When is a black person finally empowered?
After 16 years, how far do we still need to go to see full empowerment of the masses?
WHEN IS A BLACK PERSON finally empowered? Have the past 16 years of black economic empowerment yielded anything positive towards the realisation of economic liberation for black people? Must there be a deadline by which to end the entire empowerment process?
“Those are wrong questions to ask,” says Cyril Ramaphosa, one of the individual “usual suspects” of empowerment. There’s been too much criticism of individuals, with too much focus on the ownership aspect of empowerment, while all the other more important aspects – such as enterprise development – have almost been completely neglected. “That’s the mistake we make – looking only at equity ownership,” says Ramaphosa.
The first 16 years of South Africa’s black empowerment policy have brought with them mixed fortunes for the country’s previously disadvantaged black population. While empowerment has produced a thriving and growing middle class – with individual billionaires coming through the ranks of the black population who have gone on to represent not only the black population but the country as being among the richest individuals on earth – an estimated 10m South Africans were still living in abject poverty at year-end 2009, says the Business Trust.
Ramaphosa’s answer to the critics of the current form of empowerment is that it “shouldn’t just be a numbers game; we should focus on the broadness of the process”.
It’s the qualitative work that’s needed, not just the numbers. Says Ramaphosa: “The impact empowerment makes on society is what needs to be looked at.” For a broader impact on the general population, Ramaphosa says the process needs to shift focus and give more attention to other areas of the empowerment scorecard, such as skills development, employment equity, preferential procurement and enterprise development, and more inclusion of communities in empowerment deals and community development.
That’s one of the Shanduka Group’s strongest points. When it was founded 10 years ago, Ramaphosa personally gave up equity to two trusts: one focusing on education and the other on small business development. Specifically, small businesses led by women and young people.
Ramaphosa has a ready-made answer to the question of bringing a deadline to the legislated empowerment process. “Empowerment is like waking up every day and brushing your teeth. It must be done every day.” Empowerment should be seen as an ongoing process, just like democratisation. “When do we have enough democracy?”
He says empowerment can never be regarded as complete until all the different economic aspects have been paid enough attention and SA’s previously disadvantaged population is able to stand on its own feet and run businesses without hindrance and eke out a decent living from their jobs or businesses.
Given SA’s historical skills and education problems, there’s a process that needs to be followed to bring blacks to those levels of competency as developed businesses. Renewed focus needs to be paid to enterprise and skills in order to develop more economic capacity.
Ramaphosa also wonders if those “other aspects” of empowerment can ever be achieved in one go. “All those things are part of empowerment and they haven’t been done to a level that leaves people fully empowered. We can only begin discussing full empowerment when those things have been done to perfection and leave black people in charge of their own destinies,” Ramaphosa says.
Although he bemoans the undue focus of the past 16 years on only the equity ownership side, Ramaphosa declares he’s happy with the progress with regard to empowerment so far, despite his admission it hasn’t exactly achieved all that was initially hoped for. “Measured by black ownership of equities on the JSE,
empowerment hasn’t succeeded as well as we would’ve liked,” says Ramaphosa. At an estimated unencumbered 4%, black equity ownership isn’t what it should be.
But that brought a positive side: empowerment has evolved. Some of the small equity stakes gathered through debt in the early days of empowerment have helped facilitate a growing list of significant black-owned businesses, such as Shanduka and Sexwale’s Mvelaphanda Holdings.
“Whereas 16 years ago black businesspeople had to rely solely on debt to fund equity purchases, today we now bring a chequebook to a deal,” says Ramaphosa. “I’m happy with the way empowerment has gone. We’ve used those small stakes to boost our balance sheets,” using Shanduka’s 1% ownership of Standard Bank as an example.
Companies such as the Royal Bafokeng and the Mineworkers’ Investment Company (MIC) emerged in similar fashion. With a few others, they all have since made significant inroads into mainstream business by buying large strategic equity stakes in companies like Primedia, Impala Platinum and Harmony Gold, which have helped black groups move to operate some companies themselves.
Many black business owners aren’t seen because they don’t become involved in big ticket empowerment deals that grab headlines like the usual suspects. “They’re getting on with their work of developing their businesses,” says Ramaphosa.“We should be proud of that.”