Paper presented at the Local Economies Workshop of the Popular Economies and Citizen Expectations research group,

WISER, Wits University, 15 September 2010 Please do not circulate or cite without the permission of the author

The meaning of pyramid schemes in the popular economies

Detlev Krige (pfdkrige@telkomsa.net)

September 2010

Abstract

The increase in pyramid, ponzi and various fraudulent investment schemes in post-
apartheid South Africa tend to generate much normative discussion in the public
discourse. Furthermore, it has been treated by some scholars as evidence of the
emergence of occult economies (Comaroff & Comaroff 1999, 2000, 2001) and the way in
which speculation and gambling have come to replace apartheid-era ideas concerning
work, value and certainty. Research I have conducted on a number of such past and
present schemes in Gauteng reveals a number of multi-leveled and multi-scaled features
of such push-push schemes, including the pace at which the popular economies are
being financialised, the complex motivations of actors who participate in them, the
ways in which cultural ideas about hierarchy and kinship are activated by these network
schemes, the practices of recruitment that are entailed in them and the legacies of
financial illiteracy. While global processes and the culture of neoliberalism do indeed
shape aspects of the local economy, the continued intervention of the state in local
markets and in shaping local classes also impacts on local economic dynamics and the
formation of market bubbles that often give rise to ponzi and fraudulent investment
schemes.

Introduction

A few years after the kingpin of the Miracle 2000 pyramid scheme Sibusiso Radebe,
former Umkhonto weSizwe soldier in exile turned Vlakplaas askari, former policeman
and detective and corporate sales manager, former member of the Anti-Privatisation
Forum and politician, prosperity preacher in well-known Nigerian Pastor Chris Christ
Embassy Churchi was released from jail after being convicted of contravening the
Banks Act and conducting a harmful business practice, he was operating a recruitment-
based ponzi scheme from Kine Centre in the inner city of Johannesburg.ii The Kine
Centre in Commissioner Street downtown Johannesburg is not a landmark building. It
languishes in the shadows of the landmark building which stands opposite it on the
southern side of Commissioner Street: the tall and imposing Carlton building. A focus on
the sun-catching Carlton, however an important landmark it is, detracts attention away
from what is taking place in its shadows: the street-level economic occurrences,
interactions among congregants in second-floor offices used as churches, businesses
transactions in adjacent buildings, and the everyday flow of traffic and people and money.
One of the many things Carlton Centre hides in its shadow is the said Kine Centre, the
smaller, relatively non-descript building which over the last decade has been home to
several pyramid and multi-level recruitment (or push-push) schemes. In a sense, it is the
(unofficial) headquarters of (illegal) push-push schemes in southern Africa, a Sandton
simulated for the poor and marginalized who has yet to taste the fruits of the National
Democratic Revolution.

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Paper presented at the Local Economies Workshop of the Popular Economies and Citizen Expectations research group,
WISER, Wits University, 15 September 2010 Please do not circulate or cite without the permission of the author

Today several NGOs, training institutes, financial services and investment companies and
one-man political parties have their offices here, in the area of the CBD where two
decades ago white capital and considerable economic power were concentrated. Today
the Kine office space is also taken up by several dummy companies selling counterfeit
Canadian diamonds or gold coins. It is here where agents of international travel
companies registered in tax havens in Europe hold daily presentations with projectors and
laptops and PowerPoint presentations they had downloaded from the internet, pushing
pensioners to become members in multi-level business clubs and networks offering
internationalist luxury holidays and dreams of elite consumption. It is in these
presentations where incredible rags-to-riches narratives are spun around unsuspecting
citizens by overly enthusiastic yet hard-working agents who are desperate for new
recruits so they can feed their children. Here sleek presenters are offering pensioners and
working class women the opportunity to connect to the global world of consumption,
leisure and financial investment from which they have been barred by generations of
white people. Now is the time to make this yours! God wants you to be blessed now!

The scheme that Radebe had been running in Kine Centre in 2005 was called Miujiza
Sababu (that is, Swahili for Miracle Solutions).iii To join the scheme a potential investor
had to fork out R2400. Upon registration, each member would receive 750 Miujiza
Sababu pamphlets with the members agent number printed on it. For every person you
recruit, the agent would receive R200.iv In a DVD which Radebe had made in order to
market this scheme, he starts his sermon-like speech to potential investors by asking
them: How many of you here today own a mobile phone? And unsurprisingly nearly
everyone raises a hand. Thank you, he says. He then continues by asking How many
of you here today own a mobile phone that was made in Africa? He seems happy when
nobody raises a hand. How many of you own a television set? he then asks, and again it
seems as if everyone raises a hand. When he asks the audience How many of you own a
television set that was made in Africa? no one raises a hand. Having established this
concrete fact Radebe continues to turn the dependency and structural arguments made a
generation ago by Andre Gunder Frank, Walter Rodney and Immanuel Wallerstein on its
head by telling the audience that Africans are lazy and that Africans are poor because
they are consumers: they always import things from the West or the East but never
actually produce anything themselves.v This, he claims, is the reason for African poverty.
Moreover, Africans got the wrong end of the gospel of Christianity in that they
sometimes think God wants them to be poor. This is wrong, he argues, and interprets a
scene from the Gospels in such a way that allows him to argue that Jesus was indeed a
very rich man. In the rest of his very long speech to prospective investors, whom he
continuously address as millionaires, Radebe expertly fuses the language of
entrepreneurship, empowerment, humanitarian aid, poverty alleviation, black
economic nationalism, the right to consumption and religious-sanctioned prosperity
to effectively overwhelm, tire and convince his audience of his vision. At the end of the
DVD recording he manages to connect all of these promises and the vision he has to
make everyone a millionaire and defeat poverty to the simple act of joining Miujiza
Sababu.

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Paper presented at the Local Economies Workshop of the Popular Economies and Citizen Expectations research group,
WISER, Wits University, 15 September 2010 Please do not circulate or cite without the permission of the author

It is easy to dismiss Radebe as an opportunist with no principled position other than to

become rich, and so at the expense of others. Even if this were true, it would not make
him much different from many other individuals and figures in this city. If however we
view him as a cultural figure within a specific time and space, we may see that as a
cultural figure with keen observational talents he brings to the fore some of the fault lines
and structural contradictions which organize our society and economy and indeed the
relationship between South Africa and an international order. What are these fault lines I
refer to? What are the structural and cultural conditions which gave rise to popular
figures such as Radebe? And how does an analysis of the rise of pyramid and ponzi-type
schemes in postapartheid South Africa direct our attention to the process of structural
financialisation over and above the penetration of the logic of finance into the sphere of
everyday life, the changing fortune of gambling and speculation, a budding get-rich-
quick public culture, the growth in the direct selling and multilevel marketing business
sectors, and continued debates about the value of consumption versus production as the
site of value and wealth creation?

