To promote enterprise growth and job creation, there is a need to grow the black business sector, from entrepreneurs and small business owners to large businesses.
Standard Bank has well-established programmes to support empowerment financing and enterprise development. Our enterprise development team works closely with our procurement team to ensure we make the most of opportunities to incorporate small enterprises into our supply chain and help them grow into larger businesses. We scored 23.65 out of 29 for the empowerment financing and enterprise development element (including 2.53 of 4 bonus points).
We scored 9.6 out of 9.6 for empowerment financing – targeted investments. This category includes targeted investment in transformational infrastructure, black agriculture and affordable housing, as well as black SME financing.
From 1 January 2018, we made targeted investments of R5.8 billion, including but not limited to:
We also invested R15.763 billion in BBBEE transactions and black business growth over the same period. We scored 2.4 out of 2.4 for Black SME financing, and 3 out of 3 for BBBEE transaction financing and black business growth/SME funding.
The FSC requires banks to provide affordable housing for consumers that earn a gross income between R3 500 and R23 300. Standard Bank’s Affordable Housing book is valued at around R25.6 billion. In 2019, we registered 5 667 new affordable home loans. As the largest lender in the affordable housing sector, with a 27% market share, we have almost 99 500 customers on our books.
Standard Bank offers all our affordable housing mortgage customers online or classroom-based training to help manage their home ownership obligations. Training is provided by the external service providers and funded by the bank. In 2019, 1 037 customers participated in the programme.
We work closely with the National Department of Human Settlements, National Housing Finance Corporation and the provincial housing departments to help our customers access the Finance Linked Individual Subsidy Programme (FLISP) offered by the government. The programme targets the gap market – households earning more than R3 501 but less than R22 000. These families find it hard to qualify for housing finance, as their income is regarded as too low for traditional mortgage finance from banks, but too high to qualify for the government free basic housing subsidy scheme. Qualifying households can access a FLISP subsidy, ranging between R27 960 and R121 626, depending on the applicant’s monthly income.
We do everything we can to help our customers stay in their homes. However, in 2019, we regrettably had to enter legal processes with 1.6% of our customers who were in default, after all alternative arrangements had been exhausted. During 2017 and 2018, we undertook a series of engagements with government officials, members of parliament, and civil society groups to gain a better understanding of what we, as a bank, can do to try to prevent mortgage defaults. We have since implemented various changes, including more proactive communication with stakeholders regarding the processes followed in cases of default, and the options available to customers, including loan restructuring and assisted sales. We have also increased our focus on ensuring the courts have the relevant information on steps taken to try to assist customers in distress prior to taking the matter to court.
|a.||Section 129 notice is the first step in the legal process when one has defaulted on a loan repayment. It is the notice issued in terms of Section 129 of the National Credit Act (NCA), advising a consumer that they are in arrears of a certain amount in unpaid instalment(s) at a given date. A credit provider, or an attorney appointed by the credit provider, may issue notice according to Section 129 of the NCA at any time after the client has been in arrears for more than 20 business days. The credit provider may not proceed with any legal action without having fully complied with NCA requirements as contemplated in Sections 129 and 130.|
|b.||An order to appear before a judge or magistrate.|
|c.||Decision by the court.|
|d.||The transfer of the property to the creditor.|
We were involved in several major transactions in 2019, which increased economic participation by black people and led to the creation of new companies and jobs.
For example, we acted as sole advisor, third party lender, external preference share subscriber, equity secured funder, bookrunner on delta hedge execution and JSE sponsor for Sanlam’s transformative R8 billion BBBEE transaction which aimed to position Sanlam’s South African operations for strong growth through enhanced economic empowerment credentials. We played a key role in explaining the merits and importance of the transaction to Sanlam’s international investors to secure the requisite 75% shareholder approval. Thanks to a seamless collaboration across advisory, corporate broking, equity capital markets, debt and global markets, we were able to provide a fit-for-purpose solution that will enable Sanlam to meet its transformational objectives and create long-term value.
Sanlam is one of the first major South African insurers to achieve a Level 1 BBBEE scorecard rating in accordance with the updated Financial Services Charter. Beneficiaries of the transaction include professional black women, rural and urban black women groups, black youth and black business partners.
In 2018, SBSA advised on, structured and part-financed a deal for the South African National Taxi Council (SANTACO), which enabled SANTACO to acquire a 25% stake in SA Taxi, a subsidiary of Transaction Capital. By enabling SANTACO to access a direct stake in SA Taxi, the transaction has contributed to SME empowerment and economic transformation. SANTACO’s members are now able to expand into higher margin upstream sectors, and to benefit from deals negotiated alongside SA Taxi. In 2019, for example, SA Taxi partnered with Bridgestone tyres to offer taxi owners a R450 discount per tyre on the normal retail price. SA Taxi’s recently established parts business is providing quality and affordable second-hand parts to the taxi industry. Both deals are delivering cost savings for the industry, while helping to improve the safety and reliability of the country’s taxi industry, to the benefit of the millions of South Africans who depend on it every day.
