Date: 14/07/2004
Source: Ministry of Trade and Industry
Title: M Mpahlwa: Launch of Pamodzi Investment Holdings acquisition of Foodcorp
ADDRESS BY MINISTER OF TRADE AND INDUSTRY, MANDISI MPAHLWA, AT THE LAUNCH OF THE PAMODZI INVESTMENT HOLDINGS ACQUISITION OF FOODCORP, Sandton, 14 July 2004
CEO of Pamodzi, Mr Ndaba Ntsele
CEO of Foodcorp, Mr Justin Williamson
CEO of ABN AMRO, Mr Gerben Kuper
Distinguished guests
Ladies and Gentlemen
I am very pleased to be here on this occasion of the launch of one of the largest empowerment transactions so far within the Agro-processing sector in South Africa. The transaction between Foodcorp and Pamodzi stands out not only because of its size, but for what it represents, namely the creation of a true black economic empowerment giant in the Agro-processing sector. It is significant that this is the largest secondary leveraged buy-out in South Africa in a deal that has enabled Pamodzi and employees of Foodcorp to acquire a majority stake in Foodcorp that is worth R2 billion.
The other interesting feature of the transaction is that it captures most of the key principles of broad based black economic empowerment as articulated in the governments BEE strategy. The deal is broad based in its truest form in that all of the group's employees and communities in rural areas will benefit both directly and indirectly from the companies continued success. For example, the procurement opportunities that will be created in a number of agricultural products, which are needed for the processing of Foodcorp's traditional consumer brands, will be significantly enhanced.
Ladies and gentlemen, this acquisition is very much in line with government's approach to empowerment. We have argued in the BEE strategy that empowerment is part of our growth strategy and that the kind of inequality which exists in South Africa is a structural constraint to economic growth. Part of our growth strategy is therefore to ensure that we unleash the potential that exists in our country by empowering our people. Black Economic Empowerment is therefore an important component and well integrated into our micro economic reform and integrated manufacturing strategies. These overarching strategies have identified priority sectors for the country and are areas that we are targeting to drive economic growth. These sectors will see rapid growth and will open up new opportunities for black entrepreneurs.
Agro-processing is an important sector and has been identified as one of our priority sectors; it currently contributes approximately 14% to South Africa's GDP or R124 billion. The contribution of this sector should therefore be in the context of its size; how many people it employs; its contribution to GDP; and the role that it can play in driving economic growth and empowerment, particularly for rural communities. This sector plays also plays a critical role in the economy as a source of food as well the backward and forward linkages with the rest of the economy. Agro-processing can therefore play a critical role in the implementation of BEE and in the development of the small business sector. Furthermore, it is an area that will create new opportunities and economic growth in geographical areas that are currently underdeveloped.
Programme director, ladies and gentlemen, the dti has undertaken a survey of the status of BEE in the key sectors of the South African economy. Significantly, the value of black economic empowerment deals has more than trebled in 2003 compared to the preceding year. According to the dti survey, there were 189 black empowerment deals worth R42.2 billion in South Africa in 2003; compared to 104 deals totalling R12.4 million in 2002.
I strongly believe that this increase in transactions have come about because of the introduction of a set of guiding principles for BEE, which are outlined in the broad based black economic empowerment strategy and the broad based BEE Act. These principles are elucidated on in the codes of good practice, which will be released in the next few weeks. The primary objective of the codes is to introduce even greater certainty into the market in the application of BEE. This will facilitate greater implementation of BEE and avoid potential pitfalls and conflicts that are inherent in an evolving process. For example, the Codes will allow government to measure the implementation of BEE, they seek to reduce the incidence of fronting, and will provide a common understanding of BEE for all sizes of enterprises; thereby reducing speculation and varied interpretations of broad based black economic empowerment.
The sector charters, which are an outcome of the BEE strategy, have also played an important role in increasing the number of BEE transactions and in providing guiding principles for BEE in those sectors that are covered.
The new approaches that have emerged in the financing of black economic empowerment particularly at a macro level have also aided this huge increase in BEE transactions in 2003. In this regard the financial services sector is developing very innovative models and mechanisms for BEE financing. Government is also reorienting many of its incentives and enterprise support measures to promote broad based BEE. A total of R2 billion was allocated to fund BEE initiatives through the NEF. Other development finance institutions like the IDC, Public Investment Commission, Land Bank, and Umsobomvu youth fund, have also played a critical role in BEE financing and these institutions continue to develop new financial products. We are therefore confident that we can manage a process that leverages in private sector financing in a manner that is sustainable and that promotes growth and stable capital markets.
To conclude, I believe that within the private sector we now have a greater sense of alignment and sense of common future. Indicative of this enthusiasm for BEE is the flood of approaches to government that encompasses key sectors and players in the economy.
It is clear to us that if we are to achieve sustainable economic growth in our country then amongst other things we need to have BEE charters and deals that are broad based. We are therefore pleased that the Pamodzi - Foodcorp deal has taken some of the principles of broad based empowerment into account in the formulation of its BEE plans. It is exciting to see that major BEE deals are able to be broad based and that they need not only focus on the narrow aspects that have embodied some high profile BEE deals.
Finally, as one would expect and welcome in South Africa, there have been intense debates on the politics and efficacy of government's approach to BEE. I want to stress once again that what drives our policy is that equity and participation by all are the real drivers of growth and development.
Phambili to Pamodzi and Foodcorp.
I thank you.