In this paper I build on the writings of Jean and John Comaroff (1999a, 2000, 2001) on
the occult and millennial economies and the culture of neoliberalism. They have
proffered strong arguments about the emergence of particular forms of translocal
economic processes and practices in contemporary postcolonial and postrevolutionary
societies, notably South Africa and former Soviet states. These societies all have newly
constituted democratic regimes which embraced a doctrine of free market economics
coupled with a rights-based political discourse. Having risen above the clutches of
apartheid colonialism and Soviet communism respectively, millennial capitalism
presented itself to these nations as a gospel of salvation; a capitalism that, if rightly
harnessed, is invested with the capacity wholly to transform the universe of the
marginalized and disempowered (Comaroff and Comaroff 2000:2). The Comaroffs
observed the rise of occult economies among these spatially distant societies: the
intensification of reports on get-rich schemes, the popularity of prosperity gospels and
new churches, the changing fortunes of gambling, the seeming explosion in witchcraft
accusations, and rumours of trafficking in human organs. They suggested that these
occult forms of economic processes and practices not only combine a potent mix of
magical technologies and mysterious modes of accumulation, but had indeed become
ordinary - the occult has become part and parcel of mainstream economic practice
(Comaroff & Comaroff 1999a:281-2). Their contribution was to try and dissect
millennial capitalism and the culture(s) of neoliberalism: to explore their impact on the
ways in which people at different coordinates on the global map come to define the
nature of value, grapple with the forces of production and reproduction, inhabit moral
economies, and engage in political action (1999b:309).

In this paper I would like to zoom into the Comaroffs contention that the intensification
of reports on get-rich schemes forms part of the rise of occult economies in South Africa.
I suggest that their argument about an international culture of neoliberalism is too strong
a cultural argument and would like to suggest that a number of local yet structural
conditions have allowed for the emergence of get-rich-schemes such as pyramid and
ponzi schemes in post-apartheid South Africa. While it is without a doubt true that global
processes and discourses do shape the local that is the South African economy and

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Paper presented at the Local Economies Workshop of the Popular Economies and Citizen Expectations research group,
WISER, Wits University, 15 September 2010 Please do not circulate or cite without the permission of the author

society, the state and its intervention in local markets also shapes local economic
dynamics. Here I am referring especially to a number of market bubblesvi currently in
the local property market, a captured market for ARV drugs given the number of people
living with HIV/AIDS and a massive public rollout programme, and the unregulated
micro credit market in the 1990s that have given rise to particular pyramid and ponzi
schemes.vii Moreover, the growth in the direct selling industry in South Africa and the
adoption by many financial services companies of recruitment strategies which (in a form
of outsourcing) turn clients into marketers and recruiters have also added to the greater
aura of legitimacy that surrounds recruitment strategies that are themselves central to the
workings of pyramid schemes. Finally, the very distinction between multi-level networks
(MLMs) and pyramid schemes, that MLMs sell a product and pyramid schemes not, is no
longer tenable as (in the context of financialisation and securitizationviii) something as
intangible as debt can become a commodity and a product.ix The degree of abstraction
that has become commonplace in the conceptualization of financial products today and in
the very operation of financial markets provides those who work close to the heart of the
system with opportunities for arbitrage that are very profitable.

Widening inequality, unemployment and incredible upward mobility for the chosen few

It is widely accepted that economic inequality in South Africa has widened since the
negotiated settlement and the introduction of constitutional democracy. Income inequality
within the African population has widened dramatically and is manifested in the growing
numbers of households that are said to belong to the Black Elite and the Black Middle
Class. Concomitantly, we have seen a growth in the number of (urban) households who
are said to constitute a Black Underclass (Seekings & Nattrass 2000; Terreblanche 2002).
This gap between rich and poor households has become especially large in the context of
metropolitan areas as urbanisation and migration to cities continue unabated in the
context of the shrinking of rural economies (Posel 2006).x While inequality and practices
and discourses of social class and social differentiation within the African population is
not a post-apartheid phenomenon, such inequality has widened and has given rise to new
contestations in the public over the meaning of black wealth, indebtedness and
(conspicuous) consumption in the context of deep poverty, massive unemployment and
newer inequality.xi

Some argue that the root cause of this widening gap between poor and rich African
citizens has been the impact of affirmative action and black economic empowerment
policies. Others point to the impact of neo-liberal macro-economic policies which has
resulted in large outflows of capital, jobless growth, high salaries for managers but low
wages for workers, and the outsourcing of water and electricity provision by city
authorities all of which have negatively impacted on poor households already
struggling with low wages and the impact of HIV/AIDS (Bond 2004, 2007). Others have
challenged this label of the South African state as neo-liberal while pointing out the
considerable amount of money it is spending on social security. One result of this
widening inequality and deepening poverty has been the growth of issue-based urban
social movements such as the Anti-Privatisation Forum, Soweto Electricity Crisis
Committee, Treatment Action Campaign and various shack dwellers movements which
have sought to resist some of the states (neo-liberal) policies around housing, HIV/AIDS

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Paper presented at the Local Economies Workshop of the Popular Economies and Citizen Expectations research group,
WISER, Wits University, 15 September 2010 Please do not circulate or cite without the permission of the author

(Robbins 2006), the introduction of cost recovery mechanisms and privatisation of water
and electricity provision utilities (Bond 2004; Ngwane 2003; McDonald & Pape 2002)
and the new forms of governmentality that arises from the introduction of such policies
(Hart 2005; Ruiters 2007).

In this structural context of jobless economic growth and massive unemployment,

citizens experience and interpret widening inequality in new and different ways. Many of
the people I spoke to struggled to make sense of the incredible speed at which some
people, who grew up in relatively poor households, had managed to become rich. This
speed, coupled with the opaque nature of debt-financed BEE deals and tender processes
and general financial illiteracy, has meant that more and more people experience
widening inequality as the outcome of chance. In this they are not unique: the
technologies and methods for making profit under neoliberal capitalism, in particular
under the conditions of increased financialisation of the economy, has become
increasingly complex, so much so that very few people today actually understand the
complex financial instruments that operate in the international money markets (and
trading in futures and commodities and international currencies). This global financial
system which some commentators have described as a massive pyramid or ponzi
scheme relies on this mysticism (or lack of knowledge of how it works) to employ
millions of experts who have to act as brokers/intermediaries and translators between the
complexities of finance capitalism and the monies of ordinary people (pension funds,
savings) who dont understand how the system works.xii This has been captured by the
Comaroffs when they write about the seemingly intangible ways of generating value
under neoliberalism. Indeed, very few people today are certain about where value is
created under neoliberal capitalism and where the surplus is going?

