SA remains lost in economic revoluton
Busa outlines strategy to jump-start process
THE PACE and depth of inclusive economic transformation in South Africa has generally been insufficient, according to Business Unity South Africa (Busa).
The body, which represents organised business in the country, yesterday released its position paper on transformation in which it has given suggestions on how to quicken the pace of transformation.
In the document, Busa analysed each of the elements of the broad-based black economic empowerment (B-BBEE) codes – ownership, management control, enterprise and supplier development, skills development and socio-economic development.
“The time for talking is over. It is our wish to co-operate comprehensively with government, labour and other social partners to achieve the accelerated de-racialisation of the economy,” said Busa president Jabu Mabuza.
Busa said, despite extensive investment and costs, funding of B-BBEE ownership transactions, with limited equity from B-BBEE parties translates into limited influence and value generation.
The organisation said ownership had failed to deliver meaningful control and value to black people “given that shareholders are generally insufficient to exert direct influence on the strategic direction of investee companies”.
It said limited available capital hindered the implementation of BBBEE ownership transactions.
It said there was over-reliance on highly geared funding structures. The body also questioned the efficacy of the 25 percent or 26 percent ownership interest.
In its paper, Busa has proposed focus on the growth of black businesses through improved access to markets, capital and skills. “Business should work together with government to enhance the success and scale of programmes such as the black industrialist programme,” it said.
Significant changes are needed to address the historical legacy and grow the economy in an inclusive manner
Busa vice-president Martin Kingston said yesterday that the business organisation was in favour of leveraging the existing black industrialist programme in what he said was a necessary fundamental shift in gears to facilitate the entry of black people into the economy.
“There should be a shift in emphasis to create, grow and support black industrialists,” said Kingston.
The black industrialists policy, which is part of the government’s broad industrialisation initiatives to expand the industrial base, complements B-BBEE by focusing directly at black manufacturers.
Busa said business should work with the government to enhance the success and scale of the black industrialist programme.
Among Busa’s proposals is emphasis on asset-sale transactions, instead of sale of shares. Such a move would result in the sale of part of a business or the establishment of a new black-controlled business.
Busa chief executive Tanya Cohen said that apartheid systematically engineered significant aspects of the economy and society in favour of the white population.
“Addressing the systemic impact, therefore, calls for significant, fundamental structural shifts to address the historical legacy and grow the economy in an inclusive manner. Business is committed to accelerating this process and working together with government, and key social partners including organised labour,” said Cohen.
On management control, Busa said that while there had been an increase in the representation of previously disadvantaged individuals in middle management, professional and technical skilled levels, there had been slower and little progress at top and senior management levels. “Business needs to research, demonstrate and advocate the business case for diverse leadership and management control as part of business competitiveness,” said Busa.