Chris BishopBy Chris Bishop|March 29, 2021|46 Minutes|In Billionaire Talks

Billionaire Talks

How millionaire supermarket king Christo Wiese hopes to claw back his lost $4 billion fortune.

Africa’s millionaire Supermarket king Christo Wiese sat down with Billionaire  Tomorrow editor Chris Bishop to talk about high finance, taking risks, making money, and losing it. The good news is Wiese says he is set to get some of his lost $4 billion fortunes back in the next four months – the bad news he will get a mere 18 % of the billions lost in the Steinhoff scandal.

Just a little bit about your roots as an entrepreneur, and your upbringing. You’ve always said that it is the key part of you as an entrepreneur?

Very much so, I was fortunate enough that I grew up in a household where my parents were business people. My dad was also a farmer which was also quite typical of the era and the region where I grew up. So I had the great advantage of learning from a very early age about the basics of business. Secondly, I grew up in a town and in a community that had very strong sets of vales and that combination I found to be invaluable in trying to build a career.


You said that one thing that taught you, you grew up in Upington, South Africa, was a four-letter word beginning with W and ending with K. How do you think that got soaked into you as a child?

First of all, that part of the world is a very harsh region that has a particular beauty of its own, but it has a climate of extremes, droughts and floods and in order for people to survive and to prosper, there was only one formula and that was to work your butt off and stick to a good set of values. That was necessary, not only to prosper but to merely survive in that part of the world in those days, I’m talking about 60 – 70 years ago. That was part of learning about life.


You said to me recently in an interview I did for our publication when times were tough for you with the Steinhoff situation, that in your mind you went back to Upington… just tell us how that worked?

Well when a disaster like that strikes you’ve got to first of all face it and then you need to ask yourself how you are going to deal with the crisis. In my case, as I explained to you, I looked myself in the mirror and said was that the first decision I need to take is that I don’t mourn the loss of money because money comes and goes and hopefully comes again. That is the first principle, the second one is that I count my blessings because things could have been worse and things could always be worse that what you are experiencing in a particular time. The third approach was that I am not going to become a bitter human being because that means that the fraudsters and the crooks had really won because they destroyed your life. 


Give us an idea of where you are with that because it cost a vast amount of your personal wealth with Steinhoff at the time. Just tell me in the beginning the time that you invested in it you thought that it was a good idea to diversify and internationalise your business. Just tell me what your thinking was behind all of that?

The thinking was very simple, I was in my mid 70’s at the time and I realized that my shelf life was shrinking. I controlled these huge businesses, being PEPkor and Shoprite. I wanted the management team that had demonstrated that they could operate internationally with an apparent strong balance sheet that had all the skills required to grow the businesses internationally as well as locally. Steinhoff seemed like the perfect fit, at that stage it was a company with a market capitalisation well in excess of R100 billion. It appeared to be a market favourite; it was very popular with the banks and the regulators etc. So it seemed like the right business to invest in and invest in through a structure where I would still retain control and that met all the requirements that I thought was necessary for the next decade or in my business life.


It seems to me that the Steinhoff problem sort of crept up on you and you didn’t actually realise that it was almost too late and you could have lost everything?

I could have, it was just in a sense a miracle that in 2017 the auditors suddenly queried the accounts. The same the auditors were signing off on these accounts for more than a decade and they then queried it. I initially thought that they were making a bad mistake and speaking to management they assured me that the auditors got the wrong end of the stick and they were backed up by a forensics investigation group in Germany that had been investigating all these allegations and who until the last day reported back that everything was in order. Suddenly it turned out that it wasn’t in order because the CEO, without warning, offered his resignation… and then I knew that the auditors were right.


How close do you think you got to losing everything?

Very close because the process had already started where I was going to sell my next big investment, maybe my controlling stake in Shoprite which was then worth around R25 – 30 billion. I was going to sell that into a grouping where it would ultimately also end up as part of a Steinhoff listing. Obviously when the news broke that deal was immediately cancelled so I did not lose my Shoprite stake.


Now you’ve got to claim for R60 billion which is probably about $20 million. What are the chances of you getting that money back?

R60 billion just to correct would be about $4 billion at the exchange rate of today. The terms of the settlement have been announced and I will recover 18% of my original investment.


When is that likely to come through, I know you have a lot of hoops to go through legally, but when do you think it will happen?