Linked to the way in which citizens today experience their own lives and those of others
as largely determined by chance, as argued above, are the changing fortunes of gambling
and speculation. The legislation of gambling in postapartheid South African has had a
significant effect on citizens orientation towards chance. Under apartheid and its
Protestant-saturated ethic, gambling was not only illegal but also immoral. In the words
of the Comaroffs, living off gambling was the epitome of immoral accumulation and
the practice of gambling was clearly located outside the domain of work and earning,
between virtue and transgression. The contemporary embrace of gambling and
speculation, in practice and in normative discourse, is related to structural changes in the
constitution of capitalism, over and above state interventions such as the legalization of
gambling. Thus Comaroff & Comaroff write that Over a generation, gambling, in its
marked forms, has changed moral valence and invaded everyday life across the world. It
has been routinzed in a wide-spread infatuation with, and popular participation in, high-
risk dealings in stocks, bonds, and funds whose fortunes are governed largely by chance
(2001:5).xiii

Of course, feelings of a fatalistic nature and an increase in feelings of helplessness and a

recognition of the limits of agency are likely to engender appeals to specialised forms of
knowledge (technical or religious), knowledge that could bolster ones chances of taming
chance. This may be one of the sources for the popular turn towards new forms of
spirituality (Pentecostal/Charismatic).xiv The Comaroffs explicitly linked the mounting

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Paper presented at the Local Economies Workshop of the Popular Economies and Citizen Expectations research group,
WISER, Wits University, 15 September 2010 Please do not circulate or cite without the permission of the author

feelings of insecurity and alienation to the development to occult economies, which they
regarded as an attempt by ordinary people to come to terms with the mystical forms of
power/knowledge used to create wealth under the conditions of neoliberal capitalism.xv
However, what they fail to make explicit are the reasons for why ordinary people are
experiencing the financialisation of the economy (and the creation of wealth) as
mystical. They seem determined to link that mysticism to the moment of the
millennium and to religion. While we should appreciate their efforts to breach the
analytical gap between what most scholars regard as the independent spheres of the
economy and religion (cf. Marcus 1990), I would argue here for a more structural
approach to understanding this mysticism that does not only locate it in the culture of
neoliberalism, but also in the contemporary processes of the formalization of the
informal economy, the financialisation of the economy and everyday life, as well as the
legacies of financial illiteracy.

Formalizing the informal and the financialisation of the economy

What is needed is leverage to bring more and more members of the huge and ever growing black
underclass into the economic system. There is a whole new revolution to be wrought here in our legal
system, in our banking practice, and, above all, of the mind. Sparks, Alistair. 2003. Rich man, poor man.
Daily News, 9 July 2003.

The revolution which Sparks talks about in the quote above is indeed an enormous one.
The incorporation of all South Africas citizens into one formal financial system
constitutes a momentous and far-reaching programme and structural change to the
economy. The quest for integration has been driven by several factors. The state has
emphasised in its legislation the importance of increased access and consumer
protection to ensure that all citizens, especially previously excluded groups, can
participate in the formal financial system.xvi In the process they have closely aligning
their vision of political freedom with the ability of Africans to access formal finance and
exercise their own will when it comes to consumption. The state has also actively placed
political pressure on the formal banking sector to attend to the needs of the unbanked
population, estimated to be 60% of the total population. The state has developed new
sector-based regulators and forms of regulation in order to protect vulnerable citizens and
consumer groups.xvii

The revolutionary talk about increased access to formal finance often hides other
difficulties or factors, such as that much of the regulation has been driven by the need to
ensure external confidence in the economy and financial sector that is, global investors
and transnational corporations want to know that the scale of the unbanked population do
not pose a systemic risk and that their investments in the South African economy will not
only be safe but profitable. As the South African government has liberalised large sectors
of its economy and has sought a greater integration into global financial markets, these
have come at a cost as global actors are increasingly able to influence policy (Strange
1986).

In this context of the drive of formalization and incorporation, research on informal

finance has become a lucrative business. Wanting to satisfy the demands about increased
access made by state, commercial banks have sought to respond to government pressure

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Paper presented at the Local Economies Workshop of the Popular Economies and Citizen Expectations research group,
WISER, Wits University, 15 September 2010 Please do not circulate or cite without the permission of the author

about extending financial services to the poor and the previously disadvantaged by
experimenting with various low-cost and culturally sensitive products and marketing
strategies. In this context commercial banks and insurance providers have become
increasingly interested in the spending patterns, cultural economies and economic
behaviour of Africans.xviii A recurring fact that is often reported in newspaper stories and
a finding of much research surveys is that considerable pools of money are circulating
outside of the formal banking system among black, township communities. It is not only
the retail banking managers at commercial banks who listen up and pay attention when
they hear about these uncaptured flows of money: people like Sibusiso Radebe and
other financial entrepreneurs (including organized crime syndicates) also pay close
attention. And they pay attention because they know that in todays economy wealth is
made in the field of finance.

To understand the significance of finance in todays global capitalist system, we have to

turn to the literature on financialisation (Martin 2002, Epstein 2005; Foster 2007,
Langley 2007). Employed mainly by Merenskian macro economists and in the fields of
International Political Economy and Cultural Political Economy (Epstein 2005; Foster
2007), the concept financialisation has been used as a replacement for the rather general
concepts globalisation and financial globalisation and has tended to emphasise the
global structural architecture of financial capitalism. Epstein (2005:3) for example writes
that some writers use the term financialisation to mean the ascendancy of shareholder
value as a mode of corporate governance; some use it to refer to the growing dominance
of capital market financial systems over bank-based financial systems; some follow
Hilferdings lead and use the term financialization to refer to the increasing political and
economic power of a particular class grouping: the rentier class; for some financialisation
represents the explosion of financial trading with a myriad of new financial instruments;
finally, for Krippner herself, the term refers to a pattern of accumulation in which profit
making occurs increasingly through financial channels rather than through trade and
commodity production (Krippner 2004: 14).xix

Since the mid- to late 1970s or early 1980s, Epstein (2005:4) argues that structural shifts
of dramatic proportions took place in a number of countries that led to significant
increases in financial transactions, real interest rates, the profitability of financial firms,
and the shares of national income accruing to the holders of financial assets. This set of
phenomena reflects the processes of financialization in the world economy. Other
scholars such as Martin (2002) and Langley (2007) have used the concept and applied it
to everyday life and how the proliferation of financial instruments, financial companies,
intermediaries and legislation effectively call forth new financial subjects who have to
individualise risk management, deal with overindebtedness as a result of deficits of the
will while citizens are being re-framed from passive savers to active investors through
the democratisation of finance.

