Transformation
Sustainable Development: a reciprocal path
South African society is plagued by many social ills, including skills crisis, unemployment, poverty and crime. Government has made a priority of dealing with these challenges. Government alone cannot win the battle against these ills.
To overcome these challenges, forward-thinking companies like Business Connexion Group Limited (BCG) appreciate the value of forging a sustainable and reciprocal relationship with communities and government in order to combat these challenges.
The Broad-based Black Economic Empowerment (B-bBEE) policy of government makes business sense as it enhances the sustainability of the country by broadening the participation for all South Africans in the socio-economic mainstream
Empowerment in Business Connexion: a historical perspective
Business Connexion is the pioneer of Broad Based Black Economic Empowerment (B-bBEE) in South Africa. The Group embarked on the B-bBEE journey long before the B-bBEE legislation was passed in 2003.
NITAC transaction (first wave)
Persetel Q Data Holdings was formed in 1997. The organisation made numerous European acquisitions and subsequently changed its name to Comparex Holdings in November 1998.
The African operation retained the name of Persetel Q Data Africa. The group played a pioneering role in empowerment in the ICT industry in 1997, when it sold control of Persetel Q Data Africa to the National IT Acquisition Consortium (“Nitac”), which was assembled and led by Mr Don Ncube of Real Africa, comprised of a consortium of more than 900’000 PDIs and represented, inter alia, labour unions, women groups and no less than 14 small PDI ICT companies.
The Comparex Group enabled the majority of Nitac’s participants to raise the necessary finance for the purchase consideration by granting Nitac a Put Option at a discount of some 40% to the then ruling Comparex Holdings share price.
At the request of Nitac and because of the value inherent in this Put Option, the Comparex Group permitted an early exercise of the option and re-acquired control of Comparex with effect from February 2002. Pursuant to the exercise of this option, the Comparex Group paid a cash amount of R379 million and 29 million Comparex shares. The 29 million shares represented more than 10% of the issued shares of Comparex Holdings Limited at the time.
GADLEX transaction (second wave)
Background
As a result of the Nitac Put Option Comparex Africa became a wholly owned subsidiary of Comparex Holdings Limited, the JSE listed entity on 8 February 2002.
In a press announcement made on the 3rd of June 2002, Comparex Holdings stated its intention to unbundle Comparex Africa in order to provide an attractive opportunity to introduce empowerment into African operations. The Board and management unanimously agreed on this strategy.
The primary objective of the B-bBEE process was to maximise shareholder value by enabling Comparex Africa to continue to compete successfully in the South African business environment going forward. It was envisaged that the prospective B-bBEE shareholders would own at least 25 percent of the business of Comparex Africa and would assist in continued transformation of the group. Key criteria were established in the selection of B-bBEE shareholders to ensure that this objective was achieved.
Invitations were sent out to potential B-bBEE shareholders and it was expected that the process of selection and the announcement of the B-bBEE shareholders, was to be completed by the end of 2003.
In November 2003 Business Connexion Group Limited (“Business Connexion Group”) [or Comparex Africa Group (Pty) Limited as it was then known], concluded a B-bBEE transaction with Gadlex (Pty) Limited (“Gadlex”) [or Business Connexion Investments (Pty) Limited as it was then known], in terms of which Gadlex acquired a 25.01% equity interest in Business Connexion (Pty) Limited [or Comparex Africa (Pty) Limited as it was then known].
The acquisition was funded by a combination of the disposal of Gadlex’s operating subsidiary, Business Connection Solutions Holdings (Pty) Limited equivalent to 11.82% of the combined Business Connexion (Pty) Ltd and “A” Preference Shares equivalent to 13.19% of the combined Business Connexion (Pty) Ltd.
The transaction, from a Business Connexion Group perspective, was mainly driven by the need to introduce a B-bBEE shareholder into the group in anticipation of the requirements of an ICT charter.
Seven-point framework
In line with the generic B-bBEE Scorecard, the Business Connexion Transformation seven-point framework is structured as follows:
1. Equity ownership
BCG recognizes the importance of transformation and also embraces and is committed to the South African Government’s B-bBEE initiatives. To advance its empowerment objectives in order to comply with the DTI Codes and ICT Charter BCG implemented a BEE transaction in September 2010. Following the conclusion of this deal, B-bBEE entities and individuals now own 30% at BCG level.