There is a whole process, the first hurdle has been overcome, the major claimants and creditors have agreed to the settlement. I need to point out here that within months of the Steinhoff collapse I issued summons but at the same time I wrote a letter to the company say that the only way out this mess is for all creditors and claimants to sit around a table and reach a settlement, in the event it has taken more than three years to get to that point. We are now at that point and now the proper legal process starts of having the settlement voted on by all creditor and claimants and ultimately after that vote to be sanctioned by the court.


How long do you think it might take?

My own estimate is 3 to 4 months.


Obviously you aren’t getting your entire wealth back but what is it going to mean for Christo Wiese the entrepreneur?

As I said, I’ve obviously lost a large part of what I’ve worked for, for 50 years but it is not going to affect my lifestyle.


Let’s go all the way back to the beginning, I mean none of this would’ve ever happened if you hadn’t crossed the road back in Upington from your fathers garage to go and speak to a distant relative about a possibility in investing in a small shop?

That is correct. That is how it developed from that one shop, we grew a business that ultimately owned around the world about 7 000 to 8 000 shops.


Tell us a little bit about building that business, what is it that you saw in it at the time because you were the man what was ultimately on the road for years setting up a shop every week across South Africa?

It was clear that the concept of this business that was developed by my cousin that it had hit the sweet spot which is was entrepreneurship is all about. Identifying what it is that the consumer wants and delivering it to the consumer to the best possible value. It’s actually a very simple formula and it was clear from day one that it worked tremendously well. it was simple and it requires 5 basic principles to approach it a Renier Van Rooyen articulated it and the 5 principles were faith, you had to have faith in your country and your people. Positive thinking, not looking at all the things that could go wrong because I’ve often said in order to be an entrepreneur you’ve got to be slightly mad because if you wake up in the morning and think of all the things that can go wrong today over which you have no control over, then you’ve got to be mad to put your life out there at risk. But that is what entrepreneurs do. So he had faith, positive thinking, hard work, enthusiasm… if you aren’t enthusiastic about what you are doing then stay in bed, you’ve got to be bristling with enthusiasm. The last one of the five principles is compassion, you have got to have compassion for your people, for your customers, for your suppliers and that is how you build a business.


Are you going to start any new ventures after what has happened or are you going to take it easier now?

No, I am unfortunately one of those people who will have to die with my boots on. The word retirement to me is a horrible concept, so as I say I am surrounded by young, bright people and we have many ideas and we have some very good businesses in our portfolio. We will build those and we will start new ventures because there is a whole world out there. 


Your shopping empire has grown across the continent, as an entrepreneur in Africa, what do you perceive as the opportunities in the continent that can allow entrepreneurs in the country to create wealth?

Well I think that the opportunities are glaring as are the problems and the challenges… Africa is a continent and had a huge GDP, larger than India for instance.  Africa is blessed with so many natural resources, we all know the story I mean it is all out there. If any entrepreneur would ignore Africa, if you look at the demographic rejections towards the end of the century 85% of the world’s population then will live in Africa and in the East. So the action has to be in Africa and in the East and Africa being still so under developed, offers huge opportunities but it goes with a lot of challenges.


When you are doing business on the African continent, how do you interact and transact when you are looking for opportunities to make wealth?

When we started out first taking Shoprite into what we referred to as and I must make this point, a lot of people make the mistake of talking of Africa as if South Africa is not part of Africa… So when I talk about Africa I’m talking about Africa North of Limpopo River. When we first started before, we went into a new country we would go and meet the president of the country and tell him this is who we are, we are Africans through and through although we have white skin, but my family has been here for more than 300 years so what am I if not an African? So we told them, this is who we are, this is what we do and we want to come and open modern shops of which there were none in most of these African countries. We want to bring modern retail to your country and we were always welcome with open arms. 


Is it possible for entrepreneurship to be taught in schools in Africa?

There are many short definitions, recently Elon Musk quoted something someone had asked him; what words of encouragement would you give to an entrepreneur? He replied with “If you need words of encouragement you are not an entrepreneur”. It sounds very simple but worldwide if you analyse the numbers or the statistics, only 2% – 4% of the population in various regions are entrepreneurs. Everyone has been looking for the secret that makes an entrepreneur, my answer to people is always look for what you think the consumer out there would like and how do you think you could deliver that to them better? And then the magic formula, the four letter word and you just go at it and couple to those 5 principles that were used for the philosophy for PEP.


How can one, without resources make an entrepreneurial journey? What would be your advice?