In the South African context, the concept financialisation points to the structural changes
that have taken place in the South African economy over the past two decades and its
incorporation into the global networks and institutions of financial capitalism. It means
the increasing role that the commercial banks and financial services industries play in
terms of their contribution to GDP, employment and hence political power and

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Paper presented at the Local Economies Workshop of the Popular Economies and Citizen Expectations research group,
WISER, Wits University, 15 September 2010 Please do not circulate or cite without the permission of the author

influence.xx It also means the way in which the state is increasingly extending forms of
social control and governance through governing through bank accounts, whether this is
through trying to bank the unbanked, through paying social security through bank
accounts and tightening financial intelligence. And lastly, the increasing importance (even
though this is not entirely new) that processes of consumption play in identity politics and
in giving expression to income inequality and social differentiation (Epstein 2005). The
notion also sheds light on the mechanisms through which the state is governing and
through which it is pursuing its programme of redistribution of wealth. The state has tried
to address growing inequality and redress historical inequalities through several
redistributive measures such as increased social security, affirmative action and other
transfers of wealth. Such transfers of wealth have been made possible by the well-
developed financial system which is increasingly playing a large part in the national
Gross Domestic Product (close to 20%). At the same time we have seen the growing
domestic importance of finance as South Africa becomes more integrated into global
financial markets. This has further meant that much of the process of incorporation and
formalisation of popular economies is being directed through finance as its basic conduit.
Finance, then, is intimately political as much as it is technical. Finance is envisioned to be
able to both incorporate and transform domestically while integrate globally.

Finance thus plays an important role in the constitution of both the Black Elite and the
Black Underclass, over and above the level of everyday life. For some members of the
Black Elite it is debt-funded BEE deals financed by commercial banks and other vendor
companies which propelled them into the category in the first place.xxi In the case of the
Black Underclass, the state has been more active in putting pressure on banks to get the
unbanked banked than they have in creating actual jobs. The state discourses on
empowerment thus complement the logic of financialisation though framing financial
exclusion as a product of histories of racial exploitation and linking access to a bank
account as economic freedom. The fact that the state now pays social security grants
through bank accounts has also increased the importance of having a bank account for the
Black Underclass, while it has allowed for large-scale fraud through payments of grants
to ghost accounts.xxii In the same way that political freedom and democracy has come to
stand for the right to consume (Posel 2005), so the right to access financial services has
come to stand for participation in the formal and global economy.

The concept of financialisation is helpful to point to the structural changes that have
taken place in the context of financial capitalism. But how can we link this concept to
every day and the penetration of the logic of finance into everyday life? Taking a
Foucauldian perspective, scholars such as Martin (2002) have written about the
financialisation of everyday life (Martin 2002) in how the ubiquitous presence and power
of commercial finance shapes financial subjectivities, citizens expectations and public
discourse. Work remains to be done in this field in South Africa, but it the influence of
finance in general on advertising, public representations of narratives about wealth,
upward mobility and the good life are evidently important subjects for scrutiny.
Newspapers are filled with advertisements from commercial banks, insurance companies
and telecommunication companies. These same companies dominate sponsorships of
sports teams. They are consistently voted the most known company brands in South
Africa. Billboards on the roads, railways and in airports proclaim their latest products as

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Paper presented at the Local Economies Workshop of the Popular Economies and Citizen Expectations research group,
WISER, Wits University, 15 September 2010 Please do not circulate or cite without the permission of the author

financial innovations while insurance companies and banks capital divisions are
building new mansions or renovating mansions that a hundred years ago were built by the
Randlords. Airtime has become a currency. Banks and cellular phone companies now run
daily lotteries as a part of their core business. National art festivals and environmental
awards are sponsored by commercial banks. While much work needs to be done in this
field I content that one such influence of commercial finance has been the mainstreaming
of the logic of high finance particularly risk-taking and speculation- into everyday
economic and social behaviour.

How word-of-mouth recruitment and multilevel networks are activated under neoliberal
capitalism

Peter Cahn has written about the arrival of multilevel marketing and direct selling in
Mexico after the Mexican government, in response to the financial crises in the 1980s,
adopted a neoliberal economic reform programme. He argues that the rising popularity
of multilevel marketing companies in Mexico, which glorify consumption and celebrate
the possibilities of entrepreneurship, demonstrates the appeal of neoliberalism to citizens
fearful of diminished purchasing power. By tying consumption to globalized free
markets, neoliberalism does not need coercion to win acceptance. Cahn notes that
business analysts agree that multilevel marketing companies fortunes run counter to
economic cycles because they tend to expand in places where the economy contracts.
And because becoming a direct seller requires no previous experience, no formal
education, and little start-up capital, they are very attractive in a context of scarce
employment. Moreover, multilevel and marketing companies emphasise an
anticorporate style by empowering workers to be their own bosses and set their own
hours while using rhetoric of entrepreneurship and decentralization which resonates
with the logic of the neoliberal reform.

His findings resonate with my own research on pyramid and recruitment schemes in
Gauteng. As consumption is the invisible hand, or the Gucci-gloved fist, that animates
the political impulses, the material imperatives, and the social forms of capitalism in
its neoliberal, global manifestation (Comaroff and Comaroff 2000:294), multilevel
marketing finds receptive audiences wherever upward social mobility has become a value
in itself. Moreover, the strong emphasis on empowerment in South African public culture
and a long history of feelings of anti-authoritarianism in the context of work places has
been effectively exploited by MLMs. But some cultural values and social logics also play
a role in this context. The concepts of levels and downlines and uplines which feature in
the language of multilevel marketing also feed off existing and favourable attitudes
toward hierarchy and meritocracy (as well as by the Bottom of the Pyramid strategies).
MLM operators and agents stress and ethic of hard work and dedication. Several other
cultural agreements are also enacted by agents such as the reluctance of people to
question kin when they are recruiting you into a network (whether this is social or
commercial networks).