2. Management control
The Group is led by an executive leadership team that is reflective of the broader South African population. Black people constitute 66% and 46% of the board and executive management team respectively.
3. Employment equity
The Management of Business Connexion is committed to an internal transformational programme that does not only help achieve compliance with legislation and achieving targets, but also promote a work environment that is conducive for meaningful and sustainable change and transformation.
Business Connexion is embarking on a strong transformational drive to accelerate employment equity. Whilst demographic representation is important within the auspices of the Employment Equity Act, management does not only support compliance with legislation and achieving targets but also the commensurate creation of a staff environment that is conducive to meaningful and sustainable change and transformation enabling the organisation to grow and flourish.
Business Connexion strives for representation at all levels within the organisation irrespective of race, colour, gender, religious affiliation, class or creed. The group will continue to focus on creating equal opportunities in: recruitment; training; promotion; development and advancement of all employees with the intention of bolstering its current company-wide ratio of black employees.
4. Skills development
Sustainable socio-economic growth in South Africa and the developing world at large lies in building a knowledge-based economy through the development of a strong ICT sector and associated ICT skills. This will help drive an economy that offer society, previously disadvantaged communities in particular, greater access to opportunities for improving their quality of life in terms of knowledge and skills acquisition.
Business Connexion is proud of its sound business track record spanning over three decades in the information and communication technology sector. This track record has been underpinned by huge investments in the field of education and training. The focus areas of our learning and developing strategy include diversity training, management development, ICT technical skills, internships and learnerships.
5. Preferential Procurement
Business Connexion recognises that if transformation and black economic empowerment in South Africa are to be successful, big business must actively support the development of smaller enterprises. If successfully implemented, preferential procurement will drive entrepreneurship, skills development and job creation.
Following the external B-bBEE audit concluded in December 2010 Business Connexion achieved 98.5% of the DTI procurement scorecard. To achieve the maximum points we intend increasing spend on black women owned enterprises.
6. Enterprise development
We acknowledge that Enterprise Development plays a vital role in the transformation of the South African economy and can contribute to market share for BEE companies. SMMEs are considered big contributors towards economic growth and job creation.
Our new enterprise development strategy seeks to enhance the support we give to existing black owned, black empowered and black engendered SMMEs. Doing this we trust would help us contribute to the South African government’s job creation agenda.
7. Corporate Social Responsibility
The vision for Business Connexion’s Corporate Social Responsibility (CSR) is to be an innovative and inspirational corporate citizen on the African continent where the company operates. We seek to protect and enhance the Business Connexion’s brand through responsible business practices that contribute to profitable and sustainable growth.
Technology is an important and powerful tool for social connectivity as well as upliftment. Philanthropy is essential, but we believe that technology that influences social connectivity is just as important. We strive to harness the power of technology to make a real change and influence the African Web of Life. Therefore Business Connexion’s CSR mission is to empower young people to be able to change their lives as well as those of their communities through technology. We see our responsibility towards the communities where we operate as a business imperative and this forms part of the overall sustainability requirements of the organisation.
We implement our Corporate Social Investment (CSI) and Social Economic Development (SED) initiatives in conjunction with business, clients and/or partners and to ensure that our initiatives could improve access to sustainable economic growth for individuals who need them most. We aim to combine business acumen, innovation and advocacy to spark a revolution for youth, led by youth.
Business Connexion is proud to have been recognised by the National CSI Registrar on behalf of the South African Department of Social Development, for its efforts in uplifting and furthering South African society and its people. Certification by the National CSI Registrar positions Business Connexion as a true champion of South African development and a valued community contributor. As part of its formal accreditation and acknowledgement programme, the National CSI Registrar has awarded Business Connexion national Gold Community Contributor status. The certificate states: “Business Connexion has made a meaningful difference towards aiding and uplifting a countless number of this nation’s citizens out of hardship and away from suffering. South Africa as a country as well as the society we all share is a better place thanks to the social investments and ongoing, caring efforts of the CSI team of Business Connexion.”
During the 2010/2011 Financial Year Business Connexion has invested in excess of R 4 million in its Corporate Social Responsibility initiatives.
For further information on CSR also see:
CSR Philosophy and Mission
Business Connexion BBE Development Partners
