“The average youth only cares about making it and being the next to be celebrated, while leaving nothing of substance to generations to come.”
“There has not been a structural destruction of apartheid, people are still leaving their homes in the townships at 3am to go and work in urban areas which is essentially the group areas act. Things need to change.”
Since the start of our democracy more than 20 years ago, the journey to equality has been paved with some rather complex hurdles. One of these hurdles has been Black Economic Empowerment (BEE), technically known as Broad-Based Black Economic Empowerment (B-BBEE). Devised by our country’s democratic government, BEE was designed as an effort to include black South Africans in significant conversations and dealings that make up the country’s economic climate. The Department of Trade and Industry elaborates in its explanation of the policy, stating that “in 2003, the Broad-Based Black Economic Empowerment (B-BBEE) Strategy was published as a precursor to the B-BBEE Act, No. 53 of 2003. The fundamental objective of the Act is to advance economic transformation and enhance the economic participation of black people in the South African economy.” That being said, implementing this policy in practice has not been as easy as it was to define.
Although great strides have been made since its inception, there have been a number of setbacks that have not made B-BBEE as smooth a transition as what many had hoped. We take a deeper look into the policy through the eyes of four business leaders:
Vusi Thembekwayo – speaker, strategist and companies director
“The BEE system, as it was designed, was implemented successfully. Companies did equity share transactions, some even included employment schemes for their employees. What is clear is that the system itself, or the scheme itself, was designed incorrectly. I suppose that is why it is continuously changed and adapted. What has been less successful has been the implementation of employment equity under the B-BBEE. It seems that some companies chose simply to either ignore or obfuscate their responsibility on this aspect of the law.
“I would design the system better. I would not have created equity schemes which resultantly created a distortion in reward system because those that could build businesses decided rather to do quick share deals. I would focus almost exclusively on enterprise and supplier development and would have then had a share ownership (transfer) mechanism at zero cost to the black staff.
“South Africa will always need some or other form or black empowerment... at least until it deals with the legacy of apartheid.
“The real barrier to black economic development is simply anti-competitive behaviour and gatekeeping from established firms. What is needed is industry-specific guidance on set-asides that should go to black firms. It must be fixed and non-negotiable. What is also needed is punitive actions to be put in place for established firms that don't comply. If the cost to the business is zero then the disincentive is zero and the gatekeeping continues.”
Zibu Mthiyane – founder and president of enterprise development organisation, MMC South Africa
“I think that the policy is brilliant, however there is political will to implement it. Having said this, the professionals and officials who are in the positions and places where it is supposed to work, aren’t sold on it. For example, if you are black and want to initiate a start-up that is a state-owned entity, when you’re evaluated 90% is based on the funding you need and 10% on your BEE score. White-owned companies can often quote cheaper because they have the resources already, which puts them in a better position. Implementing BEE in companies is not convenient and it’s not easy. It’s often done from a condescending point of view.
“It does however take two to tango, as they say. BEE was not implemented for fun, it was implemented to address the injustices of the past that were inflicted on one race over another. Sometimes people feel as if BEE has been implemented by the government to give black people a hand. BEE is a redress mechanism to increase equal opportunities. When BEE was first implemented, all the companies outsourced their in-house cleaning services which meant that if you were a cleaner, you lost your benefits like medical aid and bursary schemes. 99% of that industry are black females, so they were immediately trapped in poverty as they were the least paid, with the least benefits. It was quite malicious because these companies used the same vehicle they were given to entrench the hierarchy. Another interesting statistic, is that 75% of CEOs in South Africa aren’t black. If BEE was ever going to work it was not just about the government implementing it but greater South Africa in general; owners of business and commerce could’ve done better. This current model will become unliveable to a point where things have to change. I think we are headed for a cliff where there is going to be a realisation.
“Redressing BEE will be even more pertinent in the future. It shouldn’t be about ‘if you want to do it’ but rather, you have to do it, to remain relevant in this country. You can’t keep the majority numb for a long time, someone is going to pick up the baton. Numbers wise, black people are the majority but we are also the economic and cultural minority, which is not sustainable. It’s impossible to move into the future without a redress. It’s a business imperative. Civil society has even more power through social media, we can boycott brands now and question them live. For years, people could get away with not giving an answer, but not anymore. Brands now have to answer. The role of business in society in the future is going to change drastically, and those who see the future have already started implementing it to give competitive edge. There has not been a structural destruction of apartheid, people are still leaving their homes in the townships at 3am to go and work in urban areas which is essentially the group areas act. Things need to change.”
