Last Thursday, I had the privilege of participating in a reflective discussion on transformation or broad-based black economic empowerment (BBBEE). The event, organised by Sanlam Gauge in partnership with Sowetan's sister’s paper Sunday Times, was to launch a BBBEE scorecard report based on research conducted by research outfit Intellidex.
At the outset, we have to commend the organisers for the foresight of conducting such an exercise at this time – two years before we commemorate 20 years of a formal BBBEE framework and nine years before the review of the National Development Plan (NDP), our current blue-print.
The purpose of this input is not to report or analyse the findings; but rather it is to reflect on what went wrong and how this can be corrected 27 years into all-race democracy.
While the report’s numbers are impressive, they conceal a fundamental defect into the application of BBBEE: namely, that BBBEE hasn’t translated into the transformation of the economy and has, in essence, been reduced into a cynical malicious compliance exercise.
Twenty-seven years into freedom (ironically the same number of years Nelson Mandela spent in prison as punishment for fighting for our freedom), the commanding heights of the economy – banks, mines, agriculture and factories – are still in minority hands (white South Africans and foreigners), and black Africans have only been accommodated to about 30% of ownerships at best with weak, if at all, management grip of the companies in which they are invested.
It’s worth putting the progress of BBBEE or transformation in focus. In fact, what has happened since 1993 (a year before the elections) has been a corporate restructuring or an exercise by shareholders of large, mainly white-owned companies to accommodate a few black Africans as co-owners of these entities. It’s significant to note that at that point, there was no BBBEE legislative let alone policy framework. To be generous, perhaps, these companies were motivated by enlightened self-interest.
Simultaneously, a few more large companies began co-opting some black directors, mainly men, onto their boards.
It was only in 2003 that the BBBEE Act was passed providing, for the first time, a framework for transformation – again, mainly corporate restructuring. A few years later, codes of good practice were enunciated to provide more detail regarding the implementation framework. Also, sector charters were negotiated save for a few industries.
The end result is what we have today: that is, at best, companies are legally bound to only accommodate 30% of us black Africans despite the fact that we are in the majority.
Left unchallenged, this is a recipe for an impending social conflagration.
How did we get here?
First, the BBBEE Act was not ambitious. As with the democratic project, it merely sought to accommodate black Africans instead of making them the real owners.
Second, our white compatriots have become too cynical about the whole democracy project. Not only are they resentful, but some among them are genuinely spiteful of it and its commitments. This is reflected in the approach towards BBBEE and demands that “once empowered always empowered” and, in worse instances, black executives are replaced by mediocre white males.
The most brazen among this brigade just stymie any transformation initiative. A case in point is the interdict against the Tourism Equity Fund.
Third, corruption has set in with the implementation of BBBEE.
Fourth, there appears to be fatigue and demobilisation across the board, especially government. In the past decade, some noble piecemeal initiatives – such as the 100 black industrialists programme – have found their way into the policy agenda as the same government was refusing to recapitalise the National Empowerment Fund.
The BBBEE Commission, the watchdog, took years to be operationalised and has yet to imprison any of the fraudsters who have used their domestic helpers and gardeners as BBBEE shareholders without the latter’s knowledge.
And fifth, the past decade has seen no major BBBEE deals, and there appears no credible plan to transform the next frontiers of growth: renewables and green economy; telecommunications (high-speed broadband); agro-processing (beyond primary farming); cannabis; and so on.
What’s to be done?
We need economic restructuring not corporate restructure which has failed. We need a plan to transfer 70% ownership and management control of the economy into black majority hands by 2030.
• Zungu is the president of the Black Business Council and founder of Zungu Investments Company which owns AmaZulu FC.
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