B-BBEE “Presentation theme: Demistifying the misconception of Broad Based Black Economic Empowerment (B-BBEE )”
It gives us pleasure as the Ministry of Economic Development and Tourism to be part of this occasion where are meeting to look at ways of how we can continue with our efforts of accelerating the transformation of the economy of this country and ensure that all of our people have a stake in it.
Programme Director, as all of us are aware, over the past fifteen years our country has traveled a long road in our quest to ensure that the freedom that we attained in 1994 is translated even in the economic arena. One of the critical tools that has been used by our government in its arsenal of measures to achieve equity in the economic field is the Broad Based Black Economic Empowerment (B-BBEE ) policy.
Like in any new venture, those who were path finders in the implementation of B-BBEE had no local best practice compass that would help them navigate these unchartered waters of the transformation of the economy of our country. The only experiences at the disposal of these pathfinders were experiences of other countries elsewhere in the world, both whose historical and material conditions were not the same as ours.
Because they were path finders, they were driven by the willingness to succeed and every lesson learnt along the way became a weapon to forestall future challenges. It is because of this reason that B-BBEE has been evolving over the years, harnessing lessons that have been learnt and adapting to the dynamic material condition in order to ensure that this critical intervention yields desired results.
As the government of KwaZulu-Natal we would be the first to admit that, while B-BBEE has contributed a lot in carving out a space for particularly the previously marginalised to occupy in the economic field of our country, it has, at times, produced unintended consequences. As we meet here today, there are many muted questions that are being asked about whether B-BBEE is still relevant in the country and whether this policy has produced the required results. It will be a height of folly for all of us to dismiss these questions and pretend as if in the table of ideas there is unanimity around the implementation of B-BBEE and that is has yielded the desired results.
Programme director, in assessing the journey that has been traveled in the implementation of the BBBEE we believe that we should be honest and frank so that we can collectively deal with the challenges. Over the past 15 years, as government we have observed that some of the beneficiaries of this critical economic tool have not quite understood the strategic goal behind this economic intervention. That is partly the reason why there is a chorus of voices questioning the very desirability of BBBEE.
Instead of viewing BBBEE as an avenue to create economic opportunities and to transform the underlying structural pillars of our racially-skewed economy, some of our people have looked at BBBEE as a quick ticket to self-enrichment. Therefore, BBEEE becomes an end in itself as opposed to a means to an end, which it actually is.
In this world of twisted BBBEE logic, acquiring a few shares in a company in order to indulge in unbridled conspicuous consumption, as described by Thorstein Veblen, the economist who coined the term is seen as a zenith of BBBEE achievement. This narrow description of what BBBEE is about is the biggest threat to all the noble intentions of this critical economic tool. The reality is that we have only scratched the economic surface of our country. It will take time before we change the structural make up of the economy of our country and ensure that all our people participate in it.
For BBEEE to achieve its goals of being an engine for economic as well as social and political change, we need visionaries and agents of transformation who look beyond the narrow goal of improving their own economic fortunes while the companies in which they have bought shares remain untransformed. Broad Based Black Economic Empowerment is a tool for social transformation. This means that our approach as entrepreneurs is slightly altered from the normal wheeling and dealing and chasing of profit margins at all costs that normally characterise the world of business.
Role-players in the BBBEE environment, from entrepreneurs to fund administrators, therefore, need to understand the transformation imperative inherent in the programme. This understanding will then dictate that all of us engage in BBBEE deals not only to get high returns from our selected ventures or to fulfill our quota of BBBEE applicants that we would have assisted as funders, but to build our nation.
As all of us know, we have also just emerged from one of the biggest economic slumps of our time which has affected the global economy and threatened to bring it to its knees. While South Africa emerged relatively unscathed from this economic storm, however, there is no doubt that it did have an effect on curtailing the implementation of BBBEE in the country as companies adopted measures to ensure that they stayed afloat. This has meant the rate of BBBEE has, as all other facets of the economy, been slowed down by the adverse economic conditions that had gripped the world.
However, having said this we think we also need to agree that there is a lot of misconceptions about what BBBEE is all about. Some of these misconceptions are:
You must know someone from higher places in order to qualify for tenders.
- B-BBEE policy is for elites who are politically-connected.
- B-BBEE policy is about black people taking over the economy from whites
- B-BBEE is a reverse discrimination.
- B-BBEE policy promotes fronting
- B-BBEE policy is a risk factor for big businesses
- B-BBEE promotes inefficiencies
- B-BBEE policy is about hiring under-qualified blacks
Indeed, Programme Director, the list goes on.
It is therefore proper to start by dealing with these misconceptions head-on and set the record straight. For starters, we reject all the misconceptions associating B-BBEE policy with malpractices which has nothing to do with the policy. The, BBBEE policy, as we understand it within government, is a strategy designed for black people to own the existing and new enterprises, to allow black people to manage and control enterprises, for equitable representation of black people in the work place, to promote skills development, to encourage enterprise development, to implement B-BBEE for preferential procurement, and socioeconomic development.
Furthermore, B-BBEE Codes of Good Practice prescribe that we must apply B-BBEE measures whenever government is involved in the following key areas:
- procurement
- licensing and concessions
- public private partnership (PPPs)
- the sale of state-owned entities
It is therefore not the government policy that there are unscrupulous individuals who are working against the very aims and objectives of B-BBEE policy by benefiting themselves at the expense of people of this province. It is our collective duty to ensure that we do not allow a coterie of individuals to tarnish BBBEE. The reality is that B-BBEE is the key weapon that our government has at its disposal to transform the economy of our country and indeed our province.
