Broad Based Black Economic Empowerment (B-BBEE) has missed the mark and is far from reaching its transformation goals. This was the general consensus at a panel debate recently hosted by Softline Pastel’s BEE-123 Portal and the Black Management Forum (BMF).
Panellist Don Mkhwanazi, founder of the National Empowerment Forum and pioneer of BEE during the transition from apartheid said his South Africa is nowhere near to creating a better life for all.
The B-BBEE Codes of Good Practice of 2007 came about precisely because BEE was too narrow in focus. Poverty alleviation, greater employment levels, and a more equitable distribution of wealth, are the goals of the new Act. Taking these into account, there was a general agreement amongst the panel with Mr Mkhwanazi’s bold assessment and according to him all that the new policy has achieved is a very lucrative compliance industry.
Lerato Ratsoma, managing director of Empowerdex, did not disagree but emphasised the fact that BEE can have a positive effect on the bottom line. She says SA has seen a change in the way companies view BEE; they are more interested to have an official status now that they recognize how it affects the bottom line. However, business still needs to work towards a longer-term view rather than a compliance based view. This was echoed by Teddy Daka, the executive chairman at Tedaka Technologies, who criticized the scorecard methodology saying that the scorecard tick-box approach is effectively diluting each B-BBEE pillar.
In the public sector there are sufficient policies, acts and charters in place but according to Mkhwanazi, there is no alignment between them. He also added that the political will is lacking. This was the consensus across the panel with Jacob Maphutha, Director of BEE Partnerships at the DTI, emphasising that B-BBEE is only five years old and in its infancy against an 18 year old democracy. He suggested that policy makers need to go right back to the initial concept of BEE and question if it’s still relevant in the current environment. He strongly recommended that government use the past five years to review where we are in order to move forward and a completely new ideological framework may be required.
So what should future policy makers keep in mind: There are two overarching messages.
Firstly, as Mkhwanazi said, the cornerstone of BEE is entrepreneurship! He firmly believes that economic upliftment rests on the SME sector and that enterprise development is a vital element of the scorecard. But again he pointed out that the political will is lacking saying that if we look at the National Planning Commission, SMEs are mentioned only three times. In South Africa the DTI is not effective enough because its focus is too broad. Where successful economies have enterprise development at their core they have an independent, separate enterprise development ministry. He called for the transformation of developmental finance institutions to provide a foundation for SMEs to flourish.
The second message was education. When BEE was introduced it wasn’t accompanied by a plan to up-skill the new entrants into the economy. The country’s poor education system has sustained the lack of skills for an additional 18 years, delaying transformation.
In conclusion, the panel agreed that BEE is not an event, it’s a process of change, and like all processes it requires time, the testing of different models and methods, and a sustained commitment from both private and public sectors remains essential for successful transformation.