Black business concerned about fronting – minister

2011-09-08 09:22

Public enterprises minister Malusi Gigaba has defended a decision by black business to break away from Business Unity SA (Busa).

He said there was concern about black economic empowerment (BEE) “fronting” because it eroded the potential for authentic black businesses.

“Look at the management core in South African business, look at the ownership of industries and enterprises,” he said in an interview with SAfm.

He was responding to a decision at a Black Business Summit yesterday to form a new Black Business Council, under the chairmanship of businessman Patrice Motsepe, and to immediately suspend its participation in Busa.

“The fact of the matter is that after 17 years of (black economic empowerment) much of what we have seen with BEE is the emergence of black shareholders who play no part in the management and ownership of the enterprises in which they hold shares. (There is) a lot of fronting.”

“Fronting” is a term used to describe the practice of white businesses presenting fake black business partners or directors in order to fulfil the black ownership requirements that accompany tendering for government business.

Gigaba said it was still important in South Africa to have black business organisations.
Although South Africa had a lot to benefit from a unified non-racial business organisation, that should be the “culmination of a process”.

There was still racism in the private sector, said Gigaba.

“Just look at a few things ... look at the JSE ... black ownership of productive capital is quite low.
“Look at the management core in South African business, look at the ownership of industries and enterprises.”

Black business people also had no access to finance, and complained that even development finance institutions were not supporting them.
“We think that the resurrection of black business is an important step that needs to be supported.”

Government needed to support black business formations and business in general and “genuine” transformation issues needed to be identified.

In a speech prepared for delivery yesterday night, Gigaba said that the conduct of some private companies was fuelling the debate on nationalisation.

“There is a growing underlying legitimacy crisis regarding whether the private enterprise is a ‘socially responsible’ institution, capable of both developing the economy in a sustainable manner and equitably sharing the benefits of economic growth and development.”

In a separate interview on SAfm, Xolani Qubeka, chairman of the black business summit organising task team, said there was a need for a unified business structure in South Africa, and that structure was currently Busa.

“It must be understood black businesses were part of the founding of Busa.”
But although they had resolved to suspend their membership of Busa, they had not resolved to not go back to Busa.

Their future would ride on the outcome of discussions with Busa.

The Black Management Forum membership of Busa pulled out earlier this year. They felt black opinions were being overrided.

Business Day reported that on Tuesday Busa CEO Nomaxabiso Majokweni and president Futhi Mtoba were asked to leave the Black Business Summit.

They were apparently invited by mistake, and were asked to leave because Busa was going to be discussed.

Qubeka also called for a 50-50 representation at the National Economic Development and Labour Council, saying current representation was majority white.

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