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Maduna, Penuel

University of Johannesburg Institutional Repository

T H E  T H I N K E R40By Dr Penuell Maduna SOUTH AFRICAN BREWERIESBlack economic empowerment (BEE) has to a large degree been tainted by the association with high profile beneficiaries of BEE, who may or may not be perceived to be connected to the ruling party and therefore close to the seat of power. With this notion comes a tendency for BEE to become about an anointed few. In contrast, the transaction by South African Breweries (SAB), called SAB Zenzele, was specifically designed to be broad-based and innovative.It sought to ensure from the beginning that the beneficiaries were ordinary men and women, previously disadvantaged SAB staff members, tavern owners and members of the broader society, through the SAB Foundation, and not a few high profile individuals. When I was invited onto the board as a member and eventually chairman, I accepted gladly, as it was an opportunity for me to add value by providing leadership.As South African capitalists and business people, we know that a lot is possible and we can extend economic and other opportunities to a whole host of people who have previously been excluded and neglected. Beyond mere compliance with existing laws and policies, BEE is an imperative of South African business. It is in the self-interest of business to ensure that gradually the colouration and gender component of business changes in this country.Every time I have the honour of chairing the SAB Zenzele annual general meeting (AGM), I am reminded of what is possible when you allow BEE to be truly transformative. One reason I accepted the opportunity to serve in this role was what I saw when I examined the details of how the initiative had been constructed. Thirty thousand taverners, operators, and owners of what we used to call speakeasies were  given an opportunity to own a stake in the company that is one of the major suppliers of what they © SABBEE can and must be transformativeDr Penuell Maduna is the chairman of SAB Zenzele Pty Ltd, which holds BBBEE participations rights in South African Breweries.41V o l u m e  4 8  /  2 0 1 3SOUTH AFRICAN BREWERIEStrade, namely beer. I have personally witnessed its transformative power on several levels, which has filled me with immense pride and gratitude.One of the first opportunities that arose from the SAB Zenzele BEE transaction was giving those shebeen owners who applied to participate in the scheme, the incentive and opportunity to become or operate licensed businesses. No longer would they be fugitives from the law, who ran the risk of being raided, arrested and their money literally poured down the drain, and with it their livelihood and only means to support their families. One mother in Alexandra Township, a previous shebeener and now a licensed tavern owner, has been able to use the dividends to create an infrastructure that allows her to feed scores of children. Many of them are orphans and the food she provides them with will often be the only meal they receive that day. Her transformation from an illegal shebeener to valued member of the community has not only influenced how she is viewed, but also how she feels about herself.She is but one of many examples of people who no longer have to “bob and weave” as smugglers or bootleggers of sorts. We have been empowered to help people to move from a state of lawlessness to become legal and legitimate businesses.  They have now also joined the tax pool and are adding to the fiscus. This has also allowed SAB to help them with business skills, with training programmes on how to trade responsibly and curb alcohol abuse, as well as ensuring they comply with liquor laws and don’t risk losing those hard earned opportunities, which has also had a transformative impact. The very fact that she and other shareholders of SAB Zenzele are already able to receive dividends twice a year is a remarkable achievement of this transaction. One of the most unique features of SAB Zenzele is the payment of cash dividends to shareholders from the first year. Retailers who acquired the minimum allocation of shares for R100 will this year receive more than R269 in dividends for the first six months, or 2.7 times their initial investment, while at the top end retailers will receive up to R1 811. A cumulative R111 million in dividends has now been paid to SAB Zenzele Holdings since the launch of the transaction.Notwithstanding their dividends paid out to date, at the end of the 10 year transaction period, their Zenzele shares will be transferred into SABMiller plc shares. In other words, they will be shareholders in a global company, in fact, the second largest beer brewer in the world, without the need for any political connection. If that is not empowerment, I'm not sure what is.The enthusiasm with which each AGM is met continues to astound. Shareholders literally arrive in their thousands and they can make decisions in their own company. And those of us who have the honour and privilege of providing leadership are held accountable by them and submit to an election process by them. I remember they asked me at last year’s AGM what was in it for me, and I said “Nothing. As an independent director, I am not employed by SAB, nor am I a shareholder of SAB Zenzele”. They asked why there were not more board members, and we said we can include more, but that would come at an additional financial cost. They voted to keep the number of board members the same. They were empowered.I had previously been used to AGMs with a handful of shareholders attending, or scores at most. The order of business would usually be concluded within thirty minutes. Not only are our SAB Zenzele shareholders enthusiastic, they are hungry for knowledge. Some have proudly told me how their children (sometimes grandchildren) take them through their notice of the AGM, giving them the opportunity of using audited financial statements of a real company as they study subjects like Accountancy. They learnt about the workings of the Companies Act. The children too are empowered by being able to apply what they are learning in school, thanks to “granny’s business.” Understanding that their participation rights have real long term value has also led many to ask questions about, and start, estate planning, again something they have never be exposed to or previously reflected on before because there was, until now very little to bequeath. At the risk of plagiarism, once you are standing on the summit, you get a totally different view of where you are. Ordinary shareholders of SAB Zenzele are increasingly in a position where they begin to see how business works, as well as to identify opportunities available in the larger economy. Some have asked about prospects for more participation rights in the share scheme, as they have seen first-hand the power of true empowerment. Some have even begun seeing opportunities elsewhere in the economy and other industries.I am a product of the Republic of South Africa. I’m grateful to live in a country where since liberation, schemes such as SAB Zenzele give us the opportunity work with ordinary people and see them become different from how or what they were at the point of entry. They give us a privilege each year when they vote us in to lead them - and one that we don’t dare take for granted. This has also  allowed SAB to help them with business skills, with training programmes on how to trade responsibly and curb alcohol abuse, as well as ensuring they comply with liquor laws and don’t risk losing those hard earned opportunities, which  has also had a transformative  impact.

BEE can and must be transformative

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BEE can and must be transformative

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