SMME sector has been let down by BEE

Since the advent of democracy in SA in 1994, the government has developed various policies to respond to the economic injustices of the past.

One such economic policy is Broad-based Black Economic Empowerment (BBBEE).

The effectiveness of the policy has been criticised in certain quarters of society.

The B-BBEE Commission reports that half the companies that are listed on the JSE still have less than 25% black ownership and only 2% are 100% black-owned.

This is an alarming statistic for a developing country such as SA.

The B-BBEE Act was developed with the succinct vision of creating an economic pathway for historically disadvantaged business individuals and companies.

Notwithstanding the trying economic climate, the previously marginalised have bemoaned the slow progress made in economic transformation and empowerment, particularly within the SMME sector.

Racial tension is still prevalent in SA. It threatens the country’s economic growth and transformation agenda and hinders the envisaged accelerated pace of inclusive economy growth.

Consequently, these challenges can potentially render BBBEE ineffective.

The effectiveness of the policy in addressing economic injustices has been vigorously debated by parliamentarians, commentators and researchers.

To date, the policy seems not to have provided the much-required impetus.

The majority of black-owned businesses do not survive beyond five years, even though there is a BBBEE policy in place.

SA remains one of the most grossly unequal societies in the world, with a Gini coefficient of 0.69.

Consequently, the National Development Plan (NDP) aims to reduce the Gini coefficient to 0.6.

The reality is that the majority of unemployed and poor people in SA are black, who directly feel the repercussions of these disparities.

The unemployment rate in SA in the second quarter of 2022 was about 33.9%.

This statistic is one of the highest compared to the other Brics nations — Brazil, Russia, India and China.

The aim is to increase employment from 13-million jobs to 23-million by 2030, according to the NDP.

It is argued by academics, researchers and policymakers alike that the government has one of the best policies on paper, but that its implementation and monitoring have been poor.

SMMES are on the receiving end of the poor implementation of the policies that are developed to help these enterprises grow to contribute meaningfully to the economy.

The Global Entrepreneurship Monitor report 2020/2021 espouses that entrepreneurship should play a pivotal role in helping economies grow.

However, the report argues that it is never easy to start a business, though it is certainly far less difficult to do so when economies are healthy or booming.

Therefore, BBBEE could play a critical role in creating a conducive environment for entrepreneurs to thrive.

SA is still engulfed in service delivery protests that have become a daily occurrence.

Consequently, entrepreneurial ventures are suffering due to the volatile business environment that results from the protracted protests.

The SMME sector operates in a volatile economic environment wherein businesses are confronted by a plethora of challenges such as a shortage of skills, nonpayment of invoices timeously and/or lack of expertise in industries deemed to be a high priority for economic growth.

Black businesses that represent the majority continue to face serious barriers such as lack of access to finance and capital, access to markets and high entry barriers due to a high concentration of markets.

Moreover, tokenism and fronting continue to manifest in respect of senior and executive appointments in companies and when it comes to business opportunities.

In an endeavour to provide impetus to the transformation that would achieve equality, eradicate poverty and reduce the rate of unemployment, effective and radical interventions and monitoring tools are urgently required.

The government must address cronyism and corruption because they destroy stateowned enterprises (SOES), thus destroying the future of black entrepreneurs.

In this regard, the department of trade and industry identified the need to amend the B-BBEE Act No 53 of 2003 as it was deemed ineffectual in tackling broader issues affecting transformation.

Several other influencing factors were prevalent, including fronting.

BEE deals entered into turned out not to be as economically beneficial or transformational as envisaged, and some involved misrepresentation of empowerment credentials merely to meet the quota.

This occurred while companies continued to benefit from contracts awarded by the government under the guise of broad-based economic empowerment, and no regulator stepped in to correct this.

At this juncture, a paradigm shift is required wherein the implementation of BBBEE is monitored closely to ensure its effectiveness.

The challenging economic times in SA, indirectly or directly, push us to accept that the solutions to our problems lie in our hands.

As a country, we need to foster a spirit of self-reliance and determination to take charge of our future through entrepreneurship.

The next decade will provide greater opportunities for enterprise and initiative than we experienced before.

The extent to which our community accepts this challenge will determine our future levels of employment and national wealth.

Black businesses that represent the majority continue to face serious barriers such as lack of access to finance and capital, access to markets and high entry barriers