The idea of network was prominent in the voices of many of my informants, together
with oft-repeated statements of the power and effectiveness of passing on information by
word of mouth. And, of course, the legal cousin of pyramid schemes, multilevel

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Paper presented at the Local Economies Workshop of the Popular Economies and Citizen Expectations research group,
WISER, Wits University, 15 September 2010 Please do not circulate or cite without the permission of the author

marketing (MLM), is a marketing strategy based on the recruitment of members through

utilising informal and formal networks of relations. In fact, for a number of reasons,
multilevel network marketing (as pioneered by pyramid schemes) is a perfect strategy to
tap into the unbanked yet considerable pools of money that are circulating among African
networks in township and suburban communities (reported about often in the media
through for example the Finscope studies). Together these create the conditions under
which multilevel network marketing does indeed flourish; in the way that pyramid
schemes did a decade ago before the highly publicised case of Miracle 2000. No wonder
then that we find a massive growth in multilevel marketing companies in contemporary
South Africa - these MLM companies have learnt that there are huge profits to be made
by exploiting the informal networks that exist among African communities. Pyramid
schemes such as Miracle 2000 have been more successful than the major financial
institutions at harvesting the savings of African communities. Undoubtedly financial
institutions at the time of the arrest of Miracle 2000 mastermind Sibusiso Radebe in
July 2000 were asking themselves how a single man could have mobilised millions of
Rands in African communities without the army of experts and researchers and marketers
that are at the disposal of formal financial institutions. Many of these companies had
learnt their lesson and are now utilising the very same discourses and strategies of
pyramid schemes such as Miracle 2000 in order to tap into these networks.

Get-rich-quickly culture, financial illiteracy and an economy of bubbles

There are both structural and cultural factors in the South African society and economy
which have created the conditions for the emergence of pyramid and ponzi schemes
which piggy back on market bubbles. An important part of the emergence of these
schemes, aside from the factors which cause market bubbles, is the lamentable fact that
many ordinary South Africans are not financially literate. In trying not to sound
paternalistic or judgmental, the Comaroffs shift the explanatory blame of the growth in
occult economies to the millennial moment and widespread mysticism, thus avoiding
having to deal with the uncomfortable question of ordinary South Africans low levels of
financial literacy and competency. This is a theme that I cannot neglect, as it is one that
emerges strongly from my own research and those of others (Finscope 2009).

There are a number of ways in which to explain this: one is surely to point to the history
of apartheid in South Africa, which denied the majority of black South Africans (and the
majority of South Africans) access to formal finance. The contemporary forms of
mysticism could then be explained as a mere hangover from apartheids strictures on
giving black South Africans access to the formal financial system. It would follow then
that, under apartheid, low levels of financial literacy could have resulted in black South
Africans resorting to forms of mysticism in order to either explain or access the formal
financial system. In other words, we should be able to find evidence that the coupling of
occult explanations or mystic invocations and the formal economy is not new, but existed
under apartheid as well.xxiii

There are reasons for why this argument was not made by the Comaroffs. They may have
been reluctant to point to low levels of financial competency among South Africans as it
could suggest they were labelling certain categories of citizens as backward; such an

10
Paper presented at the Local Economies Workshop of the Popular Economies and Citizen Expectations research group,
WISER, Wits University, 15 September 2010 Please do not circulate or cite without the permission of the author

explanation would inevitably have conjured up accusations of racism. But it is very

difficult to argue that low levels of financial literacy are unrelated to the growth in
pyramid schemes and fraudulent investment schemes. So, one of the arguments I am
presenting is that the flourishing of pyramid schemes and other forms of financial fraud is
not only a manifestation of the existence of market bubbles but that a lack of information
can also create a cultural bubble of sorts in which the high priests of finance are able to
prey on the ignorance of the masses. In other words, we have those with expert
knowledge of the world of finance capitalism who are able to prey on those who do not
possess that knowledge. The result is the massive transfer of money from poor or stressed
or marginalised communities to financial experts, or people claiming to be financial
experts (those who can best emulate or mimic the machinations of formal finance).

This line of argument does not hold all the way. What about reports about the growth of
ponzi-type and fraudulent investment schemes among the middle class? Evidently it is
not only the poor and uneducated who invest their monies in such schemes: public
servants, doctors and lawyers are seemingly as keen to invest monies in either pyramid
schemes or (fraudulent, as it turned out) investment companies and property syndicates.
And of course some of the largest pyramid schemes and investment frauds occurred
among working and middle-class white, Afrikaans people, thus severely limiting the
reach of the above argument. Let us briefly consider the example of Marburt and Krion
Financial Services which was founded by Marietjie Prinsloo in the late 1990s. Krion, as
the scheme was known, was constructed around a bubble market in the micro credit
industry in the 1990s. This bubble has it roots in the Era of Reform which the apartheid
regime introduced subsequent to the Soweto Uprisings, specifically the new avenues
which opened up for Africans wanting to access credit. Retail stores such as Ellerines and
Edcon had by then already pioneered retail credit among urban black populations. But it
was during the late 1980s that some NGOs such as the Get Ahead Foundation and
commercial lenders such as Group Credit Company, Lohen Financial Services and Credit
Indemnity started offering consumer credit (Porteous & Hazelhurst 2004:80). The
commercial lenders at the time sensed market opportunity arising form the aspirations
and needs of a growing, increasingly upwardly mobile urban population what was largely
excluded from the traditional bank-based credit system (Porteous & Hazelhurst
2004:80).

However, these lenders operated outside the law as the interest rates they charged on
loans were prohibited under the Usury Act of 1968. In 1992, prior to the 1994 democratic
elections, the then Minister of Finance signed into law an exemption to the 1968 Usury
Act which effectively legalised the lending practices of these commercial micro-lenders.
Under the exemption lenders could charge usurious interest rates on shorter than 36
month loans that are smaller than R6 000. This was an important step in the
commercialisation of micro lending and the subsequent bubble which developed. The
successes of some of the earlier micro lenders led to a frenzy of new lenders on the JSE
Securities Exchange in 1997/8, dominated by Afrikaans-speakers (Porteous &
Hazelhurst 2004:81). The explosion of the market in consumer credit is evident in some
of the industry analyses of the time: one report estimated that there were 3500 formal
micro lenders operating by 1997, an increase of 192% over 1995; moreover, the
estimated turnover of the industry over thee same period had almost trebled from R3.6

11
Paper presented at the Local Economies Workshop of the Popular Economies and Citizen Expectations research group,
WISER, Wits University, 15 September 2010 Please do not circulate or cite without the permission of the author

billion to R10.2 billion; and that there were around 25 000 informal micro lenders
(Porteous & Hazelhurst 2004:82). An important reason for the growth in this market was
a little-noticed administrative action in 1993 which allowed lenders to access the salary
system for civil servants (the Persal system) and to easily deduct payments for loans from
the salaries of civil servants (Porteous & Hazelhurst 2004:81). It was in this context
together with more local factors in the Vaal Triangle linked to the privatization of state
industries which created the bubble which Marburt and Krion Financial Services
exploited as they promised investors that their investment monies were being used as
capital for micro loans.