All entrepreneurs, again going back to Elon Musk, if you require resources in order to become an entrepreneur then you are not a real entrepreneur. You have got to find your way and there are a number of different ways of finding that initial little bit of capital or whatever it is that you need. Some people start off on a very low level, you start buying a couple of apples and trade them on the street and it takes time but that’s just how it goes. Nobody starts with a golden spoon or a silver spoon in his mouth.


Speaking of Elon Musk he is certainly creating a lot of interest in new stories at the moment. He was born here in South Africa, a lot of people have said that maybe if he had stayed in South Africa that the lack of capital that he may not have made it as big as what he has. What is your view on that?

Undoubtedly would not have.  You know, I mean, the best example of that is I got to know Rob Walton, the son of Sam Walton who built the largest retail group in the world.  We had a nice chat one day and he explained to me how Walmart was built and the history of Walmart was exactly the same as the history of Pep, Pep Stores. Exactly.  Almost to the year, it was the same.  And I said to him, but Rob, look at the fortune that your family had made.  I mean they’re by far the richest family in the world, prior to Elon Musk and Bizos and I said look at the money you make compared to me and he said but Christo it’s very simple, we were in an economy that was multiple times bigger than South Africas and with Elon Must it’s the same.  Maybe if he’d stayed in South Africa he would have made maybe ten percent of what he made in America, in monetary terms.  But there were other factors of course as well, apart from the size of the economy. That would be my answer.  I’m sure he would have been successful in South Africa as well but not to the extent that he has been in America.

One thing that you’re renowned for, I mean I’ve been reading your biography a lot recently is that you have been seen as always a master in doing deals as an entrepreneur.  Just tell me, when you’re investing or when you’re transacting, how do you assess risk?  What’s your method?

Tried and proven recipes, I mean the things that you analyze and you’re normally surrounded by accountants and merchant bankers or investment bankers and there are things that you look out for to be sure that it’s the right thing.  But you know, at the end of the day, Chris, as Steinhoff had proven, it is a game of hit and miss.  There’s no fool-proof formula.  I mean in Steinhoff it was a massive fraud that had been perpetrated over more than a decade and where the fraudsters managed to get through all the gate keepers and there is just no way of being guaranteed that you will not fall into those traps.

In your story, well in the story of most entrepreneurs in Africa, how much do you think of it is just luck, sometimes being in the right place at the right time?

No, I think anybody who denies the element of luck is a fool. Gary Player said that when people told him when he won one after the other golf titles that he was lucky, he told them “yes, but it is amazing that the harder I work the luckier I get.” So that is the combination, you’ve got to be out there for luck to find you.

Being a highly established entrepreneur, do you ever listen to people when they come to you with R100 and an idea; are you that kind of entrepreneur who always listens to people when they have a pitch?

I’m a great believer in listening and not being a total sceptic, if you’re a total sceptic then you are also not an entrepreneur. one of the greatest impulses for me in growing my, what people call my empire, was I bought a diamond mine and when it was introduced to me it just sounded like a fairy tale. I questioned why this person would sell this mine, now most people will say it’s a load of bs, I’m not going to waste my time but I said I would get on a plane and go there to look at it and speak to the people and it turned out to be a huge de-profitable undertaking for me. So if you’re a sceptic you’re always going to think that it cannot be true, and you’ve got to look at this, then again you don’t have the soul of an entrepreneur.


You mentioned the diamond mine, with your core business in retail markets on the line, what would you say would be the biggest risk or punt you ever took in the business?

Personally the biggest risk or punt was that at the age of 39 having made serious money for those days in the diamond mining business, I bought control over the group and incurred substantial amounts of debt to buy that contouring stake so I would say in the relevant of terms was the big risk.


What do you think the issues are with a lot of entrepreneur come to us and say we get so far, we get an idea and we build it up but growing is often a problem… what tips can you give in terms of getting bigger?

Well I think it comes back to the same basics I spelt before, you’ve got to be sure that you have the right business model, that what you’ve got to offer gives you a competitive advantage and you have then got to put passion, enthusiasm and energy that you possess into it. It will be different for different businesses. In the case of PEP stores, we knew we had the formula, we knew the market was there and we just went like clappers. At one stage we opened a hundred stores a year, thts two per week, which was the kind of dynamo that drove it.


What was the hardest decision you had to make in your entrepreneurial journey?

