However, in recent times government and business have placed considerable emphasis on the need for broad-based empowerment.

Ernest Kwinda, corporate financier at Rand Merchant Bank, says there is no doubt that empowerment must be broad-based if it is to have the positive effect on the country that government intends.

“There is a need to create black icons — business leaders who stand out and can be good role models for the community.

“In addition, there needs to be a solid foundation of black businesses that can only come from broad-based economic empowerment,” Kwinda says.

He says the value of creating broad-based empowerment is recognised in the trade and industry department’s Codes of Good Practice.

The recently released codes emphasise new empowerment interests and give additional points for the inclusion of communities, women and people who have not concluded deals in the past over a specified value.

“For example, a company that has a factory in a particular community has the opportunity to create a community trust and involve the community in the sustainability of that business.

“In the De Beers deal, community trusts make up one of the elements in the empowerment transaction. The trusts will cater for people living and working around its operations,” Kwinda says.

“The broad-based empowerment trend is only just starting, and it is likely to become stronger over the next few years, with FirstRand being among the first companies to conclude a major BEE transaction exclusively with broad-based groups.

“It will become unusual to see empowerment transactions that do not include a wide range of stakeholders.

“The previous pattern — in which a small number of prominent empowerment companies were involved in most of the deals — is likely be coming to an end,” Kwinda says.

He says the emphasis is less on achieving empowerment for empowerment’s sake but rather on creating a sustainable empowerment transaction that will enhance the value of the business in the future.

Rob Wessels, joint head of corporate finance at Nedbank Capital, says as a result of the shift towards broad-based empowerment, companies are customising their deals more carefully.

They are looking at their overall empowerment scorecards and considering ways in which they can use the ownership element to come up with a deal that is tailored to their specific circumstances, he says.

“They are seeking to enhance their scoring and they are seeking to do deals that will help their business in ways that are different to what has been done in the past,” Wessels says.

He says the retail element of Nedbank’s empowerment deal is an example.

In addition to the desire to further its empowerment credentials, the bank also wished to expand its retail-banking customer base, he says.

The Eyethu system was aimed at any Nedbank retail client or person who became a client who could buy three shares and then get the fourth free, Wessels says.

“This amounted to a discount that is typical of the cost of any empowerment transaction in the financial services sector.

“However, what made the Nedbank deal different was the decision to go to the bank’s client base, giving the bank a broad-based empowerment deal that also added value by encouraging customer loyalty and was still in line with government’s infrastructure spending plans,” Wessels says.

William Blackie, director of corporate finance at Standard Bank, says there is a greater shift towards broad-based ownership in the structuring of empowerment deals.

“There is a strong trend towards more staff ownership.

“It has taken companies a while to take this direction, but it is in line with government’s view on broad-based empowerment,” Blackie says.

He says empowerment has been evolving over a period of years and as it evolves it is more likely to achieve its goal of broadening the wealth base in SA.