Treasury is still failing black business
IAM hoping the National Treasury got the message that black business wants the Preferential Procurement Policy Framework Act scrapped. This resounding message came from the Department of Trade and Industry’s black economic empowerment (BEE) summit in Midrand two weeks ago.
Debate on this vicious piece of legislation, which has been going on for several years, was heated and acrimonious. Nobody had anything positive to say about it. In my book, when something is unpopular with a voting bloc such as black business, it is scrapped. Thus, the fact that the Treasury is digging in its heels either shows the extent to which black business is taken for granted, or that the Treasury is simply not bothered. It makes you think: when does the voter become more dispensable than the policy?
The Black Business Council wants the act scrapped as it negates the spirit of BEE. According to the act, preference is given for BEE on the basis of an 80:20 formula for contracts worth R500,000 or less; and 90:10 for those worth more than R500,000. This means BEE will account for only 20% or 10% of contracts and the remaining 80% or 90% will be for pricing, expertise, competency, etc. At the moment, many companies ignore the 10% and concentrate on pricing and expertise.
The Treasury argues that it must protect the taxpayer and ensure value. Indeed, there have been instances where blacks abused the system. For instance, while bandages would sell for R20 at Clicks, some black businesses would pitch them at R200. However, this argument is flawed as white organisations have also bled the system.
Worse, these white organisations have not played around with piddling amounts of R200 or a “coupla” thousand — their shenanigans are in the billions. Whatever the amount, there should be zero tolerance of corruption.
The point is that the Treasury is being anti-BEE, which was one of the pillars of the negotiations that heralded SA’s democracy. Blacks have time and again asked if the Treasury has forgotten that, only recently, apartheid-inspired policies were the order of the day. One of that regime’s many evil objectives was to ensure that blacks did not control any part of the economy.
In his book, A History of Inequality in SA, Sampie Terreblanche points out that for 250 years, since 1652, the economy was sustained by the exploitation of blacks through serfdom and slavery. For the next 100 years, there was an unequal distribution of power between the white masters and employers on the one hand, and the black servants and employees on the other. He stresses that racial capitalism was instituted by the British and sustained by apartheid through a plethora of policies in every aspect of existence. Hence, apartheid ensured blacks were given an education that did not prepare them to be more than gardeners and domestic servants. Laws forbade them from being entrepreneurs.
BEE reverses the effects of these policies and gives blacks special opportunities to enter the economy. Since its inception, BEE has produced scores of successes, but we need hundreds more. We need these new producers to improve the economy so that more people are employed. Frankly, it is just bewildering when the Treasury consistently says no.
This department did not even bother to explain itself at the BEE summit — assuming that it was there. While the Department of Economic Development and the Department of Public Enterprises played prominent roles, the Treasury was conspicuous by its absence. Yet, it is responsible for the policies that must make BEE a success.
The Treasury has had bruising encounters with other government departments, equally determined that black business gets a better deal through the scrapping of the act. But it sticks to its guns. It appears that the Treasury does not care a hoot what black business thinks and is determined to ensure that its dictates prevail, whatever the cost. Yet, very few want BEE-friendly policies for the sake of it. The core of BEE is in terms of the revised codes of BEE, which are broader based and are thus improving the lives of the people on the ground. Just what does the Treasury have against black business? Is it still an abnormality?
Mazwai is resident executive at the Wits Business School and a consultant on small business development.