Tokologo Lekgetha – Co-Founder and Executive Director, Borutho Group, South Africa
Tokologo Lekgetha, co-founder and executive director of the Borutho Group of Companies, discusses the reasons behind founding the company and the steps they have taken to build their partnership network. Furthermore, he highlights the importance of the Black Economic Empowerment (BEE) Act, relevance of gas for the future of South African energy and what must be done to ensure that Borutho is at the forefront of this energy shift.
What was the history behind setting up the company in 2008?
“In the short term we are focused on diversifying into the mining sector supported by the potential positive changes to the mining policy. Fuel and gas is extremely competitive, and this is shown by the large amount of wholesale licenses being given out.”
The petroleum sector was one out the first industries to put out a charter, while during this period the white paper on energy was released. At that time, I was working with my father in the lubricants space, and we saw an opportunity to branch off and capitalize on the aforementioned policies within the energy ecosystem.
Since then we have grown in a dynamic manner, we have built up our knowledge in the industry and have been aggressive in engaging with the majors. This has facilitated our evolution in the industry. Originally, we focused specifically on the trade of liquid fuels, though through market analysis and customer demand, we have diversified into the gas and lubricants industries.
Within which areas are Borutho most active?
Initially we started off regionally, although through the award of the contract to supply diesel to Transnet we have been able to establish ourselves as a national player. We have also traded products in Zimbabwe and Botswana. Our focus now is in the inland regions mostly within the North West, Free State, Mpumalanga, Gauteng and Limpopo.
In 2013 Transnet signed a distribution agreement with nine smaller BEE players, one of them being Borutho. How was the trade ecosystem shifted before the agreement to what it is today?
The industry is a capital-intensive ecosystem, so players must think twice before entering. This move by Transnet gave many players, including us, the confidence to enter the environment as we could see the government was being an active participant in engaging and developing the sector for local companies. Additionally, it gave us broader access to business opportunities that we did not have before, including opening doors to securing product allocations from the majors.
BEE is a policy many companies believe must be tweaked to ensure greater foreign investment. What is your opinion on this topic?
Firstly, we have to understand the nation´s history, where parity did not exist for such a long time and the BEE rule was put in place to address these imbalances. Therefore, the BEE code is welcomed by us and Borutho is always engaging with foreign companies on how we can build a partnership with them and help them bring larger operations to South Africa.
In fact, I am personally involved in the implementation of the BEE act, as part of the youth commission at the Department of Energy, working on how we can get black youths more involved in the industry. There are also other groups, such as those for woman or market newcomers, with the overriding aim to provide opportunities for previously disadvantage South Africans.
Nevertheless, I believe the mindset does need to change slightly, from less what do companies deserve to what value can they bring to the partnership, and what can South Africa gain from this interaction to develop the business and country.
How do you position Borutho as the preferred partner?
We are very knowledgeable about both our industry and the customer sectors we target this allows us to be proactive rather than reactive to our clients needs. By ensuring we have skilled dedicated staff members we bring innovation to the clients we are working with. Our assistance with demand planning to shorten lead time and commitment to ensuring exceptional quality control allows us to assist our partners in their overall operations. We are solution driven and focus on adding value and partnering, rather than simply supplying product, and we do this by first understanding the customers business to know how we can connect on a higher level.
What is the relevance of gas for the future of South Africa´s energy mix?
In South Africa, we have always known that the energy mix is something that must change, especially considering the carbon issues associates with gas. Therefore, within this space there are large opportunities and Southern Africa has expansive potential for gas discoveries to ensure it is part of the ecosystem in the future.
How can South Africa reach the gas levels of nations in Europe?
I do not believe that there is a lack of demand, and overall the country is being pressured to look at alternative forms of energy. Other avenues such as renewable energy have been looked at, and I don’t believe resources are what is stopping South Africa from reaching the correct levels. We need to train and develop the country’s capacity to use gas.
From our perspective we see the future is gas. Despite being entrepreneurs and always looking at where next to invest, we see the gas space as the future of Borutho group as it is the future of Africa.
Many people believe South Africa may move towards an import-based energy system. Do you believe this is the case and is the country ready for such a shift?
I believe that if you look towards deep investments being placed into areas such as Saldanha bay, it shows the demand is there and infrastructure is being invested in. We have had conversations with Transnet about how they can help develop our ports to accommodate imports of energy products. The Department of Energy is investigating the future demands of gas, and what must be done. Are we ready to be completely import-based now? I would say no, but it is a work in progress.
As a business man, how positive are you toward the appointment of President Ramaphosa?
As a business man myself, I believe in him as he spent some time in the world of business. We are optimistic that his mindset will create a positive atmosphere as he understands there is no point in just feeding one business arm, but you must feed the entire body (South Africa) to see true results. He is heavily focused on the economy and building South Africa for the future, and this is good for all South Africans.
What opportunities do you envision for Borutho Group in the future?
In the short term we are focused on diversifying into the mining sector supported by the potential positive changes to the mining policy. Fuel and gas is extremely competitive, and this is shown by the large amount of wholesale licenses being given out.
In the gas market, we are constantly looking at what is happening in terms of demand and global shifts. Crude oil will be around for a long time, but the smart thinkers will change their approach sooner rather than later, and we believe our position in gas will place us at the forefront of this market shift.
Additionally, we want to position ourselves as not only distributors, and are looking at opportunities for storage capabilities and filling stations, while in the meantime possibly moving into natural gas.
Lastly, within the lubricants space we are focusing on blending in the future and are opening our arms to potential partners for this service, especially if they are looking to enter the South African market. We are in the process of launching our own Brand of Lubricants called Black Gold. These will be good quality products.
How do you succeed towards your ambitious plans for the future?
Placing our business in a competitive environment means we cannot sit around and wait. There is certain government support and legislation that is required for a level of success, and policy in general is tightening up. We started in some cases a decade after some of our competitors, so we require a playing field where rules are enforced, so we can compete on the same level as our competition.
From a different perspective, we must be constantly aware of external demands and deliver our consumers what they need. It is about being innovative and creating value, which will result in us establishing partnerships that gives us ground to build on.
What advice would you give to other entrepreneurs who are looking to start out in the sector?
Looking purely at the revenues should not be the focus, but more the knowledge of where services are required. Have a deep understanding of the value chain, and this will allow them to see the large amount of opportunities that exist.
What are your aspirations in the next five years?
Overall, we want to grow the business in terms of staff and market share.
At a more macro level, the lubricants space has leaped ahead in terms of possibilities, and we are looking to have our own blending facility to produce for ourselves and external companies. Within the LPG space, we are excited for the future as the sector continue to grow, and we are looking at opportunities for investments that move us purely from just traders, but to becoming also producers.
At the same time, we understand our obligation to look after our communities and our commitment to growing our Corporate Social Responsibility and investment programs is an important part of our business ethos as is our Supplier and Enterprise Development programs