B-BBEE is not about giving tenders through malpractices. We therefore urge everyone who has any information or evidence regarding malpractices whether in government or in the private sector to come forward and report such occurrences. Our department has a dedicated Unit looking at issues of compliance and B-BBEE complaints handling. This includes all the fronting related cases where some cases are referred to the Police Commercial Crime Units for further investigation and possible prosecution.
B-BBEE policy is therefore at the core of the Provincial government programme to create conducive environment for small, medium and micro enterprises (SMMEs) and black people in general to prosper. We must say that we understand all the challenges relating to procurement processes and operations such as the conflicts in legislations between B-BBEE Codes and Preferential Procurement Policy Framework. Programme Director, it is a matter of common cause that various B-BBEE studies including our own conducted in 2008, reveal that much as government has managed to introduce strategies for intervention in the second economy but there is still a long way to go before the government’s objective is achieved. It is because this reason that we believe that having looked at the issues around the implementation of B-BBEE there must be a consensus that B-BBEE, despite its many unintended consequences, remains a critical tool with which to transform the economy of the country and to ensure that we all have a role to play in the economy of South Africa.
B-BBEE policy is therefore at the core of the provincial government programme to create conducive environment for SMMEs and black people in general to prosper. We however, would like to stress that we understand all the challenges relating to procurement processes and operations such as the conflicts in legislations between B-BBEE Codes and Preferential Procurement Policy Framework.
The national departments of Treasury as well as the Department of Trade Industry are working hard to align the two policies. However, at the provincial level our department and the Provincial Treasury are at an advance stage to complete a detailed proposal on the alignment at provincial level.
Some of the areas they are working on are the empowerment of target groups: women and youth, as well as enterprise development. We believe that the report will also include clear targets, and timeframes. This would make it easier to monitor the progress in the implementation of B-BBEE in the province. As we speak, we are currently verifying all the provincial government departments and DEDT public entities to check whether they are BBBEE compliant.
The first phase of this would be complete at the end of this financial year. This exercise will provide an accurate baseline of B-BBEE within provincial government. We are the first province to undertake an exercise of this magnitude within the public service in the country. We are doing this because we want to lead by example as government. It would be hypocritical for us as government to make lofty pronouncements about the importance of implementation of BBBEE while we do not have our house in order.
Programme Director, our government is serious about accelerating the small strides we have made in the province to implement BBBEE. We all know that in KwaZulu-Natal the progress we have made leaves a lot to be desired. It is because of this reason that we have taken a number of measures to ensure that we accelerate the implementation of BBBEE in KwaZulu-Natal. We have, among a number of measures, established a dedicated economic empowerment directorate which is the custodian of BBBEE in the province.
As all of you are aware, in 2008, the provincial government adopted the provincial BBBEE strategy which prescribes six implementation programmes which are:
- information dissemination, call centre and outreach
- skills development for the unemployed.
- preferential procurement
- enterprise development (sector matrix approach)
- partnerships and stakeholder relations
- BEE monitoring and evaluation
Additionally, there is the provincial BBBEE Implementation team composed of representatives from the provincial government departments. The implementation team is further divided into four key work-streams: Preferential procurement, enterprise development, skills development, and financing.
Furthermore, we are in the process of reinforcing our stakeholder relationship. We have partnerships with various banks through our SMME Fund, and we are engaging big businesses on BBBEE through various structures such as the Growth Coalition.
What is clear, though, is that if we are to accelerate the implementation of BBBEE in the province we cannot continue to do things the normal way. It is because of this reason that on the 10 August 2010, the provincial government had an inaugural meeting of B-BBEE Advisory Council. The provincial BBBEE Advisory Council would provide advice on programmes and instruments to achieve B-BBEE objectives in the province.
It would come up with strategies on how to accelerate the implementation of B-BBEE in the province. As government we have noted with concern that there is a tacit resistance from some companies to comply with the B-BBEE in the province. As we have stated, B-BBEE is not optional and should not be viewed as a burden to the growth of our businesses. Instead, we believe, it should be viewed as a requirement to promote growth and to ensure that we broad the economic cake so that we can all benefit. But more importantly, the time for making empty gestures of support for B-BBEE is over. We want to see concrete results or else we would be left with no option but to take drastic measures to ensure that there is compliance.
We therefore urge everyone who has not complied to do so before it is too late. Our deliberations within the Advisory Council also highlighted a number of key strategic issues for further discussion. The Advisory Council raised one critical question, which we think is pertinent for you to deal with as you go through your break away sessions. We want to know the inhibiting factors that drive people out of the province?
Why most people leave the province of KwaZulu-Natal to be successful in other provinces? We would be waiting with keen interest on your resolution on these important questions, and we must undertake to take the resolutions of this B-BBEE conference and present these personally to the provincial B-BBEE Advisory Council.
Critically, we need to mention that since B-BBEE is a one of the focal points of our government’s economic transformation agenda, we remain to ensuring that its implementation is not done in a half-hearted matter. That is why we will be commissioning a provincial study to, among other things:
- assess the levels of B-BBEE compliance
- addressing bottlenecks and red-tape around the implementation of B-BBEE
- update the province’s B-BBEE scorecard.
Where we feel that we need to act, we will do so without fear or favour because mollycoddling non-compliance would be tantamount to subjecting the majority of our people to eternal economic servitude.
In conclusion, we want to stress our government’s unwavering commitment to ensure that B-BBEE gains foothold in the province. While there are many challenges that have sprung up in our journey to implement B-BBEE however, it is our strong believe that B-BBEE remains a strategic tool with which to change the economic landscape of our province. As someone once said, we “we cannot direct the wind but we can adjust the sails”
I thank you.