Concluding remarks

How then do we interpret Sibusiso Radebe as a cultural figure that has emerged within a
specific structural context? Media reports on pyramid schemes and fraudulent investment
schemes are social dramas in themselves that seek to debate the debate the normative
dimension of wealth and poverty and the moral evaluation of production, consumption
and exchange (Parry & Bloch 1989). They tend to not only discuss the normative
dimensions but pay very little attention to the larger structural contexts in which specific
forms of economic organization are encouraged to emerge. One part of this context is a
familiar one in South Africa: how specific individuals are able to take advantage of
structural conditions and processes to enrich themselves. Today, this is happening
primarily in the field of finance and a number of factors are assisting such financial
entrepreneurs: the growing prevalence of the logic of finance in everyday life including
chance and speculation, the development of market bubbles as the state pushes its
redistributive policies while also liberalizing sectors of the economy, and low levels of
financial literacy. The desire for fast money through get rich quick schemes, then,
traverses class and race boundaries; it has become part of a more general cultural
structure of South African economy and society. And this culture has become possible
because of a number of structural developments in the economy which have created
market bubbles, over and above ideas about the turn of the millennium and subjectivities
shaped by the cultural of neoliberalism.

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APPENDIX A

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Paper presented at the Local Economies Workshop of the Popular Economies and Citizen Expectations research group,
WISER, Wits University, 15 September 2010 Please do not circulate or cite without the permission of the author

16
i
Staff Reporters. 2000. Thousands queue up to buy into get-rich-quick scheme. Sunday World. 2000/07/09, p. 3; Bothma,
Peet. 2000. Geld Peul Uit Laaie Skerpioene L Beslag Op Piramide-Skema Se Miljoene. Beeld, 2000/07/13; Gifford, Gill.
2000. Scorpions topple shady pyramid scheme 2000/07/12. Available http://www.iol.co.za/index.php?
set_id=1&click_id=13&art_id=ct20000712202508564G160209 [accessed 2009/02/17]; Nkosi, Peta Krost and Khanyisile.
2000. R3m a Day for Miracle Kingpin 2000/07/14. Available http://www.iol.co.za/index.php?
set_id=1&click_id=13&art_id=ct20000714201009548P430173. [Accessed 2009/02/17]; Bothma, Peet. 2000.
Piramideskema Laat Mense Tot R10 000 Bel. Beeld, 2000/07/13. p. 5; SAPA. 2000. Group Demands Release of
Pyramid-Scheme Boss 2000/07/13. Available from http://www.iol.co.za/index.php?
set_id=1&click_id=13&art_id=qw963495900872B265 [accessed 2009/02/17]; Nkosi, Khanyisile. Lavish Lifestyle of
Pyramid Scheme Accused 2000/07/27. Available http://www.iol.co.za/index.php?
set_id=1&click_id=13&art_id=ct20000727225503530M624944 [accessed 2009/02/17] and SAPA. 2000. Radebe's Bail
Sets Record at R1-Million 2000/07/27. Available http://www.iol.co.za/index.php?
set_id=1&click_id=13&art_id=qw96471174022B263 [accessed 2009/02/17].
ii
Molosankwe, Botho. 2005. Miracle Man promises people millions again: Radebe launches another scheme to
alleviate poverty. The Star, 17 October 2005. URL: http://www.thestar.co.za/index.php?
fSectionId=129&fArticleId=2949693
iii
See appendix A for an example.
iv
Miujiza Sababu was different from Radebes earlier scheme Miracle 2000 in a number of ways. In Miracle 2000 investors
were promised returns on their invested monies of 200 percent after a period of 42 days. Investors were required to pay a
R50 registration or joining fee for which they would receive a certificate in return. As members of Miracle 2000 they could
then invest any amount of money over R300 and after a 42-day period (or six weeks) they could reclaim their initial
investment plus a 200 percent "profit. In other words, an "investor could invest an initial R300 and collect a total of R900
after a 42-day period. As the scheme continued to grow, Radebe enlisted a number of agents to recruit, for a commission,
new members to the scheme. At the time of the clampdown on Radebes operations, NPA spokesperson Sipho Ngwema was
quoted as saying that the scheme had attracted about 300 new investors every day from all over the country, raking in an
estimated R3 million a day. Reports also noted that some of investors had been investing amounts of up to R10 000 at a
time, waiting to collect a sum of R30 000.
v
Turning a structural condition into a cultural argument allows him to exploit the prominence of cultural understandings in
everyday life. Furthermore, his positionality as an African making such a culturalist argument allows him to appear as
someone willing to speak the truth. It also allows him to produce feelings of guilt in the audience, not unlike many
religious preachers.
vi
Bubbles are here defined as the trade in products or assets with inflated values.
vii
See SAPA, 2009.Krion a Ponzi-type scheme. 28 July 2009. URL: http://www.news24.com/Africa/News/Krion-a-Ponzi-
type-scheme-20090728 ; SAPA. 2009. The R10bn betrayal The Mercury, 11 June 2009, p. 1. URL:
http://www.thestar.co.za/?fSectionId=&fArticleId=vn20090611051200485C115257 ; Extance, Andy. 2009. Pharma supplier
accused of multi-million pound fraud. 31 July 2009. URL:
http://www.rsc.org/chemistryworld/News/2009/July/31070901.asp .
viii
Simplified, securitisation is the bundling together of debt owed by people to one institution that is in turn sold in pieces to
investors.
ix
An Italian immigrant to the USA, Charles Ponzi came up with an innovative idea to make a quick buck in the money-
mad Boston of the 1920s. The Universal Postal Union, launched in 1874, created in 1906 a system of International Reply
Coupons which was basically a system of international postal currency. This was meant to enable people to more easily send
and receive self-addressed, paid-for mail across borders and postal services. This meant that an Italian immigrant in the
USA could send his mother in Italy a letter which included an envelope with an International Reply Coupon, effectively
paying for the return envelope. In order to make sure no one could profit from the purchase and redemption of their
coupons, the postal services that agreed to the International Reply Coupon system created a set of regulations that fixed the
rate of exchange between countries' currencies and postal reply coupons. This meant that coupons purchased for one
American dollar in New York would yield the equivalent of one dollar's worth of Italian lire in Rome, minus a small
processing fee. This worked fine until the First World War erupted as the unstable political situation resulted in the drastic
devaluation of some countries' currencies. The result was an opportunity to profit because if one could purchase these
International Reply Coupons in Italy in lira and redeem them in the USA, one could make a profit of 230%. Ponzi
calculated that sixty-six coupons bought in Rome for $1 (of lira) would be worth $3.30 in Boston. Ponzi never actually
traded in International Reply Coupons, but the possibility of churning out huge profits in this manner lay behind his public
claims to be able to pay investors 200% returns on their monies. In actual fact, he was engaging in the classic Peter pays
Paul scheme, using the money of increasingly large numbers of new investors to pay old investors. See Zuckoff, Mitchell.
2006. Ponzis scheme: The true story of a financial legend. New York: Random House.
x
In Soweto, for example, the Gini-coeficient (a measure of inequality between poorer and richer residents) are estimated to
be 51,3 while the South African figure is 58,4 (Piazza-Georgi 2002). However this study not only used a relative small
sample but it was also conducted before the consumer boom took full effect in other words, the inequality is likely to be
even wider at present. The survey was conducted in Soweto during 1999 - with a final sample of 908 households and 1 186
respondents and reported that despite being below the national average, only 14 countries of 90 have higher Gini
coefficients than Soweto. The percentage share in expenditure of the top 10 per cent of the sample households is 40,3 per
cent; this figure is again lower than that for South Africa as a whole (47,3 per cent) and leaves Soweto in exactly the same
rank globally as its Gini coefficient, 15th of 90. South Africa as a whole is in fifth place with regard to its Gini coefficient,
and in third place with regard to the share of the top 10 per cent of the population (see Piazza-Georgi 2002:622).
xi
The SAIRR writes that high levels of unemployment are therefore set to remain a defining characteristic of South Africa
in the period to 2020. While StatsSA puts the official unemployment rate at under 25% their definition requires that
unemployed South Africans actively look for work in order to be classified as unemployed. The proportion of Africans, who
want to work but cannot find a job, or make no effort to find one, is closer to 45%. As a result poverty and state dependency
are two features of South Africa that will feature prominently in the period to 2020. Statistics show that the proportion of
South Africans living on less than R3 000 per annum has fallen from just over 50% to just over 40% over roughly a decade.
In large part the rollout of perhaps the biggest social welfare programme in the developing world must get the credit for this.
Today three out of ten African households get their single largest source of income from the state while a quarter of all
South Africans receive social welfare. Many of these welfare recipients have become heavily dependent on the
Government (SAIRR 2009).

