2010
Black Economic Empowerment Report
Contents
Page
1 Overview
3 Ownership and control
5 Employment equity
8 Skills development
11 Preferential procurement
14 Enterprise development
16 Socioeconomic development
18 Access to financial services
27 Empowerment financing
Overview
Overview
For Standard Bank, transformation is a fundamental of both Standard Bank and Liberty’s BEE performance in
change process which affects every aspect of our terms of the dti codes. Standard Bank and Liberty qualify
business, either directly or indirectly, by virtue of being a as level two and three contributors in a nine level model,
South African company. At a national level, the ultimate with verified overall scores of 92,83 and 75,03 out of 107
purpose of transformation is to address the systematic respectively. In the 2010 Empowerdex Top 100
exclusion of the majority of South Africans from full Empowerment Companies index Standard Bank and
participation in the economy, particularly black South Liberty were ranked 18th and 47th respectively. The
Africans, people with disabilities and women. Internally, rankings are expected to improve in the 2011 index.
we aim to significantly increase the representation of these
groups in the bank and particularly in positions of While the dti codes provide a framework and balanced
leadership. Externally, we are committed to deploying our scorecard to measure transformation progress, two
funding in a way that facilitates transformation such as financial sector-specific elements are excluded: access to
providing access to finance for previously unbanked or financial services and empowerment financing. Given their
underbanked communities, funding transformational importance in driving economic transformation, we have
infrastructure and black economic empowerment (BEE) continued to deliver on the provisions of the Financial
transactions, supporting black agriculture and black small Sector Charter (charter) with respect to these two
and medium enterprises (BSMEs), providing finance for elements by establishing internal targets. We have
affordable housing and procuring from black owned included our progress on these elements in this report,
companies. and our performance has been verified by independent
external auditors.
Transformation makes commercial sense as it improves
the sustainability of South Africa by broadening economic Liberty is a separate listed entity and produces its own
activity. It is important for the maintenance of good BEE and charter report which can be accessed at
relations with government and opens new markets, www.liberty.co.za. We have included Liberty’s
enabling us to increase our customer base and the talent summarised scorecard on page 2 of this report to provide
pool for future hiring. stakeholders with an overview of its transformation
progress.
As BEE is specific to South Africa, this report is relevant to
Standard Bank’s South African operations only. Financial sector code
From 2003 to the end of 2008, the framework for
Central to Standard Bank’s transformation strategy and advancing transformation and equitable growth in the
philosophy is creating and maintaining clear accountability South African financial sector was the charter. Although
from board level down to individual business units. We widely endorsed, the charter was a voluntary framework
maintain the highest levels of integrity and transparency in published in terms of section 12 of the Broad-based Black
our transformation disclosure and reporting, to allow all Economic Empowerment (BBBEE) Act for general
our stakeholders to monitor our progress in transforming information, but not legislated. After the gazetting of the dti
the business, and our contribution to transforming the codes in early 2007, a transition period to 31 August 2008
economy and the communities in which we operate. was set to convert the charter into a sector code.
The charter was rewritten as a draft financial sector code,
Our transformation progress is currently measured against but due to industry stakeholders being unable to agree on
the Department of Trade and Industry’s (dti) Codes of the requirements of the code, the transformation progress
Good Practice for Broad-based Black Economic of the financial sector has continued to be governed by the
Empowerment (codes). During 2010, accredited BEE dti codes.
verification agencies conducted independent assessments
2010 Black Economic Empowerment Report Page | 1
Overview
In 2010, the parties to the charter reached agreement on the management and control, employment equity, skills development,
procurement and socioeconomic development pillars of the proposed sector code. The proposed charter was then gazetted for
public comment (as a section 9.5 charter) and Standard Bank provided comment to the dti. The gazetting of the charter is an
important step towards the gazetting of a bona fide Financial Sector Code of Good Practice expected in 2011. The parties are
Overview
currently dealing with the ownership, empowerment finance, enterprise development and access to financial services pillars.
Broad-based Black Economic Empowerment Act, 2003
The BBBEE Advisory Council, appointed in 2009, has set up four sub-committees to shape the direction of empowerment and
transformation in South Africa, which will impact our future BEE strategy. The committees will deliberate issues that affect the
promotion of BBBEE such as verification procedures, sector charters and fronting, as well as ownership and management
control, enterprise development, procurement, access to finance, skills development and employment equity. The BBBEE Act
is currently under review and the dti is considering updating the codes of good practice and aligning industrial policy with
BBBEE legislation. Proposed amendments to the legislation are likely to focus on the broad-based elements of BEE, as well as
ensuring that local procurement is given preferential treatment in the codes. The amendments are expected to be published by
the South African Government during 2011.
dti codes scorecards
Standard Bank
Available 2010 2009
points verified verified
Category results results
Ownership 23 20,00 13,98
Control 11 8,25 8,30
Employment equity 18 12,54 9,43
Skills development 15 12,04 8,54
Preferential procurement 20 20,00 17,37
Enterprise development 15 15,00 15,00
Socioeconomic development 5 5,00 5,00
Total score 107¹ 92,83 77,62
¹ Includes seven bonus points allocated over the ownership, control and employment equity pillars.
Liberty
Available 2010 2009
points verified verified
Category results results
Ownership 23 15,35 14,21
Control 11 4,44 4,11
Employment equity 18 9,32 9,68
Skills development 15 8,85 7,17
Preferential procurement 20 17,07 14,02
Enterprise development 15 15,00 15,00
Socioeconomic development 5 5,00 5,00
Total score 107¹ 75,03 69,19
¹ Includes seven bonus points allocated over the ownership, control and employment equity pillars.
2010 Black Economic Empowerment Report Page | 2
Ownership and control
Ownership and control
The ownership and control structures of most large listed During 2009, we proposed to the trustees and
companies in South Africa do not adequately reflect the representatives of the Tutuwa trusts that dividends paid on
demographics of the country. This challenge is due to the Standard Bank Group (SBG) ordinary shares and received
majority of South Africans having had little opportunity to by the black ownership structures would flow through to
accumulate wealth and control assets in a manner that the participants in those structures subject to:
can facilitate broader representation at board level. An A minimum two times ordinary share price cover being
objective of the dti codes is to expand the pool of maintained on the outstanding preference share
ownership of financial assets and increase black funding obligation at the date of declaration of each
representation at board level, as well as to increase the ordinary dividend.
number of black people who have direct control over The term of the preference share funding provided by
South Africa’s economic assets. Standard Bank being reduced from the original agreed
20 years to a maximum 15 years.
Ownership
Standard Bank concluded its BEE ownership transaction, In March and August 2010, SBG dividends of R2,45 and
Tutuwa, in October 2004, resulting in 10% direct R1,41 were declared per ordinary share respectively,
ownership of our South African operations by the Tutuwa amounting to a total payout of approximately R133 million
BEE consortium led by well-established BEE investment to around 6 185 black Standard Bank managers
companies Safika and Shanduka. participating in the Tutuwa Managers Trusts in South
Africa and approximately R34 million to 250 BSMEs
During 2010, agreement was reached between the participating in the Tutuwa Community Trust.
government, financial institutions, labour and community
organisations to set the direct black equity target at 15% in In 2010, the method of calculating ownership under the dti
line with the dti codes. It was agreed that financial codes was reviewed and a less punitive interpretation
institutions have the option to invest in other adopted. This has resulted in an increase in our ownership
transformation areas such as enterprise development, pillar score.
cooperative financing and procurement to achieve the
additional 5%.
Ownership scorecard
Available 2010 2009
points verified verified
score score
Voting rights Exercisable voting rights of black people including 5 4,37 2,87
black women.
Economic interest Economic interest of black people including black 6 5,37 3,51
women.
