How can we help strengthen your business?

How can we help strengthen your business?

Is BBBEE dead? Has it worked? The media and lobbyists have vilified BBBEE. Here are 3 ways we can fix it.

Is BBBEE dead? Government recently published a 25 years review from democracy in 1994. The key outcome of this report was that South Africa is the most unequal country per the Gini coefficient. But this does not tell us if BBBEE has failed or not.

Share this insight...

Insight by:

In 2019, government published a 25 years review of South African democracy, benchmarking since 1994. The key outcome of this report was that South Africa is currently the most unequal society in the world in terms of the Gini coefficient. This was also confirmed by the world bank on its report on South Africa. Unfortunately this cant be the determinant on whether BBBEE has failed or not.

What is the backbone of BBBEE? A generally-accepted definition would be: “Black Economic Empowerment (BEE) is an integration programme launched by the South African government to reconcile South Africans and redress the inequalities of Apartheid, it was later extended and called Broad Based Black Economic Empowerment (BBBEE) to ensure that it captured a larger net of those disenfranchised. It encourages businesses to integrate black people in the workspace, upskill and mentor, support black businesses, give back to mainly poor communities across the country which remain poor due to the land dispossession, with the majority of these communities being black South Africans.” In simple terms, this programme was designed to move wealth from the wealthy to the not so wealthy.

Unfortunately, the media and some lobby groups have painted the picture that only a small elite minority have benefitted from BBBEE. Although this may be true, it does not mean that the programme is flawed or has failed altogether. Ultimately, capitalism in its purest form has allowed for the system to simply perpetuate with just a few of the population gaining a some economic advantage over the masses. 

Unfortunately, the current structure of the BBBEE act and the score card which manages has easily been manipulated to benefit those who still hold the wealth, and in South Africa’s context, are predominantly white. The big ticket items like equity, can be masked through trust schemes or fronting, while enterprise supplier development (ESD) and supplier development (SD) programmes have become tick box exercises through unfocussed programmes which don’t allow for its participants to get real Rands spent by large corporates for their goods or services.

So is BBBEE dead? We do not think so. We believe that BBBEE can be rehabilitated and improved. There needs to be a complete mindset shift by big corporates in their programmes so as to ensure that the beneficiaries of their schemes are not mere window dressing. We recommend the following:

Fixing B-BBEE: how do we get BBBEE right?

  1. Equity – Ensure that equity schemes are fair. They don’t have to be free, just fair. Equity purchases do not have to drown black shareholders in debt, ultimately, the relationship is quid pro qou, so both parties should not be burdened;
  2. Management – Affirmative Action Posts should be not be designated for non strategic roles and where black individuals are placed, they should have the full backing of the executive to make decisions which are beneficial for the company;
  3. ESD and SD programmes – These programmes shouldn’t be about giving soft loans or programmes. There should be a goal to ensure that these companies are empowered to deliver into the value chain of the corporate who owns the programme. These companies struggle not only because of poor admin which these programmes usually are about, but rather through a lack of cash, which is caused by a lack of market access.

Conclusion: BBBEE is not dead

we don’t see BBBEE as dead, but rather that corporates and South Africa need to shift the thinking and appreciate what the legislation was designed for! Ultimately to move more black South Africans out of the poverty line!

Let’s fix this!

Scoring B-BBEE: what does a BBBEE scorecard look like?

Download a sample B-BBEE scorecard

Download this sample scorecard to see how the BBBEE scoring model applies to your own organisation. 

DOWNLOAD NOW

Insight by:

Justin Kettle

Managing Director

Kettle Consulting (PTY) Ltd

Do you have comments or feedback about this article? We would love to hear it! Please send your comments/feedback via the form below.

Fill out the form below to get in touch with our Consultants to discuss your B-BBEE strategy.