Trade tensions: Can ESOPs create common ground?

The current tensions between the United States and South Africa run far deeper than any single issue. Disagreements over South Africa’s stance on Gaza and other foreign policy elements have strained diplomatic relations and stirred trade conflicts. Despite these high-stakes disputes that dominate headlines, there is a less obvious but enduring point of common ground – when the time is right, and the US has moved beyond rhetoric.  

Employee ownership, a bipartisan model embraced in both the US and South Africa, could bridge the two nations amid trade tensions. Despite political challenges, this approach fosters corporate success and shared value.

A Rutgers University poll found that 74% of Democrats and 72% of Republicans prefer working for employee-owned companies, highlighting bipartisan support for a model that aligns worker interests with company performance. 

Aligned with Trump-era policies, employee ownership in the US is seen as a proven strategy for corporate success when governed by strict fiduciary standards and strong oversight. 

Well-structured employee ownership stabilises companies, preserves jobs, and boosts productivity, principles that extend far beyond US borders and reinforce a business model rooted in shared value creation.

South Africa, with its long history of Broad-Based Black Economic Empowerment (B-BEE) initiatives, already recognises the importance of employee ownership. Employee ownership is a well-established model, and plays a vital role in South African policy. The Competition Commission and various government initiatives recognise it as a key driver of economic growth. 

Employee ownership schemes that have been successfully implemented in South Africa encompass all employees—both black and white—affirming a non-racial, inclusive model. Such schemes are highly transformative due to the inherent characteristics and demographics of the workforce

Multinational corporations including US companies operating in South Africa have successfully implemented this model, generating local investment and fostering economic inclusion. Support for employee ownership spans the political spectrum, from the ANC to the Democratic Alliance and other parties within the government of national unity, highlighting its role and effectiveness in driving business success and job creation.

Employee ownership allows employees, regardless of their background, to gain a direct stake in the business, creating a sense of ownership and accountability. By ensuring that those who contribute to the company’s success are invested in its future, this approach strengthens businesses and enhances overall performance.

Driving productivity and long-term growth

Employee ownership boosts innovation, productivity, and resilience, aligning employee and company interests. US companies like Coca-Cola have shown its benefits, from better performance to increased loyalty.

When American companies invest in South African businesses with employee ownership models, they export a philosophy of shared value. For American investors, it’s a proven model for long-term profitability.

Employee ownership isn’t a quick fix; it’s a strategy for sustained success. Employees with equity contribute ideas and expertise, shaping corporate direction and creating a culture of shared responsibility and growth.

Strengthening economic ties: South Africa and the US 

South Africa has shown a willingness to continue to engage with its US counterparts in the face of strained relations. 

Highlighting the track record of employee ownership during such engagements can help strengthen economic ties. Both nations, despite political and trade tensions, share a history of economic empowerment through workforce-driven models. With bipartisan support in the US and established relevance in South Africa, employee ownership provides the opportunity to serve as a bridge between the two economies.

In a climate of geopolitical tension, employee ownership provides a common ground for progress. It transcends partisan debates and race-based divisions by promoting a shared commitment to economic growth. For both American and South African enterprises, empowering employees through ownership generates growth that benefits all stakeholders.

A model for shared value

Employee ownership unlocks new opportunities for growth by combining the best of American and South African business traditions. This fuels innovation, job creation, and long-term economic stability.

As global markets shift and trade relationships evolve, businesses and policymakers must recognise employee ownership as a proven strategy for stability and growth. The opportunity is now, and those who seize it will lead the way in shaping a stronger, more inclusive global economy.

About the Author

Bruce Hunt is the managing director at Transcend Capital. He has 18 years of experience in structuring multinational BEE transactions, including Employee Ownership, Broad Based Schemes and introducing strategic investors. He also advises on the Public Interest elements of Competition Commission approval.