Issued by: Ministry of Trade and Industry
14 July 2004
Source: Ministry of Trade and Industry
Title: M Mpahlwa: Launch of Pamodzi Investment Holdings acquisition of Foodcorp
ADDRESS BY MINISTER OF TRADE AND INDUSTRY, MANDISI MPAHLWA, AT THE LAUNCH OF THE PAMODZI INVESTMENT HOLDINGS ACQUISITION OF FOODCORP, Sandton, 14 July 2004
CEO of Pamodzi, Mr Ndaba Ntsele
CEO of Foodcorp, Mr Justin Williamson
CEO of ABN AMRO, Mr Gerben Kuper
Distinguished guests
Ladies and Gentlemen
I am very pleased to be here on this occasion of the launch of one of the largest empowerment transactions so far within the Agro-processing sector in South Africa. The transaction between Foodcorp and Pamodzi stands out not only because of its size, but for what it represents, namely the creation of a true black economic empowerment giant in the Agro-processing sector. It is significant that this is the largest secondary leveraged buy-out in South Africa in a deal that has enabled Pamodzi and employees of Foodcorp to acquire a majority stake in Foodcorp that is worth R2 billion.
The other interesting feature of the transaction is that it captures most of the key principles of broad based black economic empowerment as articulated in the governments BEE strategy. The deal is broad based in its truest form in that all of the group's employees and communities in rural areas will benefit both directly and indirectly from the companies continued success. For example, the procurement opportunities that will be created in a number of agricultural products, which are needed for the processing of Foodcorp's traditional consumer brands, will be significantly enhanced.
Ladies and gentlemen, this acquisition is very much in line with government's approach to empowerment. We have argued in the BEE strategy that empowerment is part of our growth strategy and that the kind of inequality which exists in South Africa is a structural constraint to economic growth. Part of our growth strategy is therefore to ensure that we unleash the potential that exists in our country by empowering our people. Black Economic Empowerment is therefore an important component and well integrated into our micro economic reform and integrated manufacturing strategies. These overarching strategies have identified priority sectors for the country and are areas that we are targeting to drive economic growth. These sectors will see rapid growth and will open up new opportunities for black entrepreneurs.
Agro-processing is an important sector and has been identified as one of our priority sectors; it currently contributes approximately 14% to South Africa's GDP or R124 billion. The contribution of this sector should therefore be in the context of its size; how many people it employs; its contribution to GDP; and the role that it can play in driving economic growth and empowerment, particularly for rural communities. This sector plays also plays a critical role in the economy as a source of food as well the backward and forward linkages with the rest of the economy. Agro-processing can therefore play a critical role in the implementation of BEE and in the development of the small business sector. Furthermore, it is an area that will create new opportunities and economic growth in geographical areas that are currently underdeveloped.
Programme director, ladies and gentlemen, the dti has undertaken a survey of the status of BEE in the key sectors of the South African economy. Significantly, the value of black economic empowerment deals has more than trebled in 2003 compared to the preceding year. According to the dti survey, there were 189 black empowerment deals worth R42.2 billion in South Africa in 2003; compared to 104 deals totalling R12.4 million in 2002.
I strongly believe that this increase in transactions have come about because of the introduction of a set of guiding principles for BEE, which are outlined in the broad based black economic empowerment strategy and the broad based BEE Act. These principles are elucidated on in the codes of good practice, which will be released in the next few weeks. The primary objective of the codes is to introduce even greater certainty into the market in the application of BEE. This will facilitate greater implementation of BEE and avoid potential pitfalls and conflicts that are inherent in an evolving process. For example, the Codes will allow government to measure the implementation of BEE, they seek to reduce the incidence of fronting, and will provide a common understanding of BEE for all sizes of enterprises; thereby reducing speculation and varied interpretations of broad based black economic empowerment.
The sector charters, which are an outcome of the BEE strategy, have also played an important role in increasing the number of BEE transactions and in providing guiding principles for BEE in those sectors that are covered.
The new approaches that have emerged in the financing of black economic empowerment particularly at a macro level have also aided this huge increase in BEE transactions in 2003. In this regard the financial services sector is developing very innovative models and mechanisms for BEE financing. Government is also reorienting many of its incentives and enterprise support measures to promote broad based BEE. A total of R2 billion was allocated to fund BEE initiatives through the NEF. Other development finance institutions like the IDC, Public Investment Commission, Land Bank, and Umsobomvu youth fund, have also played a critical role in BEE financing and these institutions continue to develop new financial products. We are therefore confident that we can manage a process that leverages in private sector financing in a manner that is sustainable and that promotes growth and stable capital markets.
To conclude, I believe that within the private sector we now have a greater sense of alignment and sense of common future. Indicative of this enthusiasm for BEE is the flood of approaches to government that encompasses key sectors and players in the economy.
It is clear to us that if we are to achieve sustainable economic growth in our country then amongst other things we need to have BEE charters and deals that are broad based. We are therefore pleased that the Pamodzi - Foodcorp deal has taken some of the principles of broad based empowerment into account in the formulation of its BEE plans. It is exciting to see that major BEE deals are able to be broad based and that they need not only focus on the narrow aspects that have embodied some high profile BEE deals.
Finally, as one would expect and welcome in South Africa, there have been intense debates on the politics and efficacy of government's approach to BEE. I want to stress once again that what drives our policy is that equity and participation by all are the real drivers of growth and development.
Phambili to Pamodzi and Foodcorp.
I thank you.
Issued by: Ministry of Trade and Industry
14 July 2004
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