KAGISO Trust, along with many other board-based empowerment schemes, is fighting for survival due to the ongoing uncertainty about the definition of broad-based empowerment by the BEE Commission, Kagiso’s chief executive Mankodi Moitse said last week.
Without BBBEE credentials or approval of deals by the commissioner, the empowerment scoring on transactions by the investment arms of the empowerment trusts are negatively affected, potentially stopping investments with market players.
In April 2019, the new commissioner of the BBBEE Commission, Zodwa Ntuli, who was appointed last year, questioned the legitimacy of broad-based ownership schemes, and said she did not regard “beneficiaries” as “stakeholders”.
Moitse said in an interview with Business Report that the commissioner’s view effectively stripped many empowerment trusts of their BEE credentials.
Other trusts similarly affected include the likes of Mineworkers Investment Trust, HCI Foundation, Women’s Development Bank Trust, Royal Bafokeng National Trust and Wiphold Trust.
Moitse said while the commission appeared to have indicated that it viewed the “beneficiaries” of the trusts as ownership fronts and not genuine black owners, there had to be a place in the empowerment agenda for the beneficiaries of development projects.
Kagiso’s beneficiaries include those rural black school children that had benefited from 30 years of education programmes, those that had benefited from its local government and NGO support programmes, and emerging farmers and other black entrepreneurs that benefited from Kagiso support programmes.
She said the laws itself on empowerment were not clear on the definition of broad-based black empowerment, and it appeared that the government was moving towards only viewing equity ownership as the sole criteria for empowerment.
“Given the socio-economic and developmental needs in our country, how can you exclude this from empowerment? When these development programmes are done right they also produce dividends,” she said.
As a self-funding non-profit organisation Kagiso, like other empowerment and development trust’s, do not have shareholders, and their profits go to the beneficiaries, who are considered the “owners”.
Moitse said she expected that Trade, Industry and Competition Minister Ebrahim Patel would in April publish some kind of clarification on the matter, either by way of some kind of proclamation or regulation, to remove the “unease in which we currently operate and so that we can get on with our projects”.
She said that while the Department of Trade, Industry and Competition had said on November 23, 2020 that it “affirms that we recognise the use of broad-based ownership scheme structures for BBBEE ownership”, it had not yet committed to publishing the clarification.
BUSINESS REPORT ONLINE