Business loud and proud on catalyst role
Government and state regulators didn’t invent black economic empowerment (BEE). Business did. It was pioneered by people like Richard Maponya, who built business empires despite apartheid’s constraints, and Jabu Mabuza, now chairman of Telkom, president of Business Unity SA (Busa) and chairman of Business Leadership SA, who built a taxi business back in the day.
It was pioneered, too, by companies such as Sanlam and Anglo American, which did empowerment ownership deals with leaders such as Nthato Motlana in the early to mid-1990s, years before there were BEE codes or laws.
It is significant, then, that organised business has at last moved to reclaim business’s collective space as a driver of empowerment — not just the object of a series of ever more demanding quotas and codes and rules devised by the government. It is significant, too, that Busa’s document on business’s approach to economic transformation has the support of all its member organisations, which represent businesses large and small, domestic and multinational, across all the sectors of the economy.
This is “business talking to itself”, as Mabuza put it. And the process itself is important. This is business taking ownership of the transformation challenge, recognising that it has not done nearly enough and seeking ways to deracialise the economy while lifting growth and job creation.
It’s doing so at a time when the mining industry is taking Mineral Resources Minister Mosebenzi Zwane to court to stop him implementing his outlandish new charter, while Zwane has countered by accusing business of being antitransformation.
That’s become a common charge lately from Zwane and other captured politicians, making the launch of Busa’s document particularly timeous. It’s entering into a battle over definitions, which is not just about semantics but goes to the core of what SA needs to do to bring in many more black people as active participants in a more dynamic economy that can provide livelihoods for all.
The rent-seeking faction of the governing party has been using “radical economic transformation” as a tool to beat established business and extract even more rent.
Deputy President Cyril Ramaphosa, by contrast, has lately been redefining radical economic transformation to talk about the need to fundamentally alter the racial and gender composition of ownership, control and management of the economy, so that it truly reflects the diversity of SA’s people. As he said recently: “Empowerment and growth should be mutually reinforcing.”
The term Busa has chosen, “black economic transformation”, in a sense straddles the black economic empowerment and radical economic transformation space. Key to the business approach is that Busa has defined where SA should be trying to get to – what it calls the “desired end state” of the country’s transformation efforts. Call it BEE or RET or BET, business wants “a deracialised vibrant, diverse and globally competitive economy that enables all South Africans, regardless of race or gender or age, to have the opportunity to participate in the economy and earn a sustainable livelihood”.
The next step is to try to measure how far the country is from achieving that and what can be done to get there, by business in collaboration with the government, labour and other social partners.
The trouble, says Busa, is that there’s no consistent or coherent measurement of what SA has achieved so far on transformation. The numbers on ownership and employment equity, if they exist at all, are highly contested. But often they simply don’t exist. So for example, while there is a politically charged debate on how much equity ownership has been transferred to black shareholders, the debate focuses on the top 100 JSE companies. But these account for no more than a third of SA businesses, based on tax data, and there’s been very little focus on the many private businesses that account for much of SA’s economic activity and employment.
The document emphasises that business completely supports the aspirations of the BEE legislation and codes and the employment equity legislation. But it makes the point that their design and implementation has failed to achieve the desired transformation outcomes and has often had adverse unintended consequences.
Businesses have responded, too often, with a compliance-driven, tick box, transactional approach to transformation, which is precisely what Busa and its members now want to get away from by enabling “transformation culture” within their businesses as well as collaborating to develop black-owned enterprises, to develop skills matched to its current and future needs and to scale up employment efforts.
In an implicit critique of the current equity ownership approach, the document points out that the deals done have been costly and time consuming but have often transferred very little economic value or influence. The document suggests that there should be much more focus on developing and supporting new and existing black-owned enterprises and tackling the regulatory barriers that constrain these.
It hints that getting more black people into top management positions with real power to make strategic and operational decisions will do more than equity ownership deals to change things. And, says the document, business needs to show the business case for diversity and how it can make companies more competitive.
Going into the ANC’s policy conference, the question will be whether all this will have resonance for policy makers in a highly contested political environment.
THE TROUBLE, SAYS BUSA, IS THAT THERE’S NO CONSISTENT OR COHERENT MEASUREMENT OF WHAT SA HAS ACHIEVED SO FAR