Re-Working Black Economic Empowerment

By Thandisizwe Mgudlwa

In a move to improve the lives of the masses left out of the main stream of the South African economy because of historical injustices, there’s clearly a need for a more integrated and effective approach to “grass-rooting” the transformation programme of Broad-Based Black Economic Empowerment  (B-BBEE), so that the deserving masses can rightly have a share in their country's wealth.

A good example of this is the National Empowerment Fund (NEF) and the Gordon Institute of Business Science (GIBS) partnership, which was born in 2011 to launch the GIBS Black Economic Empowerment (B-BBEE) Unit and the GIBS/NEF Black Economic Empowerment (BEE) Thought Leaders Dialogue.

Established by the National Empowerment Fund Act No 105 of 1998, the NEF is a driver and a thought-leader in promoting and facilitating Black economic participation through the provision of financial and non-financial support to Black empowered businesses, as well as by promoting a culture of savings and investment among Black people.

The GIBS B-BBEE Unit was launched to focus on the following areas, Research & Development, to establish best practice in Broad-Based Black  Economic Empowerment (B-BBEE) in South Africa (rather than the narrow  approach which is predominantly focusing on the ownership aspect of the score card); the introduction of academic and executive programmes at GIBS, including a Masters of Business Administration (MBA) Elective Module in BEE, a Certificate Programme and an Executive Programmes Short Course; ensuring that B-BBEE issues and their effect on society are  researched by members of the GIBS faculty; and hosting of Forums and Conferences: GIBS running a series of B-BBEE forums, workshops, and seminars as well as an annual conference to generate interest in B-BBEE  stakeholders.

According to the Unit, the goal of the Thought Leaders Dialogue, a major initiative of the Unit,  is to explore and influence the perception, design and implementation of B-BBEE in the South African economy. It brings business leaders and other stakeholders active in transformation together to vigorously debate the shortcomings and best practices in B-BBEE.

This group of experienced BEE thought leaders acts as a catalyst to influence and undo the unintended consequences of BEE, and point the way to a more integrated and effective approach to “grass-rooting” B-BBEE.

Ultimately, the B-BBEE Thought Leaders Dialogue may serve as a bridge between academia (in partnership with the private sector) and the Government leadership of the day.

South Africa’s entrepreneurial guru and founder of Black Like Me, Herman Mashaba was elected as the first Patron of the B-BBEE Thought Leadership Dialogue.

Meanwhile, the B-BBEE Act established a legislative framework and proposed establishing an advisory council.

And the Act’s preamble acknowledged that Apartheid excluded the majority of South Africans from accessing skills and ownership of productive assets.

Also, the Act would provide a framework to overcome this legacy by promoting the achievement of the constitutional right to equality.

Economic transformation would be achieved through various means such as changing the racial composition of enterprise ownership, management and skills acquisition.

Furthermore, the South African President would chair the BEE Advisory Council, which would include Cabinet ministers, academics and representatives of business, trade unions and community-based organisations, ( including Community Development Forums, Trusts, Councils and Associations among others).

And the Minister of Trade and Industry was empowered to issue a BEE strategy and Codes of Good Practise and publish Transformation Charters.

Codes of Good Practice would provide definitions and guidelines for implementing BEE.  While, Sectoral Transformation Charters would be developed by major stakeholders in each sector.

Notably, "the BEE Act and its associated Codes of Good Practice are legally binding on government departments, state-owned enterprises (SOEs) and other public entities. They have to apply the Act and Codes when making decisions regarding procurement, licensing and concessions, public-private partnerships and the sale of state-owned assets and businesses."

However, "the Act and Codes are not legally binding on the private sector, but they may find their business shrinking if they do not promote BEE.  For example, a 100% white-owned mining company that does not promote Black staff, or make any attempt to uplift poor communities where its mines are located, could experience difficulty getting its mining license renewed."

Similarly, "a large state-owned enterprise advertising a tender for supply of goods or services could award the tender to a private company that promotes Black Economic Empowerment (BEE), even if this company’s price is higher than another company that makes no attempt to do so."

The BEE legislation adds, “State contracts can be worth millions and this provides an incentive for private companies to change.  For many companies, transformation becomes an economic imperative.”

