The legacy of Kagiso Trust: Investing in South African communities
When Kagiso Trust began its development work in 1985, it was a vehicle to promote the struggle against apartheid. It was in this context that Archbishop Desmond Tutu, Dr. Beyers Naudé, Reverend Frank Chikane, Reverend Allan Boesak, Dr. Max Coleman, Eric Molobi and other political leaders were trying to persuade the European Union (the European community at the time) to impose complete sanctions on the South African apartheid government.
Persuading the EU was a difficult task. In 1985, the EU agreed to impose only partial sanctions on South Africa, the EU also decided through its Special Programme for the victims of apartheid to support projects that promoted non-racialism and capacity development among those disadvantaged by apartheid.
The EU indicated that it wanted to allocate development funds using three channels namely South African Council of Churches (SACC) and the South African Catholic Bishops conference and a third secular channel.
The third secular channel gave birth to Kagiso Trust (KT) on the 10th July 1986 the EU donated an initial sum of ECU 5 million (R10 million) which was used to fund 30 projects. Kagiso Trust and those associated with it had to withstand strong opposition from the apartheid government, Eric Molobi was detained under Regulation 3 of the Internal Security Act in 1987. Archbishop Tutu, Yunus Mohamed, Dr. Abe Nkomo, Reverend Frank Chikane and Father Mkhatshwa continued to be detained and harassed for their involvement with Kagiso Trust. Dr. Beyers Naudé despite the banning order being lifted, still received unwelcome attention from the security police due to his commitment and tireless work for the Trust.
Between 1986 and 1993 the EU was KT’s largest donor (R834 million) and between 1987 and 1997 KT managed to secure donor funds from the Japanese government (R107.8 million) to cover staff and administrative costs KT took a management fee of between 5% and 7% of donor funding. In 1994, the EU dissolved this Special Programme and the funding came via the European Reconstruction and Development Programme (ERPD).
With the dawn of South Africa’s democracy in 1994, it became clear that international funding from international agencies, previously funded the development work of the Trust, would redirected funding to the new democratic government when it was elected. After 1994, Kagiso Trust broadened its social vision through the establishment of Kagiso Trust Investments (KTI) and for the next decade focused on uplifting our communities through targeted education and enterprise development programmes.
Kagiso Trust Investments (KTI) later became Kagiso Tiso Holdings (KTH).
When we established Kagiso Trust Investments (today Kagiso Tiso Holdings/ KTH) 24 years ago, we had no illusion and knew very clearly that it was to ensure and secure the financial sustainability of the Trust in order to grow its development programmes.
KTI was established as an investment company under the stewardship of the late Eric Molobi, as a vehicle to generate sustainable, long-term financial support for the Trust. The company initially focused on purchasing minority equity stakes in unlisted companies that promised exceptional growth opportunities. During its establishment phase, KTI was capitalised with loan funding of R26 million from KT and JP Morgan and later with R50 million from each of Liberty Life and Nedcor Investment Bank. Remgro subsequently purchased the Liberty and Nedcor stakes, with Kagiso Trust remaining the controlling shareholder of KTI.
In his capacity as the Executive Chair of KTI, Eric Molobi recruited young black professionals, to work with him set up the entity and played a major role in building KTI to be what it is today. A remarkable story of skill and hard work of young black professionals, creating so much value for development work. Real patriotism at its best.
KTI evolved over the years, into a diversified investment company with financial, industrial and mining interests. The portfolio of businesses was restructured into three pillars namely financial services, resources and industrial. The core business areas of the financial pillar were investment banking services, life insurance and short-term insurance. The resources pillar included a joint venture in a platinum mine. The industrial pillar focused on media and ICT services, and the industrial sector.
Subsequently, KTI merged with Tiso holdings to form Kagiso Tiso Holdings, one of South Africa’s leading black-controlled and managed investment companies.
The sound financial base of the Trust, through its broader investment portfolio, continues to provide space for it to be far more innovative in developing sustainable partnerships with government and private sector partners in pursuit if of overcoming poverty in many South African communities. KT’s financial sustainability framework is intended on ensuring a continual balance between asset growth and programme spend, working towards achieving our vision of overcoming poverty.