Ripped by BBBEE

BBBEE-ActThere seems to be a trend amongst big companies – mainly the listed types – to bang on about the shares they avail to black people through so-called investment schemes. But, pitifully, some investors who were lured by prospects of earning huge returns are realising that they might have bought into fool’s gold.

Nasper’s Welkom Yizani epitomises scores of Broad Based Black Economic Empowerment (BBBEE) schemes that have not lived up to investors’ lofty expectations. Those who put their money into the venture in 2006, when the deal was unveiled, wish they never did.

Transform SA talked to an aggrieved woman who was one of the investors. On condition of anonymity, she said: “I wish I had used my money to go on holiday to an exotic destination with my husband, at least I would have felt that I spent my money on something. I had poured all my lifetime savings in the venture. I am terribly let down.” Multitudes of the scheme’s 107 investors share the woman’s woes.

Their concerns are truly justified: seven years ago investors paid R10 per share at the establishment of the scheme, while when it opened for limited trading in December 2013 its price averaged R9. In effect, this meant there was no tangible gain. Considering that R10 had more purchasing power at the scheme’s inception, investors have had their deposit virtually wiped out.

Naspers has invested Welkom Yizani BBBEE scheme in its Media24 subsidiary. The scheme holds Media24, a business mainly invested in South African print media assets.

2 thoughts on “Ripped by BBBEE

  1. Black people are always encouraged to invest in big companies. Its unfortunate to see such investments not living up to expectations. People will say yet another BBBEE scheme gone bad. How many black people lose all their savings through such schemes.

  2. I agree with you on that Daniel. This really puts BBBEE in a bad light, because who would want to invest again in another BBBEE scheme if this is what’s happening? Certainly not me and I bet that goes for other people aswell.

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