Why South Africa needs a B-BBEE Commission

Real economic transformation will result in the visible, tangible inclusion of black people in the mainstream economy, across all sectors. Picture: iStock/Getty Images
Real economic transformation will result in the visible, tangible inclusion of black people in the mainstream economy, across all sectors. Picture: iStock/Getty Images

The latest figures from Statistics South Africa show that unemployment in South Africa is at 27.2%, up from last quarter’s 26.7%.

The majority of these unemployed people are black and young South Africans.

Figures on the state of transformation for 2017 released by the Broad-Based Black Economic Empowerment Commission (B-BBEE Commission) tell us that we have regressed from 32.75% to 27% black ownership of JSE-listed companies; and that on average companies are not meeting 50% of the targets for management control, skills development, and enterprise and supplier development.

This means the inequality gap and economic disparities in South Africa continue, with little prospect of real and meaningful growth.

South Africa’s economy has to grow so that all South Africans of employable age are able to find the jobs they need to rise out of what, too often, is an endless cycle of poverty, and the misery that goes with it.

Moreover, we must enable citizens to get skills that not only prepare them for employment, but help them create and run their own businesses, with proper access to markets for their goods and services.

Until that happens South Africans will not enjoy the prosperity and stability they want and deserve.

The pace of economic transformation needs to accelerate to achieve the required inclusivity.

Broad-based black economic empowerment is a win-win for all of South Africa – it will mean greater economic growth because more people will be participating in the economy.

You cannot have one without the other.

That is where we at the B-BBEE Commission come in. We are here to fill the monitoring gap that has existed since 2003 and to make sure that economic empowerment really does take place and that it benefits the many, not just a few.

We are also here to ensure the mistakes of the recent past are not repeated.

South Africa first introduced economic empowerment legislation in 2003. Sadly, many businesses ignored it as much as they could, while others adopted a tick-box approach – they followed the letter of the law, but not the spirit. This is what gave rise to fronting.

The 2013 Amendment Act criminalised fronting and established the B-BBEE Commission, giving us investigative powers so that we can look into B-BBEE deals and make sure they reflect the letter and the spirit of the law. This will change more than just the face of the economy.

Also, when economic empowerment legislation was first introduced in 2003, it contained no monitoring mechanism to track the pace and nature of economic change.

The 2013 legislation changed that, too. Another of the B-BBEE Commission’s roles is to monitor changes in who actually owns the businesses that make up much of the economy.

The Codes of Good Practice aligned to the Act set out five areas of measurement: ownership, management control, skills development, enterprise and supplier development, and socioeconomic development.

The B-BBEE Commission is South Africa’s B-BBEE regulator, established in 2016 to put an end to fronting, which the Act defines as any act that, even indirectly, undermines or frustrates the achievement of legislated B-BBEE objectives.

If our investigations reveal fronting indicators, we can hand our evidence to the South African Police Service for criminal investigation or send the matter directly to the National Prosecuting Authority.

This, however, we would prefer to do only as a last resort – but it will be an immediate step where blatant criminality is found.

We at the B-BBEE Commission are primarily here to help everyone apply B-BBEE properly, receive the economic benefits and empower others in the process.

We offer free, confidential advisory services so that when a business entity signs a B-BBEE deal everything aligns with the law, in letter, and in spirit.

We are also here to help businesspeople interpret and clarify the legislation. This way, we can prevent mistakes of the past.

To properly transform the economy, South Africa needs to make sure ownership of the economy reflects the demographics of the country.

That’s why the Act also focuses on changing ownership patterns.

Lack of transparency in B-BBEE deals concluded in the past entrenched secrecy that allowed for a few connected people to benefit.

The Act now gives us the power to register B-BBEE deals that are valued at R25 million and above. This way, we will know who the black person behind the deal is, and whether real value accrues.

Full transformation goes further because we want a successful, productive, growing economy. An important part of the Act is ensuring that black people gain the skills necessary to successfully run their businesses, over and above being employable.

We don’t just want more black people running businesses; we want them to be effective business leaders.

Real economic transformation will result in the visible, tangible inclusion of black people in the mainstream economy, across all sectors.

This, in turn, will mean greater economic growth, which will benefit all South Africans, regardless of race.

With adequate funding and support from the government, we should be able to get this country to the next level of economic empowerment, and in the process eradicate the unscrupulous companies and practitioners that make a mockery of this much-needed empowerment tool.

That is why South Africa needs a B-BBEE Commission.

Zodwa Ntuli is the commissioner at the B-BBEE Commission

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July 2020

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