DA slams NEF share deal

By Damaria Senne, ITWeb senior journalist

Johannesburg, 23 Jul 2007

The Democratic Alliance (DA) has slammed the deal by the National Empowerment Fund (NEF) to sell 1.5% shareholding in MTN at a 20% discount to black individuals and investment groups.

If left as is, this initiative will not succeed at opening up access to opportunity for the poor, but will instead further enrich politically well-connected and already-empowered people, the DA says in a media statement.

The proposed transaction, worth about R1.3 billion, allows black South Africans to purchase MTN shares from the South African Post Office, starting today, until 16 August.

"The share scheme allows black individuals, as well as black savings and investment groups such as stokvels, burial services, trusts, co-operatives, church groups and others, the ability to invest in MTN shares at an attractive 20% discount," the state-owned entity previously said in a media statement.

The initiative, Asonge Share Scheme, allows a minimum subscription of R2 000 with a maximum of R50 000 for individuals and R100 000 for stokvels and other savings groups.

It aims to encourage saving and investment among black South Africans, especially those who have previously been unable to do so, NEF CEO Philisiwe Buthelezi said at the launch of the initiative.

However, DA MP Douglas Gibson says: "If the NEF asset management executive Victor Mabuza thinks the Asonge Share Scheme will successfully target the lower and the middle classes as he has proclaimed, then he needs to think again."

Gibson says many of the newly-rich black South Africans will be able to purchase the discounted MTN shares on offer. "In fact, seemingly anybody could gain access to this share scheme if they had the resources handy."

The DA says its visits to participating post offices in the Cape Town area revealed that counter attendants are, in most cases, willing to accept payment from anybody wanting to buy shares from the scheme.

"Is it really proper for public resources to be squandered so the middle classes and the rich may be shored-up further, when our under-capacitated state can barely manage to make a dent in meeting the needs of the poor?"

The DA says it is true that poor individuals could combine in groups to meet the minimum R2 000 subscription threshold and to minimise the considerable risk this investment offer holds. However, such bodies take time to assemble and, as far as equity investments are concerned, assume the type of investor sophistication only found among more experienced investors.