Skip to content

Savings for life to build the economy for the people: The emergence of Afrikaner corporate conglomerates in South Africa 1918-2000

Literature › Works

Grietjie Verhoef (2009). Savings for life to build the economy for the people: The emergence of Afrikaner corporate conglomerates in South Africa 1918-2000. South African Journal of Economic History, 24(1). Economic History Society of Southern Africa.
Type journal article
Scope Economics and economic history of apartheid
Method archival narrative
Period studied 1918–2000
Regions South Africa, Cape Town, Johannesburg
Themes business and state, politics ideology elections, transition post apartheid, origins segregation, macro fiscal finance debt, manufacturing industrial policy, mining migrant labour
Citation key verhoef2009

Argument

Sanlam, founded in 1918 as an Afrikaner nationalist life-assurance mutual, mobilised ordinary Afrikaners' savings to finance Afrikaner entry into industry, mining and banking through vehicles such as FVB, Federale Mynbou/Genmin and Trust Bank. The article argues that this empowerment was organised on sound business principles and used the community's own savings rather than state support. Over time diversification and control of conglomerates diluted focus and returns, conflicting with Sanlam's duty to policyholders. In the 1980s Sankorp restructured and unbundled the holdings, and Sanlam returned to core financial services. Sankorp also sponsored early black empowerment (Metropolitan Life) as an anticipation of political transition. The argument rests on company archives and is a narrative case study that endorses savings-based empowerment over statutory BEE.

Evidence and method

Sanlam Archives (board and management minutes, chairman's statements, annual reports), FVB and FM papers, Standard Bank Archives, Financial Mail and Finance Week reporting, Schumann and Sadie estimates, and the author's earlier company histories.

Place in the debates

Findings

  • Sanlam's founders set explicit goals of contributing to growth, teaching Afrikaner savings discipline and keeping profits in South Africa. (p. 7)

    to contribute to the growth and performance of the South African economy; to educate Afrikaners to develop a disciplined savings propensity that would empower them to pro-

  • Afrikaners in 1939 owned little outside farming; Schumann's estimates show them as wage earners rather than entrepreneurs. (p. 12)

    in mining and secondary industry Afrikaners were merely part of the labour force and had no meaningful share in the ownership of the industries.

  • Sanlam's establishment phase ended with a large market share and an overwhelmingly Afrikaner policyholder base by 1940. (p. 13)

    More than 90 per cent of Sanlam's policyholders were Afrikaners.

  • Afrikaner shares in sectors where FVB operated rose sharply between 1938 and 1975, though trade fell back after 1955. (p. 18)

    mining, from one per cent in 1938 to 18 per cent in 1975; manufacturing and construction from three per cent to 15 per cent;

  • Federale Mynbou/AAC deal gave Afrikaner capital a foothold in gold but with a restraint on diamond activity. (p. 24)

    The AAC reward was a written restraint on FM's diamond mining activities and a public perception of goodwill between AAC and Afrikaner mining interests.

  • The 1974 hostile bid for Union Corporation gave Afrikaner control of the second largest gold mining house. (p. 25)

    General Mining successfully completed a hostile bid for the Union Corporation Company, (another British owned gold mining company) thereby securing Afrikaner control of the second largest gold mining house.

  • FVB's over-diversification and gearing produced losses by the mid-1980s, forcing Sanlam to intervene. (p. 17)

    By the end of March 1985 FVB showed an attributable loss of R64,8m, as a result interest payments and foreign exchange losses.

  • Sanlam's dual role as life assurer and controlling conglomerate produced conflicting goals that became irreconcilable. (p. 28)

    On the one hand Sanlam was driven by a sense of nationalistic social responsibility towards the empowerment of its policyholders

  • Sankorp's unbundling of Gencor cut its weight in the portfolio and unlocked large value at low cost. (p. 38)

    The total value unlocked via this exercise amounted to more than R2,5 billion for Gencor and Gencor Holdings' shareholders.

  • Sankorp's sale of equity in Metropolitan Life is described as the first BEE transaction in South Africa. (p. 43)

    selling 10 per cent of the equity in its blue chip sub-sidiary Metropolitan Life, to a consortium of black businessmen. This constituted the first so-called Black Economic Empower-ment (BEE) transaction in South Africa.

  • Sankorp's mid-1980s assessment saw state fiscal expansion as a hindrance to business. (p. 36)

    government's share in South Africa's GDP had increased from 10,2 per cent in 1978 to 13 per cent in 1985.