Economic interest of black designated groups¹. 1 1,00 1,00
Realisation points Ownership fulfilment and net equity interest of black 8 6,26 3,73
participants.
Bonus points Ownership by black new entrants² and beneficiaries 3 3,00 2,87
of ownership scheme³.
Total score 20 + 3 20,00 13,98
¹ Black youth (aged 18 to 35 years), black rural dwellers, black disabled people and black unemployed people.
² Black people who, prior to their involvement in the ownership deal in question, had not been involved in such a deal with a
value of more than R20 million.
³ Beneficiaries of broad-based schemes, employee schemes and cooperatives.
2010 Black Economic Empowerment Report Page | 3
Ownership and control
Ownership and control
Tutuwa Managers Trusts
There are currently 6 185 black managers participating in the Tutuwa Managers Trusts. Approximately 34,6 million Tutuwa
Managers Trust shares vested on 31 December 2010 creating an estimated value of wealth of about R2,4 billion. Restrictions
on selling these shares remain until 31 December 2014.
Initiatives to further educate employees on the benefits of the Tutuwa Managers Trusts have been put in place, and will help
to:
Enhance understanding of the benefits of the scheme.
Explore how participants feel about the scheme.
Increase wealth creation awareness.
Tutuwa Community Trust
Standard Bank’s Tutuwa Community Trust initiative is focused on BSME and community development.
Tutuwa regional business groupings
In 2006, 10 million SBG ordinary shares were distributed to 250 qualifying BSMEs. This allowed us to introduce a broad base of
empowerment shareholders while providing support for BSMEs in line with the broader goals of transformation. Standard Bank
has intensified its focus on these BSMEs and is coordinating initiatives across the bank to support and grow these businesses
by ascertaining their specific needs. These include providing them with access to our procurement processes and exposing the
BSMEs to supply chain opportunities where applicable. We also provide these BSMEs with business development services in
the form of mentorship, training and business networking.
Community development foundation
The trustees are continuing with the process of registering a community foundation which, once the shares vest, will be an
independent institution with a secure capital base. The foundation will provide long-term cash flow and make allocations to
specific social development programmes.
Management
Management control scorecard
Available 2010 2009
points verified verified
score score
Board participation Black board members. 3 2,00 1,80
Black executive directors (board members). 2 0,67 0,67
Top management Black top management. 5 4,67 5,00
Bonus points Black independent non-executive board members. 1 0,91 0,83
Total score 10 + 1 8,25 8,30
Note: All indicators (except for non-executive members) are adjusted for gender recognition which requires at least 50% female
representation to score full points.
2010 Black Economic Empowerment Report Page | 4
Employment equity
Employment equity
Standard Bank aims to help address socioeconomic Transformation is managed through the Group Executive
inequalities and mobilise the energies of all South Africans Committee which reviews monthly progress reports, as
to achieve sustained economic growth, development and well as by executive management teams and employee-
transformation. The dti codes require that institutions have elected transformation forums in each business unit. The
initiatives in place that will increase the representation of transformation forums serve as consultation partners to
black people in management structures across the management on transformation-related issues and
organisation. To this end, we have aligned our generally have both management and employee
transformation targets to the dti codes. representatives, and diverse race and gender
representation. The objectives of the transformation
Our initiatives aim to significantly increase the forums are to:
representation of black people, with a specific focus on Help achieve the bank’s quantitative and qualitative
black women and black people with disabilities, across all transformation objectives.
levels of the organisation, particularly in leadership roles. Report on each business unit’s transformation
Leadership development, setting career paths, mentorship progress.
and coaching all contribute to a sustainable increase in Serve as key communication channels between
equitable representation. employees and management by encouraging all
individuals to provide input on how to transform the
Prevailing economic conditions will limit opportunities and bank.
impact our ability to achieve these targets; however we Inform employees on the Employment Equity Act, dti
have taken a longer term view of this key business codes and related policies and frameworks that impact
imperative. Standard Bank has implemented a the bank’s transformation.
transformation plan with clearly defined targets for each Ensure that all employees across the bank are
level of management within each business unit. This consulted on transformation issues.
includes identifying black talent in each business unit,
particularly individuals with the potential to move into Personal & Business Banking and Corporate & Investment
junior, middle or senior management positions within a Banking have clearly defined recruitment and promotion
12-month to three-year period. There has been a steady principles to ensure that 80% of all new recruits are black
improvement in achieving defined targets at all levels and people, and 50% of all new recruits and candidates
we have met our junior management targets. promoted are women.
Employment equity¹ scorecard
Available 2010 2009 2008
points verified verified verified
Management level score score score
Black disabled employees 2 0,83 0 0
Black senior management 5 3,96 2,81 2,82
Black middle management 4 3,75 2,82 2,71
Black junior management 4 4,00 3,80 3,78
Bonus points 3 0 0 0
Total score 15 + 3 12,54 9,43 9,31
¹ All employment equity calculations are adjusted for gender recognition.
2010 Black Economic Empowerment Report Page | 5
Employment equity
By sharing available skills, experiences and abilities in our During 2010, Standard Bank embarked on a disability
Employment equity
diverse employee base, we are able to harness the awareness campaign focused on disability-related
opportunities that exist for viewing things from different communication and training, culminating in a disability
perspectives and developing innovative solutions and audit in which over 1 200 employees voluntarily and
processes. Diversity management is achieved by confidentially disclosed their disability. We are
developing work environments where employees from communicating with these employees to gain a better
diverse backgrounds and perspectives feel valued, understanding of disability in our workplace, enabling us to
respected and able to contribute to their full potential. put solutions in place to reduce unintentional barriers that
may exist for people with disabilities.
Disability
Disability is a key concern in transforming our business. Our effort to accelerate the recruitment of people with
We have published a disability framework providing best disabilities is a continuing challenge. In 2010, 0,8%
practice guidelines for implementing a successful disability (2009: 0,4%) of our South African workforce disclosed that
programme. Continuous focus on the retention, they had disabilities.
recruitment and overall enablement of our disabled
employees will ensure that we reach our 2016 target of Personal & Business Banking has reviewed its training
3% as prescribed by the dti codes, and assist in achieving procedures to ensure inclusiveness of employees with
a truly diverse working environment. disabilities. This has also been extended to external
recruitment advisers. A central repository of disability
To address issues affecting people with disabilities we information keeps Human Resources practitioners abreast
have developed a definition of disability within the bank of new developments.
and are in the process of developing a disability policy that
calls for reasonable steps to be taken to accommodate
people with disabilities in the workplace.
Employment equity performance against dti targets
6
5
5.00
4
3.96 4.00 4.00 4.00
3.75 3.80
3
2.81 2.82
2
1
0
Senior management Middle management Junior management
2009 2010 dti target
2010 Black Economic Empowerment Report Page | 6
Employment equity
Gender awareness
Employment equity
Women networking forums have been established to develop and provide opportunities for the professional development of
women. These programmes also provide future opportunities for women to become coaches and mentors to new employees.
The Gauteng Province Women Development Programme and the Credit Women Development Programme target women in
non-managerial roles. The former introduces women to the banking environment beyond the branch network and the latter is a
12-month programme that provides women with technical skills in credit areas. In 2010, 21 women were recruited into the
information technology (IT) environment at middle and senior management levels. These women will rotate through various IT
business units and will be mentored by executives.
In 2011, 60 Personal & Business Banking employees will participate in Blue Heels, a newly-launched women’s development
programme. The 12-month programme aims to create an enabling environment that generates opportunities for women at
junior and middle management levels. The programme will enhance business skills and facilitate networking and mentoring
relationships and aims to increase the representation of women in managerial positions.
Corporate & Investment Banking’s Skills Acquisition Programme identifies black female candidates, from various sectors, who
possess the skills required by the business unit. Targeted Professional Development Programmes enables the transition into
Corporate & Investment Banking.
