"Investors express dissatisfaction as MTN's Zakhele Futhi fails to deliver substantial profits"
MTNZF Shareholders Face Delays and Modest Returns
Shareholders in the Black Economic Empowerment (BEE) investment scheme, MTN Zakhele Futhi (MTNZF), are facing concerns and challenges related to financial returns, regulatory changes, and broader economic impacts.
- Delayed Financial Returns and Uncertainty
MTNZF shareholders have waited nearly nine years for payouts, with payments only beginning from July 28, 2025[2][4]. Such delays can create uncertainty and frustration regarding the timing and magnitude of returns.
- Complex Regulatory Environment and Changing Policies
BEE schemes operate within a complex and evolving regulatory landscape. Changes such as the Employment Equity Amendment Act (effective January 2025) impose new workforce composition targets on designated employers, impacting firm strategies on empowerment[5]. These evolving regulations may affect the structure, valuation, and returns of BEE schemes, creating compliance risks and uncertainties for shareholders.
- Skepticism about Economic Impact and Empowerment Authenticity
There is debate about whether certain BEE mechanisms like the Equity Equivalent Investment Programme (EEIP), which allows multinationals to invest in socio-economic development without direct equity ownership, dilute the direct economic empowerment of black shareholders[3]. Although government officials emphasize oversight and alignment with broad economic goals, shareholders may worry that schemes do not always translate into meaningful or direct wealth creation.
- Investment Complexity and Transparency
BEE investment schemes often involve complex financial instruments and structures. This complexity can challenge transparency and make it harder for shareholders to assess true value or risks.
- Long-Term Economic and Social Challenges
The overarching goal of BEE is to address historical disparities by promoting black participation in the economy[5]. However, economic conditions, market volatility, and the slow pace of transformation in some sectors can hinder the schemes’ effectiveness, indirectly impacting shareholder confidence and potential gain.
The first payment from MTNZF to certificated shareholders will be R20.00 per share on July 28, 2025[4]. However, many investors are frustrated and disappointed with the money they are getting from MTNZF, which is far less than they expected. A second distribution of approximately R2.00-R3.00 per share is expected after the first payment[6].
Shareholders who hold shares electronically will receive the payout through their Central Securities Depository Participant or broker. They are encouraged to update their bank account and contact information through the Shareholder Services centre. Shareholders are advised to exercise caution when considering any sale of MTNZF shares, as the value is now tied to the sale of residual MTN ordinary shares and final cash distributions[7].
This situation undermines the purpose of B-BBEE, which is to drive inclusive economic transformation. In 2019, the B-BBEE Commission flagged MTNZF for being inconsistent with the objectives of the B-BBEE Act[8]. The Commission noted several restrictions and limitations placed on Black shareholders, which went against the Codes of Good Practice.
Nomvula Buthelezi, a Human Resources Practitioner, expresses disappointment, stating that the scheme did not benefit her as an investor[9]. Luvo Grey, the secretary general of Progressive Blacks in ICT, states that MTNZF's financial outcome fell short of expectations[10].
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References:
- www.gov.za
- www.fin24.com
- www.businesslive.co.za
- www.mtn.com
- www.b-bbee.org.za
- www.iol.co.za
- www.moneyweb.co.za
- www.b-bbee.org.za
- www.iol.co.za
- www.moneyweb.co.za
- Despite the initial anticipated returns, investors have received much less than expected from the MTNZF scheme, causing frustration and disappointment among shareholders.
- As BEE schemes navigate complex financial structures, concerns about transparency can emerge, making it difficult for investors to accurately assess risks and potential rewards.
- The constantly evolving regulatory landscape for BEE schemes poses compliance risks, which might impact the long-term success of businesses and the economic empowerment of black shareholders.
