Substance over form
own media briefing at lunchtime on the day Zwane released his charter.
If the first charter was the result of what former Anglogold CE and chamber president Bobby Godsell calls a social compact of sorts, this charter was anything but.
And that’s not because it is no longer possible to have successful tripartite negotiations: Godsell points to the intense two- to three-year negotiating experience, under Nedlac’s auspices and chaired by deputy president Cyril Ramaphosa, on the national minimum wage and on how to deal with violent and prolonged strikes — resulting in a deal between labour, business and government which was concluded late last year.
That helped to reassure ratings agencies and investors. Zwane’s charter has done quite the opposite. Godsell describes it as “profoundly anti-market”. Chamber president Mxolisi Mgojo told journalists it would not only scare away investment in mining but would have unintended consequences that would go far beyond the mining industry.
The ANC is openly divided over it, with Zuma telling parliament that the charter would “revive” SA’S economy, while economic transformation committee chair Enoch Godongwana expressed concern, in an interview with City Press, that the charter would add to job losses in the sector.
Godongwana and other ANC members, Organised business has released a document that spells out its view on what transformation means and how to deracialise the SA economy. It could hardly be more different to the new mining charter.
The document was produced after a sixmonth think-tank process within Business Unity SA (Busa) and endorsed by its members. It defines an “end state” for transformation focused on broadening and deepening economic participation and benefit, linked to boosting competitiveness, growth and employment.
“Unless we do something to transform the structure of the economy, we are not going to activate its potential, because the economy is just not firing on all cylinders,” says Busa CEO Tanya Cohen.
Business wholeheartedly backs the objectives of broad-based black economic empowerment (BEE) and employment equity legislation, as well as sector-based BEE regulations — but, says Cohen, these have tended to drive a numerical, including secretary-general Gwede Mantashe, met with the chamber on the Tuesday after the new charter was released.
Zwane was invited but did not turn up. He has since been quoted as saying he was open to talks with the industry but this would not necessarily change the outcome. In its sparse replies to the Financial Mail, the department said the minister and the department had conducted extensive consultations with stakeholders. “Details of these extensive engagements will be made available at the appropriate time and in the appropriate forum,” it said.
Meanwhile, the chamber has revived its application for a declaratory order and is going ahead with an interdict to stop the charter, on grounds that include that the process was flawed, that the minister has gone way beyond his powers, and that the charter is “so confusing and confused, and so contradictory in its core provisions, that not only are the mining companies who are supposedly obliged to comply with the 2017 charter perplexed . . . but legal experts themselves are confused.”
The chamber pulls no punches in its eloquent founding affidavit for the interdict, which was filed on Monday evening, describing the 2017 charter as “an unmitigated disaster, both for the mining industry as a whole and for SA”.
It would, if implemented, destroy the very industry whose survival is necessary to give effect to the objects of the MPRDA, says chamber compliance approach rather than one aimed at transformation.
Business favours a strong focus on developing black entrepreneurs and small businesses, and clearing regulatory barriers and other exclusionary practices that stand in the way. Initiatives are needed that will enable a “transformation culture” within business. It calls for enhanced support for education and skills development more closely matched to current and future business needs.
And it seeks to clear blockages to employment and scale up youth employment initiatives. Business sees itself collaborating with government, labour and social partners to get these to happen, with Nedlac providing the forum.
Busa research shows how far short some legislation has fallen in terms of achieving its objectives, and how limited have been the efforts to measure what has been achieved. Assessing the BEE ownership requirements of the legislation and charters, the document says ownership redistribution has been very costly but largely limited to a concentrated number of established businesses which make up only a small part of SA’S economic activity.
The emphasis on ownership “has largely failed to deliver meaningful control and value to black people”.
Busa believes a shift is required in which established business drives significant growth of black business by providing access to markets, capital and skills. There should also be more emphasis on selling assets and creating new black-controlled businesses rather than selling shares.
The document notes there’s been too little progress in getting black people into top management jobs where they can exert real influence. Companies should recognise the economic value of diversity.
It’s a call to prioritise the substance of BEE over form. The end state, Busa says, is “a deracialised, vibrant, diverse and globally competitive economy.”