In education, millions are invested into certain schools even though the need far exceeds supply. That the contributions are rewarded with black economic empowerment (BEE) points under the socioeconomic development category matters little.
Indeed, many of the companies with good BEE rankings claim they would do so without any coercion, and given global best-practice there is little reason to doubt them. In a few areas, however, usually in the communities in which the companies operate, education standards are improving.
For skills development, more people are being trained at all levels of the workforce, from basic skills to management training. Again, the companies would be doing so anyway; the benefits are direct.
Preferential procurement can be seen negatively because of some high profile cases of unwarranted spending in the public sector. The corporate sector no doubt is not without corrupt practices, but in the main, large companies are helping many small businesses to develop.
That ties in with enterprise development, a category on the scorecard that really does have potential to make a meaningful long-term difference to the country. Usually the primary company establishes the new enterprise with share capital or an interest-free loan, and is its only client. Payment terms are friendly.
The first measure of success is whether or not the new business can generate new clients. Hiring new employees is another achievement. But it is when the new business is able to buy out the primary company’s shareholding or pay back the loan that it can be said to be an independent, sustainable business.
There are no outright leaders in this category because nearly 70 companies achieved the maximum score, each spending the target percentage of net profit on enterprise development.
Telkom alone spent R119-million on enterprise development initiatives in its 2013 financial year. Across all industries, the bigger companies are developing small businesses. However many of those turn out to be successful, it will mean more people employed, more taxes being paid and other multiplier effects leading to a small business sector that is developing rather than stagnating.
A positive contribution
“Generally BEE is helping South Africa get to where it needs to be,” says Datecentrix chief executive Ahmed Mohamed.
“There are obvious flaws and we must recognise those. The biggest challenge is unemployment and we also need more equitable income ratio. But overall for South Africa, if you combine all the projects, BEE can contribute positively. The more organisations that get involved the better.”
Datacentrix is the top-ranked company in two categories: socioeconomic development and management control. It is scored according to the ICT charter as opposed to the department of trade and industry’s generic scorecard.
One of its education projects is a learnership programme incorporating vocational education and training. It has trained 115 previously unemployed learners — 15 of whom have disabilities — and equipped them with a technical qualification.
Its graduate programme provides work experience to candidates who are qualified, but lack practical experience in their field of expertise. Datacentrix says in the IT space, this is particularly evident in the enterprise information management and accounting fields, where previously disadvantaged candidates remain scarce.
The company supports the Thandulwazi Maths and Science Academy, an education programme run by the St Stithians Foundation that addresses the critical issues pertaining to the teaching of maths and science in schools around Gauteng.
It also runs various charity initiatives assisting underprivileged children and abused orphans as well as people with disabilities and Aids.
Given South Africa’s skills shortage, Mohamed says meeting the employment equity and management control targets is particularly difficult, especially in the IT field, which requires specialised skills.
“Typically if you have skilled people they tend to get poached by the big corporations. And BEE candidates typically earn higher salaries.”
However, Datacentrix’s initiatives are benefiting the company: “We are pleased with our progress. We focus on those areas and you can see it in our BEE scores. The St Stithians programme is working well and we have placed graduates from our learnership programme both internally and externally.
“That has an impact on various levels: educated people are more likely to be able to sustain themselves, and for every previously unemployed person trained and employed, that has an impact on a household and the community. We hope it gains more momentum and it does change lives.”
BEE programmes enhancing skills
Altron TMT scored well in skills development and socioeconomic development. Corporate services group exective Johan Klein emphasises the importance not only of creating a work pipeline for school leavers, but also providing skills enhancement to the broader community.
The Altech Multimedia Centre in KwaMashu offers a formal cadet programme with specific emphasis on computer literacy, maths and science, and this year the company is hiring 50 graduates from the centre. It was founded five years ago and the group has begun building a similar centre in Gauteng.
The company has numerous other BEE initiatives. For example, its Bill Venter academy provides 20 bursaries a year in electrical engineering, computer science and mechanical and industrial engineering.
Another is an Altech Autopage initiative called Streetwise. It supplies secondary schools with ICT packages valued at R220 000 each that enable students to access education resources online.
The overall BEE programme is guided by its Transformation Vision 2010 document that is continuously updated. Importantly, this is monitored and directed at board level. A stated target is to increase its preferential procurement and enterprise development.
Bowler Metcalf, the top-ranked company in the skills development category, emphasises the importance of developing from within, ensuring a sustainable process.
“We have consistently developed through the ranks so the biggest growth is in our junior-middle management group, although there is also movement into senior management,” says the group’s HR manager, Vanessa Paris.
The company’s central development plan targets high potential candidates, while its pipeline programme invites employees to apply for positions in different areas of the organisation.
Paris says skills development presents the opportunity to change an employee’s life. It is an area where a person can break out of limitations that may have been imposed on them by the education system.
“Skills development is the only chance they have as employees to open avenues to other areas and improve a person’s life prospects.”
She says there is an added benefit in improving retention rates because employees who receive skills training and are promoted tend to remain more loyal to the company. “And if they do move on at least we’ve improved the skills base in our country.”
Datacentrix’s Mahomed says his company has taken the view: “Let’s do the little we can do, whatever impact it has. At the least it will have an impact on households and communities.” The more companies that commit totally to BEE’s social development imperatives, the more tangible that impact will be.
The M&G Most Empowered Companies supplement was written by media and research house Intellidex. Rankings were compiled by ratings agency Empowerdex.