One business section of a weekend newspaper titled its headline story “Fight to save the charter”. This is about efforts to redeem the stalled discussions intended to move the Financial Services Charter to being gazetted. As you might recall, this charter came into effect on January 1 2004, and was ushered in with great fanfare as the “mother of all charters” by various stakeholders.
In order to give it legal effect it has to be gazetted, but the discussions to achieve this have broken down primarily around targets for ownership — what proportion of financial services companies should be in black hands. Whether this dispute is a matter of principle and genuine intent, or mere brinkmanship to squeeze more out of the concession is unclear.
It is also unclear to me whether the charter is worth saving at all. From my perspective, the advent of charters was an admission of failure by various stakeholders to commit to transformation as envisaged by the majority. There have been legal prescriptions such as the Skills Development and Employment Equity Acts, which businesses arrogantly flaunted — and still do — and therefore have not had the desired effect. Furthermore, the state seemed to have neither capacity nor the political will to deal with offenders. As a result the economic marginalisation of black people has continued, despite legislation.
There have been vehement debates in boardrooms about complying with legislation, which sets the minimum standards. These arguments still prevail today and sadly, in some instances, black executives are expressing negative views about transformation legislation.
Some black shareholders are not helpful, either, in providing a broader perspective for management on why transformation is essential. These are all beneficiaries of ownership and management targets in charters.
As pressure arising from legislation and charters has not yielded the desired outcomes, maybe naively, I believe we need to go back to moral and patriotic persuasion.
The sceptics, the lukewarm and outright opponents need to see the value of transformation for the sustainability of our democratic process and our competitiveness in the international arena.
Pressing on with the charter is not going to achieve this and obsession with ownership has yielded mediocre results in that beneficiaries thus far tend to adopt the same behaviour patterns of previous masters, that is, accumulation for the sake of it.
I strongly believe that ownership is critical to the transformation process, but feel ambivalent when I look at our track record as owners of capital. From enriching white advisers in the broad-based black economic empowerment process to “fronting” for white capital and assimilation in its practices, the indications are that we are not delivering.
In the scheme of things, this burning desire to resuscitate the charter talks and resolve the ownership conundrum is misplaced because:
There is a national clamour that the whole transformation/BBBEE process be reviewed because it has not delivered the desired outcomes to the envisaged level. In light of this, would it not be more prudent to review what the charter has delivered so far within the sector, particularly in the insurance industry? Would this change dramatically because the ownership percentage is different?
As a country we are still at odds about what transformation should deliver. There are new structures being put in place that could be helpful in crystallising this matter by creating a better national dialogue involving the BBBEE Council and the National Planning Commission, among others.
We can wait a little as within insurance we have not felt the impact (negative or positive) of the “non-gazetting” of the charter.
Though the determination to drive the charter to gazetting stage is commendable, we should continually review the effect of these measures in the real world or business situation and in larger society.
Otherwise we will find ourselves with the same euphoria of January 1 2004, performing a jitterbug only to find that the reality is a damp squib.
We have to stay cognisant of the wider national and international priorities.
We should handle transformation with the same diligence and care as the creators of that expensive watch, who say: “You do not own a Patek Philippe, you just look after it for the next generation.”
Abusing the transformation process by playing short-term political games with it does not augur well for our future.