Standard Bank’s Agribusiness Transformation Programme develops black commercial farmers and black owned agribusinesses to contribute to the transformation and economic viability of the agricultural sector in the Free State, support job creation and improve food security. Objectives include developing black sustainable commercial farmers, developing sustainable secondary agribusinesses, cultivating mutually beneficial relationships among stakeholders, strengthening agricultural training and development networks in Africa, improving academic programme and graduate employability. In 2019, we ran six training sessions in conjunction with the University of the Free State, in Bloemfontein, QwaQwa and Kroonstad.
Our supplier development (SD) programme includes a focus on access to market, access to business development and bespoke financial solutions. In 2019, we scored 3.12 out of 7 for supplier development, and an additional 2 out of 4 bonus points. Supplier beneficiary numbers have increased from 115 to about 415 in 2019.
274 suppliers participating in our supplier development programme received procurement opportunities amounting to R1.2 billion in 2019. Of these, 115 beneficiaries have received business development support, including technical support, coaching and training in various aspects of their business.
In 2019, we achieved improved alignment in our supplier development initiatives across the bank. As a result, 36% of the opportunities identified as ‘set aside’ were converted and successfully awarded to black-owned emerging micro enterprises (EME) and qualifying small enterprises (QSEs).
Supplier development also provides concessionary rates and pricing to suppliers that participate in our SD programme. The current SD loan portfolio is around R139 million, comprising business lending, VAF, home loans and commercial property finance products.
In our credit rehabilitation and recoveries (CRR) value chain, procurement from black-owned suppliers increased from 44% of total spend in 2017, to 68% in 2018, to 76% in December 2019 (with 2019’s weighted spend reported at 115%). The team proactively identifies non-performing suppliers as part of its standard supplier performance process. These suppliers are placed on probation. Any black-owned suppliers placed on probation are invited to participate in our supplier development programme and receive business development support. In 2018, 50% of the blackowned suppliers referred to the supplier development programme improved their performance and were re-instated on the credit rehabilitation and recoveries panel. During 2019, one black-owned supplier was placed on probation and invited to participate in our supplier development programme to receive business development support. Following this intervention, the supplier remains on the panel.
The Standard Insurance Limited (SIL) team which provides a wide range of short-term insurance solutions, is committed to using locally-based, black-owned enterprises to service customer claims. We onboarded a number of new qualifying black-owned service providers to service SIL claims. In 2019, 99% of our spending (amounting to over R1 billion) was on Level 1–4 service providers, of which 67% were black-owned businesses (R671.2 million) and 22% were black women-owned businesses (R225.7 million).
The SIL supply chain management team visited small black-owned service providers in metro areas around the country to provide information and support. We’ll will expand our visits to non-metro areas in 2020. We also held regular sessions with industry associations to support the development of their black-owned member companies. And we’re a signatory to the SAIA Interim Measures Agreement, which aims to increase participation of black-owned panel beaters. We continue to work with the enterprise and supplier development team to identify and address specific developmental areas within newly onboarded businesses, to help improve operational efficiencies and grow their businesses.
In the motor and non-motor space*, we’re developing specific criteria to support local black-owned enterprises. Only 1% of current spend is allocated to non-compliant BBBEE suppliers. This is due to the specific customer demands in outlying areas where qualifying candidates may not be available.
We aim to make funding more accessible to small black owned businesses. We scored 3 out of 3 on the scorecard for enterprise development. Our focus is on sustainable business growth. We spent R41.17 million on Enterprise Development initiatives in 2019, creating 1 054 jobs and benefitted 488 entrepreneurs and small business owners.
|—||In partnership with the Department of Telecommunications and Postal Services|
|—||Company-owners compete to win development and funding support and access to international and local markets (annual competition)|
|—||The winner, Simangele Mphahlele’s Ejoobi, was awarded business development support to the value of R300 000 Ejoobi’s mission is to enable organisations to connect to hard-to-reach job seekers through customized USSD and SMS campaigns.|
|—||In partnership with the Department of Telecommunications and Postal Services|
|—||Sponsored six ICT businesses to attend ITU Telecom World, an annual event which brings together digital start-ups and SMEs, governments, regulators, industry leaders and experts from around the world|
|—||Committed R200 000 per business for post-event development|
|—||Training programmes in Durban, Khayelitsha, Polokwane and Welkom|
|—||120 business owners successfully completed the programme|
|—||Three months of classroom-based training, Microsoft Office training, mentoring sessions|
|—||34 winners, each awarded an amount between R10 000 and R80 000, to a total of R1 million, provided in the form of grant funding by Standard Bank|
|—||Winners used the money for equipment, working capital, training or professional services for their businesses|
|—||Many participants indicated that the course had changed the way they approach their businesses, and that the experience of pitching their businesses made them feel more confident about approaching potential funders in the future|
One of the main areas in which ED supports small businesses, is by making funding more affordable. Over R11 million was spent in 2019 on working capital and equipment funding to help support small businesses become operational. This funding support additionally helped maintain existing jobs, as well as create over 120 new sustainable jobs. Some of these businesses supported include:
Other investments include the technology, professional services, agriculture, construction, renewable energy, food and beverage, retail, travel management and fashion design sectors.
Over R14 million was invested in 2019 to support small businesses to access funding, through leading with development initiatives. This included a number of investment programmes, alongside industry exposure events. We worked with developmental support agencies, and made capital available to support post development operations. Initiatives included:
We offer solutions to support small businesses that have purchase orders or contracts to access funding and accessible interest rates. Examples include: