After initial scepticism about the possibility of success, South Africa's oldest cooperative citrus packer, Goede Hoop Citrus Bpk, has reached an important milestone regarding broad based empowerment this week.
A project, which enabled employees of the company to become shareholders, is now five years old. As the project has grown successfully, dividends have been paid to shareholders over the past three years. The latest dividend, which brought total payments to the empowered shareholders to close to R900,000 (€92,600), was celebrated this week along with the fifth anniversary of the scheme.
Goede Hoop Citrus is one of South Africa's largest citrus packers and marketers, established in 1926 and handling around 105,000 tonnes of fruit each season.
Managing director Gabrie van Eeden explains that Goede Hoop Citrus is committed to remaining a leader in the South African citrus industry.
'To do so we constantly and deliberately have to embark on initiatives which will enable us to retain this position,' he says. 'This broad based empowerment project is one of them.'
According to Mr Van Eeden, the company is already a pioneer in terms of fruit technology, fruit packing expertise and marketing.
'Technological renewal and enhancements alone are not enough to achieve success,' he notes. 'We place a premium on the development of people and all interventions in this regard are seen as an investment in the future.'
He says the management and board of Goede Hoop Citrus is of the opinion that people development and empowerment should support each other.
'It is of utmost importance for our company that our employees should be sufficiently empowered to do their work and therefore ensure success for the company. Within the South African context this is not enough and against the background of South Africa’s history it is important for us to also contribute to the economic empowerment of our people.'
The empowerment project began in 2005 as a shareholding scheme for employees and led to the establishment of the Goede Hoop Citrus Ltd Empowerment Trust during the same year.
'At that stage the company had a number of inactive or 'resting' shareholders. The Board of Directors allowed us to buy back these shares and in this way about 30 per cent of the company's issued shares ended up in the Goede Hoop Citrus Ltd Empowerment Trust,' adds Mr Van Eeden.
The shares were then offered to employees who could apply, based on years of service and seniority, with the emphasis on the former. 'We also followed a thorough consultation process and we were delighted when 100 per cent of the employees who were offered shares, accepted our offer,' he says.
According to the agreement, employees bought their shares through a loan which was financed by the Trust. The repayment of the loan is being financed through dividends to be paid by the company.
Juanda George, a trustee, explains that in the beginning it was very difficult for prospective shareholders to visualise the end result: 'Despite this we were all excited that for the first time we could call ourselves co-owners of our own company.'
Mr Van Eeden says that after the issuing of the shares, there was still something missing to complete the circle.
'Although our staff were co-owners, they still did not have representation on the highest decision making body in the company, namely the Board of Directors,' he notes. 'A special resolution, which in future will be regarded as another landmark decision by the company, was taken by our grower shareholders and this paved the way for a member of the Trust to be nominated to serve on the Board of Goede Hoop Citrus Bpk. In this way Goede Hoop Sitrus for the first time in its history had a black person who served as a director of the company.'
According to Mr Van Eeden, the empowerment deal resulted in 15.1 per cent of the company's shares being transferred into the hands of previously disadvantaged people.
'We have been able to retain this percentage throughout the first five years, but our short term goal is to ensure that at least 20 per cent of the shares should be in the hands of black people,' he says.
Paul Visser, manager of human resources and communication, says co-ownership has brought about an enormous culture change in the company: 'The worker shareholders see Goede Hoop as their own company and this has had a huge and positive influence on productivity and other processes. It is clearly now a case of everyone pulling together and in the same direction.'
When the first dividend was declared three years ago, Dinah Cloete, a tea-maker and cleaner at Goede Hoop Citrus who is also a shareholder, described the experience: 'I never expected this and cannot believe what I am seeing. I am getting a dividend from MY company! Now I can see that my contribution as a joint owner is paying dividends.'
After five years, Donavan Cloete, another trustee and now also a director, feels that the share scheme is working well.
'We know we are truly co-owners because we are receiving our dividends,' Mr Cloete reveals. 'We often hear of share schemes that do not work, but it is clearly not the case here because we are reaping the rewards.
'Half of my dividend is used to repay my loan and the other half is going directly into my pocket,' he adds. 'One of these days the loan will be fully recovered and I will receive the full dividend. As shareholder I am proud of my company and we have enough reason to celebrate.'
Mr Van Eeden says Goede Hoop Citrus has other big ideas in the field of black economic empowerment: 'We are constantly working on the idea to get our employees into land ownership. This backward integration will enable our employees to have an influence and share in the total supply chain of the industry.'
He explains that as shareholders of Goede Hoop Citrus, employees already have an indirect interest in the companies in which it itself a shareholder. These companies are APL Cartons (a carton manufacturer), Goede Hoop Vrugte (Marketing), Citrus Juices (Processing) and Cape Fruit Coolers (Cooling).
'Obviously, as shareholders in Goede Hoop Citrus, they already have an interest in fruit packing,' says Mr Van Eeden. 'The circle is open again, and when we achieve shareholding in primary agriculture it will be closed again until we are able to explore other empowerment opportunities.
'I agree with Donavan Cloete, he adds. 'Our share scheme works and is not merely window dressing. I believe this initiative will be of critical importance for the future success of our company and its shareholders.'
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