2010 Black Economic Empowerment Report Page | 7
Skills development
Skills development
The dti codes require organisations to promote skills The Banking Sector Education and Training Authority
development to ensure an adequate supply of skilled (BANKSETA) has designed programmes to complement
individuals within the broader South African economy. existing executive development programmes run by
individual banks, and thereby assist them in achieving
Learning and development their human resource development targets. Three
Learning and development initiatives are run in all programmes are currently on offer:
business units to drive business performance and help our International Executive Development Programme,
employees develop to their full potential, with a key focus which exposes participants to executive development
on our black employees in South Africa. In 2010, Standard from an international perspective.
Bank spent a total of R450 million (2009: R419 million) on Women's Development Programme, which aims to
employee skills development with R250 million promote and accelerate quality learning for women in
(2009: R234 million) spent on black employees, in line banking.
with empowerment objectives. Masters Bursary Scheme, which provides funding
opportunities for study towards Masters degrees and
Our performance management process identifies the executive short courses.
areas in which an employee needs to develop and tracks
progress against development objectives. Our skills
development policy guides skills development planning
and execution, and assigns responsibility and
accountability for these processes.
Developing black leaders
The Global Leadership Centre is an innovative, high
quality and comprehensive learning facility which trains
and develops our managers in all areas of leadership. In
2010, 2 291 (2009: 2 891) managers attended a two-week
leadership development programme, of which 1 199
(2009: 2 402) were black employees.
Skills development scorecard
Available 2010 2009 2008
points verified verified verified
score score score
Skills development spend on black employees¹ 6 5,93 6,00 5,64
Skills development spend on black disabled employees¹ 3 0,11 0 0
Black employees participating in learning programmes² 6 6,00 2,54 3,16
Total score 15 12,04 8,54 8,80
¹ The skills spend is calculated as a % of payroll.
² Employees on learnership programmes are calculated as a % of total employees.
2010 Black Economic Empowerment Report Page | 8
Skills development
Skills development
Skills development
In addition to programmes for employees, Standard Bank participates in skills development programmes for unemployed
matriculants and graduates as part of our contribution to social upliftment and human capital development.
While BANKSETA manages the Letsema and Kuyasa skills development programmes, employers such as Standard Bank host
the learners and provide coaching, mentoring and training. The Letsema and Kuyasa programmes are aimed at training black
school-leavers and graduates respectively. In 2010, Standard Bank hosted 100 (2009: 156) learners on the Letsema
Programme and 42 (2009: 29) learners on the Kuyasa Programme.
Our Banking Skills Academy offers a 12-month programme that trains participants for various entry-level positions in the bank.
In addition to on-the-job training, students receive coaching, virtual classroom sessions and e-learning. Successful graduates
obtain a recognised National Certificate in Banking. Of the 79 learners who started the programme in 2009, 64 completed the
learnership with 94% being placed in permanent positions within Standard Bank. In 2010, a record number of 564 learners
were accepted into the academy. To date there has been a 100% pass rate on the programme, with an average placement rate
within the bank of 86%, 6% over our target of 80%. The greatest challenge faced is to attract suitable young talent who meet
the entry-level requirements of the programme. In 2011, our target is to take on 300 candidates.
Skills development statistics
2010 2009 2008
Skills development spend
Total training spend Rm 450 419¹ 415¹
Training spend as a % of Standard Bank South Africa’s payroll % 5,4 4,4 4,6
Total training spend on black employees Rm 250 234 209
Total training spend on black women employees Rm 148 141 131
Training spend on black employees as a % of Standard Bank % 2,9 3,1 2,6
South Africa’s payroll
Training spend on black women employees as a % of % 1,7 1,9 1,7
Standard Bank South Africa’s payroll
Employees trained
Total number of employees trained 32 756 34 180 30 623
Average number of training days per employee days 3 4 4
¹ Restated.
2010 Black Economic Empowerment Report Page | 9
Skills development
Future pipeline and skills training beyond employment
Skills development
Letsema learnership (matriculants) 2010 2009 2008
African Women 52 79 60
Men 30 63 48
Indian Women 4 2 1
Men 6 1 2
Coloured Women 6 9 9
Men 1 2 7
White Women 0 0 1
Men 1 0 0
Total 100 156 128
Total black learners 99 156 127
Total women learners 62 90 71
Learners employed by Standard Bank Current¹ 105 72
¹ Number of learners employed six months after the programme ends.
Kuyasa learnership (graduates) 2010 2009 2008
African Women 24 20 20
Men 18 9 12
Total 42 29 32
Learners employed by Standard Bank Current¹ 18 16
¹ Number of learners employed six months after the programme ends.
Banking Skills Academy 2010 2009 2008
African Women 231 34 80
Men 218 14 49
Indian Women 20 2 1
Men 16 3 4
Coloured Women 28 10 13
Men 36 9 2
White Women 8 2 0
Men 7 5 1
Total 564 79 150
Total black learners 549 72 149
Total women learners 287 48 94
Learners employed by Standard Bank Current¹ 60 81
¹ Number of learners employed six months after the programme ends.
Support to universities, colleges, sector education and training authorities and schools
2010 2009 2008
Financial support Rm 36 8 13
Number of beneficiaries 13 340 3 651 3 247
2010 Black Economic Empowerment Report Page | 10
Preferential procurement
Preferential procurement
The preferential procurement pillar of the dti codes sets specific targets for procurement from BEE suppliers, to ensure that
black businesses in South Africa have access to markets. It also seeks to provide incentives for purchasing from qualifying
small enterprises, exempted micro enterprises, black owned enterprises and black women owned enterprises.
The dti preferential procurement requirements have been incorporated into Standard Bank’s procurement policy structure. In
2010, the bank rolled out the revised policy to business units to create awareness and understanding of the requirements.
Preferential procurement scorecard
Available 2010 2009 2008
points verified verified verified
Supplier classification score score score
All suppliers level 1 to 8 12 12,00 12,00 11,44
Qualifying small enterprises and exempted micro 3 3,00 2,73 2,84
enterprises – level 1 to 8
Black owned (> 50%) 3 3,00 1,96 2,17
Black women owned (> 30%) 2 2,00 0,68 1,50
Total score 20 20,00 17,37 17,95
Standard Bank’s procurement spend is calculated on both an actual and weighted basis. Actual spend reflects the rand value
spent with suppliers, while weighted spend, as per the dti codes, takes into account the BEE status or BEE recognition levels of
the suppliers we procure from. The weighting serves to provide incentives to organisations to purchase from suppliers with
higher contributor levels and therefore better BEE status ratings, with level one being the highest. For example, the bank’s
spend with a level one contributor, a company that scores 100 points or more, is enhanced at 135%; however spend with a
level eight contributor is diminished by10%. Procurement recognition can further be enhanced by procuring from a value adding
supplier recognised at 125%, from black professionals or entrepreneurs at 125% and from a supplier that is a beneficiary of
enterprise development contribution at 120%.
Standard Bank is a level two BEE contributor and classified as a value-adding supplier, a benefit that accrues to those that
utilise the bank as a supplier. We have developed a preferential procurement strategy to help us improve on our dti code score;
however some of the challenges faced include a lack of access to reliable qualifying small enterprise databases and the
inability of these businesses to compete with larger suppliers due to their constrained capacity to meet demand requirements.