Paul Nzimande – speaker, consultant and social entrepreneur
“BEE has worked for a few in this country. The reality, which is a statistical fact, is that the majority of the previously disadvantaged remain disadvantaged. We have all agreed that we face the triple challenges of unemployment, inequality and poverty. If it had worked, we would have less inequality, less poverty and less unemployment. At the very least these factors would not continue to be confined predominantly to black people. So, in that sense, it has not worked for the vast majority.
“In its conception, BEE had assumed that a patriotic middle class would come about, and this middle class would begin to open up the economy for the rest of the masses. Instead two things happened. The first is that our best brains were sucked into the whirlwind of making money in an environment of greed and ruthlessness. It became all about the next deal while creating nothing, and leaving nothing of impact to society. Secondly, this middle class became entangled in a life of opulence and grand displays of nouveau riche, thereby role-modelling crass materialism to the upcoming youth. They taught us that lavish living is all there is to aspire to, thereby compromising the very fibre of patriotism. The average youth only cares about making it and being the next to be celebrated, while leaving nothing of substance to generations to come. This is vastly different to the values lived by our struggle heroes such as Tata Madiba who lived a life of personal sacrifice for the greater good of mankind. These are obviously very broad generalisations and there are exceptions.
“In my boardroom experience, white people, who continue to hold sway in the boardroom, have learnt that they hold the power. They have learnt that there is no punishment for remaining untransformed. They can get a better BEE scorecard than me. They can get business without transforming, as long as they tick a few boxes, and get a brother to front. Unless we deploy resources as government into making absolutely sure that we sniff out and punish fronting, we will not see much progress. There are too many greedy people prepared to front for a quick buck. There are far too many arrogant minority business people who have been rewarded with business. There are entire industries, such as the payments industry which I am familiar with, where darkies have zero space to play.
“In my view, we have to go the long route and get our hands dirty. Black people are not poor, they are just poor spenders. We have to take responsibility for how we spend our money. We must penalise those who refuse to transform and reward those who do. It must no longer be government's business but the business of the citizens. We must be patriotic enough to ask what the BEE credentials of the magazine I am reading are, the company who produces the yoghurt I am eating... this means that we will begin to create our own entrepreneurs in these spaces who will benefit from our spending.
“If the Muslims can be strict about Halaal standards, and the Jews can be strict about Kosher and get the market to take them seriously, surely we can establish a council of our own to ensure that our food is BEE compliant. It's not an easy road, but it is certainly doable. If we could establish empowerment rating agencies, we could do this also. The Afrikaners did it. The English did it. The Indians did it. Even the Chinese are doing it. We are the only ones spending our rand indiscriminately.”
Yolisa Phahle – CEO of M-Net
B-BBEE 101 by Brand South Africa
Brand South Africa, with help from the government, has defined the objectives of this policy as being to:
· Empower more black people to own and manage enterprises. Enterprises are regarded as black-owned if 51% of the enterprise is owned by black people, and black people have substantial management control of the business.
· Achieve a substantial change in the racial composition of ownership and management structures and in the skilled occupations of existing and new enterprises.
· Promote access to finance for black economic empowerment.
· Empower rural and local communities by enabling their access to economic activities, land, infrastructure, ownership and skills.
· Promote human resource development of black people through, for example, mentorships, learnerships and internships.
· Increase the extent to which communities, workers, co-operatives and other collective enterprises own and manage existing and new enterprises, and increase their access to economic activities, infrastructure and skills.
· Ensure that black-owned enterprises benefit from the government’s preferential procurement policies.
· Assist in the development of the operational and financial capacity of BEE enterprises, especially small, medium and micro enterprises (SMMEs) and black-owned enterprises.
· Increase the extent to which black women own and manage existing and new enterprises, and facilitate their access to economic activities, infrastructure and skills training.