BEE scheme flourishes

2014-07-18 00:00

SANLAM said yesterday it had generated R15 billion for its empowerment shareholders over 10 years to become, arguably, the most successful empowerment scheme to date.

And, Sanlam Group market development chief executive Temba Mvusi told The Witness yesterday that the pot of money is likely to fund the start of South Africa’s first large, black-owned financial institution.

He was in Durban on a campaign to update Ubuntu-Botho shareholders of their investment.

Economic empowerment schemes by large companies have attracted much criticism because many have failed financially, while some only managed to enrich a few privileged shareholders and did not benefit a broader community.

The Ubuntu-Botho deal — a partnership between Sanlam and business leader Patrice Motsepe — matured on December 31, 2013 with R15 billion in value created, from an initial investment of only R1,3 billion.

Among the broad-based shareholder community in the scheme that included women, churches, trade union and education groups, nine were companies, one from each province, with 60-100 beneficiaries each.

Also among the KwaZulu-Natal beneficiaries were 12 schools and two large church organisations.

“The deal achieved the success it did because it was foremost a business deal,” Johan van Zyl, group chief executive officer of Sanlam said in a statement.

“BEE should not just be about wealth redistribution or earning points on the BEE scorecard,” he said.

Sanlam had approached the partnership as it would any other business deal — it was subjected to the usual due diligence reviews, to ensure both parties would realise significant value.

“It had an advantage over others of its kind in that Patrice personally invested R200 million to kick-start the transaction, which meant the deal was not as highly geared as many others are,” said Van Zyl.

During the 10 years of the scheme, Sanlam’s share price rose from R7,65 in 2004 to around R56 today.

Mvusi said going forward, the idea was not to dissolve the scheme, although, of course, shareholders would have the option to sell their shares.

“We want to now go to the core to create a black-controlled entity. We want to move to the next level of empowerment. There are no sizeable black-owned companies in financial services,” said Mvusi.

In terms of the scheme, R3 billion in value was created for the Community Development Trust, to be allocated to education and educational infrastructure projects for the “poorest of the poor”, said Mvusi.

He said the formation of new black-owned large financial services group would also be of benefit to Sanlam, and that further details on the way forward would be worked out in the months ahead.

Join the conversation! encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions. publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24


6 myths about male cancer

It is important to be aware of the most prevalent cancer diseases amongst men in our country.


You won't want to miss...

Who are the highest paid models of 2017?
10 gorgeous plus-sized models who aren't Ashley Graham
5 top leg exercises for men
10 best dressed men of 2017
Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.