Contribution level Score BEE recognition level
Level 1 contributor >= 100 135%
Level 2 contributor >= 85 but = 75 but = 65 but = 55 but = 45 but = 40 but = 30 but < 40 10%
Non-compliant contributor < 30 0
2010 Black Economic Empowerment Report Page | 11
Preferential procurement
Preferential procurement
To do business with Standard Bank, a supplier must have Procurement from BSMEs
a minimum BEE contributor level of four. Where an Our aim is to increase our procurement from BSMEs to
exception occurs, the supplier is required to provide their help these businesses gain market access. The
transformation plans on how they intend to improve their Procurement and Logistics unit identifies prospective
BEE contributor level. In these instances, Standard Bank BSMEs and encourages business units to utilise their
reserves the right to terminate a contract should a supplier services. Standard Bank’s BSME weighted spend in 2010
fail to improve its BEE contribution level within the was R455 million (2009: R316 million).
timeframe agreed.
Consideration is extended to BSMEs by affording them the
Standard Bank has consistently increased its procurement right of first refusal and then the opportunity to requote on
spend with BEE suppliers. As per the weighted calculation a tender to ensure competitive and fair pricing. Certain
provided in the dti codes, in 2010 our procurement spend commodities are being set aside for exclusive
from BEE suppliers amounted to R15,7 billion from procurement from qualifying enterprises. Our Procurement
R7,2 billion in 2009, a 118% increase. A robust process of and Logistics unit measures the performance of these
obtaining BEE certificates from suppliers and engagement suppliers and assists in identifying opportunities to
with internal stakeholders and suppliers on the bank’s improve service delivery.
transformation process in the supply chain, resulted in this
increase. Furthermore, we conduct provincial supplier summits that:
Provide information on provincial operations and
opportunities for BSMEs.
Assist with the forging of partnerships between small
and big suppliers.
Provide access to new suppliers.
Procurement spend statistics
2010 2009
Weighted procurement spend from BEE suppliers Rbn 15,7 7,2
Weighted procurement spend from BSME suppliers Rm 455 316
Procurement spend at provincial level Rm 901 794¹
¹ Restated.
Top 20 supplier spend (Rm)
Rm
2 500
2 000
1 500
1 000
500
0 BEE suppliers
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
2010 Black Economic Empowerment Report Page | 12
Preferential procurement
Preferential procurement
Decentralised procurement framework
Decentralised procurement helps ensure that provincial suppliers benefit from Standard Bank’s procurement spending while
guarding against an over-concentration of spending in one region. The main objective of this approach is to identify, develop
and contract with black empowered organisations in every province. The bank has implemented decentralised procurement
capabilities at its provincial head offices in all nine provinces in South Africa. Our procurement spend at a provincial level
amounted to R901 million in 2010 (2009: R794 million).
By decentralising the procurement process we:
Support local government and contribute to local economic growth.
Improve our credentials for local government tenders.
Expand our provincial supplier base by identifying local suppliers through institutions such as the local Chambers of
Commerce that can respond to different provincial needs.
Leverage the opportunity to grow black businesses.
Our decentralised procurement strategy is reviewed annually to ensure continuous improvement and efficiency gains.
To achieve our decentralised procurement objectives, provincial operations identify products and services that can be reserved
for regional procurement.
Provincial procurement spend
2010 2009 2008
Eastern Cape Rm 94 65 54
Free State and Northern Cape Rm 79 77 60
Gauteng Rm 283 268 226
KwaZulu-Natal Rm 132 137 104
Limpopo Rm 68 45 30
Mpumalanga Rm 72 63 48
North West Rm 39 35 41
Western Cape Rm 134 104 95
Total spend Rm 901 794¹ 658
¹ Restated.
2010 Black Economic Empowerment Report Page | 13
Enterprise development
Enterprise development
Enterprise development serves to create wealth by plans. These plans are then used to select the top 20
providing existing and start-up entrepreneurs, particularly entrepreneurs, who are awarded R35 000 in business
in rural and non-metropolitan areas, with opportunities to development services vouchers and one year of aftercare
grow and sustain their businesses through training, services to help ensure the long-term sustainability of their
coaching and mentoring, as well as access to funding and businesses. Additionally, R75 000 in seed capital is
markets. Standard Bank is involved in many enterprise awarded to the top ten entrepreneurs.
development initiatives.
Launched in 2010, the Alumni Network Programme creates
Believe Begin Become a platform for the 240 entrepreneurs who have completed
Believe Begin Become is a comprehensive the programme to share and jointly resolve common
entrepreneurship development programme which promotes challenges, while supporting the entrepreneurs through
and supports small and medium enterprise development by training and mentoring, industry support, networking
providing technical and management skills to growing and events, business development vouchers and call centre
aspiring business owners. The programme was launched support facilities. Selected entrepreneurs will also be given
by Standard Bank together with TechnoServe, a United an opportunity to accelerate the growth of their business
States-based non-profit economic development through mentorship, access to finance and market linkage.
organisation. The programme aims to empower rural South
Africans by teaching them how to create wealth and run
their own businesses, focusing on the agriculture, light Youth Entrepreneurship Conference
manufacturing, tourism and construction sectors. Standard During the year we supported the National Youth
Bank has been involved in this initiative since 2007, Development Agency’s Youth Entrepreneurship
investing a total of R25,2 million to develop a pool of 240 Conference. The theme of the conference was how to
emerging entrepreneurs. build sustainable and globally competitive small and
medium enterprises, focusing on entrepreneurship
The programme identifies potential entrepreneurs with development practitioners and service providers to equip
promising businesses or ideas, who are driven to succeed them in their role of providing assistance to young
but face business obstacles. Each participant receives business owners.
training for 12 months, during which time they work with
mentors who provide coaching on drafting viable business
Enterprise development scorecard
Available 2010 2009 2008
points verified verified verified
score score score
Annual value of all qualifying contributions as a % of net 15 15 15 15
profit after tax
2010 Black Economic Empowerment Report Page | 14
Enterprise development
Enterprise development
Farmer Support Mentorship Programme
In 2010, Standard Bank partnered with Mngcunube Development to introduce black farmers into the commercial agrifood value
chain, increasing their market access and agricultural opportunities. The programme addresses challenges around issues such
as the government’s land reform programme, threats to food security and slow rural development. We have invested
R2,3 million in the programme which is being piloted in the Eastern Cape and Free State provinces.
SA Agri Academy programmes
Standard Bank funds the Market Access Development Programme which assists emerging black farmers gain access to local,
regional and international markets. The programme offers training including technical and business coaching and mentorship,
as well as soft skills such as marketing, finance and costing, management and organisational behaviour. It has been
implemented in the Eastern Cape, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape and Western Cape.
Emerging farmers often face difficulties in being competitive in the market due to limited volumes and lack of administrative
support, marketing capacity and market information. In addition, many of these farmers focus on primary agriculture when there
is a need to diversify existing produce into other agribusiness products. The programme assists farmers in sustainably
accessing markets through capacity building programmes particularly aimed at the youth and women.
We have also invested R5,5 million in SA Agri Academy’s Economic Cluster Development Programme to establish regional
farming clusters in citrus, flower, honey bush tea, organic and conventional fruits and vegetables in the Eastern Cape,
KwaZulu-Natal, Limpopo, Western Cape and Northern Cape provinces. This cluster approach has been identified as the best
solution to enabling farmers gain a competitive position to sustain their business and create more full-time employment
especially in rural areas. Furthermore, this concept facilitates the transfer of knowledge and best practice.
2010 Black Economic Empowerment Report Page | 15
Socioeconomic development
Socioeconomic development
Recognising that transformation cannot occur solely on commercial
terms, corporate social investment (CSI) spending is mandated within
the dti codes to support the broader values and objectives of the codes.
To ensure meaningful delivery against the social requirements of the
codes we focus our CSI spending on three areas: education, enterprise
development, and health and wellness.
Socioeconomic impediments negatively affect our ability to grow.
Standard Bank’s approach to CSI is therefore to commit funding and
other resources to create long-term social value for the communities we
operate in. We view CSI as an opportunity to drive positive change and
mitigate risk in communities that have generally been marginalised.
