Sandile Zungu Empowerment, where did we go wrong?
Discussion on BBBEE reveals how far back black empowerment in the economy is lagging
Last Thursday, I had the privilege of participating in a reflective discussion on transformation or broadbased black economic empowerment (BBBEE).
The event, organised by Sanlam Gauge in partnership with Sowetan’s sister paper Sunday Times, was to launch a BBBEE scorecard report based on research conducted by Intellidex – two years before we commemorate 20 years of a formal BBBEE framework and nine years before the review of the National Development Plan (NDP), our blue-print.
The purpose of this input is to reflect on what went wrong and how this can be corrected 27 years into allrace democracy.
While the report’s numbers are impressive, they conceal a fundamental defect into the application of BBBEE: namely, that it hasn’t transformed the economy and has, in essence, been reduced into a cynical, malicious compliance exercise.
The commanding heights of the economy – banks, mines, agriculture and factories – are still in minority hands (white South Africans and foreigners), and blacks have only been accommodated to about 30% of ownerships at best with weak, if at all, management grip of the companies in which they are invested.
In fact, what has happened since 1993 has been a corporate restructuring or an exercise by shareholders of large, mainly white-owned companies to accommodate a few blacks as co-owners of these entities. It’s significant that at that point, there was no BBBEE legislative let alone policy framework. To be generous, perhaps, these companies were motivated by enlightened self-interest.
Simultaneously, a few more large companies co-opted some black directors, mainly men, onto their boards.
It was only in 2003 that the BBBEE Act was passed providing, for the first time, a framework for transformation – again, mainly corporate restructuring. A few years later, codes of good practice provided more detail regarding implementation.
The end result is what we have today: that is, at best, companies are legally bound to only accommodate 30% of us blacks despite the fact that we are in the majority.
Left unchallenged, this is a recipe for an impending social conflagration.
How did we get here? First, the BBBEE Act merely sought to accommodate black Africans instead of making them the real owners.
Second, our white compatriots have become too cynical about the whole democracy project. Not only are they resentful, but some are spiteful of it and its commitments. This is reflected in the approach towards BBBEE and demands that “once empowered always empowered” and, in worse instances, black executives are replaced by mediocre white males.
Third, corruption has set in with the implementation of BBBEE.
Fourth, there appears to be fatigue across the board, especially government. In the past decade, some noble piecemeal initiatives – such as the 100 black industrialists programme – have found their way into the policy agenda as the same government was refusing to recapitalise the National Empowerment Fund.
The BBBEE Commission, the watchdog, took years and has yet to imprison any of the fraudsters who have used their domestic helpers and gardeners as BBBEE shareholders without the latter’s knowledge.
And fifth, the past decade has seen no major BBBEE deals, and there appears no credible plan to transform the next frontiers of growth: renewables and green economy; telecommunications ; agro-processing; cannabis; and so on.
We need economic restructuring not corporate restructure which has failed. We need a plan to transfer 70% ownership and management control of the economy into black majority hands by 2030.