Why do big players go against SA’s BEE ideal?
SMALL Business Development Minister Lindiwe Zulu certainly has a lot on her plate as small businesses being denied the right to exist come knocking at her door in droves. A few weeks ago Ma Dhlamini, not her real name, desperately asked for help. She did not want capital or anything. Instead her company, A Pty which employs 10 people, is being flushed out of the liquid gas sector by being denied supplies.
According to her, the market is being closed to black small businesses by the likes of Sasol, Afrox, Total and BP, to name the big hitters in this sector. Obviously, this is of concern to the ministry.
According to Ma Dhlamini they used to get supplies on a cash basis from a black economic empowerment (BEE) outfit. Apparently it is the norm for smaller clients to pay cash, although bigger players have credit facilities. Unacceptable This is problematic if playing fields must be levelled. But, as we all know, it affects other sectors and has become the custom for various reasons, some of them legitimate but still unacceptable if we preach economic transformation. In any case, and getting back to my story, investors from the East then bought into the BEE outfit.
This has created major problems for Ma Dhlamini and fellow black small businesses as the new management stopped supplies to smaller black companies and tried to force them out of the market. Ma Dhlamini then procured from PetroSA, which could only give them one load per week, but the transport surcharge was onerous. They have made numerous attempts to get their supplies from the other big players, nogal on a cash basis, but to no avail.
They are told that supplies have been sold out which, to them, is strange as they are prepared to pay in advance as this would guarantee them supply. Even this offer is strangely ignored. Their needs are 500 tons a month, amounting to 20 trucks. It does appear that Ma Dhlamini is a relatively serious small business if she is talking such numbers.
However, this is neither here or there, but what we have is a situation of small black companies being smoked out of business to make way for the continued dominance of the bigger players.
This is happening under our noses when we daily talk of BEE.
Yet companies in the energy sector subscribe to the BEE Charter. One or two even have BEE initiatives, for instance the Inzalo share ownership scheme, and this scheme is simply fantastic. What is the point of having such a scheme, if the claims by Ma Dhlamini are true, and if they force smaller black companies into liquidation? Is it a case of tick a box or to get marketing advantage, but hammer independent black companies out of existence? Perhaps the greater concern should be what Karl Marx calls the “superstructure”. Marxist philosophy defines the “superstructure” as the economic architecture in which are embedded the processes and practices that ensure that the reigning capitalist structure perpetuates itself and thus provides certainty.
Yours truly does not believe in socialism. After all, it has failed lamentably wherever it has been tried. However, its analysis on society cannot be ignored.
To this day Karl Marx’s analysis of the contradiction and dynamics in the economy makes scintillating reading, although, and unfortunately, his proffered solutions are best ignored.
The “superstructure” is deeply in- grained and even irreversible in economies as it is now the accepted way of doing things. Unfortunately for black South Africa, when a new dispensation took over in 1994 scant attention was paid to the economic environment.
For instance, the Organisation for Economic Development and Co-operation and other international organisations persistently warned that the highly concentrated South African business environment is counter-productive for economic growth and development.
Instead, the new black entrepreneurs and capitalists are being made to fit and operate into this environment, and some are paying a heavy price. It was an architecture previously based on the massive and ruthless suppression of black interests.
Hence, and arguably, efforts to create and grow our small business sector are hampered by an architecture that, in addition to the above, is based on profit maximisation and ignores the people concept. After all, Milton Friedman made it clear in 1970 that the social responsibility of business is to Increase its profits. Problems Issues like BEE must thus fit into the architecture, and this explains the problems Ma Dhlamini and her fellow small businesses face.
However, in the light of above, we also need to look at a host of other things. For instance, we need to ask ourselves if unbridled economic freedom with the demanded regulatory reforms stimulates or hampers BEE?
We see black town councils accept Greek gifts and excitedly promote linkages between big supermarkets like Pick n Pay and spaza shops; oblivious to the fact that they are in fact extending the market of these chains and independent black business entities, on which thousands of families survive, collapse.
Regardless, Zulu is preparing to address the repression of Ma Dhlamini and other small businesses in the liquid gas sector.