Dec 09

9 December 2004

Greater slice of BEE cake needed for grass roots

A leading broad-based empowerment company has called for BEE consortiums to allocate a greater percentage of transactions to broad-based entities.

Bandi Biko, director of Ditikeni Investment Company, said that while encouraging figures reported this week by the Minister of Trade and Industry, Mandisi Mpahlwa, showed that broad-based transactions represented 40% of the R28.4bn of empowerment deals concluded in 2003, far greater participation by broad-based organisations was called for.

“I would like to see this figure rise considerably by this time next year,” said Biko, who is also a director of the Social Change Assistance Trust (Scat), one of 23 non-profit, non-government organizations (NGOs) that depend on Ditikeni’s broad-based empowerment model for funding.

Biko, sister of the late Steve Biko, the black consciousness activist, said that her concern was for the future sustainability of all NGOs which were dependent on broad-based initiatives for a stake in the economy.

“Clearly, in the figures reported by the Minister, the larger part of this equation, 60%, is not broad-based, and therefore held by the shareholders of the BEE consortiums which arranged these initiatives.

“NGOs depend on the participation of investment companies such as Ditikeni in BEE initiatives, but there are not enough broad-based stakes available to go around. If the broad-based element of these deals in 2003 had been at least 50:50, think how much more funding could be available for the people at the grass roots.”

A structured broad-based BEE funding model developed by Ditikeni has been providing a solution to South African businesses seeking appropriate partners to qualify them as black-empowerment enterprises.

Biko pointed out that while she saluted those that had initiated BEE deals to include employee ownership in their structure, while these suited ownership levels required by the law, they were benefiting people who were already employed.

“True broad-based empowerment should be dedicated to those who have nothing, and who, without this vital funding, can neither support their families nor be fit to seek new skills or employment.”

The investment company represents BEE shareholders with strong links to government and broad-based economic empowerment through the work of the NGOs at 109 locations around the country. Shareholders include the Association for Rural Advancement, Trust for Community Outreach and Education, The Black Sash Trust, Social Change Assistance Trust (Scat), the Labour Research Service and the South African Council of Churches.

Ditikeni, which has successfully implemented a model which has been taken up by large and small companies for the eventual benefit of its NGO shareholders, recently acquired stakes in Stanlib (1.625%), Medikredit (2%) and Avis Van Rental Eastern Cape (30%). Among other investments made on behalf of its shareholding NGOs is a 1% beneficial interest in Caltex Oil of South Africa .

“The model we have developed is ripe for replication,” said Biko. “If broad-based empowerment was encouraged more soundly by government, the poverty of hundreds of thousands of South African citizens could be alleviated and lifestyles uplifted.”

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
Tel: 082 928 0028