Ditikeni investment concept spreads empowerment to the needy
More than five million people stand to benefit from the assets being built up by a broad-based empowerment investment company as money is released to fund the programmes of the shareholding non-government organisations (NGOs).
A portfolio of investments held by the 23 NGO shareholders in Ditikeni Investment Company – which includes a beneficial interest in fuel giant Caltex – will pay benefits to some of the poorest communities in South Africa and providing financial sustainability to the development sector
Ditikeni director Dasi Moodley says the investment concept is proving as valuable to black entrepreneurs looking for a broad-based partner to legitimise BEE deals as it is to established companies seeking to comply with government policies.
The funding vehicle, named after the Venda word ditikeni – something to lean on, or sustainability – has grown considerably since its foundation in June 2000 by seven NGOs encouraged by Dutch funder Interchurch Organisation for Development Co-operation (ICCO).
Prominent in the process have been former NGO staffers with political roots in the liberation struggle, such as Moodley, who had moved to investment banking and was able to provide professional input.
Through rights issues in 2000 and 2003 a total of R2.5 million (US$350,000) was raised. Among the 23 shareholding NGOs today are The Association for Rural Advancement, Trust for Community Outreach and Education, The Black Sash Trust, Social Change Assistance Trust, Labour Research Service and the South African Council of Churches. All of the NGOs have a progressive developmental focus to their work.
“Ditikeni has built up a portfolio of investments through persuading business owners to sell shares on favourable terms thereby enabling them to meet targets in terms of “black” ownership,” said Moodley.
Deals in the past year have seen Ditikeni take a 5% stake in Sphere Holdings, an 18.4% interest in the Natural Resources Empowerment Fund and in March this year, a 10% holding in Vunani Executive Search.
The investment company also persuades black investors to make available a percentage of their shares when deals are being made. According to Moodley, this is a way that individuals, many of whom rose to prominence as leaders in the anti-apartheid movement, can share some of their newfound wealth with social causes.
Ditikeni applies ethical criteria to all of its investments and works hard to make the most of the limited resources it has. There is no physical office, overheads are kept to a minimum and capital is used just to cover essential legal and transaction costs associated with its investments.
Ditikeni will in due course consider a further rights offer to give other NGOs in South Africa an opportunity to buy into the company, said Moodley.
Currently the 23 shareholders each own a proportion of the value of the shares owned by Ditikeni. These assets could be realised either through a partial sale or by winding up the company. Alternatively mechanisms may be created where individual shareholders can liquidate part or all of their stake in the company by selling to other like-minded NGOs.
“Ultimately more than five million people stand to benefit from the assets being built up by Ditikeni,” said Moodley.
“This is an imaginative and creative approach to resource mobilisation, making use of commercial markets and financial investment skills to benefit the most marginalised communities in South Africa .”
Gordon Young, investment adviser to Ditikeni, believes its investment model is unique. “There are others moving into this terrain but we got in ahead of the game. Our strategy implements government policy and, over time, will provide a capital base for NGOs which have to operate under onerous hand-to-mouth fund raising regimes.”
Ditikeni represents credible BEE shareholders with strong links to government and broad-based economic empowerment through the work of the NGOs at 109 locations around the country.
While the investment conditions being exploited are unique to South Africa , there are lessons that can be applied in other countries, Young said.
Issued by HWB Communications on behalf of Ditikeni Investment Company
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