Two recently released reports on BEE are typically South African and expose a racial gulf. The one commissioned by the Presidential Black Business Working Group (PBBWG) spoke of 75% non-compliance. The survey released by a white-owned auditing firm, KPMG, spoke of a success rate of well over 75%.
In the Mail & Guardian of August 3 2007, specialist writer Reg Rumney was non-committal on the black business report while lauding the KPMG report — did he look at the fine print?
The Black Business Working Group report is the culmination of a pro-cess that started last year when black business presented their initial report, which some found lacking. President Thabo Mbeki suggested a much more in-depth study which would then be discussed at the next meeting of the working group.
This study cost more than R1-million; the trade and industry department paid 50% of the cost while the other 50% was borne by a group of black business people, which included Tokyo Sexwale, Cyril Rama-phosa, Safika (Saki Macozoma and Moss Ngoasheng), Peu (Peter Malungani), Kagiso, Tiso Group, Tsogo Sun (Jabu Mabuza) AMB, Thebe Investments and Patrice Motsepe.
The baseline report was the main agenda item at the BEE Summit at the Presidential Guest House on August 3 2007, chaired by the president. This report will now serve as a baseline to monitor progress on BEE in the next few years. The figures in the working group report were shocking, as detailed on previous pages.
Our chairman, Peter Vundla, points out that the lowest non-compliance figure was for Employment Equity at 60%. This is so despite the fact that there is specific legislation that makes organisations employ people of colour. But in all areas of empowerment where legislation is not enforced, compliance is lax.
A task team that will consist of the Black Business Working Group, the big business working group comprising mostly white-owned organisations, the labour movement and government is to be set up to determine strategies to ensure that BEE is implemented. According to the black commentators, there is going to be a push for companies to report on BEE in their annual reports and a lobby to ensure that the BEE Council will have regulatory rather than advisory powers.
Of specific concern is that non-compliance for skills development was more than 80%. This means that South African businesses are not ”skilling” their people as they should given the skills shortage in the country. If they do not skill local people, moreso black graduates without jobs, does their pressure for skills to be imported from overseas suggest other motives?
This gives credence to arguments made by Jimmy Manyi that the hullabaloo on the skills shortage is an urban legend. Many of us believe the real motive is that the private sector is anti-black advancement and wants to continue to keep the economy in white hands.
Coming back to the two research reports, there is a chasm of more than 50% between them.
The PBBWG report talks of a compliance of 12,5 %, while the KPMG talks of 75%. The answer is in the detail. As the reports are compared, it’s worth bearing in mind the following:
• The presidential black business group’s baseline study was done by Consulta, an entity 100% owned by the University of Pretoria and whose chairman is respected academic Professor Sibusiso Vil-Nkomo. The company is headed by Professor Adri Schreuder. KPMG conducted its own survey.
• Our report was based on 2 187 responses, more than twice this number of questionnaires having been sent out. The KPMG sent out 1 000 questionnaires but the organisation does not specify the response rate.
In the absence of this response rate, it is much safer to see the report as more qualitative than quantitative. In any case, the thrust in terms of the questions that were asked is more qualitative than quantitative. Yet without a determinable sample, it certainly cannot be even seen as a progress report. In short, does the response rate justify the analysis?
• The KPMG report also has serious shortcomings as a qualitative study as the responses are from a mail survey and there is no evidence of personal interviews, even by telephone. The responses to the survey are qualified in terms of size and nature of industry and conclusions based on ”according to the respondents”.
• Although the KPMG report lauds some developments, opposite findings are made by our report. For instance, the KPMG survey suggests that procurement benefits are very high for qualifying small enterprises (those with turnover of between R5-million to R35-million) and exempted small enterprises (turnover of less than R5-million). The PBBWG report says the opposite. According to this report, non-compliance in terms of procurement is 83% and, worse still, non-compliance is more than 90% in women-owned and black-owned entities.
The implication is that the private sector will source from empowered organisations, those where black presence is less than 26%. The private sector does not necessarily search out 51% black-owned companies or those owned by women.
Thami Mazwai is a member of the PBBWG but writes in his personal capacity