Our CSI activities are underpinned by sound business rationale aligned
with our strategic business objectives. We employ a research-based
approach to understand the socioeconomic needs of communities by
engaging with government, other businesses and community organisations. For example, our partnerships with various
provincial governments in South Africa help us align our CSI contributions to provincial objectives, and allow us to identify
communities where we can grow our customer base. By merging business and CSI goals we aim to create meaningful mutual
benefit.
Beyond donating money to charities, we are in a position to provide skilled support to organisations that is sustainable and
offers long-lasting benefit. For example, to help resolve inefficiencies in the financial accounting system, we seconded a senior
accountant to Child Welfare South Africa for three months to identify problems in its financial controls and put systems and
processes in place to rectify these. To keep the systems working and to transfer the skills needed to help the organisation
implement the changes required to meet donor expectations, we also seconded an experienced banker to the organisation.
This initiative has assisted Child Welfare in securing funding from major donors.
In 2010, Standard Bank’s CSI spend in South Africa amounted to R99,5 million (2009: R69,6 million).
Socioeconomic development scorecard
Available 2010 2009 2008
points verified verified verified
score score score
Qualifying contributions measured as a % of net profit after 5 5 5 5
tax.
2010 Black Economic Empowerment Report Page | 16
Socioeconomic development
Socioeconomic development
Education
16 days of activism
As education plays a critical role in the future sustainability We annually partner with various municipalities and
and economic upliftment of South Africa, a large portion of provincial governments across South Africa during
our CSI spend is focused in this area. Under Standard the 16 days of activism against abuse of women and
Bank’s partnership with the Department of Basic children. These campaigns promote awareness of the
Education, we have adopted 114 schools and invested rights of women and children.
R20,8 million in 2010 to help participating schools become
centres of excellence in mathematics and science, and to
improve the number of learners passing these subjects in
Grade 12. Community investment partnerships
Standard Bank increased the number of community
We engage extensively with the Department of Basic investment funds from eight in 2009 to 17 in 2010. The
Education at national, provincial and district levels to help funds offer micro loans to informal businesses that do not
it integrate the multitude of levels and structures of the qualify for credit under the existing criteria of most banks,
education system. This engagement helps us harness recognising that, while banks have become adept at
relationships between the departmental structures, as well lending to the salaried market, there has been little
as respond appropriately to the needs of the schools and progress in providing credit to people operating in the
adapt to the ever-changing school environment. informal economy. The biggest stumbling blocks are
developing the mechanisms to assess the ability of people
During 2010, Standard Bank established a support to repay and establishing efficient collection strategies. A
programme for orphans and vulnerable children in the model designed to address both of these challenges,
schools we have adopted and a Standard Bank which extends loans to small and informal businesses, is
Scholarship Programme for the learners at these schools. being implemented in South Africa.
In addition, we developed an electronic repository of each
school’s performance improvement plans which will be The model is based on the bank entering into a
used to generate alternative streams of revenue for the partnership with a community-based organisation such as
schools. We intend to leverage the research we have a cooperative, non-governmental organisation (NGO) or
completed on the schools to roll out an offering, including trust, which puts together a panel of volunteers to identify
relevant learning material, to improve mathematics and potential recipients of the business loans. The bank works
science learning. In addition, we will facilitate the closely with the panels in administering the funds and
development of health and wellness support. managing repayments. Loans range from R1 000 to
R50 000 and to date, nearly 71% have been awarded to
women entrepreneurs. Standard Bank derives no income
Health and wellness
from these funds as loan repayments are reinvested in the
The health and wellness of communities is critical to the
community-based funds. Over the past three years, over
success of our business, the economy and the country as
R30 million has been loaned to 1 585 entrepreneurs in
a whole. When we contract with social partners we seek
previously marginalised communities. The model aims to
organisations that work within communities to increase
contribute to capacity building in communities and to give
awareness of HIV/Aids and provide education,
informal businesses the opportunity to access capital.
counselling, testing and support, and improve community
skills for providing home-based care and the care of
orphans and the elderly. Together these services help
restore the social fabric of communities.
In 2010, our health and wellness champions accompanied
New Start, a community HIV-testing organisation, in
testing some 5 000 community members. This initiative
has helped create closer ties between the bank and
various grassroots organisations.
2010 Black Economic Empowerment Report Page | 17
Access to financial services
Access to financial services
Whether through finance for housing, education or business, or through savings and insurance products, our services are
integral in moving people from the informal to the formal economy. Standard Bank strives to increase the number of historically
disadvantaged South Africans who have convenient access to financial services through physical access, products affordable
to low-income earners, consumer education and the extension of finance solutions such as loans, revolving credit and
overdrafts to persons or businesses that are defined as affordable housing candidates, BSMEs and black agricultural entities.
To effectively reach this market we must understand the needs and requirements of unbanked customers and develop banking
models that are low cost, scalable and replicable, but do not compromise the quality of service provided. In 2010, Standard
Bank established an Inclusive Banking unit to further the inroads we have made toward delivering affordable banking products
through convenient access points to the South African low-income market.
Physical access
To ensure convenient access to banking services, we must provide broader physical access through:
ATMs with a transactability function, where customers can withdraw cash or view bank statements, within 10km for 80% of
people earning a monthly income of less than R3 122 (classified as LSM 1-5).
Branches, service centres and ATMs with a full service function where customers can transact, as well as open or close
accounts and interact with a bank employee, within 15km for 80% of the population classified as being in the LSM 1-5
category.
Ensuring that all South Africans have convenient access to banking services is a key factor in determining where we place new
branches and service centres. During 2010, five new Standard Bank branches or service centres were opened in underbanked
areas including Daveyton, Esikhawini and Vosloorus. In addition, seven branches or service centres in previously underbanked
areas were revamped or upgraded and three were relocated within the same areas. Of the 27 projects in underbanked areas
identified in 2009 for opening, revamping, upgrading and relocation in 2010, eleven projects were completed, nine are in
progress with four projects scheduled to be completed in 2011. Six of these projects have been put on hold to further monitor
their performance and market conditions. The remaining project has been terminated due to forced closure, however we have
retained ATM presence in the area.
Access to financial services scorecard
2010 2009 2008
verified verified verified
1. Access to financial services
Transaction products (Mzansi): 1 086 094² 913 244² 720 924²
(Effective access for LSM 1-5¹)
Savings products (Mzansi): 1 086 094² 913 244² 720 924²
(Effective access for LSM 1-5¹)
Transactability coverage (%) 68,55 66,36³ 61,17³
Full service coverage (%) 63,43 62,93³ 63,49³
2. Origination
Affordable housing (cumulative) (Rm) 17 460 14 480 12 872
3. Consumer education spend
% of post tax operating profit 0,24 0,24 0,20
¹ LSM 1-5: Living Standards Measure (LSM) 1-5 includes all persons with a monthly income below R3 122.
² Mzansi accounts excluding zero balances. Total including zero balances is 1 116 357 (2009: 941 375, 2008: 733 938).
³ Restated: The banking industry adopted new definitions of LSM in 2010.
2010 Black Economic Empowerment Report Page | 18
Access to financial services
Access to financial services
Customers in this market are generally unfamiliar with traditional banking facilities, therefore it is important to develop access to
loans in convenient places such as local shops and commuter nodes. In 2010, Standard Bank rolled out more than 50 loan
centres to improve customer reach in selected LSM 1-5 markets.
In 2010, we installed 755 new ATMs, of which 302 are in townships or former homeland areas. Of our total ATM network in
South Africa, 35% are situated in predominantly LSM 1-5 areas. Of the 302 ATMs installed, 58% were new sites and 7% were
sites that have been restored after bombing. In 2011, we are planning to install approximately 500 ATMs in remote areas.
