President Cyril Ramaphosa’s announcement that he will donate half his R3.6 million a year state salary to a new fund in honour of Nelson Mandela has been met with some derision. Critics suggest the President, whose wealth Forbes magazine estimates to be around R5.2 billion, could have done more.
But the donation is about so much more than the money. It’s a signal from a President who is seeking to rebuild the credibility of his office in a tough economic environment and to lead by example.
Ramaphosa’s gesture is a stark contrast to his predecessor, Jacob Zuma, accused of being the overlord of the state capture project – who has apparently run out of money to keep postponing his day in court on corruption charges.
"This is a private, citizen-driven initiative that will ask all those with the means to contribute a small portion of their salaries to supporting the many small projects that build the nation,” Ramaphosa told Parliament.
He seems to hope that his contribution will act as a catalyst for others to do the same.
Giving away vast amounts of wealth is nothing new. There are industries in philanthropy around the world that use money from benefactors to do good work.
Best known is billionaire philanthropist Bill Gates, who has succeeded in convincing good friend Warren Buffett to give away the vast majority of his fortune for good works. South African businessperson Patrice Motsepe followed suit in 2013 with a commitment to give away half his family’s wealth. Last year PSG founder Jannie Mouton took a pledge to donate a significant portion of his wealth to a trust to boost education.
For most of us, giving away half our salary is incomprehensible. Who really can make ends meet nowadays, even without an additional burden on the family purse?
In some cases the decision to forego a salary is a signal of great self-confidence and does not have an overtly altruistic element to it. Naspers chairperson Koos Bekker famously did not draw a salary for his work as CEO of the group and sought only to be incentivised through shares in the company he ran. For a while it seemed like a high-risk strategy – until Naspers hit pay-dirt with its investment in Chinese internet firm Tencent. Naspers’ stake in the firm is worth over R1 trillion.
Ketso Gordhan, when he ran cement maker PPC, convinced senior executives at the company to take pay cuts for distribution to lesser-paid staff. In doing that he narrowed the pay gap between highest and most lowly paid workers, at least until he stormed out of the boardroom in a fit of pique.
Mark Lamberti, who recently stepped down from the boards of Eskom and Imperial where he was CEO, returned payment he’d received for preparatory work at the state owned company. It’s less well-known, however, that he donated all of his cash salary while CEO of the logistics and transport group to an education trust for the benefit of workers at that company.
Again, in consultation with his family, Lamberti set up the Next Generation Trust and at his suggestion, the company made an amount equal to his remuneration available for the university education of the children and grandchildren of employees with at least five years service who earned less than R600,000 a year.
Lamberti earned his wealth through the creation of Massmart and later chaired Transaction Capital before moving in 2014 to run Imperial where he still stands to benefit financially from the share awards made to him as part of his remuneration.
Richemont chairperson Johann Rupert is also understood to donate his earnings from the firm to charity.
Ramaphosa’s gesture this week signals that ordinary South Africans, not just the high-earners, are going to need to find innovative ways to deal with the issues the country faces.