20 YEARS LATER

B-BBEE STILL DOES NOT REDRESS PAST IMBALANCES

Written by Dumisani Hlatswayo

It has been 20 years since the Broad-Based Black Economic Empowerment Act became law, but little progress has been made in redressing past imbalances.

The gap between the rich and the poor in South Africa is the widest in the world, and inequality has increased significantly. Our country has more than 500 townships, of which Soweto has more than 1.3 million residents. Yet, there is no evidence that B-BBEE is stimulating township economies, or empowering township entrepreneurs in any way.

Could this be due to poor leadership, corruption, or simply the inability of the current government to implement BEE policies?

According to financial services company Investec, the informal economy, or so-called township economy, accounts for 17% of total employment in the country. The township economy can create more jobs if the government focuses on stimulating it. However, this can only be achieved if the government focuses on the following issues that hinder B-BBEE progress.:

Fronting

We all agree that fronting hinders economic transformation. Even so, fronting continues unabated, with many companies giving previously disadvantaged employees a title but not a salary. When this happens, lawbreakers steal deserved opportunities from those who comply with B-BBEE scorecards.

Several companies have been investigated for fronting by the B-BBEE Commission, including Netcare Holdings, MTN Zakhele, and Nokia Solutions. In its report, the B-BBEE Commission found that the MTN Zakhele Futhi B-BBEE Scheme did not meet the objectives of the Empowerment Act. A remedial recommendation to address the defects of the Zakhele Futhi scheme was to change the governing documents and train the members of the board.

Historically, many reports have proven that fronting hinders progress for the township and rural economies in terms of economic empowerment. In its attempt to address fronting, the B-BBEE Commission issued warnings and terminated the licences of several companies. Still, window dressing is still the order of the day.

Black employees are still positioned as executives, but with significantly lower salaries than other executives. A lack of active participation by alleged black managers in top-level decision-making processes is concerning.

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Black women’s empowerment

Many reports reveal that black women in South Africa are represented in the boardroom. One of those is the inaugural 2021 Sanlam Gauge report on the B-BBEE scorecard performance of 11 sectors in the country. According to this report, women are underrepresented in the agriculture, construction, finance, and forestry sectors.

The Commission for Employment Equity’s Annual Report for 2021/2022 shows that over three years, 55.3% of men and 44.7% of women are eligible for equal representation, with a gap of 7.8% between African men and women. The percentage of men in top management is around 75%, and the percentage of women is around 25%.

• In addition, Black Female ownership has decreased by 1.10 percent (-2.17%). The average growth of Black Women’s ownership is lower than Black ownership, indicating growing disparities.

Lack of black ownership

The Department of Trade and Industry (DTI) published amendments to the BBBEE Codes of Good Practice that went into effect on 31 November 2018. A key goal of the policy was to address South Africa’s high unemployment rate and lack of black ownership.

“Large numbers of young people exited the education system prematurely and possess no professional or technical skills, making them effectively unemployable. About 60 percent of unemployed youth aged below 35 years have never worked,” stated the document.

According to the B-BBEE Certificate Portal, Black ownership decreased in 2021:

• Based on limited data, an analysis of large entities indicated that the Agri-BEE, Financial, and MAC sectors failed to meet their sector targets for Black and Female ownership.

• Construction and Property sectors failed to reach their Black ownership targets. Consequently, 40% of procurement spend should be allocated to women-owned businesses for growth and sustainability.

All of the above issues will require a high level of strictness and compliance from the B-BBEE Commission. The commission is responsible for ensuring that all companies comply with BEE policies, and that wealth filters down to relevant beneficiaries. It should ensure that there is no fronting and that women and black people are economically represented. Otherwise, what’s the point of having good policies if we can’t implement them?

Skills Development should be a priority for achieving South Africa’s economic growth and employment goals. This BBBEE element should measure the extent to which employers carry out initiatives designed to develop the competencies of black employees.

It is also recommended that companies align their enterprise development and supplier development initiatives with their supply chain requirements. Supplier Development assesses the extent to which companies purchase goods and services from empowering suppliers who are BBBEE-recognised.

Oscarine is a well-seasoned African female Industrial Engineer who obtained her Bachelor of Technology degree at Nelson Mandela University and her postgraduate diploma in industrial engineering at WITS University. Her background is in continuous improvement, business process re-engineering, and Program management.

How do you see your role at Multichoice? Frontline or a gatekeeper role, a BA’s scope is centred around ensuring what is good; is adopted by the business, and what’s negative is done away with to keep the business healthy.