xii
One of the overriding themes emerging from my research is how pervasive and omnipresent the prominence of chance
has become in the lives of South Africans. While there were built-in contradictions and tensions within the system of
apartheid, not to mention its brutality, it did produce in urban areas some levels of stability and order. Controlled
urbanisation through the influx control, the pass system which linked residence in an urban area with formal employment,
visible and violent policing, and limited rights to social mobility and movement, well-controlled borders, coupled with
international isolation, resulted in a relatively stable system under apartheid. There was employment and there was even a
functioning welfare system within urban townships, not to mention service delivery such as spraying of poisons for rats,
free medicine, etc. By stable I refer to how it was experienced by Sowetans. This is not to deny the brutality of the system or
the fact that it was exploitative, unjust and regarded as the enemy. But from interviews conducted with older people it
emerged that life under apartheid was more predictable than today. And this is not just because the informants are older now
and that these views express some nostalgic longing for a past that was never as ordered as it seems now but which
organises some peoples action today. See Kynoch (2003).
xiii
The changing fortune of gambling also permeates the workings of government as a neoliberal government is not interest
in raising taxes so instead lotteries and gambling levies have become a favoured means of filling national coffers; the
welfare state is bankrolled by the wheels of fortune. The growth in Pentecostal and Charismatic churches over the past
decade, especially those that have aggressively preached a version of the prosperity gospels, has paved the way for
speculation becoming an ever greater part of every day life. In addition, the media in South Africa is awash with marketing
campaigns that utilise SMS lotteries in order to advertise and market their products. Advertisements mimic the discourses of
pyramid schemes and leads to the confusion of categories (gambling, savings, and investment). Multilevel marketing
strategies are now deployed by mainstream business, effectively turning clients into marketing employees, or outsourcing
marketing to clients.
xiv
The rise in new churches over the past twenty years in South Africa has been dramatic. Anthony Egan (2007:451) shows
in his analysis of census data that the African Initiated Churches (Ethiopian, Zionist and ZCC), together with
Pentecostal/Charismatic churches, are now in effect the mainline churches of South Africa in terms of membership. Egan
suggests that this charismatic-expressive shifts might be rooted in a general concern for healing in a time of AIDS, and
for the AICs function as part of a renewed discovery of an African identity among newly liberated South Africans. But
surely it also has to do with the current neoliberal moment and the growth in network marketing in South Africa.
xv
Thus the Comaroffs write: To be sure, occult economies frequently have this bipolar character: At one level, they consist
in the constant quest for new, magical means for otherwise unattainable ends; at another, they vocalize a desire to sanction,
to demonize and even eradicate, people held to have accumulated assets by those very means (1999a:26).
xvi
The Financial Sector Charter - a transformation charter in terms of the Broad-based Black Economic Empowerment
[BBBEE] Act [Act 53 of 2003] - thus commits itself to actively promoting a transformed, vibrant, and globally competitive
financial sector that reflects the demographics of South Africa, and contributes to the establishment of an equitable society
by effectively providing accessible financial services to black people and by directing investment into targeted sectors of the
economy. This Charter came into effect in January 2004 subsequent to the Financial Sector Summit which was hosted by
the National Economic Development and Labour Council (government, business, labour and community constituencies) and
the multilateral social dialogue forum on social, economic and labour policy. In the context of this Charter, effective access
means inter alia distance to service points, range of financial products, non-discriminatory practices, appropriate and
affordably priced products and services, and structuring and describing financial products and services in a simple and
manner. The preamble to the National Credit Act (Act 34 of 2005) starts with the following sentence: To promote a fair and
non-discriminatory marketplace for access to consumer credit and for that purpose to provide for the general regulation of
consumer credit and improved standards of consumer information.
xvii
One interesting aspect of this process is the re-evaluation and legitimisation of informal economic institutions such as the
stokvel in the public discourse. The stokvel, for example, has been used by the state to argue for capitalism with a human
face and has also served the politics of indigeneity which has been an important part of postliberation forms of
nationalism. The formalisation of popular economies has also promised the state a greater and expanded tax revenue basis
as it has aimed to formalise informal economic activities and to incorporate informal entrepreneurs into the formal system.
Commercial banks now cater for stokvels through club accounts while offering consumer credit has become a core element
of their business. Commercial banks and other companies now regularly offer customers incentives such as membership to
burial societies or burial insurance products. The valorisation of popular economic institutions such as the stokvel has
allowed many scamsters to dress up as empowerment plans and stokvels a range of ponzi-type schemes. During the late
1990s, hundred of thousands of South Africans poured millions of rands into pyramid schemes. In 2000, the South African
Reserve Bank (SARB) expressed worry about the spate of pyramid schemes and voiced its suspicions that a syndicate
may be behind the schemes. See Heard, Janet. 2000. Reserve Bank acts to halt pyramid frenzy. Sunday Times, 24
December 2000.
xviii
The mainly journalistic (and at times schizophrenic) writings about the black poor and middle class has tended to
describe them as stupid spenders while more recent research has tended to describe the poor as smart money managers.
See Clayton, Charlene. 2005. Poor are busy with their money. Personal Finance, 11 June 2005 and Scott, Christina. 2005.
