have approached the SACP. But it has refused to give its stamp of approval before now. And even though the decision has been made to enter the business world, it still does not sit too easily.

Strachan says plans will begin to firm in the next month. What he can say now is that the party's ventures will not in any way look like the glittering JCI and Johnnic deals; there will be no speculative deals on the stock exchange; no incursions into diamonds and minerals. "We're looking at much smaller ventures. Remember that we don't have capital to invest or leverage over pension funds," he says. So what business dealings can one expect from the communist party?

Tourism is one plan; a tour agency may even be on the cards to take advantage of the forex which many strugglelistas, who worked in the anti-apartheid movement, are now keen to bring to these shores on holidays. Strachan says it will also consider bidding for government development contracts, be it pipe-laying, housing contracts or road construction.

For this, the party will look to joint ventures with civic and non-governmental organisations and may invest in smaller companies it has already studied. "These businesses clearly have to have a good business strategy, plan and practice," says Strachan, adding: "It's also about beginning to reverse ownership."

But economist Iraj Abedian of The Budget Project in Cape Town says development ventures don't necessarily yield high profits. "There are good returns from financial instruments, property (like shopping malls), and derivatives, all of which are the bed-rock of a capitalist economy."

While some gasp at the apparent ideological swing of the party, it is only taking its cue from successful communist parties around the world that have become self-sufficient through their own businesses. Portugal's party has a string of restaurants, Cuba's young communists run dollar-denominated discos and England's Socialist Workers' Party is largely funded through its own publishing arm, Pathfinder.

At the communist party head office in Braamfontein, Dale McKinley sits near a yet-to-be-catalogued set of Das Kapital. He is on the finance committee of the party and one of the task team responsible for the political vetting that every potential business deal must pass. "This is not some kind of approach to defeat capitalism, it's a tactical means of becoming self-sufficient," he says.

There is a political motive behind the party's move into the boardroom: it doesn't take a crystal ball to know that tension within the alliance (between the African National Congress, the Congress of South African Trade Unions and the SACP) is growing and some inside the SACP see the need to begin organising separately. There is also quite a bit of cross-funding in the alliance.

"We don't want to be told to keep quiet and have that linked to a financial pulling of the strings," says McKinley. Profits from any of the communist party's business ventures will be ploughed straight back into its coffers, with no cuts for brokers.

It is envisaged that these profits will be used to fund everything from posters and pamphlets to political education seminars.