Business unity row rages on
The walkout of black business from the umbrella organisation has re-ignited the debate about whether black business should be looking after its exclusive interests or whether all business should be working towards growth and, in the process, deal with transformation.
Business Unity South Africa (Busa) was publicly criticised when black businesses convened a summit this month and resolved to suspend their membership of the organisation and resurrect the Black Business Council. Busa was accused of acting as the voice of white business interests and sidestepping the issue of transformation.
The Black Business Council (BBC) and Business South Africa merged in 2003 and formed Busa. But the chairman of the newly reformed BBC, Patrice Motsepe, said it was a mistake to disband the council. The National African Federated Chamber of Commerce (Nafcoc) was the first to leave Busa in 2009. But when the Black Management Forum (BMF) withdrew membership in July this year, it seems the timing and widespread dissatisfaction allowed for a swift revolt.
Sandile Zungu, spokesperson for the BBC, said transformation had to be interwoven in everything a business organisation such as Busa did. The council is yet to decide whether it will affiliate with Busa. The two are expected to meet soon, when the BBC will present a list of demands, which Zungu said were aimed at transforming Busa. South Africa’s culture was that of unemployment, inequality and poor growth, Zungu said. “A black business organisation must not be seen to turn its back on this—it must be purposeful. We don’t want Busa to be overburdened by these issues but it cannot be oblivious [to them] either.”
But Francois Cronje, deputy chief executive at the South African Institute for Race Relations, was not sure that transformation was what business really required. Changing the colour of the money, he said, did not mean there would be any more money than there was before. Even if nine out of 10 chief executives were black, they would still be faced with the same troublesome business environment faced today. “Recent developments are causing everyone to lose sight of the bigger picture, which is growth,” he said.
Cronje said that black business must realise it was in the same boat white business has been for decades. “It’s a boat that can sink if South Africa does not become more prosperous and equal — Black business is storming off to one side of the boat while white business cowers on the other side.”
But for South Africa to grow fast enough to make inroads in transformation issues of all kinds, business has to work together. Zungu said growth was on the agenda. “It must be accelerated. Anywhere between 3% and 5% is mediocre.” But it also has to be inclusive.
Ajay Lalu, managing director of Black Lite Consulting, said one thing that had to be recognised was that the issues faced by black businesses were not the same as those faced by established businesses. Although it would be a “recipe for disaster” to separate black and white business, “we need to recognise that established business and new businesses have different needs and face different issues”.
He said it was indeed important to have a unified voice to represent both sides of business. It was unfortunate, he said, that the BMF’s walkout from Busa coincided with the appointment of the new chief executive. “It has clouded the primary issue: established businesses have a voice through organisations like Business Leadership South Africa, and black business abandoned its collective voice through the Black Business Council when it joined Busa.”
But Lalu agreed transformation had to be placed higher on Busa’s agenda. “There cannot be sustained growth in a country if more than 80% of the population is not in the mainstream of the economy. “We cannot have growth at the expense of transformation—the two must go hand in hand. We need to convert previously driven black consumption demand to demand driven by black productive assets and savings.”
Mechanisms had to be put in place to make things easier for emerging black businesses. Lalu said black business had to regroup and be able to discuss issues among themselves in a unified structure before engagement at a Busa level. This would mean that black business could speak with a clear and unified voice.
Busa said it was open to constructive engagement with the council on matters of common concern, such as those that contributed to the strengthening of a unified business voice, as well as the role of business in achieving the overarching national imperatives of growth, job creation, inequality and poverty alleviation.
Given the economic challenges facing South Africa domestically and internationally, Busa said it believed that business unity should be based on a shared vision.
Business Unity South Africa (Busa) recently released a study that found the pace of transformation was inadequate. The study found that the overall percentage of black people in business was 25.3%, well below the 50% target. But the National Union of Mineworkers (NUM) criticised the results and said it was “shocked by Busa’s understatement on transformation results”.
Union spokesperson Lesiba Seshoka said the study was conservative and the situation was far worse thanprojected. The NUM said it strongly believed the figures were “cooked” and that the transformation percentages were generally far below the 20s—around 10% and below. “For Busa to therefore argue that the current pace of transformation is inadequate is an understatement and ridiculous and a bluff to the majority of South Africans,” Seshoka said. “Busa is part of the problem and cannot therefore point fingers in the direction of the companies it represents.”
The study, “A Snapshot of the Demographic Profile and Pace of Transformation of JSE-listed companies”, found that blacks accounted for 9.5% of executive directors, whereas the number of black non-executive directors stood at 27.6%. Black chairpersons accounted for 22%, black chief executives for 6.9% and black chief financial officers for 7.9%. The target for all categories is 50%. The percentage of black female directors was 10.2%, black female chief executives 1.2% and black female chairpersons 3.9%.