Making a little go a long way. Mail & Guardian, 26 April 2005. The Financial Diaries project, for example, has found that
poor households are not too heavily indebted as research has shown. They have found that the majority of lower income
earners are not over indebted. While 95% of their sample of low income earners paid some form of debt every month, only
26% of the sampled households debt payments totaled more than 20% of the household income. (Clayton 2005). These
researchers have portrayed the poor as smart money managers who is constantly thinking about her financial future and
constantly juggles an astonishing number of money-saving (and money-growing) techniques (Scott 2005). Such
representations and interpretations are taking place in the context of very strong if not acknowledged commercial and
political interests.
xix
As an example, Epstein notes that the Bank for International Settlements reports that the daily volume of foreign
exchange transactions amounted to more than 1.9 trillion dollars each day in 2004. In 1989 this was 570 billion per day in
1989 (www.bis.org/press/p040928.htm; www.bis.org/publ/rpfx02t.pdf). Other sources indicate that funds raised on
international financial markets as a percentage of world exports rose from .5 per cent in 1950 to over 20 per cent in 1996
(Epstein 2005:4). For many OECD countries the share of national income coming from financial institutions and holders of
financial wealth (the rentier share) was significantly higher in the 1980s and 1990s than it had been in the 1970s. Nain
(2000:134) notes that the Global Financial System has ballooned over the last 20 years from US$6.8 trillion in 1990 to US%
19.9 in 2004. This has occurred because of a growth of complexity in the financial system together with the opening and
deregulation of financial sectors and the greater linking up between domestic financial sectors. Moreover, new technologies
have lowered transaction costs and made linkages easier while the abandoning of exchange controls have facilitated a
massive increase in the exchange of currencies.
xx
Patrick Bond has coupled the financialisation of the South African economy with de-industrialisation. He argues that the
present-day economy is much more integrated with the global financial economy and much more oriented to profit-taking
from financial markets than production of real products (Bond 2008). As a result, SAs two most successful major sectors
from 1994-2004 were communications (12.2% growth per year) and finance (7.6%), while labour-intensive sectors such as
textiles, footwear and gold mining shrunk by 1-5% per year, and overall, manufacturing as a percentage of GDP also
declined. Some of the policies that made the financialisation of the economy possible include the removal of impediments to
free flow of capital, giving primacy to price stability, fiscal restraint. Ben Fine has argued that the idea that finance
efficiently mobilises and allocates resources on behalf of the real economy borders on the ridiculous (Fine n.d.). In South
Africa, he argues, the financial services sector has indeed been the fasted growing sector since the overthrow of apartheid
and now contributes 20% of GDP, more than the mining sector and the agricultural sector. But, he warns, 40% of the
population do not have access to most financial services. For Fine this means that financialisation in South Africa has been
deployed to financialise and globalise the operations of previously internationally constrained, highly concentrated,
domestic conglomerates that is to export domestic capital and surplus generated within the economy. Effectively, far from
contributing 20% of GDP, finance has appropriated a quarter of it, claiming this to be a contribution to what has been
produced.
xxi
In the first phase of BEE in the mid 1990s, BEE deals were in the main financed through special purpose vehicles
(SPVs). These SPVs were established only for the purpose of facilitating the buying of equity in an established company.
Butler (2006) writes that SPVs used shares as collateral against loans, and the 1998 emerging market crisis saw the banks
rapidly wind most of them up. In this way, the emerging market crisis exposed the unsustainable financial structuring of
most BEE deals and drastically reduced black ownership on the JSE. The 1998 crash reduced BEE ownership of total JSE
market capitalization from 7 percent to perhaps 2.2 percent. Since the 1998 crash banks have become more reluctant to
finance empowerment deals. After the 2001 BEE Commission, thus, the shortage of black capital remains a key obstacle to
successful BEE. In order for such deals to materialise, black businesspeople have to borrow it from third parties, and often
at high cost. As Butler puts is, such black businesspeople acquire high-risk equity using financial structuring that leaves
them vulnerable in the event of economic downturn. Since 2001 banks have returned to the BEE lending market but they
now refuse to carry significant risks. As a result, so-called vendor companies increasingly facilitate BEE transactions
by providing loan guarantees, price discounts, or internal vendor financing at below market rates. So while BEE has been
part of a political project of the deracialisation of the economy, its architecture is rooted in the logic of financialisation: BEE
deals are reliant on the appreciation of target companies share prices; debt-obligations and debt-service requirements are
often obscured by the references to financial innovations; earnings from shares often do not cover the high costs of debt-
financed deals (interest and capital repayments) which means that BEE companies often have to sell shares at the end of the
locked-in term. In addition, BEE is likely to have caused an explosion of fronting (Butler 2006) and thus furthered a
growing sense of deception among those who do not understand these complex and innovative financial debt-deals.
xxii
SAPA. 2010. Government to plug social grants leaks. The Times, 23 April 2010. URL:
http://www.timeslive.co.za/local/article417293.ece/Government-to-plug-social-grants-leaks
xxiii
There is some evidence to support this argument. The one is the old game of speculation called fafhee (cf. Krige
forthcoming). The other is rumours and stories that served to explain aspects of the financial system, such as the origins of
money, in particular the rumour that circulated during apartheid that those individuals who were sent to the gallows by the
apartheid state was in fact not killed but ended up working at the Mint, making money.