Revised BBBEE codes take SA backward

2013-11-11 10:00

South Africa’s history of unequal development and the denial of opportunities – jobs, assets and education – has left a social and economic legacy with a disproportionate effect on the black, coloured and Indian population.

This legacy is reflected in persistent levels of inequality between racial groups and an economy that is not reaching its potential.

Our common morality and commitment to the Constitution bind us to the vision of an inclusive society striving to “heal the divisions of the past; improve the quality of life for all; and free the potential of each person”.

When the DA asserts its identity as a party that brings together South Africans who “share a commitment to the Constitution”, we are confirming a commitment to section 9(2): “To promote the achievement of equality, legislative and other measures designed to protect or advance persons, or categories of persons, disadvantaged by unfair discrimination may be taken”.

The DA, therefore, supports public policies that promote redress.

We believe that the most sustainable way to achieve redress is through economic growth, clean government and service delivery. We also recognise that the nature and extent of socioeconomic exclusion demand a dedicated effort to empower a broader base of South Africans – with an emphasis on historically disadvantaged groups.

Our support for broad-based black economic empowerment (BBBEE) is framed within this context.

The DA believes that a framework of incentives, such as that provided by the BBBEE scorecard and the procurement process that supports it, can help to build a more inclusive economy.

When considering our support for specific proposals in terms of how BBBEE should be implemented (such as the Codes of Good Practice on BEE), we apply a simple test.

Does the initiative broaden opportunity for disadvantaged people?

Or does it seek to manipulate outcomes for the politically connected?

We support empowerment that broadens opportunity.

In his article “Why BBBEE is working” (City Press, November 3 2013), Jimmy Manyi argues that the groundswell of opinion that BBBEE has become a tool for elite enrichment is invalid because seven elements were “carefully chosen” to cover a “broad spectrum of beneficiaries”.

The DA agrees that a balanced, streamlined BBBEE scorecard can be used to promote economic inclusion.

We believe that businesses must invest in skills, must be active stakeholders in the communities where they operate and must support the development of small enterprises.

But the new scorecard and Codes of Good Practice published by the department of trade and industry (the dti) last month are unlikely to support these objectives.

Manyi quite rightly says that “the ownership element is not the alpha and omega of BBBEE; it is just one out of seven (or now five)”.

One must, however, consider how the ANC-led government is using this “broad-based” scorecard and recognise that the new codes are again putting the emphasis on ownership transfer – most likely at the expense of more inclusive approaches to empowerment.

»?Firstly, while the design of the scorecard promotes a broad-based approach, the ANC’s rhetoric and the not-so-subtle manipulation of tender and licensing processes have placed a disproportionate focus on ownership.

»?Secondly, the new codes decrease the targets for ownership by broad-based schemes and new entrants – from 10% to 3% and 2%, respectively.

»?Thirdly, the definition of “black new entrants” has been broadened to include persons who hold less that R50?million in shares. Some may argue that you must be considered an established participant in the economy long before your stockbroking account reaches the R50?million mark.

»?Fourthly, the codes now deem the ownership element to be one of the “threshold elements” for which minimum scores must be achieved. Businesses that agree with Manyi that ownership is not the “alpha and omega” will now do so at the expense of their overall status as empowered enterprises.

»?Lastly, companies must get at least 80 points (previously 65 points). This brings the scorecard perilously close to the point where businesses may opt out of this entire process.

The department has basically produced a new set of codes that are so stringent in their requirements and so narrow based in their approach. The inflexibility of thesecodes takesus back to the Stone Age of empowerment.

»?James is the DA’s shadow minister of trade and industry

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