My reply to that question is that one of South Africas great entrepreneurs, towards the end of his career said that if he had known just how difficult it would be to build his empire, he would have never started. Yet coming to the end of his career looking back he marvels at how easy it was. When you are right there in the arena facing the fire there are thousands of very hard decisions that you have to make on almost a daily basis. So, I cannot take one and say that it was the hardest decision I’ve ever had to make. I know what the worst decision was and that was investing the R60 billion in a fraudulent scheme that Steinhoff was.


What was your first job in life?

I studied to be a lawyer; I was admitted as an advocate in South Africa but immediately after being admitted I joined PEP stores as the company secretary. So that I suppose was my real job. I stayed in that job for around 7 years, I was then a wealthy guy because the company was listed and I decided to go and practice law at the Cape. Then the whole history is there, I went back into PEP and the rest is well known.


How do you think Africa can marshal its resources to invest in the wave of development that is beginning in the continent so that wealth can stay and grow in Africa by Africans?

The first steps in that development are now being taken. One of Africa’s great tragedies is that the intra African trade in less than 20% of Africa’s total trade. We don’t trade with each other, we trade with the rest of the world and therefore we never build this mighty economic block that Africa potentially is. Recently they had finally come to an agreement where there would be an almost African Union like the European Union. We are beginning to make it easier to trade with each other. I mean one of the tragedies of Africa for instance is our immigration policies, that it is almost impossible to get expertise from other parts of the world to come and share their expertise with us. We experienced that with Shoprite, we go into a country where there were no modern supermarkets, so we had to send people from here to go and train the people there and to have an insurmountable amount of problems in getting work visas and it is still a problem to this day. 


The African continental free trade area came into existence on the 1st of January 2021, there is a lot of work to be done they say Europe wasn’t built in a day, what are your hopes for this trading block once I gets fully underway?

The hope is very clear that Africa potentially will finally begin to unlock. That is clearly what I am hoping for and other people like the political leaders. I mean it is obviously what they are hoping for. 


Just a little bit about your career as an entrepreneur, as I said you’re known as a candy deal maker. A lot of people still speak about OK bazaars, how you bought it for R1 and you had to take on a pile of debt. You had actually gained billions of rand in assets. How come you saw that and no one else did?

The bulk of credit for that deal belongs to (NAME 49:40) who at that stage was running Shoprite. He is a very close friend of mine, we have been friends for almost 60 years and we were at university together. So I don’t take that credit for myself except to the extent that I backed him up 100% in what he was doing and the true facts of that deal was that we paid R1 for R1 billion of assets, so that is that part that people always miss. We didn’t take on debt because you don’t have to take on a lot of debt to pay R1. But here is the other side of the coin, OK bazaars at that stage was part of SA breweries, SA breweries traded on the stock exchange at a 20 times fee. OK bazaars was losing R200 million a year so by giving OK bazaars away for R1 the market cap of SA breweries, theoretically should have increased by R4 million. That is how deals work. It was good for us but fantastic for SA breweries 


How do you determine when it is time to scale up a business?

You will know, if you start a business you will feel it and that is the best answer, I can give you. I have often made this point, people who are starting out a business, young entrepreneurs, they look at people who have so called made it and they think to themselves that that person must have had some blue-print. There is no blue-print, business is all about being opportunistic, you will see the opportunity, you will make your assessment and you will grab it. It’s all opportunistic, people who tell you that they started out with a very clear plan of how they are going to make their fortune, take Elon Musk again, his first business were an IT business called PayPal where he made his first billion or two billion. But his real fortune was made in electric motor cars, Tesla, and from Tesla he went into space. I mean the one had nothing to do with the other… So being opportunistic is what it is all about.


Some people have views that business plans as drawn up around the world; don’t work in Africa, what is your view on that?

Business plans are a pretty wide concept; I’m not sure in what sense they see it. But there is no reason that Africa should in that aspect is different from anywhere else because your business plan has to clearly encompass the region where you are operating. There will be African business plans, there will be British business plans and those business plans will take into account where you are.


What about getting to the point of raising capital? You said that you think entrepreneurs can start with zero in your pocket, but what are your tips on growing young entrepreneurs who actually want to grow capital and get money from the banks?

Again it comes back from the basics, if you have a model that works and you can convince people of your integrity and your serious intent to make the business work. You must remember as much as you look for capital, to the same extent there are people with capital looking for places to invest. It took me a long time to understand that, which you get to a point where your problem is finding the places where you can deploy your capital. That is almost as hard as building the place where other people can deploy their capital.