The cost of servicing ATMs, particularly in remote areas, can be high. Therefore the potential transaction volume of an area
must be considered when deciding to install an ATM. Often these volumes are insufficient, forcing the bank to look at
alternative methods of providing access to cash. This is achieved through innovations such as AutoMoney, a cashless mini-
ATM placed in small retail stores, from which customers can obtain a voucher which the retailer exchanges for cash. We have
also designed standalone ATMs which are placed in locations such as taxi ranks and petrol stations.
At 31 December 2010 Standard Bank’s coverage stood at:
Transactability Full service
2010 2009 2008 2010 2009 2008
% % % % % %
Standard Bank coverage 68,55 66,36¹ 61,17¹ 63,43 62,93¹ 63,49¹
Banking industry coverage N/A² 78,76¹ 63,46¹ N/A² 74,78¹ 74,58¹
¹ Restated: The banking industry adopted new definitions of LSM in 2010.
² Not available.
Distribution channels
2010 2009 2008
Branches and service centres 705 664 681
ATMs 5 565 4 810 4 244
Internet banking subscribers¹ 898 960 814 458 721 121
Branches and services centres per province
Eastern Cape 88 86 85
Free State and Northern Cape 81 78 80
Gauteng 179 169 172
KwaZulu-Natal 107 99 105
Limpopo 41 38 42
Mpumalanga 53 50 50
North West 34 31 33
Western Cape 122 113 114
Total 705 664 681
¹ Active registered users.
2010 Black Economic Empowerment Report Page | 19
Access to financial services
Access to financial services
Accessibility turnover in excess of R3 million at the end of 2010 and a
Through combining cellphone banking, community projected annual turnover of R100 million by the end of
retailers and community bankers, Standard Bank extends 2011.
banking without the need to build branches or install
ATMs. The business involves contracting small community Affordability and low-income products
retailers such as spaza shops and butchers as the bank’s Mzansi is an industry-wide initiative that offers a basic
agents in communities, where customers can open bank savings and transactional product to underbanked and
accounts, access basic account information and perform unbanked people in South Africa. Free cellphone banking
transactions such as withdrawing and depositing cash, to all Mzansi Blue customers provides improved access to
paying utility bills and buying airtime. Community bankers, their accounts, as well as the opportunity to purchase
local people hired as Standard Bank employees, are prepaid airtime free of transaction charges. Customers
available to assist new customers. New accounts are also receive two free ATM deposits per month. Following
activated within minutes and new customers are issued the Competition Commission enquiry into bank charges,
with debit cards enabling them to transact using their the penalty fee for dishonoured debit orders on Mzansi
cellphone or swipe card devices at the community accounts has been reduced from R31,50 to R7, with the
retailers. Community banking customers also have full first default each month being free. Thereafter this fee is
access to other transactional infrastructure such as ATMs. capped to a maximum of four dishonours per month, with
a maximum charge of R28. We have been unable to
At December 2010, approximately 210 000 customers in introduce electronic inter-account transfers and electronic
the low-income market were using this banking capability. account payments due to system constraints. We continue
We are expanding this model with over 7 500 bank shops to explore alternative ways to simplify the banking
across South Africa providing our customers with a low requirements of these customers and in 2011, the cost of
cost to doing their banking. We aim to migrate five million performing debit card purchases in retail stores will be
current customers into the new model. reduced.
Instant Money It is estimated that of all the Mzansi accounts opened
With an estimated 35 million people in South Africa across all the commercial banks in South Africa, about
owning cellphones and only 18 million of these holding 42% are now dormant. The number of Standard Bank
bank accounts, there is much need for money transfers Mzansi Blue account holders increased by 19% from
without visiting a branch. A majority of South Africans in 941 375 in 2009 to 1 116 357 in 2010, with 3% having
rural areas operate on a cash basis and breadwinners live zero balances.
and work in urban economic hubs but have extended
families in poorer rural areas. They require a banking Affordable loans
service that will give them the means to send money home As our lower-income customers have been the hardest hit
in a simple and cheaper manner. In 2010, together with by higher inflation, job losses and the general slowdown in
Spar, a leading retail group, Standard Bank launched the economy, we continued to support their credit needs
Instant Money, a person to person money transfer system. through a fixed-rate, fixed-instalment, fixed-term loan
The partnership allows the bank to access Spar’s product.
800-store footprint to reach remote communities. At a
Spar store, customers can pay a R9,95 transaction fee Almost every weekday, Deborah Gumede, a social worker in
and hand the teller the money they want to send. The Umlazi, Durban, brings a pensioner, a person with
person receiving the cash will receive an SMS voucher disabilities or a single mother to the Standard Bank stall in
number which they can then redeem at a Spar store by the corner of the social security offices. Here our community
entering the secret four digit code. Instant Money has bankers open accounts for social security recipients using
been developed in such a way that the service can be cellphones. Ms Gumede is convinced it is a good idea. “It is
accessed on even the simplest mobile phone models and the easiest thing for them,” she says, explaining that her
across networks. Since launch, Instant Money has grown clients, who are paid a few hundred rand a month, often fall
in volume by 100% month on month, with an annual victim to theft when they receive their money in cash.
2010 Black Economic Empowerment Report Page | 20
Access to financial services
Access to financial services
Access to financial services
Inclusive banking products
2010 2009 2008
Number of Mzansi Blue accounts¹ 1 116 357 941 375 733 938
% of Mzansi Blue accounts held by women % 58 58 59
Number of E Plan accounts 3 488 478 3 766 977 4 020 289
% of E Plan accounts held by women % 48 48 48
Number of funeral plan policies 1 043 930 1 024 863 1 056 161
Value of society schemes Rm 1 329 1 073 1 010
¹ Mzansi Blue accounts including zero balances.
Mzansi Blue accounts
Rm
1 200 000
1 086 094
1 000 000
800 000
652 179
600 000
400 000 Number of accounts excluding zero balances
2008 target
Linear (number of accounts)
200 000
Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10
Consumer education
Among the transformation objectives for the financial with outcomes-based education and taught as part of Life
sector is the need to provide potential and existing Orientation, Economic and Management Sciences or
consumers with the financial knowledge to empower them Mathematics Literacy subjects. We have also made
to make better financial choices. Standard Bank’s significant investments in providing educators with
consumer education activities provide generic financial personal financial management training. Winning Teams
education to low-income communities and the youth to reached 1 832 public high schools across all nine
meet this objective, with a particular focus on the informal provinces in 2010.
economy. In 2010, Standard Bank spent R19,4 million on
consumer education. Communities
Standard Bank runs two community-based consumer
Youth education programmes, the Financial Literacy Outreach
As a proponent of investing in the education and Programme and Basics of Business Management, which
empowerment of young people, Standard Bank has introduce formal financial services to unbanked
continued its involvement in the Winning Teams communities and educate on language, literacy and the
Programme. The programme is a schools-based initiative suitability of products.
that takes the form of an engaging and interactive board
game which teaches learners about money management, The Financial Literacy Outreach Programme conducts
banking, entrepreneurship and the economy. It is aligned workshops for community members that cover the basics
2010 Black Economic Empowerment Report Page | 21
Access to financial services
Access to financial services
of banking, savings, budgeting and credit. Community Affordable housing
facilitators and master trainers are recruited from the The current housing output of 20 000 bonded units per
communities and trained by Standard Bank. In 2010, the annum falls short of the some 130 000 units per annum
Money Talk series was added to the programme. required to make a meaningful impact on the housing
Broadcast on local community radio stations, Money Talk shortage. Barriers to producing such housing stock include
helped people with effectively managing their money. To a shortage of funds and affordability constraints
reach a wider audience, the radio campaign was exacerbated by rising input costs. To address these
combined with print and intensive outreach campaigns. challenges, effective partnering between all participants in
Standard Bank employees and community bankers the housing value chain is essential, particularly between
participated in the live Money Talk radio programmes the private and public sectors so as to leverage
providing information on the topic being covered and economies of scale to benefit all stakeholders.
answering listeners’ questions. The use of community-
based radio and print media allows us to communicate Standard Bank is committed to providing access to
with communities in their local languages. The Financial housing finance for low-income customers. We have set
Literacy Outreach Programme was taken to 12 internal targets to ensure that the needs of this market are
(2009: four) communities and reached some 41 000 met.
(2009: 31 000) people across eight (2009: three)
provinces in South Africa. Our strategy focuses on:
Acquiring and retaining customers by focusing on
Basics of Business Management is a customised six-week sales, product development, understanding their
programme developed for informal businesses, combining needs and developing relevant communication
classroom-based and on-the-job training in financial channels.
literacy, personal financial management and business Implementing appropriate and effective risk mitigation,
financial management. Participants in the 2010 including customer education and appropriate credit
programme were retailers operating as authorised assessments.
Standard Bank community bankers. The programme was Adopting an integrated approach across our business
run in Bojanala, an informal settlement in Rustenburg, and units to align our focus on the low-income segment.
will be rolled out to over 12 other communities in early Effectively engaging with key stakeholders, specifically
2011. customers and government.
Origination of affordable housing loans
Rm
18 000 17 460
16 000
14 000
12 000 11 340
10 000
Origination of affordable housing loans
8 000 2008 target
Linear (origination of affordable housing
loans
6 000
Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10
2010 Black Economic Empowerment Report Page | 22
Access to financial services
Access to financial services
Housing finance for low-income customers The public sector is critical to sustainable integrated
During 2010, Standard Bank granted R2,5 billion residential developments and our public private
(2009: R1,6 billion) worth of loans in this market segment, partnerships enable us to arrange and structure funding
approximately 32 610 home loans. We offer 100% loan-to- where appropriate, including funding for bulk
value loans and up to 104% for first-time home buyers infrastructure.
with good credit records.
We work with the private sector on projects that provide
Low-income earners who belong to pension and provident innovative, high quality products with a significant
funds can enter agreements with Standard Bank’s percentage of units that sell for below R500 000. We
Pension-backed Lending unit, to access finance to buy, assist developers with mitigating risk and, where feasible,
build or renovate a home. Customers who receive loans reducing their cost of borrowing.
are educated on all applicable terms and conditions. In
2010, this unit issued loans to the value of R479 million Revitalising Johannesburg city centre
(2009: R473 million). Part of our service offering, in the drive to revitalise
Johannesburg, is to assist landlords access capital to
Financing integrated housing developments refurbish and upgrade their inner-city buildings and we are
Standard Bank combines expertise from across the bank involved in financing the conversion of commercial office
to ensure we adopt a comprehensive approach to blocks to affordable rental accommodation. Over 5 000
financing quality affordable housing. We provide relevant rental housing opportunities in over 60 buildings have
financial products such as development loans, bridging been created in the Johannesburg inner-city and
and term finance and equity participation. surrounding areas within the last five years with rental
levels ranging between R1 500 and R3 700. We also enter
Integrated housing developments ensure that residents into strategic partnerships with intermediaries to assist
are offered investment value, as well as convenience smaller inner-city landlords who would not necessarily
through facilities such as parks, taxi ranks, schools, retail qualify for finance through conventional lending criteria.
outlets and sporting facilities which are incorporated into More than 2 400 inner-city units have been refurbished
the design concept. We focus on projects that offer through these strategic relationships.
residents a range of typologies and tenure options, such
as rental, freehold and sectional title, as well as social and Environmental considerations
commercial infrastructure. Housing includes the South When involved in new residential development
African Government’s subsidised housing, gap housing projects, Standard Bank implements interventions
and middle-income housing, as well as social, community such as passive design considerations like the
and commercial facilities. Housing unit prices range from optimum use of public transport, facilitating ease of
state-funded (at no cost to the individual) to approximately pedestrian movement, proper orientation of
R800 000. residential units, appropriate window sizes and roof
overhang. Alternative technologies that promote the
Gap housing is locally defined as housing units priced use of renewable energy and energy efficiency, such
between approximately R150 000 and R300 000, as solar geysers, are implemented where feasible.
generally for individuals earning between R3 500 and Attention is also being given to the possibility of
R8 000 per month (approximately 80% of the total working improving the use of scarce resources such as
population in South Africa). This product targets people water, by harvesting rain water and recycling grey
who earn more than the upper limit qualification for water.
subsidised housing but less than the bondable products
currently offered. A creative development funding model
that involves risk sharing with financial institutions is
required for this market. Standard Bank will play a
meaningful role in providing funding in this market where
appropriate.
2010 Black Economic Empowerment Report Page | 23
Access to financial services
Access to financial services
BSMEs government, inadequate screening and assessment
Standard Bank has established an Enterprise processes when awarding tenders and the misuse of
Development team to support small enterprises. This team finance received. Standard Bank is working to ensure
reviews the bank’s existing offerings to small and medium sustainable finance is provided to BSMEs. This includes
enterprises and provides new and supportive services to developing new support structures with corporates,
meet the needs of this market. With a majority of development finance institutions and provincial
businesses failing during their first two years of operation, governments, and engaging with them on issues such as
the team will focus on new businesses, providing financial late payments and proper assessments of BSMEs’
and non-financial services and tools. Extensive work is capabilities during tendering. Where traditional balance
being done to revise how the bank funds these sheet lending does not suffice, the bank is enhancing its
businesses, including how they are assessed for loans product offering to meet the needs of BSMEs.
and finding relevant capital funding solutions.
Our service offerings to BSMEs include leveraged finance,
The bank is establishing a model that combines financial contract finance and franchising. We work with key
support, business development support and market stakeholders such as the dti, development finance
access through corporate supply chains, particularly for institutions, provincial and local governments and
black owned and black women owned businesses. We associated agencies in this regard. Alliances have been
have developed a list of preferred business development made with the Khula Enterprise Indemnity Scheme and
support providers and are piloting a tool to track the the KwaZulu-Natal Department of Economic Development
success of their interventions. The team collaborates with Fund. In 2010, a number of businesses supported by the
our Procurement and Logistics unit and other large KwaZulu-Natal development fund received business
corporate entities in South Africa to facilitate BSME development support to aid their growth. We also have a
access to supply chains and is creating solutions to help Memorandum of Understanding with the Construction
BSMEs manage their businesses and cash flows. Industry Development Board in South Africa to facilitate
access to finance for emerging contractors that have been
Over the past years, BSMEs have been afforded greater awarded contracts by private or public companies.
opportunity. Their success has however been hindered in
part by their lack of general business experience and
technical expertise, late payments from corporates and
2010 Black Economic Empowerment Report Page | 24
Access to financial services
Access to financial services
Other ongoing initiatives
Business advice seminars
During 2010, Standard Bank sponsored two-day workshops for small businesses in Bloemfontein, Cape Town, Durban,
Johannesburg and Kimberley. The workshops covered practical information and small business case studies, as well as
how to write a good business plan that meets a bank’s requirements.
Research sponsorships
In collaboration with the Finmark Trust, Standard Bank is a sponsor of the Finscope South Africa Small Business survey
that undertakes research in the micro business market in South Africa. In 2010, the survey undertook 5 700 interviews of
representatives at national, provincial and urban-rural levels. The survey highlighted the employment opportunities for small
businesses, gender dynamics and gaps in awareness of the support required by micro businesses.
The Global Entrepreneurship Monitor Report, an initiative supported by Standard Bank, provides empirical data on the level
of entrepreneurship in developing countries. Given the failure of the formal and public sector to absorb the growing number
of job seekers, increased attention has been placed on entrepreneurship and its potential for contributing to economic
growth and job creation. The 2010 report focused on the level of entrepreneurial activity in South Africa and contextualised
activity against global benchmarks. Special focus projects included social entrepreneurship and access to finance. The
report provides a number of recommendations to inform policymakers in formulating interventions that stimulate
entrepreneurship.
Customer guides
Standard Bank has published a set of practical guides containing information, advice and tips for business people to start,
manage and grow their small and medium enterprises. The following guides have been published:
Business Basics booklet – provides advice on how to start a business.
Cash Flow Basics guide – offers tips and guidelines on how to improve cash flow.
Small Capital guide – contains information, advice and tips on starting, managing and growing small and medium
enterprises.
Standard Bank, in partnership with MWEB and Microsoft, has consolidated the above guides into the Small Capital
Omnibus. A website is also available for customers to network with each other and access the guides online.
2010 Black Economic Empowerment Report Page | 25
Access to financial services
Access to financial services
Agriculture
Increased agricultural productivity means improved household food and income security, market surpluses, improved access to
markets, the development of rural businesses serving farmers and improved rural employment.
The strategic objective of the local government’s land reform programme is to transform the agricultural sector to reflect the
demographics of South Africa. The programme aims to transfer ownership of 20 million hectares of farmland to small-scale
emerging farmers. This transfer has not been successful to date for a number of reasons including a lack of skills and training
resulting in the productive value of the land decreasing substantially after transfer, and the difficulties farmers face in obtaining
finance due to high performance risk and the fact that restituted land cannot be used as collateral.
Standard Bank is accredited by the Department of Land Affairs as a strategic partner in land reform, helping government
accelerate the process. We have also signed a Memorandum of Understanding with the Gauteng Department of Agriculture,
Conservation and Environment, whereby all service providers awarded tenders by the department will use Standard Bank for
their funding needs. Our partnership with Khula Enterprise Finance supports emerging farmers who have strong
entrepreneurship skills, but lack collateral to access finance.
Our specialist team of agricultural bankers and advisers assist experienced customers to transform their businesses and
transfer their expertise and experience to emerging farmers. We also continue to invest a portion of our CSI spend in
development programmes that equip farmers with skills and business acumen necessary to achieve success, particularly in
market access.
We have put much effort into adjusting our current product range to accommodate the specific needs of targeted industries
within South Africa. We continually interact with agribusinesses, as well as customers and other commodity organisations to
determine possible funding solutions and viable projects. We launched the Standard Bank Centre for Agribusiness Leadership
and Mentorship Development in partnership with the University of Stellenbosch to create skilled mentors who can assist
emerging farmers in the agricultural industry. The centre will offer postgraduate degrees, diplomas, networking opportunities, as
well as research publications and a range of knowledge development, transfer and learning mechanisms. Standard Bank is
investing R3,2 million of its CSI budget in this project over the next three years.
Standard Bank committed R500 million to support emerging farmers in South Africa in 2010. The fund aims to provide a holistic
solution that is better aligned to the specific needs of emerging farmers without neglecting the risks associated with agriculture,
and will be distributed between the livestock, citrus, grain and sugar industries over a three year period. A tripartite structure will
be put in place for each deal between the farmer, Standard Bank and a cooperative that will provide technical expertise,
ensuring the transfer of knowledge. In addition, we will ensure that the farmers are supported by management companies who
will assist with the day to day running of their finances and payments. The first deal has been structured with financing of
R13 million being made available to 2 000 emerging farmers in the sugar industry.
2010 Black Economic Empowerment Report Page | 26
Empowerment financing
Empowerment financing
One of the most influential transformational tools of the opportunities. However, delays in aligning the charter to
charter is the obligation placed on financial institutions to the dti codes and the government’s procurement process,
provide what is broadly referred to as empowerment as well as the lack of combined funding solutions between
financing. This is essentially the on-balance sheet lending banks and development finance institutions limit access to
to fund empowerment transactions which Standard Bank these opportunities. Standard Bank continues to engage
has accumulated at 31 December 2010. There are two with the public sector to facilitate private sector
categories of empowerment financing: targeted participation in meeting the funding needs of state-owned
investments and BEE transaction financing. enterprises and with development finance institutions to
increase cooperation in funding infrastructure projects.
Targeted investments
Targeted investment refers to debt financing or other Once the policies to address the energy crisis in South
forms of credit extension to, or equity investment in, areas Africa have been resolved, the renewable and clean
where gaps or backlogs in economic development and job energy sector will provide further opportunity for targeted
creation have not been adequately addressed by financial investment.
institutions in South Africa. The commitment to grant loans
under this access pillar is mirrored by a commitment to As the private sector increases its role in funding the
hold a portion of the loans granted on Standard Bank’s country’s infrastructure needs, our customer base within
balance sheet. At December 2010, Standard Bank’s total targeted investment lending is set to grow. The current
balance of targeted investment amounted to pipeline of infrastructure deals across various product
R7 528 million. areas is more than R20 billion. At December 2010,
Standard Bank had a total balance of transformational
The South African Government’s Infrastructure Capex infrastructure lending amounting to R1,5 billion.
Programme, which now officially stands at R809 billion,
provides the bank with targeted investment lending
Empowerment financing scorecard
2010 2009 2008
verified verified verified
1. Targeted investment Rm 7 528 6 908 8 885
Affordable housing¹ Rm 3 416 2 000 5 174
BSME² Rm 2 258 2 480 1 683
BAgriculture³ Rm 397 297 422
Transformational infrastructure4 Rm 1 457 2 131 1 606
2. BEE transaction financing Rm 20 006 19 859 19 761
BEE transaction financing5 Rm 20 006 19 859 19 761
Total Rm 27 534 26 767 28 646
¹ Affordable housing measures the balance outstanding at 31 December 2010 for funding advanced to households whose
average monthly income did not exceed R15 498 for the period ended 31 December 2010.
² BSME measures the balance outstanding on funding advanced to BSMEs at 31 December 2010.
³ BAgriculture measures the balance of funding advanced to BAgriculture customers at 31 December 2010.
4
Transformational infrastructure measures the 12-month weighted average balances outstanding on funding advanced for the
purposes of infrastructure development for the period ended 31 December 2010.
5
BEE transaction financing measures the 12-month weighted average balance outstanding on funding advanced for the period
ended 31 December 2010.
2010 Black Economic Empowerment Report Page | 27
Empowerment financing
Empowerment financing
BEE transaction financing
BEE transactions are defined as:
All transactions for the acquisition, by historically disadvantaged people, of direct ownership in an existing or new entity
(other than a small and medium enterprise) in any sector of the South African economy.
Joint ventures with debt financing and equity investments in BEE companies (other than small and medium enterprises).
Recovery from the financial crisis in 2009 has been slow; however towards the end of 2010 BEE activity increased, with a
number of significant broad-based empowerment transactions announced. This trend is expected to continue with the gazetting
of the dti sector codes for various sectors, including the financial services sector. Standard Bank also provides a range of
advisory services, from assisting with structuring transactions and negotiating with partners involved in the deal, to arranging
and underwriting the funding. At December 2010, the empowerment deals financed by Standard Bank were in excess of
R20 billion including finance advanced to BEE entities.
Advisory services
During 2010, SABMiller won the prestigious 2009 Dealmakers Deal of the Year Award for its BEE transaction. Standard
Bank advised SABMiller on all aspects of the R7,3 billion transaction, from structuring and funding to assisting in the
ultimate composition of black participants. Two other Standard Bank customers, Tiger Brands and Assore, also made the
Dealmakers Deal of the Year Award short list for their BEE transactions.
2010 Black Economic Empowerment Report Page | 28