When was Tutuwa launched?

Standard Bank’s black ownership initiative - Tutuwa – was launched in July 2004.

What is Tutuwa?

The Tutuwa scheme has been carefully designed and structured to benefit historically disadvantaged individuals, in line with South Africa’s black economic empowerment objectives, and as articulated through the Financial Sector Charter, which was negotiated between and endorsed by a wide range of stakeholders.

The black beneficiaries of the scheme include 6,188 management level staff (current and former employees), as well as 261 black-owned small businesses and two broad-based strategic partners: Safika and Shanduka. Standard Bank is also in the process of establishing a philanthropic foundation, which will support education and development among the youth in deprived communities.

All these participants have benefited from the value created by Tutuwa, through share price appreciation and from dividend distributions. South Africa as a nation has also benefited through the collection of more than R1 billion in income tax, Dividend Withholding Tax and Capital Gains Tax thus far over the life of the scheme.

What are the benefits to the SMME’s?

Each of the SMME beneficiaries in the Tutuwa Community Trust will receive a direct financial benefit of between R2milion and R3million, allowing them to invest in and grow their business, employ more people and contribute to the overall prosperity of South Africa. This is in addition to the R260 million cash distributed to this group of participants between 2008 and 2014 (mostly from dividends over the period).

The SMME’s could choose whether to keep their residual shares as an investment or to cash out and deploy the proceeds into their businesses.

Would Standard Bank hail this transaction as a success?

Standard Bank believes that the Tutuwa scheme has successfully fulfilled the group’s ownership commitments under the Financial Sector Charter, by proactively supporting economic transformation in our country, and making a real difference to the lives of those who were negatively impacted by the injustices of our country’s past. The scheme has created approximately R10.7 billion in value which has benefited 6,188 Standard Bank HDI employees (current and former), 261 black-owned small businesses, and the two strategic partners with their own black shareholder bases, while also enabling the establishment of a philanthropic foundation to support youth development and education.n

Will Standard Bank consider a further BEE transaction?

Standard Bank has no plans for another BBBEE transaction at this stage.

What types of SMMEs have benefited from the scheme?

SME participation in Tutuwa followed a public application programme, advertised nationally in the print media and radio in 2006. Participation rights were awarded to the business, not the business owner.

The participants selected represent a wide spectrum of businesses across the South African economy: farmers, retailers, professional services, construction and manufacturing.

Every province in South Africa was represented in the SMME scheme. The majority of SME participants are located in Gauteng (82), followed by KZN (57), the Eastern Cape (34) and Western Cape (25), with small numbers in each remaining province (NW 17); Limpopo (16); Free State (14); Mpumalanga (13); Northern Cape (3).

How were the SMME applications screened?

A number of entry criteria were set in order for applicants to qualify for consideration as participants. The business had to be majority black-owned; had to have been in existence for at least three years; had to have an annual turnover between R500,000 and R20 million and had to employ at least ten full time staff members (excluding the owners). It had to be SARS compliant and be registered as a corporate entity (CC or Pty), or take steps to convert within six months of being accepted as a beneficiary. It was not a requirement that participants banked with Standard Bank, although the majority do so.

To remain within the scheme, the participants had to remain majority black-owned; remain solvent and operational; and not sell the business or cede the participation rights, unless to another qualifying black SME; through the duration of the lock-in period.

Are there restrictions on what beneficiaries can do with their shares?

There are no restrictions on how the beneficiaries may trade or dispose of their shares, now that the lock-in period has expired (on 31 December 2014), although some staff members will need to observe the group’s closed periods.

Is Standard Bank expecting its BEE ownership to be diluted and why?

To the extent that beneficiaries exercise their right to sell some or all of their shares, black ownership of the bank will reduce. Such monetization after ten years of participation in the scheme would be a natural choice for certain of the beneficiaries and Standard Bank believes that the right of beneficiaries to utilize fully and freely the value inherent in their shares in a manner of their choosing is very important as a pillar of empowerment.