Evidence ledger

Sources used

Source Kind Period How used
Sanlam Archives (SA): minutes of Santam/Sanlam board of directors, 1918-1960s (incl. establishment minutes 28/03/18, 21/01/18, 3/05/18) company records or reports 1917-1960s Establishes the founding, board composition, capital structure and early decisions of Santam and Sanlam.
Sanlam chairman's statements and annual general meeting reports (1919-1946) company records or reports 1919-1946 Shows the stated aims of Sanlam (nationalist and thrift goals, empowerment through policyholder savings) and early performance and market share.
Sanlam balance sheets, income statements and annual reports (1918-1939, 1945, 1954, 1980, 1986) company records or reports 1918-1986 Provides first-year profit, investment policy, return on assets and the Bonuskor foundation.
Standard Bank Archives (SBA): General manager's office (GMO), 3/1/116 state archives c.1938-1939 Source for Sanlam's 1938 growth figures, ranking among life assurers and average investment yield, plus its early investment portfolio.
Sanlam management and Sankorp management/board minutes (1941-1994) company records or reports 1941-1994 Documents FVB unbundling, asset distributions, Sankorp strategy, the Equal Opportunity strategy and Gencor unbundling.
FVB and Federale Mynbou (FM) board and management minutes, FVB annual reports and papers company records or reports 1938-1990 Traces FVB's formation, expansion into mining, the FM joint venture, asset growth, and the AAC/Genmin transactions.
FVB Archives, C.H. Brink personal papers and FVB annual reports 1943 and 1990 company records or reports 1940-1990 Supports FVB's paid-up capital (August 1940), initial board composition and 1990 unbundling.
Personal papers in Sanlam Archives: M.S. Louw, A.P.J. Burger, A.D. Wassenaar, W.B. Coetzer memoires, H.F. Oppenheimer letter state archives 1946-1965 Shows the motives of Coetzer/Brink and the confidential AAC–FM agreement on diamonds and General Mining control.
M.S. Louw memorandum (20/09/38) and 'Die aanwending van die kapitaalkrag van die Afrikaner' in Ekonomiese Volkskongres proceedings, 1939 commission or official report 1938-1939 Documents the proposal for an Afrikaner finance house modelled on the mining finance houses.
C.G.W. Schumann, 'Die huidige posisie van die Afrikaner op ekonomiese gebied' (Ekonomiese Volkskongres, 1939) secondary literature compilation 1939 Supplies estimates of Afrikaners' share of agricultural output and national income in 1939.
J.L. Sadie, 'The fall and rise of the Afrikaner in the South African economy' (Stellenbosch Annals 2001/02) secondary literature compilation 1938-1975 Supplies estimated Afrikaner shares by sector (mining, manufacturing, trade, finance) between 1938 and 1975.
South African Statistical Services statistics on life assurance (cited in Sanlam chairman's statement) official statistical series c.1918 Showed that life assurance was dominated by foreign-incorporated companies, motivating Sanlam's founding.
Carnegie Commission report on the Poor White Problem (Grosskopf, Economic Report, 1932) commission or official report 1932 Background on Afrikaner rural impoverishment and the poor white problem.
Financial press: Financial Mail, Finance Week, Sunday Times Business Times, Business Day (1970-1994) newspapers periodicals 1970-1994 Contemporary criticism of Sanlam/Sankorp acquisitions and the Billiton deal; FVB data.
Author's own prior studies and research report for Gencor (Verhoef 1990, 1992, 1999, 2003, 2004, 2008) secondary literature compilation 1918-2002 Relied on for the detailed narratives of FVB, FM, Trust Bank, Sanlam's early years and BEE origins.
Sankorp strategic planning documents (Strydom Environmental Outline for Strategic Planning 1986; Gouws 1986; EO strategy 1987; mission statement 1985; policy document 1990) company records or reports 1985-1990 Documents Sankorp's economic outlook, government relations and Equal Opportunity strategy, with its BEE transition.
Sankorp portfolio performance indices and portfolio composition (Tables 1 and unbundling table) company records or reports 1985-1993 Shows Sankorp assets underperformed the JSE and the portfolio composition before and after the Gencor unbundling.
Jones, Through fortress and rock: The story of Gencor, 1895-1995 (1995) secondary literature compilation 1895-1995 Corroborates the AAC/FM/Gencor transactions and the Billiton deal.

Inference

Quantification: Descriptive tables.

Single-firm historical case study based on narrative reconstruction from Sanlam, FVB, FM and Sankorp archival minutes and annual reports, supplemented by a few company performance figures, a performance-index table and secondary estimates of Afrikaner sectoral shares.

Key claims

Claim Basis Strength
Sanlam was founded in 1918 by Afrikaner businessmen to mobilise Afrikaner savings and counter foreign-owned dominance of life assurance, but was run on sound business principles and grew quickly. (p. 9) Sanlam board minutes, chairman's statements, balance sheets and the Statistical Services data on foreign dominance. Partial data
Sanlam's policyholders were overwhelmingly Afrikaners and it captured over 22 per cent of the market by 1940. (p. 13) Chairman's statement of 13/12/39; no underlying market data are shown. Asserted
Sanlam used policyholder funds to create FVB, which diversified Afrikaner capital into industry, mining and banking. (p. 18) Sanlam, FVB and FM minutes, FVB reports and asset figures. Partial data
Afrikaner shares in mining, manufacturing, trade and finance rose sharply between 1938 and 1975. (p. 18) Sadie's estimates (secondary), without underlying data or method discussed. Illustrative or anecdotal
FM, in a negotiated deal with Anglo American, gained control of General Mining and thereby Afrikaner control of a gold mining house, at the price of diamond restraints. (p. 24) FM and AAC memoranda, letters and minutes in Sanlam archives. Partial data
Diversification led to loss of focus and underperformance (FVB, Trust Bank, Genmin); Sankorp assets lagged the JSE in 1985-86. (p. 31) Sankorp minutes, Table 1 performance index, FVB financial figures and press criticism. Systematic data
The unbundling of Gencor reduced the conglomerate discount and prepared Sanlam to initiate Black Economic Empowerment, beginning with the Metropolitan Life sale. (p. 43) Sankorp board minutes, Financial Mail and Jones (1995); BEE origins rest on the author's earlier articles. Partial data

The author's caveats

The author notes only that it is extremely difficult to establish exactly what proportion of the South African economy is in Afrikaner control; the Afrikaner sectoral shares are described as estimates.

Gaps in the evidence

The argument that Sanlam's savings mobilisation drove broader Afrikaner empowerment would need comparative data on rival insurers (Old Mutual, foreign firms), policyholder-level data on ethnicity and savings, and investment returns relative to the market over the whole period. The Afrikaner sectoral share figures are second-hand with no method, and the role of state support (Afrikaner-favouring policy, public contracts) is not tested against the 'own resources' claim. Company and industry statistics (Registrar of Insurance returns, JSE data, Sanlam balance sheets) existed and could be used; the archival minutes are accessible only with Sanlam's permission.

Replicability: Data described but not public.