Empowerment will benefit us all
Companies should view BEE as a prerequisite for economic growth, a way to reduce the inequality gap and cut poverty
Black Economic Empowerment is supposed to be a pragmatic strategy that aims to correct the injustices of the past by incorporating black people into the economic mainstream. Apartheid systematically restricted the majority of South Africans from participating in the economy and if we are to grow the economy, the full potential of the economy needs to be realised.
Adopting BEE requirements should not be a matter of employing black people in order to tick the BEE boxes.
Companies should view BEE as a prerequisite for economic growth, a way to reduce the inequality gap and cut poverty. I’d like to believe that most South Africans support transformation.
At Argon Asset Management’s 10th anniversary dinner, Finance Minister Nhlanhla Nene delivered a speech in which he said transformation is at the centre of the South African story; it reflects our collective desire to correct the injustices of the past and ensure a sustainable future.
But is transformation truly at the centre of the South African story? Is corporate SA doing enough to ensure that every company reflects SA’s demographics? The pressure to move up a few BEE levels in order to win tenders or get business from those corporates that will only deal with companies at a particular BEE level negates what BEE set out to address.
Corporates may want to fulfil their BEE score level by employing black people who just tick the BEE boxes, instead of having a holistic and long-term approach, which may involve student recruitment programmes or the funding of university scholars on condition that they work for the funder for a few years. For instance, a company of 10 people with an annual payroll of R10m can score 12,6% on BBBEE scorecard by simply placing one black female on a disability-focused learnership.
This encourages a focus on the BEE scorecard and not necessarily on that employee’s trajectory. This scenario raises the question: Are we truly sincere about the transformation agenda and if we are, why are we limiting ourselves to BEE requirements?
National treasury announced the first income tax hikes in 20 years in the February budget. These increases are mainly due to slower revenue collection, which is a result of reduced economic growth. The hike in income tax was targeted mainly at the middle- and upper-income earners, leading many to argue that the very people who pay taxes are being punished.
If we were more sincere about transformation by hiring more previously disadvantaged people and making sure they receive the best training, are supported at the workplace, promoted and paid fairly, we will be doing a lot more for transformation and addressing inequality that so stifles economic growth. The dependency ratio of a previously disadvantaged person is high because he supports not only his immediate family, but his extended family as well.
SA is the only country in the world that has fewer employed workers than people on welfare. The quicker transformation occurs here, the sooner fewer people will depend on welfare. If less money is allocated to welfare subsidies and more goes towards infrastructure development, we should see long-term sustained economic growth.
The private sector provides tools that can deliver transformation. It is the instrument to correct broader societal imbalances but on the other hand it may also contribute and, at times, exacerbate, those very imbalances.
Indeed, the interaction is very complicated because previously disadvantaged people within the private sector are both victims of inequality and participate in a sector that deepens and entrenches inequality.
South Africans have a tendency to rely on government to lead the transformation agenda.
But the responsibility to transform the economy and address our inequality problem lies with both government and the private sector.
SA is the only country in the world that has fewer employed workers than people on welfare