More heat than luminance

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The opening of Khanyi Dhlomo’s luxury boutique has created a media storm.

It is the fourth day since the luxury store Luminance’s opening and Khanyi Dhlomo is pacing the coffee shop area, taking calls on her BlackBerry. When she turns her attention to an interview with the Mail & Guardian, her delicate features become tense.

“Yes, I was taken aback by the negative reaction to the store. However, one of the reasons I have agreed to talk is because I’m beginning to realise the more information people get, the more they understand,” the 38-year-old mogul says.

And in the controversy swirling around the mini-department store stocked with eye-wateringly expensive products, understanding hasn’t been easy to come by.

After a glamorous function that opened the store in Johannesburg’s Hyde Park last week, rumours exploded: the government’s National Empowerment Fund (NEF) gave the wealthy businessperson R34.1-million of taxpayer’s money; the head of the fund, Police Minister Nathi Mthethwa’s wife, Philisiwe, was a co-owner; Dhlomo and her business partners used their political connections to score the windfall.

Even the details of the products were magnified: the store only stocked items that ran into thousands of rands and customers were not allowed to touch the pricey designer items. Staff wore white gloves when handling products.

It didn’t take much digging to derail the sensational elements of the story. The R34.1-million was a loan, not a donation, and Dhlomo’s company, Ndalo Luxury Ventures, had put up R15-million of its own and had already started repaying the NEF.

The repayment terms for this usually “patient lender” were stringent: five years instead of the maximum 10 to repay, with relatively high interest rates and a much larger down payment than normal, according to Dhlomo, as the loan was large and the concept new — factors that apparently led to commercial banks turning their noses up at the deal.

The myth busting went on: Mthethwa had no ownership in the deal; Dhlomo and her mother, Venetia, owned 65% of it and wealthy local businessperson Judy Dlamini, the wife of First Rand chief executive Sizwe Nxasana, owned 15%, but 10% had been allocated to a collective of rural women and another 10% was for the staff.

And the company, according to the NEF, “applied like everyone else”, something that Dhlomo said was an exacting process that involved due diligence, a reformatting of their ownership structure to include rural women and other requirements that took five months to fulfil before the loan was approved in August 2012.

When the M&G visited the store, there wasn’t a white glove in sight and all items were available to touch, and try on when required, in plush changing rooms. It is a concept shop in the model of the grand department stores in New York and Paris: think Bloomingdales on an übermicro scale.

Gem-encrusted Kara Ross jewellery, delicate Dior baby clothes and collections of deep-blue ceramics by Oscar da la Renta are laid out in sumptuous displays. You can get a cup of coffee for R25 or a baobab candle for R300 while eyeing a Stella McCartney dress for R63 200. A pair of leather court-heel stilettos by the store’s private label will cost you just R2 520, a reasonable sort of price tag, at least in this shopping mall.

But even as some of the misconceptions cleared up, the bad taste lingered. On Wednesday, after Mthethwa addressed a session at the Black Business Council, one woman stood up and said: “As a woman, I would love to be able to defend you and Khanyi. But right now I have no ammunition.”

Dhlomo’s fans have defended and championed her. But many South Africans couldn’t get past the fact that a successful woman like Dhlomo had been granted a loan from an empowerment body to import luxury goods. Julius Malema’s radical Economic Freedom Fighters party demanded she return the money outright.

More sobering, Trade and Industry Minister Rob Davies, under whom the NEF falls, has called for a report on the loan, and has gone as far as questioning the NEF mandate, an agency that has disbursed R3.6-billion to 417 companies since 2005.

But the NEF’s spokesperson, Moemise Motsepe, stands by their mission: “Our mandate is for the NEF to provide financial support to black people, not black people of a certain background or financial standing.” The compelling factors for the NEF was that the business was in the “wholly untransformed sector” of retail where black women have little to no ownership.

Dhlomo has worked her way up the rich ladder. She left a popular TV job to become a lowly beauty assistant at True Love magazine so she could learn the ropes of that industry and eventually became editor.

After a brief stint in Paris, she went to Harvard to get her MBA, was tutored by Jonathan Newhouse, chairperson of Condé Nast Inter national, and came back home to start Ndalo Media, a joint venture with Media24, which publishes the high-end magazines Destiny and Destiny Man. Luminance is her first foray into retail.

But all that hard work seems to be lost when what is visible is, as the disgruntled textile union Sactwu puts it, that the NEF has funded “a boutique for the rich” that “undermines the local textile industry”.

Still, Luminance isn’t the first business to get such a large loan from the NEF, nor the only one with already wealthy individuals involved.

According to the NEF, at least 20 loans of over R30-million have been granted in the past three years to businesses that include On Digital Media (R40-million), the film Long Walk to Freedom (R50-million) and Just On Cosmetics (R50-million). Dhlomo’s loan was at the low end of the scale, it says, as the NEF makes up to R75-million available in its new-ventures product.

But questions still remain about the deal. It’s not clear which banks turned them down, if any. Motsepe said they were turned down but Dhlomo skirted the question when the M&G asked her about it and she spoke about how it would have been generally difficult for black women to get a loan for this sort of concept.

It’s also difficult to discount the fact that Dhlomo’s partner, Dlamini, is the wife of First Rand’s chief executive.

The store’s PR spin appears to be about how 58% of the money invested is being spent locally. But that includes building and architecture. It is not clear what percentage of the stock in the shop is from South Africa. Neither could we determine what the 51 jobs created referred to — the local factory producing 50% of the in-house products was already an established business.

Then the connections between Dhlomo and Mthethwa aren’t hard to make. Mthethwa appeared on the cover of Dhlomo’s Destiny magazine in the month the deal was closed, and Dhlomo was one of 500 guests at Mthethwa’s wedding in February this year. Dhlomo said the pair first got in touch when they both lived in Paris, a fact the NEF contradicted when they told the M&G the pair had not lived in Paris at the same time.

The pivotal point for Dhlomo, however, is that they lost touch when she moved to Harvard.

“She doesn’t know where I live and she doesn’t know the names of my children,” said Dhlomo, clearly riled by the suggestion that a friendship could have influenced the deal.

So, with all the light surrounding the venture at Luminance, much of the detail remains in the dark.

Photo Caption: Sitting pretty: Khanyi Dhlomo in her boutique Luminance. Photo by: Simphiwe Nkwali/Sunday Times


VERASHNI PILLAY is a Rhodes University graduate

Article Source: Mail & Guardian