What boere can teach BEE

2011-10-01 15:46

The Black Business Council (BBC), which has set itself the task of spearheading the empowerment of black African entrepreneurs, should pull together the financial muscle of black people to achieve an economic revolution. This is according to black business veterans and a leading academic.

And now the BBC is toying with the idea of creating a black-owned financial institution and a venture capital fund as part of a strategy to create an army of black entrepreneurs.

It is hoped that this strategy will help increase the share that blacks have in the South African economy. But how can the BBC put these ideas into action?

The former president of the National Federated African Chamber of Commerce and Industry, Dr Sam Motsuenyane, says the BBC should first focus on encouraging black people who live in rural areas to utilise their land effectively.

“The land is under-utilised and the BBC should lobby the government to make funding easily available to black farmers,” he says.

“Out of every 10 farms that are given to black people, only one survives and this shows the importance of lobbying government and creating enthusiasm among ourselves as black people to develop businesses in agriculture.”

Motsuenyane says this could pave the way for the BBC to helping its members set up their own distribution networks and companies that would manufacture the produce.

His suggestions echo what many commentators have been arguing for years, namely that black people need to start their own enterprises and move away from buying small stakes in giant, white-owned companies under the policy of black economic empowerment (BEE).

While BEE has enabled a few black people to accumulate billions of rands in wealth, it has done very little to change the ownership structure of the economy, which is still under white control.

Critics of the current BEE model point to the success of Afrikaner empowerment, which was built on mobilising savings and using those savings to start new businesses and buying controlling stakes in English-owned companies.

Afrikaner empowerment started in 1918, when short-term insurer Santam and savings group Sanlam were established through capital from wealthy Afrikaner vineyard owners.

After the National Party came into power in 1948 Afrikaners scaled up their empowerment and used Sanlam and Volkskas banks as their main vehicles to advance the Afrikaner nation’s economic interests.

In many respects Afrikaner empowerment was different to black empowerment. Sanlam and Volkskas were used to finance Afrikaner-led businesses and start-ups or to buy controlling stakes in English-owned businesses, according to Dr Anton Ehlers, a specialist in business history at Stellenbosch University.

Akrikaner-owned and run businesses such as media giant Naspers, lender Capitec Bank and financial services firm PSG are thriving on the back of sacrifices made by the pioneers of Afrikaner empowerment.

Motsuenyane says the BBC should create a fund into which black people can channel their savings towards building new businesses.

Motsuenyane’s idea of creating a BEE fund through savings could work because in recent years black people have invested billions of rands of their savings in established companies such as Sasol and MTN to take advantage of BEE deals.

Political commentator and BEE critic Moeletsi Mbeki believes that black business could create big black businesses by persuading government to sell them parastatals.

Mbeki says: “During apartheid the National Party created Sasol, for instance, through taxpayers’ money and later sold it cheap to Afrikaners.

“The BBC should also approach government and request it to sell the Industrial Development Corporation, Transnet, Denel, SAA and the Development Bank of South Africa cheaply to black businesspeople. This could be an easier way to create a black bank in South Africa.”

Mbeki adds that black business is “small fry” in South Africa and not an important creator of jobs and should therefore not expect to have a larger voice than that of white business.

“The BBC is mistaking the world of politics with the world of economics. In business and economics it is the bucks that count. In the world of politics it is the poor guy who votes ANC,” says Mbeki.

Mbeki differs slightly with Motsuenyane, arguing that Afrikaners managed to start their own companies, which eventually became multi-nationals, only because they owned a massive amount of commercially viable “fertile” land countrywide.

“Afrikaners were able to build financial institutions on the back of land ownership,” says Mbeki. “There is no similarity between the blacks and Afrikaners as they were landowners of fertile land.”

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