FIFI PETERS: Let us now check in on what is happening at Old Mutual, and what is happening with the Bula Tsela B-BBEE scheme. It has been a month or so since Old Mutual launched its latest black-empowerment scheme to the public, Bula Tsela, seSotho for ‘Pave the Way’.
For an update on how things are going right now, I’m joined by Taskeen Ismail, who’s the head of corporate finance at Old Mutual. Taskeen, thanks so much for your time. I see you say that … 30 000 people [have] applied for this scheme within the first six weeks. Is this in line with what you were expecting? Is it better or is it worse?
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TASKEEN ISMAIL: Good evening, Fifi. Good evening to your listeners. Thank you so much for the time and opportunity to talk to you. Yes, applications have been tracking really, really well. We’ve just gone through the halfway mark of the application window. We opened applications at the end of August and applications will close on October 24. So we’ve left a two-month window to give people as much time as possible to put all their documentation together, to get their applications in, get their cash into the system – and we’re definitely on track in terms of numbers.
FIFI PETERS: It’s really interesting to see that the majority of the candidates who have signed up for the scheme now are mainly over-60s. That I found really interesting and I wanted to find out from you if your data show whether they’re buying Bula Tsela for themselves or whether they’re buying for their children or perhaps even grandchildren.
TASKEEN ISMAIL: Those stats do change on a weekly basis as we see our communication and marketing campaign unfold, which is obviously done in stages. And we do keep track of this on a provincial level. So as we’ve seen, to date most of the applications are coming through from the three major provinces, Gauteng, KZN and Western Cape – and we’re starting to see an uplift in the rest of our provinces.
The split has been pretty much equal male versus female.
You are right, there’s lot of interest from older candidates and, interestingly enough, a lot of them are starting to think about how they can invest and sort of leave a legacy for their kids and their grandkids.
So a lot of the interest is from guys over 50 years old trying to buy shares on behalf of grandchildren – which is a wonderful, wonderful thing to do.
FIFI PETERS: What’s also wonderful is if we have some participation coming through from the youth. How is that looking?
TASKEEN ISMAIL: In the last week we have had an uptick in applications coming through from youth. I’ll be able to give you some more accurate percentages in the next couple of weeks as we see those marketing and communication campaigns roll out. But there’s a lot of interest from the youth.
FIFI PETERS: It’s also interesting to see that quite a number of those who are signing up for the scheme are going for the option in which they can pay via instalments – signing up for 100 shares, where they get to pay the R1 000 over a 12-month period, as opposed to paying the full lump sum of R2 000 where you get 200 shares. What do you think about this and why do you think that people are going for the instalment option? What is it telling you about the situation out there?
TASKEEN ISMAIL: We’ve had interest for both of those options. Just to remind everyone, most of the scheme is set up in a very traditional retail-scheme manner, where you need to put down at least R2 000 as your equity cheque size and that’s buying you at least 200 retail co-shares, which cost R10 each. Then we set aside 10% of the scheme for this very special facilitation mechanism where, if you can’t afford to buy 200 shares, you buy 100 shares, pay only R100 up front, and then you’ve got 12 months to settle that.
There is equal interest for both. So the reason why we actually put that R1 000 facility in place is we know that in the traditional construct of a retail scheme, trying to put together R2 000, even if you’ve got a two-month window to do that, is quite a massive ask for the majority of South Africans.
So this scheme is specifically trying to include people who would traditionally be excluded, and to give them the best chance of getting the same exposure, getting the same kind of financial education that you’d experience as part of a retail scheme concept, with as much facilitation as possible.
So there’s a lot of interest for that R1 000 pool, and that means that there is actually a need for schemes like this for that element of the market, and we are very pleased that there is quite a bit of take-up for it, which means that we haven’t wasted our time in actually making that facility available.
Equally on the R2 000 bucket, there are a lot of people who’ve applied maybe for the R1 000 pool and then have done a bit of financial rejigging on their side, and have now decided that, based on what they can actually save and put together over the next two months, they might actually be able to afford to participate in the R2 000 bucket. Interestingly enough, we’re seeing people swap from the R1 000 application pool, managing to put more cash together, and then deciding to actually apply as part of the R2 000 bucket. That is starting to get people to think about how they [can] manage their finances better as well.
FIFI PETERS: I also see in the statement that dropped from your communications team that there have been a number of questions that people have been asking throughout this process, and perhaps you can just talk to us about the main questions that people are flagging out there.
TASKEEN ISMAIL: The biggest questions we’ve received, especially from people who are applying for the R1 000 pool, are: “Give us some more information on how share schemes work.” “What does it mean to own a share, what kind of voting rights do I get?” “What kind of dividends do I get? And, “How do those really work?”
So there is definitely interest in the construct of these schemes, which is quite helpful. We do have a financial-education programme that’ll be tied to the retail scheme, which will be rolled out over the next 10 years. So the need for it is dire. We’re quite happy that we are launching Bula Tsela in a way that is quite easy for people to understand.
FIFI PETERS: A quick one, though. You said you are just over the halfway mark at this stage. Is it too late? If you’re hearing this interview for the first time and you’re [thinking], Bula Tsela what? I’m wanting to pave the way for my own financial future right now. Can [I] still sign up?
TASKEEN ISMAIL: Oh, absolutely. The one thing we’ve been quite clear on is we are not going to be doing these allocations on a first-come-first-served basis. We are allowing everyone the chance to apply as long as we’ve got all of your documents, all of your cash, by October 24. We’ll then go through a verification process or we’ll go through all of the documents in the background, and then look at all of the applications and figure out the fairest way to allocate, based on the mix of applications that we’ve received.
We’re are getting interest from across the board, so a lot of individuals [are] applying, a lot of companies, groups like stokvels, trusts, NPOs – so there’s quite a nice mix that we’ll be able to work with after the scheme closes.
FIFI PETERS: It sounds pretty cool. Let’s catch up on the 24th at four o’clock on the dot, where I see this scheme actually closes. In terms of being able to sign up for it, you need to have handed through all your documents in order to qualify.
Taskeen, we’ll leave it there. Taskeen Ismail is head of corporate finance at Old Mutual.
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