Mar 31

Investment Strategy Yields Bumper Dividends For Community Development Organisations

Disciplined, long-term investing by 16 non-profit social development organisations serving more than 1 million people in poor communities is paying handsome dividends, enabling them to remain sustainable in tough economic times.


Their broad-based black economic empowerment (BBBEE) investment company, Ditikeni, announced this week that it has paid them a bumper R11.7 million dividend. This brings to R44.5 million the amount that Ditikeni has distributed to its shareholders since its establishment 20 years ago.


Ditikeni’s dividend, based on its holdings in a range of listed and private companies, was split into an ordinary dividend of R1.08 — 20% up on 2019 — and a special dividend of R3.00, making R4.08 per share in all. The ordinary dividend has been increased by 20% every year for the past six years.


Ditikeni, which means “something to lean on” in tshiVenda, was established 20 years ago following a bold but speculative decision by non-profit organisations to reduce their dependence on foreign donor funding. This had sustained many of them during the apartheid years but began to dwindle after South Africa’s transition from apartheid to democracy in 1994.


The organisations scraped together R2.8 million as seed capital to established Ditikeni as a BBBEE investment holding entity that aimed to acquire shares in mainly unlisted companies which required BBBEE credentials. Dividends would be used by the organisations to partly fund their activities.


While numerous other organisations declined to participate in the venture on the grounds that investment in unlisted companies was too risky, Ditikeni today has net assets of more than R200 million with investments in listed and unlisted companies. Ditikeni is a certified 98% black-owned and 60% black women- owned investment company.


“Our non-profit shareholders seed-funded Ditikeni in the year 2000 with an investment of R1.00 per share, so to get R4.08 back in 2020 is good going. That’s a dividend yield of 408% on their initial investment, which is difficult to match,” says Ditikeni chairperson Sahra  Ryklief.


But there’s more to come, she adds. “We have several holdings that are still in growth phase from which we expect good things in future. Our shareholders, being non-profits, are finding it increasingly challenging to meet the demands on them by their communities from conventional funding sources. Ditikeni supplements those sources, and what is great for the non-profits is that Ditikeni’s dividends give them flexibiliity – they can be used to pay for things that funders are reluctant to fund, for example.”