Microsoft Word 6-057 a gentler Capitalism Final version June 2006. doc

 

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The whites here thought we were moving much too quickly.  We 

couldn’t hire the black people we wanted because they thought we were 

doing “too little, too late.”  And I needed to constantly intervene to make 

sure the black people we had hired had the space to get their work done.  

And yet, the only way to keep growing was to keep moving on 

empowerment.  It was difficult balancing all these competing claims. 

I think sometimes you have to be cruel to be kind.  One person 

literally had to be on the extreme so that we could end up in the middle.  

There was a perception that MTN was only a white company, and we 

needed to change that mindset.  We needed to prove that this company 

was black-owned and black-managed.  Because you couldn't just go to the 

regulator and say that the company was black-owned although not black-

managed.  It was important from a business point of view that we employ 

black people; if we didn't, we would have regulatory difficulties such as 

obtaining spectrum.  The government might have just gone and auctioned 

it, and once they start auctioning spectrum, it’s not in our favor.  It would 

be too expensive. 

The blacks in the company were applauding her aggressiveness. MTN’s Assistant 

Company Secretary Matthew Moodley, when an Indian man sent her an e-mail 

congratulating her for winning South Africa's Business Woman of the Year Award, he 

wrote, "Your commitment to the group is reminiscent of a shepherd herding her flock, 

nurturing them from lambs, providing guidance and protection, to reach adulthood and 

ultimately success."  Charnley believed the message indicated a positive change in 

MTN’s culture.  At the same time, she knew others felt that MTN had very far too go, a 

point of view emphasized by a young, African man with an excellent track record in a 

major multinational corporation.  Charnley tried to recruit him, but he had declined her 

offer.  He later explained: 

 

Companies that were voluntarily willing to do something about 

BEE did so in 1994.  Progressive companies, progressive CEOs moved 

when the government changed.  They saw that bringing in black people 

grew opportunity and money for all.  Those companies that are only 

reacting now are those that were resisting transformation, holding on to 

power, and hoping things would be delayed.  And that is not an 

environment in which I want to work.  I need white people in the company 

to train me.  I need their buy-in that I represent an opportunity, not a 

negative.  

 

Assessing Impact 

 

In December 2003, Charnley left her position as executive director at Johnnic 

Group to take the executive position of commercial director at MTN.  During the three 

years of her appointment as executive director of telecommunications for Johnnic,  

Charnley had pressed MTN to think more strategically about its future growth.  She 

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pushed MTN to pay attention to the black market in South Africa, to aggressively expand 

into foreign markets, and to capitalize on synergies with Johnnic’s other subsidiaries.  

MTN was now providing eighty percent of Johnnic’s revenues.  By 2003, MTN was 

present in Nigeria, Cameroon, Uganda, Rwanda, and Swaziland, and those operations 

provided 36% of revenue and 46% of EBITDA.

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 Subscribers grew from 2.3 million in 

2000 to 8.9 million in December 2003.  MTN’s share price climbed steadily from ~10 

Rand per share in the autumn of 2002 to ~30 Rand per share in December 2003 (see 

Exhibit 5 and 6 for MTN metrics). In addition, MTN introduced more stringent BEE 

requirements with regard to its procurement practices. If a supplier did not meet MTN’s 

BEE standards, a BEE clause was included in the contract and monitored quarterly. 

standards were not met, a BEE clause was inserted in the contract and monitored 

quarterly.

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Charnley’s insistence on MTN’s senior management diversification had been 

successful as well.  By 2000, there were five black executives in top management 

including the managing director for South African (SA) operations and the company was 

recruiting a black executive to head up MTN International.  Furthermore, out of a total of 

five group-wide executive directors at MTN, two were black men, one was a black 

woman, one was a white woman, and one was a white man.  Phuthuma Nhleko, an 

African man, was now CEO.  As MTN’s commercial director, Charnley led a 

management “buy-in” of an 18.7% stake of MTN Group. The shares were to be allocated 

to all employees with 57.2% of the shares going to 200 managers and the remaining 

42.8% of the shares going to the staff of 2,153.  Because 65% of the beneficiaries of the 

scheme would be black, MTN CEO Nhleko considered the deal to be a “milestone for 

black economic empowerment.”  In 2002 and 2003, Charnley was named to Fortune’s 

“Global Most Powerful Women in Business” list.  Upon leaving the Chairpersonship of 

MTN’s board, Charnley was pleased with the progress the company had made, but 

worried about management resting on their laurels:  “This is a high-growth company used 

to success.  But their market is maturing, a third cellular license could be issued any day, 

and they are still runner-up in market share. They need to feel the wolves at their heels.  

And they still do not understand the urgency that the regulatory environment calls for in 

integrating the ranks of professionals and senior management.”   

The initial path that Charnley and Johnnic took was representative of the path 

taken by black business leaders in South African corporations.  They started off the 

decade engaging in empowerment deals largely dictated to them by white business.  

While these deals allowed black business leaders a foot in the door and capital gains if 

the stock market cooperated, they did not offer real opportunities to demand or craft 

change in how corporate South Africa worked. Charnley soon recognized this reality and 

began to negotiate for a more active role in Johnnic.  She moved from an advisory 

position on the board to an executive position within management while remaining 

accountable to the wishes of her shareholders in the union.  This shift allowed Charnley 

to implement rather than just recommend.  With this power of implementation, she 

played a pivotal role in reshaping Johnnic into an active company whose day-to-day 

operational activities had real consequences for South Africans, and, among many others, 

                                                 

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 MTN Sustainability Report 2004, pp. 2.  

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 MTN Sustainability Report 2004, pp. 26.  

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