A lot of people complain that banks and financial institutions only want to lend you money when you don’t need it anymore but are not so forthcoming when you are actually are going to do something productive with it. Is this the case?

There is an old saying – they lend you an umbrella and then ask for it back when the rain comes. But I think that’s unfair… if you study the history of capitalism and you read Niall Fergusons books about the ascent of money and how it works. It’s not really true, there are people with savings or pension funds that have to find places in which they can invest their money and make it grow.

What expertise, special expertise that Africans have that can make a difference in this world of entrepreneurs and wealth creation?

Their expertise should be that they know the continent, they know the rhythm of life in this continent, and they have tremendous local knowledge which is kind of saying the same thing over and over again. And that will be their competitive advantage, if they can correctly exploit it.


So you operated both in the old days in South Africa and also in the democracy of South Africa, how would you compare the economies now to then?

There are obviously great similarities, there are regrettably also great differences, it’s not news to anyone but South Africa in this transitionary period is going through an era where we have to deal with very high levels of crime, very high levels of corruption and to an extent with a greater lack of bureaucratic expertise- I would call it. In the transition a lot of the old people in the civil service retired or took packages and people were thrown into the pot facing huge challenges so we’re making mistakes. But we are in a transitionary period and we have simply got to get through it. The world had tended to become a lot more regulated which makes it very difficult for entrepreneurs to get started. Someone had told me about how many forms they had to fill in to start a small business, and it’s crazy… Where as in a country like Rwanda, so again don’t speak of Africa as if it is a single entity, in Rwanda they tell me that you could start any business and get all your approvals and all your permits within 36 hours. If you’ve got an idea, you submit a form or you go online and within 36 hours you’re up and running. Now in South Africa that is regrettably not the case.


What about the economy here in South Africa which is still the biggest and most important economies on the continent, but everyone can admit that especially with COVID and even before COVID there were problems. How confident are you that the countries will emerge from its problems?

There were many countries before South Africa that went into deeper problems that what we are currently experiencing and they managed to emerge. Why should we not be able to do so? South Africa has been written off by people many, many times in the last 70 – 80 years. It was the people that sold out, that left South Africa, who gave up. But South Africa has come through it, a remarkably, resilient country. We will get out of these problems that we are currently experiencing.


How do you see business changing in South Africa as we emerge from the COVID-19 crisis?

In line with our businesses all over the world will have to change. We are in an offset phase where this is our new normal, we all have to think differently. The world has become a digital world. Things we couldn’t even dream of 10 – 20 years ago are happening right now and we all have to adapt. But there is no difference between Africa and the rest of the world in that regard.


What about small places like Botswana with very small populations, how can they play a role in investors and creating wealth?

If you look at its history it has done remarkably well. I believe it is one of South Africas success stories. I also believe that it is small population was helpful in that regard, but Botswana will play that role that it deserves having regard to its size. It’s not going to be a superpower but it’s doing well and with the right policies, the right political leadership, Botswana will do very well.


How do you stay motivated in business for so long and do you mentor young people?

To answer the first part, it it’s very easy, I enjoy it. I wouldn’t know what to do with myself if I didn’t do what I continued to do. I love it! Mentoring young people… well one has this kind of discussion and I’m always open, I’ve done it in the past countless times and I’m trying to cut back on that. But if you can get some benefit off of my experience ill happily share it with you.


What do you look for in someone that would make you think that they will succeed?

My answer is that I don’t know… Anybody that tells you different is not, in my view, telling the truth. It’s a gut feeling.


What can be classified as a put off when sitting down with somebody what discourages you when someone starts telling you about their entrepreneurial dreams?

Well if he is in his 20’s and asks to join my company. If that is where you are aiming then you are on the wrong track.


What about the work ethic? From the young generation of entrepreneurs, what is your view on that kind of work ethic?

To me it seems pretty obvious that we are going into an era of working smarter. We’re in a completely new world but I don’t think that people’s work ethic has really changed. My father’s generation thought that we had it easy so if you can think of the world that they grew up in, they didn’t have any of the wondrous equipment that we grew up with. 


A lot has been said about getting the right people around you as an entrepreneur to be successful. Do you need to be an accounting guru to be an entrepreneur and how do you goes about mastering that skill?

I don’t think you need to be an accounting guru, in fact with all due respect to charted accountants, I have often said that one of my greatest blessings was that I was not a charted accountant because some people tend to analyse things to death and accountants by virtue of their training, their approach to life may fall into that category. But you certainly have to understand the basics and they are actually very simple.