1. Black Economic Empowerment: How does the Western Cape fare? Colin Reddy: BEE Director BusinessMap Foundation

2. What we will discuss……….. Performance of the market… The future…..

3. The Market’s BEE response…deal flow 1996 - 2002 Source: BusinessMap Foundation

4. The Market’s BEE response…sector profile Source: BusinessMap Foundation

5. The Market’s BEE response…Listed BEE Controlled Companies Total number of companies on JSE is about 500 Source: BusinessMap Foundation

6. The Market’s BEE response…market caps of black controlled companies Total JSE market capitalisation is about R 1.3 trillion Source: BusinessMap Foundation

7. The Market’s BEE response…black controlled market cap by value Source: BusinessMap Foundation

8. The Market’s BEE response…BusinessMap Foundation BEE index Source: BusinessMap Foundation

9. Black ownership studies.. Sector Black beneficial holdings of total shares in issue * High caseLow case Resources14.18%12.34% Banking14.86%12.61% Support Services17.04%14.57% Diversified Industrials12.24%10.69% Food Producers & Processors 17.50%15.13% [Source: The BusinessMap Foundation] * Based on total shares in issue, including foreign shares

10. Listed BEE companies based in the Cape … Company Share price (c) – 28 Feb 2003 Share price (c) – 1 Mar 2002 Share price change (%) Brimstone653491.2 Brimstone-N653491.2 Cape Empowerment Trust121020.0 Casey2512,400 HCI34523248.7 LA Group16013518.5 LA Group-N140 0.0 Oceana1,3901,400(0.7) Sekunjalo Investments4120105.0 [Source: The BusinessMap Foundation]

11. Some definitions.. Black refers to African, Coloured and Indians Western Cape has…. Coloureds (and Indians) = 55% African = 23% White = 22% 4.35m people

12. A case study - Sekunjalo Black-controlled by about 74% A strong share price performance –105% rise in year to February Has healthcare and fishing subsidiaries Latest results: Turnover = R346m, Net profit = R17m and cash flow = R22m. The main shareholder is fully operationally involved. It boasts a 90% composition of black managers and staff. 70 % of the procurement budget is spent on black suppliers. 2.5% of profits are spent on CSI initiatives.

13. A case study – Mastercurrency - Unlisted 51% owned by KK Combi Inv. KK Combi is exec chairman. Exec management are 71% of HDSA Turnover = R35.5m, Net income = R7.2m Net profit = R4.1m (for 6 months to Dec 2002) Has a risk committee, internal audit committee. 58% black managers, 73% HDSA. Future leaders programme. 6% of net profit on CSI 25% of procurement expenditure

14. Western Cape: Persons Banked versus Un-banked Source: SAtoZ Sample size = 2 895 982

15. Western Cape: Are there senior black employees in your business? Source: SAtoZ Sample = 1139

16. Western Cape: Management Source: SAtoZ

17. Western Cape: Do black people have shares in your business? Source: SAtoZ

18. Western Cape: Working? Source: SAtoZ

19. Western Cape: Living standards? Source: SAtoZ

20. Western Cape: Property ownership? Source: SAtoZ

21. Entrepreneurship Start-up activity is highest among Coloured (5.0%) and Indian (4.5%) adults, followed by Black (3.8%) and White (3.8%) adults. In contrast, new firms are more likely to be owned by White adults (3.6%), followed by Coloured adults (3.0%). Established firms are far more likely to be owned by White adults (6.8%) than any other group. Source: GEM

22. Racial classification of respondents that believe they have the requisite skills to start a business, 2002 Source: GEM AfricanColouredIndianWhite No matric17.134.124.438 Matric27.664.751.745 Tertiary30.151.97565

23. Experts’ opinions of the most important factors restricting entrepreneurship in decreasing order… Education & Training Financial Support Cultural & Social norms Government Policy Government Programmes Market Openness R&D Transfer Access to Physical Infrastructure Commercial & Professional Infrastructure

24. Is BEE advancing in the Western Cape? Significant number of black listed company presence. However this is within a very small active black presence in JSE – about 3% Property ownership – somewhat more positive than other factors

25. Is BEE advancing in the Western Cape? Large number of un-banked

26. Is BEE advancing in the Western Cape? Large number of unemployed, but WC unemployment rate is about 19% compared to the national average of about 30%.

27. Is BEE advancing in the Western Cape? Lower LSMs still occupied by black people– indicates little economic interest Still a lack of meaningful BEE

28. However, the following requires investigation….for conclusiveness Success of Western Cape government’s preferential procurement – pendulum shifting towards blacks Is the licensing and quota system furthering BEE? – deeper problem of capacity to handle fishing quotas The status of staff training in the Western Cape? Increasing towards blacks Is SMME development furthering BEE in the Western Cape?

29. The solution…. Grow the WC economy Organic growth Capture from other provinces

30. Colin@BusinessMap.org.za Questions?