In order for all this to exist the Reconstruction and Development Programme (RDP) as a South African socio-economic policy framework implemented by the African National Congress (ANC) government of Nelson Mandela in 1994, would need to be revived. 

"The RDP came into being after months of discussions, consultations and  negotiations between the ANC, its Alliance partners the Congress of South African Trade Unions and the South African Communist Party, and "mass organisations in the wider civil society."

The ANC's chief aim in developing and implementing the Reconstruction and Development Programme, was to address the immense socioeconomic problems brought about by the consequences of the struggle against its predecessors under the Apartheid regime. 

Specifically, it set its sights on alleviating poverty and addressing the massive shortfalls in social services across the country, something that the document acknowledged would rely upon a stronger macroeconomic environment.

"Achieving poverty alleviation, and a stronger economy were thus seen as deeply interrelated and mutually supporting objectives, development without growth would be financially unsustainable, while growth without development would fail to bring about the necessary structural transformation within South Africa's deeply inequitable and largely impoverished population."

"Hence the RDP attempted to combine measures to boost the economy such as contained fiscal spending, sustained or lowered taxes, reduction of government debt and trade liberalisation with socially minded social service provisions and infrastructural projects. And as commentators then remarked that in this way, the policy took on both socialist and neo-liberal elements, but could not be easily categorised wholly in either camp."

Facing this "deep-seated structural crisis of The Reconstruction and Development Programme(RDP) Policy Framework,the government attempted to put together a policy framework that could begin to address the variety of problems being faced economically.The RDP White Paper,(which was presented to the Parliament of South Africa in 1994),identified economic, social, legal, political, moral, cultural and environmental problems that the country faced.

While the RDP White Paper outlined around six major principles that would guide and give substance to the remainder of the programme, the RDP would be integrated, well coordinated and a sustainable programme, to be conducted in and integrated amongst all three spheres of government, along with civil society, business companies and parastatals; the RDP would be 'people-driven'.

"Here, the programme noticed that development is not about the delivery of goods to a passive citizenry, it is about active involvement and growing empowerment. In taking this approach the Government will build on the many forums, peace structures and negotiations that our people are involved in through the land; the RDP attempted to play a role in ending the endemic violence within South Africa by embarking on a national drive for the peace and security of the country.The Programme would also help to encourage investment, thus feeding back into the drive towards economic expansion and greater development; the commitment of all parties to the RDP would encourage the grand project 'Nation-Building'. "

The Programme noted, "We are a single country, with a single economy, functioning within a constitutional framework that establishes provincial and local powers, respect and protection for minorities, and a process to accommodate those wishing to retain their cultural identity. It is on the basis of our unity in diversity that we will consolidate our national sovereignty."

Furthermore, the RDP would link growth, development, reconstruction, redistribution and reconciliation into an unified program, held together by a broad infrastructural programme that would focus on creating and enhancing existing services in the electricity, water, telecommunications, transport, health, education and training sectors.

"And the programme will pay close attention to those economic factors inhibiting growth and investment and placing obstacles in the way of private sector expansion."

In addition, "The success of the first five principles would in turn facilitate the sixth, democratisation. Here the document made note of minority control and privilege within the economy as a major obstacle to the achievement of an integrated developmentally orientated economy. It also acknowledged that the people most affected by economic policy should participate in the decision-making, and that the government would also have to be restructured to fit the priorities of the RDP."

To compliment the above mentioned factors who be the Batho Pele (People First), a South African government's political initiative. The initiative was first introduced by the Mandela Administration on October 1, 1997 to stand for the better delivery of goods and services to the public. It is also now used to imply the dissolvement of government organizations deemed corrupt or obsolete.

The Batho Pele initiative aims to enhance the quality and accessibility of government services by improving efficiency and accountability to the recipients of public goods and services.

Batho Pele requires that eight service delivery principles be implemented, regularly consult with customers; set service standards; increase access to services; ensure higher levels of courtesy; provide more and better information about services, increase openness and transparency about services; remedy failures and mistakes; give the best possible value for money.

So clearly the B-BBEE Thought Leadership Dialogue project must be deepened and spreaded across the country for the participation and involvement of all our people. More so, at the early stages of the implementation of the National Development Plan. BEE provides the economic balance in the NDP, a Vision 2030 programme.