Most stakeholders in business agree that the racial patterns of business ownership are yet to change, yet this has not prevented calls for BEE to be reviewed or scrapped from some organisations and prominent individuals.
In her recently published book, Trick or Treat, economist Jenny Cargill argued for a review and a more flexible approach to empowerment, saying that BEE codes are rigid and do not allow for flexibility.
She also warned of the corrupting influence of BEE ownership — saying it is easy to extract wealth without being productive when a policy legitimises the process. She argued for stopping the redistributive component of BEE and winding it down, as currently envisaged.
‘Companies should complete their current BEE obligations but after that, when black shareholding unwinds, they should not be obliged to find other black shareholders,” she said. She also echoed an old concern that BEE regulations should be realistic about the capacity of small to medium-sized companies to meet all their code obligations.
Some opposition parties have also called for a review of BEE. But for many transformation advocates the concern is different — it is that the benefits that are supposed to accrue from BEE are taking too long to filter through. At the inaugural meeting of the president’s Broad-Based Black Economic Empowerment Council this year, Deputy President Kgalema Motlanthe said that the speed of economic transformation had been too slow.
The council is supposed to advise the government on how to implement BEE more effectively and monitor its implementation. Business Unity of South Africa (Busa) feels BEE needs to speed up and is happy with the work that President Jacob Zuma has done so far.
‘Firstly we should applaud President Zuma’s administration for appointing this long-awaited advisory council. We waited since 2004 for the appointment to happen. The council is a very strategic body that is chaired by the president of the Republic and as such it is expected to give direction to BBBEE on a high level,” Kganki Matabane, Busa’s executive director for transformation policy and internal operations, said.
They were not unduly worried by concerns that the council’s mandate was too broad and that, because it meets only four times a year, its impact could be limited. ‘The bulk of the work will be performed through subcommittees, which will be supported by the secretariat of the council based at the department of trade and industry. We were informed that the subcommittees would meet more frequently and take their proposals to the council that meets four times a year for decision-making.
‘I think the council should be given time and the benefit of the doubt as it is still new. I am confident that the council will have a meaningful impact on the acceleration of the implementation of BBBEE,” Matabane said.
‘Much is expected from this council and we don’t expect it to fail. The department briefed us on the envisaged ways in which the subcommittees are going to function and we are satisfied that if the subcommittees function as planned, their mandate will be fulfilled. They will be inviting technical specialists to assist the subcommittees as and when necessary.”
Matabane said the importance of BEE was underlined by research that showed the poor representation of blacks in the senior management of companies. He cited an Empowerdex study that indicated that black South Africans owned a meagre 1.6% of the JSE’s value 16 years into democracy, which represents a debt-free portion of the total black ownership that stands at 5.75%.
A survey commissioned by Busa revealed that blacks and women continue to be grossly under-represented in all directorships and top executive leadership positions of JSE-listed
companies. Some of the study’s major findings showed that of 269 chief executive positions:
- Blacks occupy 9% (Africans 4%, coloureds 3%, Indians 2%) and whites 91%;
- Women accounted for 3% and males for 97% of 219 chief financial officer positions; and
- Blacks occupy 8% (Africans 2%, coloureds 1%, Indians 5%) and whites 92% of 245 non-executive chairperson positions.
‘BBBEE will remain relevant until the playing field is levelled and all the citizens of our beloved South Africa meaningfully participate in their economy in the interest of growing it and the sustainability of democracy,” Matabane said. But Duma Gcubule, a director of Kio Advisory Services, an empowerment strategy company, was sceptical about the reach of the council’s work.
‘The council has a narrow mandate. There are 40-million black people in South Africa and they must benefit from BEE. Most of them will not benefit as most do not work for companies that have to comply with the code, some are unemployed [or] underemployed in the public sector.
‘It frustrates me to think that BEE is the be-all and end-all. The council needs to revisit the definition. ‘The council needs a robust framework for monitoring. By this I mean that it needs to have up-to-date aggregated statistics across the economy. It needs to monitor on a sector level as well as a national level. The problem is that the public sector doesn’t even comply with its own policies.
‘It should be a norm to not give people without a certificate of BEE codes tenders. Look at what happened in that stadium situation where a person was posing for a white company, which got the tender. ‘The council must run like a public body and have the capacity to effectively monitor BEE not only in the mining industry but also in the retail industry.”