BEE: The glue that keeps KTI together

Kagiso Trust Investments (KTI) is widely regarded as one of South Africa’s pre-eminent black economic empowerment (BEE) companies.

It was set up in 1993 as the investment arm of Kagiso Trust, one of the oldest and most respected development agencies in South Africa. The Trust’s primary focus is to support development projects among the rural poor.

KTI continues to be closely associated with the Trust and proudly espouses the same values – a value system that is based on identifying with the poor and the transformation process in the country.

For KTI, BEE is not about winning points on a checklist and trying to come out on top. Rather, BEE defines KTI. It is a philosophy that its management and staff deeply believe in and live for. The pay-off line for the Kagiso Group as a whole sums it up: The difference is trust.

For KTI, BEE is about working and associating with people who buy into the philosophy of giving back to the community. It is the glue that binds people together. Many people at KTI – if their only mission in life was to make money – would have moved on to other companies and organisations that offer more lucrative career opportunities.

A way of life

The founders of KTI committed themselves to certain standards and values of conducting business in accordance with the highest standards of integrity and to be principled by avoiding investment activities that are harmful to humanity and the environment.

More importantly, KTI has committed itself to establishing a balance between achieving commercial success and fulfilling their broader commitments to socio-economic development. The people at KTI recognise the need to continually seek the best way to benefit not only the organisation and shareholders, but the community of South Africa as a whole.

That is why for KTI, BEE and transformation are about ploughing back. Empowering people is not only a legislative imperative or a business imperative – it is a way of life.

A focused and integrated approach

KTI is dedicated to implementing a programme of social and economic change throughout the Group, through a focused and integrated BEE scorecard, which includes the following elements:

• Ownership
• Management and control
• Training and skills development
• Procurement
• Access to finance
• Entrepreneurial development
• Corporate social responsibility.

Entrenched in the ethos, values and philosophy of KTI is a firm belief that for BEE to be effective and sustainable, it must be embraced fully by all participants. It must be accompanied by a firm understanding and appreciation that it needs to be integrated into all spheres of the organisation.

The company is supportive of all Department of Trade and Industry (the dti) codes of good practice and sector charters and is encourages by the progress that has been achieved in various areas of the economy in this regard.

Ongoing initiatives

KTI is planning to introduce a company-wide induction programme in 2008 to ensure that all individual members understand the underlying ethos of the Group. This will not only apply to new recruits but will also be applied retrospectively to ensure that there is buy-in across the Group.

KTI has also introduced a BEE steering committee, where senior managers of all the companies will meet regularly to discuss the future BEE landscape. The idea is to set long-term targets in areas like ownership, employment equity and procurement.

In terms of prospective business partners, members of KTI spend a lot of time with them assessing their attitude and commitment to BEE. The normal due diligence is performed, where KTI determines whether the transaction makes good business sense. But the commitment to transformation and BEE of potential business partners plays a crucial part in KTI’s screening and filtering process.

This approach has worked well. The longer it takes to do a deal, the more sustainable the relationship is after the transaction.

KTI’s relationship with Metropolitan is a good example. The two companies spent close to a year putting the deal together, and the relationship is strong and enduring as a result.

KTI understands that the kind of transformation it stands for and is working towards is not something that is going to happen overnight. It is a journey that the company will continue to travel, fully committed to going the full distance.

Corporate social responsibility

Going beyond BEE has many opportunities for KTI and no more so than in the area of corporate social responsibility. Indeed, the organisation was born out of a need to eradicate poverty and to create opportunities for the communities in which there was, and is, dire need for improvement. More than twenty years down the line, this has become a self fulfilling philosophy especially in terms of the code of ethics embraced by the group. Living up to KTI’s payoff line – The difference is trust - is a way of life and a responsibility for all who subscribe not only to the principles of sustainable development but who form an integral part of the organization.

Projects embraced by Kagiso Trust have evolved over time. Successful, and more importantly, sustainable, projects have formed the basis for the development of models whose proven track records have been drawn on by both government and corporates alike. Being accountable for funds and time spent in this arena are a critical aspect of the corporate social arena and transparency is key to the successful implementation and maintenance of any given programme.

Education is one of the fundamental areas in which significant change is not only required but mandated, for the combating of poverty and inequality in our country. While this is the main focus of Kagiso Trust, many of the companies within the Kagiso Group give of their time, skills and financial backing to ensure that they are able to make a difference within the footprint in which they operate/serve.

The Trust is involved in funding and overseeing the implementation of programmes conceptualised and designed in-house. The two flag-ship projects include:

• The Beyers Naude Schools Development Programme (BNSDP)
• Eric Molobi Scholarship Programme (EMSP)

The BNSDP is involved in the following initiatives in rural schools:

• Infrastructure upgrading
• Development of training programmes
• Curriculum and class management
• Development of leadership skills
• Sport and cultural activity programmes

Todate the following milestones have been reached:

• Over R35 million disbursed
• 30 schools currently in the programme
• Three provinces targeted to date with the prospects of including two additional provinces imminent
• In excess of 5 000 learners, educators and orphans have benefitted
• All beneficiaries are black, rural youth - the majority of whom are women

The EMSP programme was initiated in 2006.

• Students are recruited from BNSDP
• The selected students show an aptitude for maths and science and meet additional stringent criteria.
• Funding provided for duration of studies primarily in the fields of engineering.
• To establish and sustain the programme, a R50 million endowment fund is required which will cover:
• Tuition fees
• Books and educational equipment
• Accommodation
• Transport
• Personal expenses

Results to date include:

• Over R900 000 spent since inception
• 16 students in the programme to date
• There are a number of commitments from the private sector and individuals to support the schaloarships through sustainable donations
• Feedback is given to sponsors on an annual basis regarding the results achieved by the students.