Sep 14

14 September 2005

‘Political democracy falls far short of any meaningful economic transformation’

Broad-based economic empowerment should be driver of new growth
14 September 2005

Broad-based empowerment should be about “transformation rather than transfer” and linked directly to the expansion of the economic base and the restructuring of society.

Councillor Duma Nkosi, executive mayor of Ekurhuleni Metropolitan Municipality who was speaking at the Broad-Based Empowerment Conference 2005 in Johannesburg yesterday, said: “Rather than being a cost, broad based economic empowerment should become the driver of new growth; in this way new markets and new investments and new economic activity will focus on the development of the second economy.

“Broad based empowerment should focus on strengthening the non-profit, developmental sector that seeks to build assets and capacity among the poorest. This sector includes the emerging developmental micro-finance movement, as well as the cooperatives sector. The development of productive assets among the masses of our people, particularly the rural poor includes physical assets, but equally important the intangible assets associated with education and knowledge.”

Sahra Ryklief, chairperson of Ditikeni Investment Company, the broad-based empowerment vehicle that hosted the conference, said while political democracy since 1994 had succeeded in eliminating the legal basis for discrimination in South Africa, it still falls far short of any meaningful economic transformation, specifically in relation to the poor and economically marginalised.

“Our country’s legacy of discrimination has resulted in an unsustainable disparity in ownership, wealth and incomes. There are many divergent views as to the pace of redress, the means to narrow inequality levels and the extent to which state power should be used to influence market forces.”

There has however been a notable growth in the broad-based component in recent BEE transactions. Ditikeni’s own model enables its shareholding NGOs to acquire stakes in successful companies for their future financial sustainability. The organisation already has stakes in corporates such as Caltex and Stanlib as well as nine other companies including First Afrijoint Assemblers, Medikredit and Avis Van Rental (Eastern Cape).

At the conference Ditikeni announced three new investments: a stake of 7% of Verso Health, 10% of African Pioneer Investments based in Port Elizabeth, and 1% of the J and J Group.

“We believe that there is now widespread recognition of the value of “civil society” in the complex fabric of our nation,” said Nomfundo Walaza, a trustee of the Social Change Assistance Trust, one of the founding
Ditikeni shareholders.

Issued by HWB Communications
Contact: Caroline Swift
Tel: 021 462 0416
Cell: 084 303 6777

On behalf of:
Ditikeni Investment Company

Contact: Gordon Young, Investment Adviser
Cell: 082 928 0028