SAP carves up empowerment with a different tack
Unlike broad-based black economic empowerment (BBBEE) schemes, which are of ten criticised for making a few people very rich, German software firm SAP is creating a new way to empower South Africans.
As part of government efforts to rectify the negative effects of apartheid, firms operating in South Africa are compelled by law to meet black ownership targets.
To comply with the legislation, SAP will issue 19.5% shares to the SAP South Africa Empowerment Trust, which will “benefit its beneficiaries consisting of previously disadvantaged black students”.
For now, the German company isn’t disclosing the size of dividend it will pay to the trust. SAP South Africa beneficiaries are not required to pay for the deal.
Instead, the students will use the dividends paid to the trust by SAP South Africa to settle their fees for studies facilitated by the Johannesburg-based Maharishi Institute SA.
The Institute, founded in 2007, aims to make tertiary education accessible to all.
CEO Dr Taddy Blecher believes that the deal done by SAP South Africa will facilitate access to post-secondary education is a game-changer for the institute.
“We are a non-profit group that has exclusively served disadvantaged individuals for years with a focus on youth in South Africa,” explains Blecher.
“We have seen the power of facilitating access to post-secondary education, bringing employment to over 14 000 [previously unemployed] individuals who are now breadwinners for over 70 000 family members,” says Blecher.
He adds that the beneficiaries of the SAP South Africa Empowerment Trust will increase this number.
“We will change the lives of the beneficiaries by giving them meaningful life skills and bringing them into the information technology sector and the wider corporate business world in South Africa and the global economy.”
The move to i ssue shares to a trust will bolster SAP South Africa’s empowerment credentials. It will also enable the German f irm to meet the required 30% ownership target stipulated by the BBBEE codes applicable to IT firms operating in South Africa.
SAP South Africa has 10.5% ownership via BLITEC, a broad-based black IT company.
The German-based company could have elected to sell an additional stake to BLITEC, but instead choose to focus on sustainable economic self-sufficiency – a commendable move considering other technology multinationals are struggling to comply with South Africa’s BBBEE policy.
The second BBBEE deal done by SAP South Africa through its trust and the Maharishi Institute is worth emulating if it delivers on its promise to empower huge numbers of South African youths through education.
Some BBBEE deals haven’t delivered on promises to communities and some of them have been used by politically connected i ndiv i duals t o enrich themselves.
However, the SAP South Africa Empowerment Trust promises that the beneficiaries of the trust will have access to business degrees and exposure to SAP South Africa. They will be equipped with “real world” tools they need to become potential leaders and business owners.
SAP Africa’s CEO Pfungwa Serima says: “SAP is passionately driving the Africa innovation technology agenda by focusing on skills development initiatives that result in sustainable and meaningful empowerment of previously disadvantaged persons. Strategic skills development translates into job creation.
“We identif ied t he Maharishi Institute because of its long-term track record of success in facilitating the development of skills so that graduates get more than a piece of paper post-training and acquire the life skills and attitudes essential for the fast-changing technology arena in the 21st century.”