Sunday World (South Africa)
Call to fund more black businesses
Report exposes skewed economy
The Black Business Council (BBC) has challenged government to fund more black players to level the playing field in SA’S skewed economy as laid bare in the second Major B-BBEE Transactions Analysis Report for 2018/19, released this week.
The B-BBEE Commission looked at 95 major B-BBEE transactions filed for the 2018/19 financial year with a total transaction value of R111.938-billion, compared to R188.7-billion from 272 transactions recorded in 2017/2018.
The regulator’s report shows that 31 of the 95 transactions surveyed were vendor financed at 32.6%, followed by share swap at 17.9% and bank loans at 15.9%, with the lowest being government financing at 4.2%. The report further shows that access to funding for black people remains a challenge that seems to have a direct influence on how the transactions are structured.
For instance, the reduced voting rights can be linked to the fact that most deals are vendor financed, with parties often inclined to include pledges, options and dividend restrictions that unduly restrict the ownership rights.
BBC CEO Kganki Matabane said most of the BEE agreements are one-sided, to the detriment of black people who want to participate in the mainstream economy.
“It is time government takes a lead in driving transformation by increasing the level of funding for black people as well as driving the enforcement agenda for lack of transformation,” Matabane said.
The B-BBEE Commission’s Zodwa Ntuli said the method of funding also determines how black participants exercise their rights.
“If funding is not extended to black people to be able to acquire part of the economy then we can forget about the facilitation of the ownership from the previously advantaged to the black people so that we can all own the economy equally,” Ntuli said.
The latest report by the regulator comes just a week after it released the National Status and Trends on B-BBEE for 2019, which showed that Jse-listed companies are not cooperating with it. That report found that less than half of the companies on the bourse submitted their mandatory transformation reports to the regulator.
Economist and founding director at the Centre for Economic Development Duma Gqubule said empowerment in SA has gone through three phases.
“The first one is from 1996 to 2003, which was private led with no framework from government and that wasn’t very successful. Between 2004 and 2008 when we had the codes and economy was doing well, that is when we created a lot of value in the economy. Then we had a third phase between 2009 to 2019 when we had a lost decade in terms of our economy and we saw a regression in empowerment in many industries,” Gqubule said.
The Congress of South African Trade Unions (Cosatu) has slammed the government for not protecting jobs in the textile industry when procuring personal protective equipment (PPE).
In a letter from Bheki Ntshalintshali, Cosatu secretary-general, to National Treasury director-general Dondo Mogajane, the trade union federation said the sector is dominated by women whose jobs needed to be saved.
Ntshalilntshali said the clothing manufacturing industry has around 700 formal sector factories and supports around 80 000 local jobs. He further stressed that approximately 70% of clothing, textile, footwear and leather workers are women.
In its presentation to legislators, the National Treasury said when COVID-19 hit SA, some of these products could be locally produced but ramping up domestic production at the time would take some time.
The National Treasury has since canned the emergency procurement of PPE and protective clothing, reverting to open procurement processes.
Minister of Finance Tito Mboweni has published the financial sector regulations amendments that are intended to simplify the process of appointing the commissioner and deputy-commissioners of the Financial Sector Conduct Authority (FSCA).
The amendments also empower the minister to appoint additional people to the transitional management committee of the FSCA, and to designate a person to perform the functions of the commissioner while the recruitment process is under way.