‘03

"OVER MORE THAN A YEAR, THE LEADERS OF THE FINANCIAL SECTOR IN SOUTH AFRICA MET - WEEKLY, AND IN THE END DAILY - TO THRASH OUT THE FINANCIAL SECTOR CHARTER. THE RELEASE OF THE CHARTER ON 17 OCTOBER 2003 BROUGHT TO AN END A PROCESS BEGUN IN AUGUST 2002, AT THE NEDLAC FINANCIAL SECTOR SUMMIT. OLD MUTUAL WAS ACTIVELY INVOLVED IN THE PROCESS OF COMPILING THE CHARTER THROUGH THE CONTINUOUS EFFORTS OF THE COMPANY'S MOST SENIOR MANAGERS." Debra Marsden

In Old Mutual's submission to the Black Economic Empowerment (BEE) Commission in 2000, the company defined BEE as a key aspect of the process of economic and social transformation in South Africa. In that submission the company described black economic empowerment as a multi-faceted long-term process (accelerated through short-term interventions) through which black people acquire, build and increase their participation, management and control over the wealth creation/productive systems of the country.

The submission described BEE as a process comprising:

• BEE financial transactions;
• Education;
• Capacity-building;
• Infrastructural investments;
• Social investment;
• Skills development; and
• Employment equity.

Implemented, this approach would lead to improvements in the lives of black people, a spreading of assets, the creation of a black entrepreneurial class, increased human capital development, and an elimination of race in economic activities.

The Old Mutual submission contended that all deliverables "should also be measured in terms of meeting stated goals".

These principles lent themselves to the creation of Old Mutual's 10-point Black Economic Empowerment Framework.

In 2003 the Financial Sector Charter was released to the public, having been crafted by all members of the financial sector and roundly approved by government.

The Charter shares many of the principles espoused in the Old Mutual submission to the BEE Commission. Old Mutual has acted on those principles in the past to achieve a broad-based empowerment strategy that has seen the company take a leadership position among its peers.

Specific accomplishments include:

• Roughly 45% of Old Mutual South Africa's operating profits are under the control of black executives;
• Old Mutual is the largest private sector manager of infrastructure assets in South Africa;
• Old Mutual has over R2 billion invested in listed, direct equity and structured empowerment investments;
• The Group Schemes division offers products accessible to low income earners and is supported by a strong financial education initiative run by dedicated resources;
• A highly-regarded social investment programme supports rural economic and enterprise development;
• A commitment to affirmative procurement has already seen 22.5% of all procurement spending routed to black economic empowerment accredited companies; and
• The construction of a Business School that offers skills development, and support to the wider employment equity and diversity management programmes within Old Mutual South Africa.

Despite these successes there are areas that will receive focus by Old Mutual in 2004. These include:

• Increased direct ownership of Old Mutual by black people;
• Increased empowerment financing activities to facilitate the transfer of equity into black hands, and the development of black businesses;
• Higher black representation at senior management levels;
• Increased representation of black women in all levels of management; and
• Increased focus on targeted investments.